A GOOD PATENT, PROPERLY HANDLED,
IS A STEPPING STONE
TO SUCCESS AND FORTUNE.

PRACTICAL

POINTERS for PATENTEES

CONTAINING VALUABLE INFORMATION
AND ADVICE ON THE SALE
OF PATENTS

AN ELUCIDATION OF THE BEST METHODS
EMPLOYED BY THE MOST SUCCESSFUL
INVENTORS IN HANDLING THEIR INVENTIONS

By

F. A. CRESEE, M.E.

Revised and Corrected, with New Forms and Tables of Population
of the United States in Accordance with the 1910 Census

MUNN & CO., Inc.

Scientific American Office

361 Broadway

new york

1912

Copyright, 1901, by the
POTOMAC PUBLISHING COMPANY

Copyright, 1902, by
MUNN & COMPANY

Copyright, 1906, by
MUNN & COMPANY

Copyright, 1912, by
MUNN & CO., Inc.

New York
Macgowan & Slipper
30 Beekman Street

PREFACE

The original conception and working out of an invention is usually a labor of love on the part of the inventor: having perfected his invention in every detail, he finds able and skilled counsel waiting to prepare and prosecute his application for patent before the Patent Office Examiner. When the patent is allowed or issued, the patentee's real work begins—that of turning the patent into money. This is the business end of the inventor's work, which is generally to his interest financially to undertake himself, or to have under his immediate supervision.

The object of this little work, based upon the experience and observation of the author and other successful inventors, is to give the patentee such information and advice as will enable him to proceed more intelligently, on the most successful and economical basis, to realize from his invention.

The American Government issues annually over thirty-five thousand patents, a large number of which are offered for sale by their respective patentees, who in many cases have no definite [p. 4]lines to pursue in negotiating their patents; many realizing little or nothing from their inventions through careless or bad management, while others, through incompetency, drift into the hands of unscrupulous patent-selling agents only to be swindled.

The numerous inquiries from patentees seeking practical, reliable, and up-to-date information as to the best and most successful methods of realizing from the product of their ingenuity, has led the author, after due deliberation, to prepare and present this work to the American inventor, with a view of supplying a long-felt want, with the hope that it will save them many expensive experiments in handling their patents, and advance them on the road to success.

It has been the endeavor of the writer to cover briefly every subject that is usually encountered by patentees in disposing of their patents, not only in the matter of selling, but also in the equally important and perplexing questions of arriving at the value of patents, legal forms, statistics, etc., etc.

Realizing that the work may be deficient in many respects, the hope that it will prove instructive, and the belief that it contains many practical pointers for patentees is still entertained by

THE AUTHOR.

CONTENTS

[p. 5]

[p. 8]

[p. 9]

PRACTICAL

POINTERS for PATENTEES

CHAPTER I

DEMAND FOR INVENTIONS OF MERIT

That there is a demand for inventions of merit which can be readily disposed of at a reasonable profit to the inventor, there can be no doubt. There perhaps never was a time in the history of our country when the demand for meritorious inventions was so great as the present. The conveniences of mankind, in all his varied vocations and callings, require continual changes and improvements in the apparatuses and implements used in order to save time, labor, and expense, and to keep pace with the never-ceasing progress of civilization.

At no time in the past has there been so deep an interest manifested by the public generally in the inventions of our bright-minded men and women, and at no time has capital been more readily interested and ready to invest in any[p. 10] practical improvement which can offer a fair chance of monopoly under the patent laws.

Business men, capitalists, and manufacturers are ever on the alert for new and desirable inventions, which will supersede in utility those which are already on the market. By purchasing such inventions, they secure novelties which will not only enable them to avoid the keen competition and to a great extent monopolize the trade in their own respective lines of business, but also to make sales more easily, and thus make their business more profitable.

Monopoly in Patents.

Every well-informed person knows that a monopoly is the desideratum of business men. The monopoly or protection of an industry afforded by the patent laws is, perhaps, the one monopoly that directly benefits the world. Were it not for the protection and monopoly offered inventors by governments, for a certain number of years, to disclose their inventions, inventors would simply keep them secret, or if used at all, would do so only in such a manner as would prevent the world at large from learning of or utilizing them, thus debarring the public as a whole from their benefits. This monopoly in patents has had much to do with the material progress of the world during the century just ended.

Anyone having a monopoly of a good trade article is assured of a fortune. If capitalists and[p. 11] manufacturers can secure the control of any new invention of merit for their sole use and purposes, which can be manufactured and sold more cheaply than those now on the market, and which will perform its work in a quicker and better manner than the devices now in use, they will be only too willing to pay patentees handsomely for patents covering such inventions.

There are numerous staple articles of commerce whose manufacture is open to all, and which every mercantile house in the country is handling at a profit, notwithstanding the great number engaged in their manufacture and sale in every section of the country. Now, if there can be supplied some better or cheaper article in any line of industry, the firm or person who secures the monopoly of its manufacture and sale, simply controls the market, and human endurance and energy are the only limits to the degree of profits such a firm or person can secure from the manufacture and sale of such an article, if adequately protected by a valid patent.

Industrial Progress Based on the Patent System.

In an official report the Commissioner of Patents clearly sets forth that from six to seven eighths of the entire manufacturing capital of the United States is either directly or indirectly based upon patents. This vast amount of money, upward of six thousand millions of dollars, con[p. 12]tinually employing great armies of people, in industries based upon patents of every class, supplies the country with improved articles of every description. It has been well said that, "Patents and trade go hand in hand."

The largest and most opulent manufacturers in the country will be found to be the heaviest owners of patents, developers of inventions, and patrons of the Patent Office. While all inventions are not telegraphs, telephones, sewing-machines, or electric lights; nor can all business houses be Westinghouses, Hoes, McCormicks, Bells, or Edisons, yet all over this country, and others as well, there are springing up a great number of moderately large growing firms who, ever on the alert for success, devise or secure control of some valuable patent, by which they can successfully invade and control to a certain extent particular lines of industry.

Nearly every leading factory in the world owes its commencement and success to the prestige and protection afforded by the possession of a good and valid patent.

[p. 13]

CHAPTER II

INCOME FROM INVENTIONS

It has been aptly said that the products of all the gold, silver, and diamond mines in the world would not equal in value the annual income of American inventors. It has been carefully estimated that there are at least fifty patents in the United States which yield over $1,000,000 annually, some 300 that yield over one-half million, from 500 to 800 which bring from $250,000 to $500,000, and between 15,000 and 20,000 that bring over $100,000 annuities. Besides these, there are thousands upon thousands of patents which yield yearly more profit to their fortunate possessors than could be accumulated in a lifetime by a wage-earner.

Independence through Successful Invention.

There are thousands of patents sold outright every year by the patentees of the United States for thousands of dollars; and, to the already long list of successful inventors, each year adds many more, who have become independent through the proper handling of the product of their ingenuity. Indeed there can hardly be conceived a quicker way for the average person to attain independence and[p. 14] wealth than by inventing something of real worth and merit that can be quickly turned into money. The inventive field is large, and each invention opens up a new field for improvements, and it is the "improver," without question, that reaps the greatest benefit from any invention. Owing to the ever forward progress of civilization, there is no limit to the possible improvements in the sciences, arts, and manufactures.

Unprofitable Patents.

It must, however, be borne in mind that all patents are not remunerative, neither are all gold mines productive of fortunes, and one may lose money in patents as well as in any other business. There are thousands of patents, many having merit no doubt, which have never been sufficiently brought before the public to test their merits, effect their sale, or manufacture; this in many instances is owing to incompetency, or bad management on the part of the patentee or his agents. There are thousands of other patents that do not prove remunerative because they do not supply a real want, while still others are such slight improvements upon existing inventions that they necessitate such narrow claims, which render the patent of little or no value. One has only to look over the weekly issue of patents to see many of the last class.

As before stated, while there are many thousands of patents that do not pay—and many no[p. 15] doubt cause their owners disaster, as is the case in any other business or investment; on the other hand, the far greater proportion of patents granted are productive of handsome profits, if properly managed.

Money in Patents.

That the majority of patents taken out prove lucrative is evident from the fact that upward of seventy thousand applications for patents and designs are filed each year in the United States Patent Office, and approximately eight hundred are granted and issued each week. Probably about one-fifth of these patentees obtain their patents with a definite view of manufacturing their inventions, and the remainder obtain theirs with a view of realizing from the sale of the rights to manufacture.

It may be said, as a general thing, there is more money in small inventions than in larger ones, from the fact that they can be easily manufactured anywhere with but little outlay of capital; they usually fill a general need, and the profit derived from their manufacture is large, besides the patent is more readily disposed of; while with larger inventions it requires more money and ability in handling the patent, and the invention must be unusually promising to justify the erection of a plant costing thousands of dollars for its manufacture. However, when large and complicated inventions do pay, they usually pay well.[p. 16]

Business Capacity of the Inventor.

It must be remembered that the actual cash value of a patent is not in the patent itself, but in the sale or use of the monopoly it affords, and the amount realized from any invention frequently depends upon the business capacity of the inventor or his agents. Owing to his business ability, one person may make a fortune out of an unpromising improvement, while another, through bad or careless management, will realize little or nothing from a brilliant invention.

Speaking along this line in an official report the chief examiner of the Patent Office says: "A patent, if it is worth anything, when properly managed, is worth and can easily be sold for from $1,000 to $50,000. These remarks only apply to patents of ordinary or minor value. They do not include such as the telegraph, the planing machine, and the rubber patents, which are worth millions each. A few cases of the first kind will better illustrate my meaning:

"A man obtained a patent for a slight improvement in straw cutters, took a model of his invention through the Western States, and after a tour of eight months returned with $40,000 in cash or its equivalent.

"Another inventor in about fifteen months made sales that brought him $60,000, his invention being a machine to thrash and clean grain.[p. 17] A third obtained a patent for a printing ink, and refused $50,000, and finally sold it for about $60,000.

"These are ordinary cases of minor inventions embracing no very considerable inventive powers and of which hundreds go out from the Patent Office every year. Experience shows that the most profitable patents are those which contain very little real invention, and are to a superficial observer of little value."

Under the writer's personal observation has come many instances where inventors have secured patents on improvements which to a casual observer would appear insignificant, yet through shrewd management they have been made to yield princely incomes. Among these one case worthy of note is that of a young man in Pennsylvania who secured a patent on a toy game which any person could have thought of, but few would have considered worth protecting by letters patent. He was offered $1,000 for the patent by one manufacturer at the outset which he refused, and afterward he placed it on royalty with quite a number of large manufacturers throughout the country. He receives but one cent on each one manufactured, yet his income averages over $12,000 a year. Another borrowed part of the money with which to obtain a patent on a railway tie plate, which was bought by a[p. 18] corporation for $25,000, after having manufactured it for two years on royalty. And many others, who have realized from one to five thousand dollars on such slight improvements on which few would have thought worth applying for a patent.

Patentees who would realize any considerable amount from their patents must not sit down and expect the other fellow to make money out of their inventions for them.

Inventions as a Poor Man's Opportunity to Advance.

Invention is sometimes called the "genius of the poor," and it is a singular fact that there are a greater number of inventions made by men and women of limited means than by those whose wealth, education, and other advantages would seem to have especially fitted them for success in a field dominated so completely by "brains." This may be explained in a measure by the fact that people of moderate means are brought into closer contact with the arts and manufactures, and are thus the first to discover and improve their defects.

A self-made millionaire, recently speaking to the writer about patents, said: "I know of no business or vocation requiring so small amount of capital, and yielding such immense profits as that of invention. Certainly no person of inventive genius can employ his time and ingenuity to better[p. 19] or more profitable advantage than to invent something that is really needed. Many poor men, through the art of invention, have risen from poverty to reputation, fame, and honor, and taken high places among noted men of all times.

Our moneyed kings may have enriched themselves by stock jobbing, but this precarious procedure requires large capital, and the few enormous fortunes accumulated are merely the monuments marking the graves of thousands of foolhardy unfortunates caught in the vortex of speculation."

[p. 20]

CHAPTER III

SECURING CAPITAL

It is a curious but well demonstrated fact that people who have inventive genius often lack the means to carry out their ideas. An inventor who has ample means can secure his patent and proceed to turn it into money without the necessity of being compelled to solicit financial aid from anyone. This, unfortunately, is not generally the case with inventors; indeed, many are often barely able to stand the expense incident to taking out the patent. Patentees laboring under this disadvantage are frequently tempted to part with a small interest in their patents for the sake of securing sufficient funds to carry on the promotion of their inventions and sale of the patent; and in doing this the inexperienced patentee is apt to make the fatal mistake of assigning to another an undivided interest in his invention.

Danger in an Undivided Interest.

Such an assignment may appear well enough on the face of it, and many patentees have been misled, supposing that under the assignment the proceeds from the patent should be divided pro rata, according to the several interests. This, however, is not[p. 21] the case in such assignments, and joint-ownership of a patent, or interest therein, does not of itself, without an express agreement to that effect, make the parties partners. They are merely tenants in common, each having the right to separately make, use, or sell the invention so assigned without liability to account to their co-owners for any part of the profits derived from the invention through their own efforts.

In an assignment of an undivided interest, the assignee is afforded an opportunity of manufacturing, using, and selling to others to be used the article covered by the patent; also, to grant territorial grants, such rights being unlimited by the terms of the assignment, and it is actually of little consequence how small an interest is thus conveyed, the assignee can proceed with the patent in much the same way as if he were the sole owner; therefore, whenever it is intended that the relation of co-partnership shall exist between the patentee and the assignee of an undivided interest, and that the profits arising from the invention shall be equitable, for their joint benefit, there must be an express agreement between them to that effect, otherwise the assignee will have a decided advantage over the inventor, if he is inclined to be dishonorable, and there are numerous cases on record where patentees have virtually lost their patents by such assignments. Patentees should[p. 22] especially guard against strangers who offer to purchase an undivided interest in their patents.

A Better Plan.

A better procedure to secure means necessary for the development, introduction, and sale of an invention is to borrow the money from a friend contingent on the sale of the patent, sell a State or county right, or enter into a contract with a party willing to furnish the means for a certain proportion of the proceeds derived from the invention. Generally speaking, it will not be hard to find a party willing to advance sufficient means to promote an invention which is protected by a patent for a certain percentage of the net receipts arising from its manufacture, sale, or territorial grants, and the patentee will probably find a person among his own acquaintances who will not only be glad to furnish the means necessary, but also be of value to the patentee in realizing from his invention. In any case, whatever is agreed upon should be put in the form of a contract, or an agreement, couched in such terms as will leave no doubt as to the understanding between the parties. The following form secures both parties, and will be suggestive of others:

Form of Agreement.

Whereas I, Richard Doe, of Philadelphia, County of Philadelphia, and State of Pennsylvania, have invented certain new and useful improvements in[p. 23] Telegraph Keys, for which I have obtained Letters Patent of the United States, bearing date January 1, 1901, and number 000,000, and whereas John Roe, of Camden, County of Camden, and State of New Jersey, is desirous of obtaining an interest in the net profits arising from the sale or working of the said invention covered by the said Letters Patent.

Now, therefore, this indenture witnesseth, that for and in consideration of one dollar by each of the parties hereto paid to the other, the receipt of which is hereby acknowledged, it is stipulated and agreed as follows:

First, That the said John Roe shall pay all moneys necessary to the construction of a suitable model to represent the said invention; that he shall pay all necessary expense in advertising and bringing said invention before interested parties (and such other clauses as may be deemed necessary and agreed upon, such as the expense of constructing a working model, or carrying out a process, etc.); that he shall make diligent effort to promote the said invention, its manufacture, and sale.

Second, That the said Richard Doe, sole owner of said invention and Letters Patent, in consideration of the payment of the moneys above mentioned, agrees to pay the said John Roe twenty-five per cent. (or other amount agreed upon) of[p. 24] all the net receipts in any manner arising from the sale or working of the said Letters Patent, during the term for which said patent is granted.

Witness our hands and seals this tenth day of January, A.D. 1901.

Richard Doe,
John Roe.

In the presence of:

John Smith,

Thos. Jones.

Perfecting Inventions.

Should an inventor defer the filing of his application until his invention is fully developed as regards the detail construction and arrangement of the parts? The best opinion seems to be in favor of the prompt filing of the application. The final form of the details can best be determined by the manufacturer and expert machinists and designers, who appreciate the matter of economical manufacture, which is quite as essential as the efficiency of the device or machine. Clearly, therefore, the inventor cannot decide as to all the details; why then should he delay his application?

The safest course for an inventor is to file his application for a patent as soon as his invention is complete in its principal features, so as to conform to the requirement of the Patent Law that an invention be sufficiently complete to be theoretically operative. The mechanical details are rarely of great importance as far as the patentable fea[p. 25]tures of the invention are concerned. Still, it is well to give the attorney full particulars of whatever details the inventor has in mind.

Exhibit of the Invention.

Under the security thus afforded for the main features involved in his idea, the inventor can proceed more deliberately in perfecting and improving his invention, and can then file an additional application if necessary, to secure special protection on particular improvements or the improved invention as a whole. The early filing of an application may turn out to be important in securing to the inventor his right of priority. When the inventor comes to exhibit his invention, with the idea of bringing it to the attention of the public in general, there is no question that he should then have his invention in the best form he can, and in as attractive shape as possible.

To Avoid being "Squeezed."

The patentee who proposes to realize from his invention should never let it be known that he is in want; of course, in some cases he cannot help himself, but he should endeavor to obtain the necessary assistance from his acquaintances, and under no circumstances let those with whom he is trying to deal get an insight into his financial condition, as capitalists and others will very often take the advantage of an inventor when known to be in straitened circumstances, and the patentee probably would[p. 26] not realize as much from his patent as he otherwise could. Therefore, it is advisable in all cases for the patentee to manifest no impatience, remain silent as to his financial condition, and strive to impress those with whom he is dealing that he is in no condition to be "squeezed."

Value of Record of Invention.

Inventors, while working on a complicated machine, should not overlook the value and importance of keeping a record of the progress of the development, illustrating it with sketches, signing and dating them with each new addition, and, when practical, having it witnessed by one or more persons. This plan is preferred by many inventors to filing a caveat. Such a record will be found very valuable in case of an infringement, as it enables the inventor to ascertain the various steps of his invention, and is a sort of evidence that cannot be impeached. Such a record of a complicated invention, when the inventor has put much time and study upon the subject in perfecting it, will also be found valuable in effecting sales, and in fixing the price of the patent.

Prejudice against Patents.

It cannot be denied that at the present time there seems to be in many sections of the country a strong prejudice against patents, which sometimes makes it difficult to get people sufficiently interested to take hold of any patent; especially is this true[p. 27] when the patentee endeavors to sell his patent piecemeal; that is, by county, township, shop, or farm rights. No matter how important or valuable the invention may be, there seems to be a disposition on the part of the public to look upon such rights as a fraud, and to be very cautious how they invest in them.

The public is not wholly to blame for this, as in recent years there has been a class of men who have canvassed the country with patent rights, not caring what representations they made so long as they were able to effect a sale; consequently, many people have been lured into purchasing patent rights for a small territory which in many instances were worthless or not as represented, causing them to be more or less skeptical of all patents, as well as to bring this manner of selling patents generally into ill repute. With manufacturers and capitalists, this prejudice does not exist to any great extent, as with them the patent rests solely upon its own merits.

Newspaper Notoriety.

Many inventors overlook the importance of interesting newspaper men in their inventions. This is a matter of great consequence to the inventor in exploiting his invention, and should be given some attention. Newspapers desire items of interest of every description, and readers are usually interested in brief accounts of any new invention possessing[p. 28] novelty or merit; so that when the inventor once gets his invention into the newspapers it is generally copied by other papers, with the result that the invention gets a large amount of free advertising and publicity. These items frequently attract the attention of capitalists, manufacturers, and others, and at once put the invention in a favorable position before the public as could be done possibly in no other way—certainly in no cheaper way.

Many of the trade journals and other periodicals are also open to receive technical descriptions of inventions of merit concerning industrial improvements. Such articles should be written in good form, containing not over five hundred or a thousand words, and if admitted to this class of publications will be of the utmost value and importance in creating favorable public opinion, and in advancing the inventor's interests.

With hardly an exception, if an invention strikes editors favorably and is adjudged to be of sufficient interest to form an article of news in newspapers, or of sufficient merit to warrant a description in the trade papers, it is pretty certain to prove a success and bring the inventor large returns.

If the invention is of such a character as to strike newspaper men unfavorably, the inventor can resort to the advertisement columns; using[p. 29] the large daily papers, or such publications which in some way relate to the industry to which the patent appertains, and such as have the largest circulation among the class of people it is desired to reach. See about advertising on page 46.

[p. 30]

CHAPTER IV

HOW TO ARRIVE AT THE VALUE OF A PATENT

Most inventors are not concerned so much about the fame or honor their inventions will bring them, or how much their inventions will advance civilization, or build up a nation, or administer to the conveniences and pleasures of mankind generally, as they are about how much it will net them in dollars and cents; but the patentee should not lose sight of the fact that the profits are in the exact proportion to the actual usefulness of the invention, and its general adaptability. It is immaterial whether the inventor himself intends to deal with the public, or to deal with a man or set of men who are afterward to deal with the public, the conditions are the same, and the profits must ultimately come from the sale of the manufactured article.

Pecuniary Value.

It may seem superfluous to say that mere Letters Patent aside from an invention is of no value, though many inventors are under the erroneous impression that if an invention possesses patentability, it must also necessarily have pecuniary value. To be of any pecuniary[p. 31] value whatever, the invention must cover something for which there is a demand, or for which there can be a demand created, for it cannot be disputed, that if an invention will not bring in money by manufacturing it, it is, in a financial sense, worthless; and the patent thereon is therefore worth some seventy or eighty dollars less than nothing.

Commercial Value.

An invention, to have commercial value, as previously stated, must cover something for which there is a demand, or for which there can be a demand created. It may be an entirely new device, or it may be an improvement upon an existing invention, but in any event it must contain a certain degree of utility. In rare cases inventors are able to hit upon an invention in an entirely new field; for these a demand has to be created. For improvements, however, as a general thing, the demand already exists; then the important question arises in determining the commercial value of the patent. "Does the invention in question possess sufficient merit to successfully compete with existing devices of the same class?" In order to do this, it must be of a simpler or cheaper construction, so that it can be manufactured and put on the market at a lower figure; or, it must yield better results, work quicker and at less expense, or economize power, labor, or time. A patented improve[p. 32]ment upon an article that can be sold more cheaply, or one which will yield better results than those now selling well on the market, has a decided commercial value and can easily be disposed of at a good price. If the inventor be fortunate enough to combine both of these features in his invention, the value is doubled and success certain.

Basis for Estimation.

Perhaps one of the hardest questions that confronts the patentee is how to arrive at a just valuation of his patent, and to know just exactly what he should receive for it. This is a very important question, and one which should be looked into before undertaking negotiations. Patentees should not, of course, undervalue their patents, or accept the first small offer made for fear of not receiving another; at the same time, they should not fall into the common error of asking a price that cannot be obtained, which too frequently precludes all chances of a sale. Many business men would rather lose the patent than waste their time constantly dickering about an unreasonable price.

Inventors should be reasonable in their demands, and consider that the purchaser must have a fair share of the profits. He cannot expect to realize all there is in the patent himself. Indeed, patentees usually find that men willing to establish a business on the basis of their untried patents will[p. 33] require the greater bulk of the profits to be derived from it.

General Rules for Valuation.

It is evident that only the most general rules for valuation can be given, as each invention must be studied and valued strictly upon its own merits. Undoubtedly, the best and most practical method of ascertaining the value of any invention which is susceptible of being manufactured on a small scale is to have a limited quantity of the articles manufactured—say five hundred or a thousand—and try the experiment of introducing them in a small territory; that is, in a certain county, city, or town, taking great precaution in selecting a person who is capable of carrying forward the business in a business-like manner. This method demonstrates conclusively whether or not the invention will meet with success, and with these figures at hand the patentee will be prepared to prove, to the satisfaction of interested parties, just what the patent is really worth.

This method of procedure not only enables the patentee to get a just valuation of his patent, but also puts it in a more favorable position to be sold; since the commercial value is known and established, it no longer remains an experiment. Interested parties can take their calculations from these figures, and the patentee can exact a price in proportion to the success of the trial experiment.[p. 34]

In order to thus demonstrate the value of a patent, the patentee must possess and advance the necessary means to carry it forward, though, if the experiment prove at all successful, the profits derived from the articles sold will in nearly all cases more than offset the expense incurred. This is a very popular course with inventors, especially in handling small inventions, known as novelty or specialty patents.

If the patentee have not the means to successfully demonstrate the value of his patent by actual trial, as above outlined, then the next best course would be to inquire among reliable manufacturers and ascertain the lowest price for which the invention can be manufactured in large quantities, and the highest price at which it will retail; and then, by carefully studying the market, the patentee should be able to estimate the amount of competition, cost of selling, probable number of sales, interest on the investment, etc., and on these figures base the price he should receive for the patent, being careful to allow the purchaser a liberally fair profit.

While there are at present about ninety-five million inhabitants in the United States, it is scarcely probable that any invention has yet or ever will be made that will reach half this number of people. With an article of the most general adaptability, including both sexes, the inventor[p. 35] can hardly hope to reach more than a fourth of the entire population, though, of course, the invention may be subject to regular consumption, so that the people reached would naturally purchase the article again a number of times during the course of a year.

The statistics in the last chapter are given with the view of assisting patentees in determining what proportion of the population will likely want their inventions, and to enable them to estimate prices. In estimating the price to ask for a patent, patentees should not conceive and hang their hopes upon fabulous prices and immediate wealth, which too often dooms ambitious inventors to bitter disappointment; they should rather endeavor to look at their inventions from the purchaser's stand-point, and try to see it in the light in which others view it. It may be well to remember that the million mark of patents issued in the United States, including re-issues and designs, was passed in 1911, and it is quite probable that any one inventor may not have the only good thing in the line of patents.

How Rating for Royalty Is Figured.

Many patents are more profitable by being placed upon royalty than by any other means, and quite often the patent can be placed this way when it is not possible to sell outright at a satisfactory price. In determining what royalty the patentee should receive,[p. 36] he should carefully estimate, in connection with the probable number of sales, what profit the manufacturer can probably make on each, or a number of the articles containing the patented improvements, and should require about twenty-five per cent. of the profits as royalty. Another method used by some inventors is to ascertain the price at which the article can be retailed, and figure the royalty at between one-twentieth and one-tenth of the retail price. Either of the above should give the approximate figure to ask for exclusive royalty contracts. For non-exclusive rights the patentee should ask about one-half of that for exclusive rights.

Stock in Stock Companies.

There is another class of patents that can be best realized from by organizing the proper kind of joint stock companies, and manufacturing the invention, the inventor taking a certain amount of the stock and assigning the patent to the company. The patentee should receive between one-fourth and one-half of the capital stock in consideration of his assigning his patent and rights to the company.

The inventor should see that a good portion of the stock is subscribed for and the amount actually paid into the treasury of the company before making the assignment. As a rule, inventors' stock is full paid and non-assessable.[p. 37]

Prices for Territorial Rights.

In calculating the prices for territorial rights, the application of the invention to that section must be taken into consideration, as well as the advancement in manufacturing, etc. If the invention belongs to that class of inventions which may be generally adapted in all States alike, such as domestic articles and articles of wearing apparel, then the population will form a very satisfactory basis for valuation.

There are other inventions, however, that apply almost wholly to a certain section of the country, while still others apply more to one section than to another; thus, for instance, mechanical contrivances of the higher order, such as writing machines, mathematical instruments, etc., the North and East are the most valuable; for mining and agricultural implements, etc., the West; while such as the cotton-gin, seeders, and presses apply almost wholly to the South. States and counties having large cities and large towns are also usually more valuable than other States and counties of same population.

Valuation Tables.

The following tables are given as a general estimate of the relative value of the different States and divisions in the majority of cases; however, these tables are only arbitrary at best, and cannot be applied to all classes of inventions satisfactorily, though they[p. 38] may serve to materially aid the patentee in determining what price to put upon each State in his own case. Having determined the value of the patent as a whole, the aggregate of the State prices should be about two-thirds more, as there are always some States that cannot be sold separately, while others may have to be sold at a discount.

TABLES FOR ESTIMATING PRICES OF STATE RIGHTS

[p. 39]

TABLES FOR ESTIMATING PRICES OF STATE RIGHTS—Continued

[p. 40]

TABLES FOR ESTIMATING PRICES OF STATE RIGHTS—Continued

[p. 41]

CHAPTER V

HOW TO CONDUCT THE SALE OF PATENTS

While the inventor may put much hard study upon his invention and make many costly experiments, this part of his work is usually a pleasure; and in securing the patent he invariably has able counsel in his attorney with no anxiety on his part; but with the commercial proceeding of selling his patent, which involves the greatest prudence and care in managing, it is different, and here is where the inventor's real work begins if he expects to reap the benefit of his invention.

Patent-selling Agencies.

For the benefit of unexperienced patentees it is deemed expedient to give a word of warning here regarding the host of so-called patent-selling agencies, which under various imposing titles, coupled with an apparently honest and straightforward method of business, tempt each patentee, upon the issue of his patent, to place the same in their hands and authorize them to negotiate the sale thereof. Their propositions are very attractive and temptingly prepared; their offers appear to be "gilt edge"; their circulars are high-sounding and[p. 42] rose-colored; their contracts are formal looking, and drawn up in an impressive way, highly advantageous to the patentee; but it will be noted in all cases that they will require the patentee to pay down a certain sum under some pretence,—such as to cover the cost of advertising the patent, to have circulars printed, to secure copies of the patent for distribution, to have a cut made illustrating the invention, or for membership fee, and so on, it matters not what, so long as it is an advance fee. Many will also agree to sell both the United States and Canadian patents, if the patentee will file the Canadian application through them; it is evident, however, that this is only a scheme to get the patentee to take out the Canadian patent through them—they having no facilities for disposing of either of the patents.

The writer is not prepared to say that there are no honestly conducted patent-selling agencies, but from long experience and observation, has never known where a patentee was ever materially benefited by placing his interests in the hands of these concerns, and has yet to learn of them ever making a sale solely through their own efforts. Very few of these concerns have any facilities whatever for selling patents; all of their time being taken up in mailing their weekly circulars to inventors immediately upon the publication of the Official Gazette, and working inventors up to the[p. 43] remitting point which usually ends the matter so far as they are concerned, unless they believe they can get another fee out of the patentee.

There may be exceptions, but patentees should fully satisfy themselves as to the integrity of these firms before placing business in their hands, as the Assistant Commissioner of Patents in his report in the Webberburn case, 81 O. G., 191 K, clearly pointed out that the methods of these concerns were such as to sell the patentees rather than their patents.

The Patentee the Best Selling Agent.

That the patentee himself is the best selling agent there can be no doubt, for he is familiar with the construction and operation of his invention in every detail, and knows its merits and superior points far better than anyone else, besides manufacturers and others wishing to purchase patents invariably desire to deal with the patentee himself. Business men, it may be said as a rule, do not think very much of an invention which the inventor has abandoned to others to negotiate, moreover the personal push of the inventor is, in nearly all cases, essential to the successful termination of a sale.

Subtract the personal energy and presence of the inventor from the successful inventions of the past and of to-day, and the chances are that they would not have succeeded as they did. It is not[p. 44] only a question of material interest, but also of enthusiasm and confidence, and each patentee, having but one patent or a set of patents to push, can lend thereto that individual attention which insures good work and success.

In Case the Patentee Cannot Undertake the Selling.

However, if from any reason the patentee is unable to handle his own invention and must engage the services of an agent or salesman, he should select one from among his own acquaintances, in whom he has confidence. He should if possible get a person who has had experience in the line of the invention, as such a person would likely understand it and the trade better than others. It is not really necessary that he should have had experience in selling patents; if he is a good talker, knows how to approach business men, and thoroughly understands the invention, he will probably make money for the inventor and himself. The patentee should have him submit all offers of value for his consideration, and should not give the agent power to sign or collect. The patentee should name a reasonable price for the patent, allowing the agent a liberal commission upon the price, and encouraging the agent by allowing him a certain percentage of all he may be able to get over and above the price named. This will encourage the agent to work for the highest price obtainable. The inventor should make every effort[p. 45] to be able to personally attend to the details of selling, and keep the business under his personal supervision.

Methods of Selling Patents.

There are a number of plausible methods to which the patentee may resort in disposing of his patent without the aid of questionable selling agents, and it is the purpose of the following pages and succeeding chapter to set forth such methods as have in the past proved beneficial to patentees; those along which success have been achieved, and such as are employed by the most successful inventors of the present time in handling their patents.

It is true that no definite method or system can be given that will apply to all patents alike, as the method in each case will depend more or less upon the character of the invention, and to the particular art to which it belongs; however, from the following pages the patentee should be able to judge what particular methods will best apply to his individual case, and proceed along these lines.

There are many patents issued which the patentees thereof can as successfully dispose of from the smallest hamlet in the United States as from New York, Chicago, or any of our larger cities, while, of course, there are others which only those directly connected with the largest and wealthiest corporations can hope to dispose of successfully. The main thing is not to become discour[p. 46]aged or give up until one succeeds in making a sale.

About Advertising.

To make the merits and importance of an invention publicly known is, in many cases, one of the best ways of bringing about the introduction and sale of a patent. If the inventor has a patent on an invention that manufacturers or others want, and can make its merits and superior qualities known to them, negotiations will soon follow. There is no way for patentees to place themselves in communication with prospective investors quite equal to an advertisement in the proper medium. Here it may be well to state that patentees who decide to advertise their patents for sale or otherwise should place their advertisements in publications of known standing, such as the leading daily newspapers. A brief, well-worded advertisement in the "Business Opportunities" column of these papers bring quick and good results, though, perhaps a better class of inquiries may be obtained by advertising in the trade journals of the class to which the invention relates, and while the trade journals may not bring about as many inquiries as the dailies, those that answer will be more apt to be interested and talk business. Either of the above are good mediums, but in advertising patents for sale patentees should carefully avoid those publications that are published at uncertain[p. 47] intervals, and usually for the express purpose of circulating among inventors for various purposes. They do not reach the class of people that invest in patents. Inventors should know the class of people that would be likely to become interested in their inventions, and advertise in such mediums as have the largest circulation among that class.

How to Write an Advertisement.

In the construction of an advertisement there is often too much waste by using too much verbiage, too many unnecessary words or sentences, sometimes too much display. Prudence in the arrangement, and care in editing an advertisement, will save much expense. The size of an advertisement of this class has really little to do with its pulling qualities.

The statements should be assuming, and at the same time truthful, as any deception in an advertisement is sure to work an injury. There should not be more claimed in the advertisement than sounds reasonable, even though it be stating facts; if an advertisement sounds unreasonable it will not have the desired result. Inventors sometimes become so enthusiastic over their inventions that they exaggerate unintentionally. A good rule is for the inventor to read over the advertisement, and ask himself, "If this statement was read by me, would I believe it; would it convince me?" etc.[p. 48]

Putting one's self in the purchaser's place is always one of the best factors in writing good advertisements. The inventor should put himself in the place of the purchaser of the patent, and reason what would induce him to investigate its merits; what would likely cause him to take it up, and so on; he should think and write fully along these general lines, incorporate these reasons into an advertisement; then boil it down by cutting out the unnecessary words and sentences; prune, remodel, and rewrite until he has a brief advertisement, clear, concise, and to the point.

Correspondence as a Means of Bringing Patents before Interested Parties.

While to advertise, as suggested in the foregoing pages, would require a very moderate outlay, and be, perhaps, the better course to pursue: however, in connection with it, or if the patentee does not feel that he can afford the expense of advertising, a very good plan is for him to secure copies of a number of the trade journals of the class to which his invention relates, and carefully look over the advertisements therein, and select a list of such manufacturers as would seem likely to be induced to purchase the patent in question, or manufacture the article on royalty. In this manner the patentee will probably get the best up-to-date list obtainable, and it may be set down as a fact, with very few exceptions, that if manufacturers[p. 49] and dealers who make and handle just such articles as the patent calls for cannot be interested, it is very hard to interest others not engaged in such line, except when the invention is large, and requires a great deal of capital to work the same.

How to Correspond with Manufacturers.

To each of the parties of the list thus selected, or to a number of them, the inventor should write a well-composed and convincing letter setting forth the invention in its best light, and stating just why it would be to the interest of the parties solicited to investigate the same. Some time should be spent on this letter before attempting to write it, and the writer should weigh well in his own mind what would be best to say, and the proper way of expressing it. He should be as brief as possible, consistent with legibility. The statements should be assuming, yet in every respect true. He should state in brief terms just what the invention is, what it will do, the points and advantages it has, and at the same time endeavoring to get the parties interested so that they will inquire into the invention, rather than attempt to come to terms in the first letter.

The letter should be brief and pointed, and plainly written upon business-size paper; and if the inventor has a typewriter, or access to one, he should use it. If he has printed circulars he should send one with his first letter, which will[p. 50] enable him to make the letter briefer and more business-like.

In correspondence it is well not to name a price until the parties are interested, and first endeavor to get them to make an offer. The patentee should be patient and should not expect to jump right into a bargain at once. If the invention is a meritorious one there will be more than one of the manufacturers to whom the patentee may write, who will become interested, and when such a state exists, the patentee can begin to be more exacting as to his demands since competition has been created between the manufacturers.

Circulars.

A few dollars invested in circulars will frequently be found of great value to the patentee if he intends to negotiate the sale of his patent mainly by advertising and correspondence, as they will save a great deal of writing and explaining as well as appear more business-like and attractive, and may be the means of more readily effecting a sale.

Illustrations.

If the patentee can afford the additional expense of an illustration, it will greatly increase the appearance of the circular, and make it more readily understood and interesting. The cut should be neat and set forth the invention in its best light. It would be better to entrust the procuring of the cut to the printer, for he will know just what is wanted and can se[p. 51]cure the same at a better price. A sufficient number of well printed circulars, with illustration, can be obtained of any printer for a few dollars.

About Getting up Circulars.

The circulars should be attractive, convincing, and logical; nicely arranged, and neatly printed upon good paper. A mistake is often made in sending out trashy-looking circulars, poorly printed upon cheap paper; they repel rather than attract, and do not have the desired effect.

The circular should have good head-lines so as to attract the attention of its recipient at a glance, and his interest should be held by having the uses and advantages of the invention well written.

Many of the pointers suggested in advertising and letter-writing will equally apply to the writing and getting up of the circulars, and need not be treated further here, except that the patentee should dwell especially upon the merits of the invention, its uses, and advantages over like articles. This should be done in the most interesting manner possible, describing it so that its value will be fully understood.

Uses of Printed Copies.

It will be well for the patentee to order some printed copies of his patent, as manufacturers and others usually ask for them if interested, in order that they may examine the patent, or have an expert to examine it, to ascertain its validity, novelty, and[p. 52] what protection is really afforded by the patent. It cannot be denied that in either case the invention will suffer a cold-blooded rigid examination, and must stand or fall solely upon its merits. If, however, the invention is adjudged to have real merit and properly protected by the Letters Patent, business negotiations will likely begin, and the patentee will perhaps speedily make a satisfactory deal.

First Impressions All-Important.

Some inventors use printed copies of their patents instead of circulars, but, while they fully set forth the invention in a technical way, it cannot be said that in all cases it is advisable to send copies of the patent until called for. Many parties who become interested in patents are not familiar with mechanical drawings and technical specifications, and very often do not get a very favorable impression from a copy of the patent; and it is very important that the first impressions should be favorably created, for upon this much will depend. If parties become sufficiently interested to fully investigate an invention, they are very apt to form a favorable opinion of it.

Value of Models.

There is no way of so easily creating a favorable impression and gaining the interest in an invention as by a neat and perfect working model of the invention. Man never loses the child-love for toys, and[p. 53] a perfect miniature machine of any description will attract more attention than one of full size. With a model the inventor has the full and immediate attention of his prospective purchasers at once. If the patentee, or his agent, intends visiting manufacturers, or to sell the patent by territorial rights, he will find a model of his invention almost indispensable.

Inventors should be very careful about sending models to unknown parties, and should mark the number of the patent and their name and address upon the model. It should invariably be understood in advance who is to pay the transportation charges, before sending a model with any charges to collect.

While models are very helpful in setting forth an invention and making sales, high prices exclude many inventors from their use. Model-makers usually charge fifty cents per hour for each man working upon the model, and market price for the material used; from these figures the inventor may make a rough estimate of what a model of his invention will cost.

Working Drawings.

Working drawings are different from those forming a part of the patent in that they are more detailed, giving the size of each piece and the material of which it is constructed. While working drawings are not quite as expensive as models, they do not show the invention to[p. 54] the advantage that models do, and are of little value to those who do not understand them. On the other hand, working drawings have the advantage of being easily sent through the mails, and can be duplicated at small cost. Manufacturers prefer working drawings to models in quoting prices on manufacturing the invention in quantities.

[p. 55]

CHAPTER VI

HOW TO CONDUCT THE SALE OF PATENTS—Continued

In conducting the sale of patents, the greatest difficulty is most frequently experienced in getting manufacturers or others sufficiently interested to look into the merits and possibilities of the invention. If the inventor can get the parties to actually consent in their own minds to the proposition of taking up the invention, the question of terms and conditions can soon be arranged. Until the parties solicited can see beyond a doubt that there is large profits in it for them, the price of the patent is out of the question; therefore, the first step is to demonstrate its merits and commercial value, and get the parties thoroughly interested.

Patentees should not labor under the impression that because a patent is offered at a very low price that it will be quickly snapped up as a bargain; as before stated, if a patent will not bring in money by manufacturing and selling the article, it is worthless; and its real value is in exact proportion to the amount of profits that can be made from its manufacture.[p. 56]

Should the patentee find that his patent has no commercial value, it is almost useless to spend more time and money in trying to realize anything from it; he had better start again, and endeavor to invent something that has value and can be sold.

Value of Personal Influence.

Inventors should use the full extent of their personal influence to spread particulars of their inventions as far as possible, for this indirect work is often a leading factor in creating a favorable impression that frequently results in the adaption of an invention.

However unacquainted he may be in a business way, every patentee can, more or less, in his immediate neighborhood, consult with merchants, friends, and others in the line of his invention, who can post him upon the right parties to submit the patent to, and the best way to see them about it, and perhaps go with him to visit such as might be interested in the invention.

Personal Solicitation Advisable.

In nearly every case it is more satisfactory for the patentee to call on the manufacturers or interested parties personally whenever it is possible for him to do so. This brings about a more satisfactory understanding between them. Many inventors, however, prefer opening up communication by correspondence, and after the parties manifest a willingness or desire to look into the invention[p. 57] more closely, then arrange to visit them personally.

Having determined upon a visit, the patentee should endeavor to get a friend known by the parties to go with him to make their acquaintance. If the friend cannot go with the patentee, he will probably give him a note of introduction. It may happen that his friend does not know the parties whom the patentee wishes to see, in that event he may know of someone who does, to whom he can introduce the patentee and who in turn may either go with him or arrange to make him known to the parties solicited. An introduction, of course, is not absolutely necessary, but it invariably has a good effect and is generally worth the effort.

The patentee should be prepared to make a straightforward, business-like presentation of his invention by means of a suitable model or drawings; carefully explaining its merits and advantages, showing as clearly as possible just what the value of the invention is and what can be made out of it, and giving tangible reasons why it would be to the interest of the parties solicited to invest in the patent. If the patentee is dealing with a manufacturer it is well to point out not only the possible advantage he may have by securing the control of the patent, but also the possible loss that his business may suffer by allowing one of his competitors to obtain its control. Many busi[p. 58]nesses have been hopelessly crippled by an enterprising firm securing control of a good patent and introducing a like article that can be sold cheaper, or one that will do its work in a better and more satisfactory manner.

Selling Outright.

Many inventors prefer to sell their patents outright; that is, in consideration of a specified sum of money the patentee assigns his entire interest in the patent, in the same manner that a person would sell a piece of real estate. This is a very good method and one of the quickest ways for the patentee to turn his invention into money, though it must be remembered that to sell a patent outright is usually for a very much smaller sum than could be realized if handled by other methods.

The day for obtaining enormous sums or fortunes from the sale of a patent outright is past; at present to realize any considerable amount, the patentee generally has to share in the risks as well as the profits, unless the invention is very highly developed, and even then he cannot expect to get as much out of an outright assignment as he could by sharing in the success of the invention commercially. If, however, the patentee is content to take the utmost cash his patent will bring him outright, he is assured of a principal or lump sum, free from any chances of the article not selling well when placed upon the market.[p. 59]

Before signing and delivering the assignment, the patentee will, of course, see that he has the consideration, or its equivalent, for which the assignment is made. If the transaction is made through correspondence he should send the assignment duly executed to the purchaser through the bank or express C. O. D. for the amount.

Assigning an Undivided Interest.

In a preceding chapter, the dangers and disadvantages of an undivided interest are set forth, and it cannot be considered a wise course under any consideration to part with any undivided interest in the proprietorship of the patent, unless unusually well paid, or there exists an agreement of copartnership between the patentee and the assignee. By such an assignment, no matter how small, the patentee loses control of his patent.

Dividing a Patent into Different Classes of Rights.

Many patents, from the nature of the invention, can be subdivided into different classes of rights, and each class sold or granted separately as the patentee may choose. Thus, the patentee of a tire, or other appliances for a bicycle, could license one party to make the same for bicycles and another for automobiles. In like manner a car-coupler could be divided between those who build railway equipments and those who build street-cars, and so on.

Goodyear, the inventor of the process of vul[p. 60]canizing rubber, divided his patent up into many different rights, licensing one company for manufacturing rubber combs, licensing another for hose pipes, another for shoes, another for clothing, and a number of other different rights, for which each company or partner paid a tariff. Lyall, inventor of the continuous loom, also divided his patent into many different rights; one company weaving carpets, another corsets, another bags, another sheeting, etc.

In every case where the invention covers articles not in the same line of manufacture, the patentee should not fail to divide the rights into different classes, granting each party only such rights as they may be interested in. In this way the patentee can quite often double or treble the receipts from his invention.

The patentee may, if he desires, have his machines built and require the purchasers to pay him a regular annual rental on each machine, or a tariff upon the goods produced, in addition to the price of the machine. Companies are sometimes organized to manufacture an invention, and employ travelling men to place the article on annual rental instead of selling.

Selling by Territorial Rights.

Another method is to sell State and county rights. This consists of a license whereby the patentee, in consideration of a certain sum of money paid him, grants unto another person or[p. 61] persons the exclusive right to make and sell the invention, and to authorize others to make and sell the same, within a specified territory, during the life of the patent. This plan of disposing of a patent has often been highly profitable, but it must be said that these territorial sales have been conducted in such a manner in the past, as to bring the whole system of selling patent rights into disrepute, and in recent years patentees have found some difficulty in making sales in this way, unless the device is of unusual great novelty and attraction to householders or the general public.

Occasionally, however, there are patents issued for meritorious inventions that are susceptible of this mode of procedure, and which can be disposed of to the greatest advantage by territorial grants. Such inventions as household novelties possessing great merit and utility have been most successfully placed upon this plan, but it must be remembered that the value of the system rests upon its capabilities of effecting sales of the manufactured article to a vast proportion of the people.

In selling territorial rights it is a mistake to begin with the small places with the idea of working the business up and effecting larger sales on the basis of the smaller ones; it is better to shove the sales, as much as possible in the start, and after[p. 62] the more valuable portion of the territory is disposed of, proceed with the balance until it ceases to be profitable.

Experience teaches that it is usually advisable to accept any reasonable offer made for a small right, even if it does not come up to the patentee's estimate of its value, as he has plenty of other territory left, and may lose much time and money in finding another in the same territory willing to pay more; besides, the purchaser of such a right may, by his energy and good judgment, advertise the invention in such a way as to greatly benefit the patentee in making further sales.

Some patentees employ good and reliable special agents to travel and dispose of the patent rights; others advertise for and appoint State agents to sell their respective county rights. In either case these agents expect to make money by the operation, and require a liberal proportion of the proceeds for their remuneration; generally speaking, they will require about one-third the selling price, unless the patentee can show that the rights will sell readily, in which case the rating can be made lower.

Granting Licenses.

The patentee may also sell licenses under his patent; that is, in consideration of a certain sum, the patentee licenses a manufacturer to make the invention at his own place of business; it being a personal privilege[p. 63] and is not transferable unless its terms so state.

Unless there are a great many manufacturers in the line of industry to which the patent relates, and unless the invention has real merit so that it will be readily adapted by the manufacturers, the patentee cannot hope to realize any considerable amount from selling shop-rights alone. As a general thing, patents for mechanical inventions can be disposed of to better advantage by other means, or by selling shop-rights in connection with other methods; for example, if the patentee was selling his patent by territorial grants, he might grant shop-rights in such territory as he has not sold; or if he is placing the patent upon non-exclusive royalty contracts, he could grant shop-rights in such portions of the territory as he does not contemplate using otherwise.

Some inventions, such as methods or processes, as a general rule, have to ultimately be sold by licenses. Such patents can be employed most profitably by selling licenses, county and State rights; thus, in the case of a method of constructing fences, the patentee could sell State and county rights to parties, who in turn could grant farm rights, etc.

Placing upon Royalty.

The license and royalty plan is perhaps the best and most popular method with inventors for realizing from their inventions. This, in effect, in[p. 64]volves a contract between the patentee and the manufacturer, by which the latter in consideration of a license to manufacture the article covered by the patent, agrees to pay the patentee a certain specified sum as royalty for each article manufactured or sold bearing the patented improvement.

Placing a patent on royalty is ordinarily taking chances, but if the patentee has full confidence in his article selling well, he should by all means take royalty in preference to selling the patent in its entirety. Many valuable patents are sold by their owners for from $1,000 to $10,000, which yield the purchasers, when the article is on the market and selling well, as much as $25,000 annually in profits. This calls to the author's mind a patent for which at the outset was doubtfully offered $3,000, but before the negotiations terminated, the patentee succeeded in placing it upon an exclusive royalty basis. The royalties paid to the patentee during the first four years amounted to over $50,000, and the manufacturers subsequently made an offer of $100,000, for the patent.

In making royalty contracts with parties, the patentee should investigate the standing, rating, and capabilities of the manufacturer, and, above all, should be certain that the parties have the right motive in view, and that the contract is so drawn that it will fully protect his own interests.[p. 65] Many patentees have been caught by manufacturers offering large royalties for the sole purpose of gaining possession of the patent, that they might pigeon-hole it, in order to keep the article out of the market, so that the sale of some similar article in which they are interested would not be interfered with by the introduction of a similar or better article, such as the patent anticipates.

There are others who propose and make royalty contracts with patentees with no other object than that of making the special tools, patterns, dies, etc., for which they charge the patentee an extortionate price.

The best and safest way for the patentee to guard against having his patent tied up is to bind the parties to do certain things in the way of pushing the sales, making the necessary tools at their own expense, and commencing its manufacture within a reasonable time, paying an advance royalty, or annexing some such condition to the agreement by which they will be the loser should they fail to push the inventor's interests.

Unless it cannot be otherwise arranged, the patentee should not transfer his rights merely in consideration of receiving a certain sum on each article sold, as however sterling the character of the manufacturer, there would be no certainty of the sales being pushed. The patentee should endeavor to get the manufacturer to guarantee that[p. 66] the royalties shall amount to at least a certain pre-stipulated sum each year, or within a period of time, and that such sum shall absolutely be paid to him by the manufacturer, irrespective of sales. This insures that the manufacturer will be obliged to push the sales of the article, and do it justice, since if he neglects his duty purposely, or from lack of energy, he is out of pocket, and the patentee is sure of a certain income, with the addition of a possible fortune that unprecedented sales may yield him. However, manufacturers are not always willing to agree to this condition, unless the guaranteed amount is exceedingly reasonable; they will usually simply agree to do their best, and if the sales do not reach a certain figure each year, the patentee shall have the option of cancelling the agreement, and receiving back the patent free and clear.

Royalty licenses can either be exclusive or non-exclusive; that is, with an exclusive contract the manufacturer has the exclusive right to manufacture the article, excluding all others; non-exclusive is simply a shop-right, in consideration of which the manufacturer agrees to pay the patentee or owner of the patent a stipulated price or percentage upon each article made or sold. The license can also be exclusive in a certain section, county, State, or a number of States, as may be agreed upon.[p. 67]

Any number of conditions that may be agreed upon may be annexed to and form a part of the contract, and such an agreement should be drawn up in compliance with the terms and conditions agreed upon by a competent attorney, or one skilled in matters of this kind.

Manufacturing and Forming Companies.

If the patentee has a really good invention, often he cannot do better than to retain the patent and work it himself, in case he has the ability to do so. If he cannot conduct the manufacturing alone, he may be able to secure a partner with just sufficient funds, and equal common sense and business acumen, to add the necessary elements to the firm to achieve success.

In some cases, if the patentee does not wish to retain the whole patent for his own use, an excellent plan is to commence the manufacture of the invention in a suitable locality, and after the business is so far under way as to show progress and profit, then sell out the business with license under the patent. To illustrate: a gentleman in Illinois, having obtained a patent on a farming implement, succeeded in interesting a party in his own neighborhood to join with him in its manufacture, which soon proved successful and remunerative, and in a short time he was able to sell out his interest in the business to his partner, with license under the patent, after which the patentee[p. 68] started its manufacture in a number of places elsewhere, and, at the same time, granting licenses and selling territory in still other sections, where he was unable to work the invention. In this way he made a fair fortune from his invention, realizing about as much from each business established as he could have probably obtained for the entire patent if sold outright at first.

In this manner the patentee, with a valuable patent on an article of general usefulness, could go on and establish its manufacture in any number of places, and sell out with license under the patent. If the first experiment is successful, it is an easy matter to carry the method out in other places, and the business can be readily disposed of anywhere, if it can be shown to be on a paying basis.

To Organize Stock Companies

In recent years many inventors have been quite successful in organizing stock companies on the basis of their patents. This is considered one of the best ways for handling patents for large and promising inventions, and it is a method that any patentee, with ordinary business ability, should be able to carry out successfully, providing his invention is of sufficient merit and importance to form a suitable basis for a successful stock company.

Many stock companies are incorporated under[p. 69] the laws of New Jersey, but it is believed the State of West Virginia is also very favorable to corporations. The entire expense for incorporating a company under the laws of the latter State should not exceed $150. The company can be incorporated for any amount; large or small, one hundred dollars or five millions, cost and fees being the same. The incorporators need not be residents of the State. No annual statements required. The meetings of the directors can be held at any place, and need not be held in the State where the charter is granted.

Before applying for a charter for a corporation or stock company, the patentee should mention his plan to some of his friends and get five persons who will promise to subscribe for one or more shares of the stock and act as incorporators of the company.

Next he should secure the services of a reliable attorney, familiar with corporation laws, to prepare the necessary articles of incorporation and legal papers. The attorney will advise the patentee how to proceed properly in organizing his company, and as to the securing of the stock certificates, subscription blanks, seal, etc. These, including the attorney's fee, should not cost the patentee more than $50.

It is well to have some stationery printed with the proposed name of the company and business[p. 70] displayed thereon; and also a prospectus published, setting forth the invention and the plans of the company for introducing it, etc.

Quite often the patentee can find enough idle capital in his immediate neighborhood to float a good portion of the stock. Capital is more easily secured by the formation of a stock company than by any other means, as people can subscribe for small or large amounts, and they often prove good investments.

In soliciting subscriptions for stock, it is desirable to get as many prominent and influential men to buy one or more shares at first to head the list—their names will be a great aid in making further sales. Ordinarily the promoter only collects ten per cent, of the amount subscribed, the balance being subject to the call of the board of directors.

After it is ascertained that the shares or stock are being rapidly subscribed for and selling fully up to expectation, the patentee can have the incorporators sign the charter application and have the attorney file it with the proper State authorities. This will cost the patentee about $100 more, for State tax, attorney fees, etc.

When sufficient stock has been subscribed for, a meeting of the stockholders should be called to elect directors, and to transact such other business as may be deemed necessary in regard to[p. 71] locating and building the plant and getting the company in shape.

The patentee should receive about one-half the capital stock in consideration of his transferring his rights and franchises to the corporation, the remainder of the stock is sold for the benefit of the company to create a working capital. The patentee may sell a portion of his stock, if he desires, but should also retain a good portion of it to show his own confidence in the business.

After the meeting of the stockholders, the direction of the business will probably be taken out of the hands of the inventor, and the control will lie in the board of directors of the company. As a rule it is better that the inventor does not take an active part in the management of the company's affairs, unless he is specially fitted for the position.

If the company is provided with ample capital, and if the business manager is a competent man, there is little chance of failure if the invention has real merit.

Trading as a Last Resort.

Patentees are sometimes offered securities or other property in trade for a patent. It is not deemed a wise course by most inventors to consider any proposition for a trade, especially in the early life of a patent. Only as a last resort, after failing to realize from a patent by any other means, is it[p. 72] advisable to trade a patent; and, before finally agreeing upon a trade, the patentee should have a reputable attorney to look fully into the value and title of the property offered. He should also insist upon receiving an abstract of title, or a title guarantee from a reliable title insurance company.

Unless known to himself, the patentee should never engage the services of an attorney or broker recommended by the parties offering the trade to look into the value and title of the property. Inventors should be on the lookout for a set of sharpers who make a business of offering worthless securities and property in exchange for patents.

[p. 73]

CHAPTER VII

ABOUT CANADIAN PATENTS

The geographical nearness of Canada to the United States, and the intimate commercial relations existing between the two countries, render Canada, in one sense, a part of the industrial market of America; and owing to its liberal patent laws, which are based closely upon our own, inventors generally find it advantageous to protect their interests in this country, which can be done from time to time by a very small outlay, and thus giving the inventor the advantage of disposing of his patent or dropping it if not found remunerative, before expending the total cost of the patent.

The commercial and manufacturing interests of Canada are extensive, increasing yearly, and are closely knit with our own. If the invention is not protected in Canada, it is sometimes manufactured there and sent here without paying royalty to the inventor.

Copies of the "Rules and Forms of the Canadian Patent Office" and "The Patent Act" can be obtained upon application to the Hon. Commissioner of Patents, Ottawa, Canada. Section 8 of the Patent Act, revised May, 1898, provides:

"Any inventor who elects to obtain a patent for his invention in a foreign country before obtaining a patent for the same invention in Canada, may[p. 74] obtain a patent in Canada, if the same be applied for within one year from the date of the issue of the first foreign patent for such invention; and,

"If within three months after the date of the issue of a foreign patent, the inventor give notice to the Commissioner of his intention to apply for a patent in Canada for such invention, then no other person having commenced to manufacture the same device in Canada during such period of one year, shall be entitled to continue the manufacture of the same after the inventor has obtained a patent therefor in Canada, without the consent or allowance of the inventor."

The Patent Act as amended does not now require a Canadian patent to expire at the earliest date at which a foreign patent for the same invention expires.

Under the section just cited the patentee has three months, after the issue of his patent, within which to protect his interests in Canada. If within these three months he has not sufficiently demonstrated the commercial value of his home patent, and the advisability of taking out a Canadian patent, he is advised to give notice to the Commissioner of Patents, Ottawa, of his intention of doing so, which will fully protect his interests for one year, as under the above provision; and if the patentee fail to give this formal notice, he cannot obtain redress from any person who has[p. 75] commenced to manufacture his invention in Canada during the year.

There is also an advantage sometimes in giving this formal notice within three months and delaying the grant of the patent for one year, as the patentee is allowed to import the patented article into Canada during one year only, after the grant of the Canadian patent.

The construction or manufacturing of the invention in Canada must be commenced within two years from the date of the patent, and continuously carried on from that time, though the extension of this time may be secured upon timely application to the Commissioner, giving any good and proper reason. The time for importation is also sometimes extended upon proper application.

Canadian patents are granted originally for a term of eighteen years, the Government fee being $60 for the eighteen years, but at the election of the patentee this fee may be divided into three payments of $20 each, as follows: $20 at the time of the grant, $20 at the expiration of the sixth year, if the owner desires to keep the patent alive, if not he can allow the patent to become forfeited; and at the end of the twelfth year, if it is still desired to maintain the patent, the remaining fee of $20 may be paid. If the patentee in the meantime assigns his patent, the assignee will pay the required government fees at the end of the sixth[p. 76] and twelfth years, if it is desired to maintain its validity.

The Canadian patent covers and affords full protection in the following provinces:

Selling Canadian Patents.

In selling Canadian patents, the patentee will proceed in much the same way as in the United States, though he cannot expect, nor should he ask, more than about one-third as much for the Canadian patent as he receives, or expects, from the United States patent. Patents are not as readily sold in Canada as here, but if the inventor has a useful invention of merit, which is being manufactured profitably in the United States, he will have no trouble in disposing of his Canadian patent at a satisfactory price.[p. 77]

It is in nearly all cases advisable for the inventor to first put his invention upon the market in the United States before trying to realize from his Canadian interests, as it will be found difficult to interest Canadian capital in a patent that has not been first put into practice here; and if the patentee be able to dispose of his Canadian patent at all, it is usually for a very insignificant sum; whereas, on the other hand, if the patentee fully protects his interests there, and proceeds to put the invention upon the home market, he will not only be able to present his Canadian patent in a more favorable and forcible way by proving its commercial value, but he will undoubtedly get better offers, and realize full value for his Canadian interests, in exact proportion to the success of his invention in the United States.

[p. 78]

POPULATION OF

CANADIAN CITIES

(Compiled from the Census of 1911)

[p. 79]

CHAPTER VIII

DECISIONS AND NOTES

The following digest will be found to contain much useful information for the patentee, it being a carefully selected list of decisions affecting assignments, territorial grants, licenses, State laws, etc.; including those rendered by the Supreme Court of the United States, the Circuit Court of Appeals, State Courts, and of various Commissioners of Patents, all of which decisions enunciate well-settled and controlling principles of Patent Law.

Assignments.

Assignments of patents are not required to be under seal. The statutes simply provide that "every patent, or any interest therein shall be assignable in law by an instrument in writing." (Gottfried vs. Miller, U. S. S. C. Decided Jan. 23, 1882.)

A contract assigning a patent and all future improvements thereon is enforceable against assignees of such improvements who take notice of the contract. (Westinghouse Air Brake Co. vs. Chicago Brake and Mfg. Co., 85 F. R., 786.)

Each co-owner of a patent may use his right[p. 80] without the concurrence of the others and license at will. (Washburn & Moen Co. vs. Chicago Wire Fence Co., 109 Ill., 71.)

Owners of a patent are tenants in common, and each, as an incident of his ownership, has the right to use the patent or manufacture under it. But neither can be compelled by his co-owner to join in such use or work, or be liable for the losses which may occur, or to account for the profits which may arise from such use. (De Witt vs. Elmira Nobles Mfg. Co., 12 N. Y. Spur., 301.)

Joint owners of a patent, right are not copartners, and in the absence of any express contract each is at liberty to use his moiety as he may think fit, without any liability to or accounting to the other for profits or losses. (Vose vs. Singer, 4 Allen (Mass.), 226; vide Pitt vs. Hall, 3 Blatch., 201.)

Although an assignment of patent is not recorded within three months, it is binding on the assignor, and he cannot sell the patent again. (Ex parte Waters, Com. Dec., 1899, p. 42.)

A verbal license or interest in an invention has no effect as against a subsequent assignee without notice of such verbal license or interest. (U. S. S. C., Gates Iron Works vs. Fraser et al., 1894, C. D., 304.)

An assignment to assign future patents, in consideration of the assignee's paying the expense of[p. 81] taking them out, is broken by his refusal to pay for and take out a particular patent when requested, and a subsequent assignment to another conveys a perfect title. (Buck vs. Timony, 78 Fed. Rep., 487.)

Any assignment which does not convey to the assignee the entire and unqualified monopoly which the patentee holds in the territory specified, or an undivided interest in the entire monopoly, is a mere license. (Sanford vs. Messer, 2 O. G., 470.)

When a party does license, grant, and convey any invention which he may hereafter make, this gives only an equitable right to have an assignment made, and this right may be defeated by assignment of the patent to a purchaser for value without notice of this equity. (Regan Vapor Engine Co. vs. Pacific Gas Engine Co. (Nineth Cir.), 7 U. S., App., 73.)

Territorial Grants.

A territorial grantee cannot be restrained from advertising and selling within his territory, even though the purchasers may take the patented article outside the vendor's territory. (Hatch vs. Hall, 22 Fed. Rep., 483.)

One who buys patented articles of manufacture from an assignee for a specified territory becomes possessed of an absolute property in such articles, unrestricted in time or place. (U. S. S. C., Keller et al. vs. Standard Folding Bed Co., 71 O. G., 451.)[p. 82]

The sale of a patented machine by one authorized to sell, conveys the whole ownership to the purchaser, who may sell it again to another. (Morgan Envelope Co. vs. Albany Perforated Wrapping Paper Co., 152 U. S. 425.)

Licenses.

Every person who pays the patentee for a license to use his process becomes the owner of the product, and may sell it to whom he pleases, or apply it to any purpose, unless he binds himself by covenants to restrict his rights of making and vending certain articles that may interfere with the special business of some other licensee. (Met. Washing Machine Co. vs. Earl, 2 Fish., 203; 2 Wall., Jr., 230.)

A license is not forfeitable for non-payment of royalties in the absence of express provisions to that effect. (Wagner Typewriter Co. vs. Watkins, 84 Fed. Rep., 57; 1898.)

A shop right is a personal license and is not assignable. (Gibbs vs. Hoefner, 19 Fed. Rep., 323; 22 Blatch., 36.)

A license to a person to use an invention only "at his own establishment" does not authorize a use at an establishment owned by him and others. (Rubber Co. vs. Goodyear, 9 Wallace, 788.)

A license is not transferable unless its terms so state. (Olmer vs. Rumford Chemical Co., 109 U. S., 75.)

A license merely to make and not to sell does[p. 83] not impair the patent owner's right to sue for infringement outside of the license; and the purchaser of the licensee's tools and materials would not carry the right to sell the product made thereon. (American Graphophone Co. vs. Walcut, 87 Fed. Rep., 556; 1898.)

A license to use a machine carries with it the right to repair the machine, and replace worn parts until the essential original parts of the machine have disappeared. (Robinson on Patents, Sec. 827.)

A lawful sale of a patented article by a patentee or grantee, within his own territory, carries with it the right to use such article throughout the whole United States. (Adams vs. Burke, 5 O.G., 118; Hobbie vs. Smith. 27 Fed. Rep., 636.)

When an applicant in certain instruments assigned his right, title, and interest in an invention, retaining for himself the exclusive right to employ the invention in the manufacture of a certain class of machines, Held, that such instruments do not convey the entire interest in the invention or any undivided part thereof, and they are construed to be nothing more than licenses. (Ex parte Rosback, 89 O. G., 705. Decided Oct. 5, 1899.)

An implied license to use a patented improvement without payment of any royalties during the continuance of employment of the inventor, and[p. 84] thereafter, on the same terms and royalties fixed for other parties, is shown where the inventor applies the patent to his employer's work without any agreement for compensation for its use further than a notice that he would require pay after his employment terminated. (Keys vs. Eureka Consol. Min. Co., U. S. S. C., 158 U. S., 150.)

A breach of a covenant in a license does not work a forfeiture of the license unless it is so expressly agreed. (Consol. Middlings Purifier Co. vs. Wolf, 37 O. G., 567.)

Patent Title.

A patent right, like any other personal property, is understood by Congress to vest in the executors and administrators of the patentee, if he dies without having assigned it. (Shaw Relief Valve Co. vs. City of New Bedford, 19th Fed. Rep., 758.)

A patent to a dead man at the time of its grant is not void for the want of a grantee, but vests in his heirs or assigns. (U. S. S. C, De La Vergne Ref. Machine Co. vs. Featherstone, 1893, C. D., 181.)

A court of equity may direct a sale of an inventor's interest in his patent to satisfy a judgment against him, and will require the patentee to assign as provided in Rev. Stat., Sec. 4898, and if he refuses, will appoint a trustee to make the assignment. (Murray vs. Ager, 20 O. G., 1311.)

A patent right cannot be seized and sold on execution. (Carver vs. Peck, 131 Mass., 291.)[p. 85]

A receiver cannot, under his general powers, convey the legal title to a patent (Adams vs. Howard, 23 Blatch., 27), but a court may compel an insolvent to assign his patent to a trustee or receiver. (Pacific Bank vs. Robinson, 20 O. G., 1314; Murray vs. Ager, 20 O. G., 1311.)

A patentee who assigns his patent cannot, when sued for infringement, contest the validity thereof. (Griffith vs. Shaw, 89 Fed. Rep., 313.)

RULES OF PRACTICE

The following from the "Rules of Practice in the United States Patent Office" may be perused with interest to the patentee; a copy of which, together with a copy of the "Patent Laws," will be mailed free to any person upon addressing the Hon. Commissioner of Patents, Washington, D. C., requesting the same; these being the only books or pamphlets published by the Office for gratuitous distribution.

Assignments.

Every patent or any interest therein shall be assignable in law by an instrument in writing; and the patentee or his assigns or legal representatives may, in like manner, grant and convey an exclusive right under the patent to the whole or any specified part of the United States. Interests in patents may be vested in assignees, in grantees of exclusive sectional rights, in mortgagees, and in licensees.[p. 86]

Assignees.

An assignee is a transferee of the whole interest of the original patent or of an undivided part of such whole interest, extending to every portion of the United States. The assignment must be written or printed and duly signed.

Grantees.

A grantee acquires by the grant the exclusive right under the patent to make and use and to grant to others the right to make and use, the thing patented within and throughout some specified part of the United States, excluding the patentee therefrom. The grant must be written or printed and be duly signed.

Mortgages.

A mortgage must be written or printed and duly signed.

Licensees.

A licensee takes an interest less than or different from either of the others. A license may be oral, written, or printed, and if written or printed, must be duly signed.

Must be Recorded.

An assignment, grant, or conveyance of a patent will be void as against any subsequent purchaser or mortgagee for a valuable consideration without notice unless recorded in the Patent Office within three months from the date thereof. If any such assignment, grant, or conveyance of any patent shall be acknowledged before any notary public of the several States or territories, or the District of Columbia,[p. 87] or any commissioner of the United States Circuit Court, or before any secretary of legation, or consular officer authorized to administer oaths or perform notarial acts under Section 1750 of the Revised Statutes, the certificate of such acknowledgment, under the hand and official seal of such notary or other officer, shall be prima facie evidence of the execution of such assignment, grant, or conveyance.

No instrument will be recorded which does not, in the judgment of the Commissioner, amount to an assignment, grant, mortgage, lien, encumbrance, or license, or which does not affect the title of the patent or invention to which it relates. Such instruments should identify the patent by date and number; or, if the invention is unpatented, the name of the inventor, the serial number, and date of the application should be stated.

Conditional Assignments.

Assignments which are made conditional on the performance of certain stipulations, as the conditional payment of money, if recorded in the office are regarded as absolute assignments until cancelled with the written consent of both parties, or by the decree of a competent court. The office has no means for determining whether such conditions have been filled. (Rev. Stat., Sec. 4898.)[p. 88]

STATE LAWS ON SELLING PATENTS

In some States, laws have been passed by which attempts have been made to regulate or prevent the sale of patent rights within their borders, by imposing upon patentees or their agents certain State restrictions, such as requiring the filing of copies of patents, making and filing proofs, taking out licenses, procuring certificates, complying with forms, or prescribing the terms of a note to be given for a patent.

While it has never been squarely brought before the United States Supreme Court, with the result that much conflicting legislation has been enacted by the different States, it may be said, as a general proposition, that a State or municipality, through the medium of its Legislature or officials, has no constitutional right to make or enforce laws which in any way affect or control the transfer, sale, or other disposition of United States Letters Patent; or to interfere in any manner with the patentee going into the open market anywhere to sell his rights conferred by the patent.

It is a well-established principle of law that Congress has exclusive right and power to legislate on the subjects specially assigned to it by the Constitution, while power is delegated to the several States to legislate on those subjects not[p. 89] thus expressly placed within the control of Congress. It would seem clear that there can be no State interference with the rights which are incident to the grant of Letters Patent and expressly conferred thereby.

Ohio was the first State attempting to place restrictions upon the handling of patent rights, which, in 1868, passed an act requiring any person, before offering for sale a patent right in any county, to submit the patent to the Probate Judge of the county, and make affidavit before said judge that the patent was in force, and that the applicant had the right to sell, and also requiring that any written obligation taken on the sale of such right should bear on its face the words, "Given for a Patent Right."

The portion of the Ohio statute relating to the making and filing proofs was subsequently made the law in Illinois, Minnesota, Indiana, Nebraska, and Kansas, while the requirement that written obligations given for a patent right should bear such statement written upon its face was made the law in Vermont, Michigan, Pennsylvania, Wisconsin, New York, Connecticut, and Arkansas.

In view of the decisions rendered by the Supreme Court of the United States in the cases of ex parte Robinson, 2 Bissel, 309, and Webber vs. Virginia, 103 U. S., 347; 20 O. G., 136, some of the States repealed their statutes relating to the[p. 90] filing of proofs, while others did not—notably Indiana and Kansas, where the statute still remains in force.

While the Supreme Court in the above cases did not decide the constitutionality of the State statutes, it was clearly indicated that property in inventions existed by virtue of the laws of Congress, and that no State had any right to interfere with its enjoyment, or to annex conditions to the grant, and that the patentee had a right to go into the open market anywhere in the United States and sell his property. It also established the proposition that a State may require the taking out of a license for the sale of the manufactured article covered by the patent; and the patentee should keep in mind the distinction between selling patents, or patent privileges, and the selling of goods or manufactured articles, as all who sell goods, whether patented or not, must conform with the local and State laws relating to same.

The statute requiring the insertion in written obligations of the words, "Given for a Patent Right," has been declared unconstitutional by the higher State Courts in Illinois, Michigan, Minnesota, and Nebraska, and by the Circuit Courts in the southern district of Ohio, and in the district of Indiana; while its validity has been sustained by the courts of last resort in New York, Pennsylvania, Ohio, Indiana, and Kansas. Therefore, the[p. 91] validity of the State statutes on the point referred to may be regarded as finally established in the last-named States until brought before the Supreme Court of the United States.

[p. 92]

CHAPTER IX

THE TRANSFER OF PATENT RIGHTS

It frequently occurs to the patentee that a knowledge of the legal requirements of the transfer of patent rights would save him much time and trouble. Patentees should carefully scrutinize all papers offered by the parties in whose favor they are drawn, and, if possible, he should have his attorney to examine them.

There are three classes of persons in whom the patentee can vest an interest of some kind. They are an assignee, a grantee of an exclusive sectional right, and a licensee.

Assignee, Grantee, and Licensee Defined.

"An assignee is one who has transferred to him in writing the whole interest in the original patent, or any undivided part of such whole interest in every portion of the United States. And no one, unless he has such an interest transferred to him, is an assignee.

"A grantee is one who has transferred in writing the exclusive right under the patent, to make and use, and to grant to others to make and use, the thing patented, within and throughout some[p. 93] specified part or portion of the United States. Such right must be an exclusive sectional right, excluding the patentee therefrom.

"A licensee is one who has transferred to him in writing, or orally, a less or different interest than either the interest in the whole patent, or an undivided part of such whole interest, or an exclusive sectional interest." (Potter vs. Holland, 1 Fish, 327.)

The Language of Law.

If a man were to give another an orange he would simply say, "I give you this orange"; but if the transaction be intrusted to a lawyer to draw up according to the requirements of law, says the Observer, he would most probably put it in the following language: "I hereby give, grant, and convey to you all my interest, right, title, and advantage of and in said orange, together with its rind, skin, juice, pulp, and pits, and all right and advantage therein with full power to bite, suck, cut, or otherwise eat the same or to give the same away, as fully and effectually as I, the said A. B., am now entitled to cut, bite, or otherwise eat the same, or give away the same with or without the rind, skin, juice, pulp, or pits; anything hereinbefore or hereafter or in any other deed or deeds, instruments of nature or kind whatsoever to the contrary in anywise notwithstanding."

It is always better and more satisfactory to[p. 94] have assignments, royalty contracts, agreements, etc., drawn up specially to accord with the facts, details, and covenants of each particular case; and there is no one probably better able to do this than the attorney who secured the patent. However, if in the case the parties to the transaction cannot well delay proceedings to have the papers prepared by an attorney, by adhering to the following forms in any such transactions, both the purchaser and seller may rest assured that their rights are protected.

ASSIGNMENT OF ENTIRE INTEREST IN
LETTERS PATENT

Whereas, I, Richard Doe, of Columbus, County of Franklin, State of Ohio, did obtain Letters Patent of the United States for an improvement in Typewriting Machines, which Letters Patent are numbered 000,000, and bear date January 1, 1901; and whereas I am now sole owner of said patent, and of all rights under the same; and whereas the Ohio Typewriter Company, a corporation, of Cincinnati, County of Hamilton, and State of Ohio, is desirous of acquiring an interest in the same:

Now, therefore, to all whom it may concern, be it known, that for and in consideration of the sum of five thousand dollars to me in hand paid by the aforesaid corporation, the receipt of which[p. 95] is hereby acknowledged, I, the said Richard Doe have sold, assigned, and transferred, and by these presents do sell, assign, and transfer unto the said Ohio Typewriter Company, its successors and assigns, the entire right, title and interest in and to said Letters Patent and the invention therein patented; the same to be held and enjoyed by the said corporation for its own use and behoof, and for the use and behoof of its successors and assigns, to the full end of the term for which said Letters Patent are or may be granted, as fully and entirely as the same would have been held and enjoyed by me had this assignment and sale not been made.

In testimony whereof, I have hereto set my hand and affixed my seal, at Columbus, County and State aforesaid, this tenth day of January, A.D. 1901.

Richard Doe. (Seal.)

In the presence of

John Smith,

Thos. Jones.

Subscribed and acknowledged before me this tenth day of January, a.d. 1901.

Seal.

John Rice,
Notary Public.

[p. 96]

If it is the intention of the assignor to convey to the assignee the right to recover for past infringement of the patent, a clause like the following should be added:

And for the same consideration, I do hereby sell, assign and transfer unto the aforesaid corporation, all claims and demands, both at law and in equity, which may have accrued to me by reason of the infringement of the aforesaid Letters Patent with the right to sue and recover therefor in its own name and for its own use and behoof.

ASSIGNMENT OF AN UNDIVIDED INTEREST

Whereas, I, Richard Doe, of Philadelphia, County of Philadelphia, State of Pennsylvania, did obtain Letters Patent of the United States for improvements in Locomotive Headlights, which Letters Patent are numbered 000,000, and bear the date of June 26, 1900; and whereas, John Roe, of Philadelphia, County of Philadelphia and State of Pennsylvania, is desirous of acquiring an interest in the same: Now, therefore, this indenture witnesseth, that for and in consideration of the sum of one thousand dollars to me in hand paid by said John Roe, the receipt of which is hereby acknowledged, I do hereby sell, assign, and transfer unto the said John Roe, his heirs and assigns, one undivided one-half interest in and to[p. 97] the aforesaid Letters Patent and the invention therein patented; the same to be held and enjoyed by the said John Roe, his heirs and assigns to the full end of the term for which said Letters Patent are or may be granted as fully and entirely as the same would have been held and enjoyed by me if this assignment and sale had not been made.

And I do hereby declare that I have not conveyed to any other party the rights and interest herein transferred to the said John Roe.

Witness my hand and seal this tenth day of January, a.d. 1901,

Richard Doe.

In the presence of

John Smith,

Thos. Jones.

Subscribed and sworn before me this tenth day of January, a.d. 1901.

Seal.

John Rice,
Notary Public.

GRANT OF A TERRITORIAL INTEREST

Whereas, I, Richard Doe, of Dayton, County of Montgomery, State of Ohio, did obtain Letters Patent of the United States for improve[p. 98]ments in Corn-Cultivators, which Letters Patent are numbered 000,000, and bear date the first day of January, 1901, and whereas, I am now the sole owner of said patent, and of all rights under the same in the below-recited territory; and whereas, John Roe, of Indianapolis, County of Marion, State of Indiana, is desirous of acquiring an interest in the same;

Now, therefore, to all whom it may concern, be it known, that for and in consideration of the sum of one thousand dollars to me in hand paid, by the said John Roe, the receipt of which is hereby acknowledge, I, the said Richard Doe, have sold, assigned, and transferred, and by these presents do sell, assign and transfer unto the said John Roe, his heirs and assigns, the entire right, title and interest in and to said Letters Patent, and in and to the invention therein patented for the States of Indiana and Illinois, and in no other place or places; the same to be held and enjoyed by the said John Roe, his heirs and assigns, within and throughout the above specified territory, but not elsewhere, to the full end of the term for which said Letters Patent are or may be granted, as fully and entirely as the same would have been held and enjoyed by me had this assignment and sale not been made.

In testimony whereof, I have hereunto set my hand and affixed my seal this tenth day of Janu[p. 99]ary, a.d. 1901, in the presence of the subscribing witnesses.

Richard Doe.

In the presence of

John Smith,

Thos. Jones.

On this tenth day of January, a.d. 1901, personally appeared before me Richard Doe, to me known and known to me to be the individual who executed the foregoing instrument, and who acknowledged to me that he executed the same for the purpose therein expressed.

Seal.

John Rice,
Notary Public.

LICENSE:—SHOP-RIGHT

In consideration of the sum of two hundred dollars to me paid by The John Roe Company, a corporation of Pennsylvania, located in the city of Pittsburg, I do hereby license and empower said company to make and use at its foundry and machine shop in said Pittsburg, and in no other place or places, in connection with its own business only, or that of its successors and assigns, the improvements in Lathes, for which Letters Patent of the United States No. 000,000, were granted to me January 1, 1901, to the full end of the[p. 100] term for which said Letters Patent are granted.

Signed and delivered at Pittsburg, in the County of Allegheny, State of Pennsylvania, this tenth day of January, A. D. 1901.

Richard Doe.

To John Roe Company,

Pittsburg, Pa.

LICENSE:—NON-EXCLUSIVE—WITH ROYALTY

This agreement, made this tenth day of January, 1901, between Richard Doe, of Wilmington, County of New Castle, State of Delaware, party of the first part, and the Metallic Railway Tie Company, of Chicago, in the County of Cook, and State of Illinois, party of the second part,

Witnesseth, that whereas Letters Patent of the United States, No. 000,000, for an improvement in Metallic Railroad-Ties, were granted to the party of the first part January 1, 1901; and whereas the party of the second part is desirous of manufacturing Metallic Railroad-Ties containing the said patented improvements:

Now, therefore, the parties hereto have agreed as follows:

I. The party of the first part hereby licenses and empowers the party of the second part to manufacture, subject to the conditions herein named, at their plant in Chicago, and in no other place or places, to the end of the term for which[p. 101] said Letters Patent were granted, Metallic Railroad-Ties containing the patented improvements, and to sell the same within the United States.

II. The party of the second part agrees to make full and true returns to the party of the first part, under oath, upon the first days of January and July in each year, of all Metallic Railroad-Ties containing said patented improvements manufactured by them.

III. The party of the second part agrees to pay the party of the first part five dollars as a license fee upon each and every thousand Metallic Railroad-Ties manufactured by the party of the second part containing the patented improvements: provided, that if the said fee be paid upon the days provided herein for semi-annual returns, or within ten days thereafter, a discount of fifty per cent, shall be made from said fee for prompt payment.

IV. The party of the second part agrees to put forth their best efforts and use due diligence in the manufacture and sale of the Metallic Railroad-Ties containing the said patented improvements, and if the royalties do not amount to five hundred dollars semi-annually, the party of the first part may terminate this license by serving a written notice upon the party of the second part.

V. Upon the failure of the party of the second[p. 102] part to make returns or to make payment of license fees, as herein provided, for thirty days after the days herein named, the party of the first part may terminate this license by serving a written notice upon the party of the second part; but the party of the second part shall not thereby be discharged from any liability to the party of the first part for any license fees due at the time of the service of such notice.

In witness whereof, the parties above named have hereto set their hands the day and year first above written, at Chicago, County of Cook, and State of Illinois.

Richard Doe,

Metallic Railroad Tie Company,

Per John Roe, President.

LICENSE:—EXCLUSIVE—WITH ROYALTY

This agreement, made this tenth day of January, 1901, between Richard Doe, of Boston, State of Massachusetts, party of the first part, and the Roe Vending Machine Company, a corporate body under the laws of the State of New Jersey, located and doing business at the city of New York, in the State of New York, party of the second part,

Witnesseth, that whereas, Letters Patent of the United States, No. 000,000, were, on the first day of January, 1901, granted to the said party[p. 103] of the first part, for improvements in Coin-Controlled Machines, and whereas said party of the second part is desirous of manufacturing and selling said patented article: Now, therefore, the parties hereto have agreed as follows:

I. The party of the first part gives to the party of the second part the exclusive right to manufacture and sell the said patented improvements, to the end of the term of said patent, subject to the conditions hereinafter named.

II. The party of the second part agrees to make full and true returns, on the first days of January and July in each year, of all machines manufactured and sold by them containing the said patented improvements in the six calendar months next preceding the date of any such notice; and if the party of the first part shall not be satisfied in any respect with any such return, then shall the party of the first part have the right, either by himself or by his attorney, to examine any and all books of account of said party of the second part concerning any items, charges, memoranda, or information relating to the manufacture or sale of said patented Coin-Controlled Machines; and upon request made, said party of the second part shall produce all such books for said examination.

III. The party of the second part agrees to pay the party of the first part five dollars as a[p. 104] license fee upon every one of the said patented Coin-Controlled Machines manufactured by them, the whole of said license fee for each term of six months to be due and payable on the days hereinabove provided for semi-annual returns; provided, that if said fee be paid upon the days herein provided, or within fifteen days thereafter, a discount of fifty per cent, shall be made from said fee for prompt payment.

IV. The party of the second part agrees to pay the party of the first part at least two thousand dollars, less discount, as said license fee upon each of the semi-annual terms, even though they should not make enough of said patented machines to amount to that sum at the regular royalty of five dollars each.

V. The party of the second part shall cast, or otherwise permanently place, upon every such machine made under this license the word "Doe," and in close relation thereto the word "Patented," and the number and date of said patent.

VI. The party of the second part shall not, during the life of this license, make or sell any article which can compete in the market with said Coin-Controlled Machines.

VII. Upon the failure of the party of the second part to keep each and all of the conditions of this license and agreement, the party of the first part may, at his option, terminate this[p. 105] license, and such termination shall not release said party of the second part from any liability due at such time to the party of the first part.

In witness whereof, the above-named parties (the said Roe Vending Machine Company, by its president) have hereto set their hands the day and year first above written,

Richard Doe,

Roe Vending Machine Company,

By John Roe, President.

No general legal forms should be relied upon too implicitly as suiting particular cases, and an inventor, in order to fully protect his interests, should consult a reliable patent attorney, and have the forms properly prepared to suit his individual case.

Map of Continental USA

[p. 107]

CHAPTER X

TABLES AND STATISTICS

official census

OF THE

united states, by counties, for 1910

(From the Bulletin of the Director of the Census)

ALABAMA.—Area, 51,998 square miles.

[p. 108]

ARIZONA.—Area, 113,956 square miles.

ARKANSAS.—Area, 53,335 square miles.

CALIFORNIA.—Area, 158,297 square miles.

COLORADO.—Area, 103,948 square miles.

CONNECTICUT.—Area, 4,965 square miles.

DELAWARE.—Area, 2,370 square miles.

DISTRICT OF COLUMBIA.—Area, 70 square miles.

[p. 110]

FLORIDA.—Area, 58,666 square miles.

GEORGIA.—Area, 59,265 square miles.

IDAHO.—Area, 84,313 square miles.

ILLINOIS.—Area, 56,665 square miles.

INDIANA.—Area, 36,354 square miles.

IOWA.—Area, 56,147 square miles.

[p. 114]

KANSAS.—Area, 82,158 square miles.

KENTUCKY.—Area, 49,598 square miles.

LOUISIANA.—Area, 48,506 square miles.

MAINE.—Area, 33,040 square miles.

MARYLAND.—Area, 12,327 square miles.

MASSACHUSETTS.—Area, 8,266 square miles.

MICHIGAN.—Area, 57,980 square miles.

MINNESOTA.—Area, 84,628 square miles.

[p. 118]

MISSISSIPPI.—Area, 46,865 square miles.

MISSOURI.—Area, 69,420 square miles.

MONTANA.—Area, 146,572 square miles.

NEBRASKA.—Area, 77,520 square miles.

NEVADA.—Area, 110,690 square miles.

NEW HAMPSHIRE.—Area, 9,341 square miles.

NEW JERSEY.—Area, 8,224 square miles.

[p. 121]

NEW MEXICO.—Area, 122,634 square miles.

NEW YORK.—Area, 49,204 square miles.

NORTH CAROLINA.—Area, 52,426 square miles.

NORTH DAKOTA.—Area, 70,837 square miles.

OHIO.—Area, 41,040 square miles.

OKLAHOMA.—Area, 70,057 square miles.

OREGON.—Area, 96,699 square miles.

PENNSYLVANIA.—Area, 45,126 square miles.

[p. 125]

RHODE ISLAND.—Area, 1,248 square miles.

SOUTH CAROLINA.—Area, 30,989 square miles.

SOUTH DAKOTA.—Area, 77,615 square miles.