SoundBender (red) clips onto iPad to direct (and amplify) sound to the user
In Season 4, Episode 13 of ABC’s Shark Tank, Rabbi Moshe Weiss pitched his SoundBender product to the Sharks. The “Soundbender” is a piece of curved plastic with a magnet. It clips onto an iPad (as shown) over the iPad’s speaker. Although it seems simple, this invention improves an iPad’s sound quality dramatically. (Normally the iPad’s speaker points away from the user).
The Soundbender very cleverly attaches (magnetically) to the iPad. It redirects (toward the user) the sound coming out of the iPad’s speaker.
The SoundBender greatly improves the sound quality experienced by the user. The sound becomes louder and more focused.
SoundBender’s Patent Protects Huge Margins
Rabbi Weiss makes each SoundBender for $1. He sells it retail for $12.99. He asked the Sharks for $54k for a 26% stake in his business.
Notably, Rabbi Weiss has a patent pending for the SoundBender. Were this not the case, the Sharks undoubtedly would have asked this question: Why can’t I just make it myself and drive you out of business?
Kevin views the patent as the single most valuable asset. He asks whether the Rabbi would consider licensing the patents and sending the manufacturing overseas. But Rabbi Weiss is not open to licensing, so Kevin is out.
Eventually, Rabbi Weiss partners with Daymond on account of Daymond’s marketing experience.
Notably, the only reason that Rabbi Weiss was able to discuss deals of this magnitude is because he filed a patent application before negotiating a deal. Without a patent application, the Sharks (like many others) would simply hire a contract manufacturer to produce the SoundBender independently.
In season one of Shark Tank, Erin Whalen and Tim Stansbury pitched their company, Grease Monkey Wipes. The duo formed Grease Monkey Wipes in response to problems cleaning road slime (grease) off of their hands during bike rides. Grease Monkey Wipes are single use cloths having a special citrus formula. The citrus formula cuts through grease and grime. Ordinary moist towelettes do not wash away grease. For example Wet-naps and baby wipes smear grease around but do not remove it from surfaces. Grease Monkey wipes solve this widespread problem by using all-natural citrus oils.
Grease Monkey Wipes Not Patented
About 2m and 45s into the episode (see below), the Sharks are clearly impressed with the technology. The product solves an existing need and it does so with an all natural solution. At this point, Ms. Whalen and Mr. Stansbury are well-positioned to strike it rich with their invention. However, the Sharks then ask about whether the company has protected the technology by filing a patent application.
At about 3m and 20s into the episode, Kevin O’Leary asks what would stop him from making a competing product. Specifically, he asks the following:
“is that patented?”
“is there any patent here?”
“what stops me from doing this?”
When the Grease Monkey team says “no,” the pitch falls apart. Kevin’s face drops. ABC’s production team cues the dramatic music. See 3m 35s – 3m 45s. Although Mr. Stansbury attempts to offer reasons for why they decided not to patent the invention as part of their business strategy, the Sharks are not impressed. Mr. Stansbury indicates that the company decided not to patent the invention for financial reasons and to keep the recipe secret. But Kevin O’Leary becomes visibly aggitated with these reasons. The photo below sums up how he responded to Grease Money Wipe’s “decision” not to patent the invention.
“My problem with this is the lack of proprietary content.”
After the Shark’s uncover the complete lack of patent protection, they start dropping out of the negotiations. They Sharks express concern with the fact that the invention can be easily “knocked off.”
Ultimately, the Grease Monkey Wipes team does get an investment. But, the investment is secured on strictly personal grounds. They Sharks stop treating Grease Monkey Wipes seriously and instead consider pity investments. They jab at one another, saying “look at that face.” Ultimately, the deal goes through based on Ms. Whalen’s repeated assurances that “I promise I won’t let you down.” (That’s not a great business reason).
The situation would have been completely different if the inventors had used the patent system to claim the invention. Properly protecting the invention would have eliminated all of Kevin O’Leary’s concerns about the company having no proprietary content. Securing patent protection would have protected the company from knock off products. In all likelihood, the two business partners would have received a much better deal if they had at least filed a provisional patent application.
In season 2 episode 7 of Shark Tank, inventor Jeff Stroope pitched his quick-connecting hose technology to the Sharks. Mr. Stroope conceived of the quick-connector while working as a fireman. His experience connecting hoses to fire hydrants taught him that the process was both time and labor intensive. Accordingly, he worked to “come up with a solution” to this problem. Mr. Stroope spent several years developing it. Now, the technology serves the basis for Mr. his company, HyConn LLC.
HyConn provides a faster way to connect hoses
According to Mr. Stroope, the HyConn technology is newand completely differentfrom existing technology. He notes that there is “nothing out there like it.” These words indicate that HyConn’s technology includes patentable technology.
To be patentable, an invention must be new and not obvious. See Graham. Mr. Stroope’s description of the HyConn technology indicates that it meets these criteria. Notably, he describes the HyConn technology as better than existing products, promising to”…revolutionize the way you provide water to the fire scene.” (If it were “obvious,” one would imagine that the technology would already be on the market, given these benefits).
HyConn’s Critical Patent Moment
The pivotal moment in the episode came when Mr. Stroope was asked this question: “Do you have a patent on that?” See embedded video below. After Mr. Stroope says that he does have a patent, the tone of the negotiations shift heavily in his favor. See 6m 35s into the episode below.
After Mr. Stroope discloses that he does have apatent,the Sharks begin competing to make a deal with him. Because Mr. Stroope had protected his invention, the Sharks were able to discus a variety of licensing deals and other opportunities for monetizing the invention. If Mr. Stroope had not claimed his invention, the negotiation very likely would have turned to questions of how the Sharks could simply cut him out of the loop, manufacturing the device by themselves.
For those interested in Mr. Stroope’s patent application, here is a link to the application on Google Patents: US 20100244435 A1.
During patent prosecution, the claims are often rejected by the examiner as being “obvious” in view of the prior art. In addition to being new, an invention must be not obvious in order to be patented. The test for nonobviousness is set forth in a 1966 Supreme Court case called Graham v. John Deere. Subsequent cases have affirmed that the Graham factual inquires must be used for evaluating the obviousness of a claim under 35 U.S.C. 103. This mandatory 4-part test provides the objective framework for evaluating obviousness. The four parts to this test are as follows:
Determining the scope and contents of the art when the invention was made;
Ascertaining the differences between that art and the claim(s) at issue;
Resolving the level of ordinary skill in the pertinent art when the invention was made; and
The Graham Test is described in detail in the Manual of Patent Examining Procedure (MPEP) at section 2141 (II).
The Graham Test appears deceptively simple.
At first glance, the Graham test appears easy. The examiner studies the prior art. Next, the examiner determines how the invention differs from it. Then, the examiner determines whether an ordinary artisan would have found the invention obvious despite that prior art.
While this test may appear easy, applying the Graham Test often proves extremely difficult. These difficulties arise from problems viewing the state of the art at the time the invention was made. Inventors should draft patent applications at the time the invention is made. But, those applications are examined several years later. Accordingly, by the time the applications are examined, the public may consider them to be old news. With the benefit of the inventor’s disclosure, a patent examiner may not appreciate the genius involved in creating the invention from scratch.
The answer to a problem often seems obvious after looking at the solution. (Consider picture search puzzles and word search puzzles where the answer leaps off the page after seeing it the for the first time). A patent examiner necessarily approaches a patent application by looking at the solution first. Then, that examiner must attempt to ignore that understanding and appreciate how the problem would have appeared just before the invention was made.
The Graham Test attempts to curb hindsight.
The Graham Test attempts to ensure that the examiner evaluates obviousness “at the time the invention was made” and not at the time the invention is examined. The goal of the Graham Test is to prevent the examiner from using the inventor’s own disclosure as a blueprint (or roadmap) for piecing together the prior art in a manner that makes the invention appear obvious.
Practically speaking, hindsight cannot be prevented. Accordingly, it becomes extremely important for inventors to use legal arguments to protect themselves against losing property on account of a patent examiner’s hindsight. During patent prosecution, the applicant will inevitably argue with the examiner over whether the invention would have been obvious. Those arguments will often converge on the fact that the examiner is approaching the problems solved by the inventor with the benefit of the inventor’s own disclosure. This leaves the inventor with the task of defending the intellectual contribution. Fortunately, given the lengthy historical development of the obviousness doctrine, a patent applicant has many opportunities for preventing the examiner from drawing conclusions based on impermissible hindsight. Nevertheless, all off these opportunities will eventually follow the above listed 4-part Graham test. Accordingly, while the Graham test may appear simple, it should be regarded as one of the patent applicant’s most powerful tools.
Shark Tank’s season 1 episode 7 featured Sawyer Sparks and his Soy-Yer Dough invention. Soy-Yer Dough is a wheat-free soy-based play dough. The product provides an alternative to Play-Doh. Unlike Play-Doh, Soy-Yer Dough can be used by children who are allergic to wheat. (Approximately 1 in 8 children suffer from this allergy and can’t use Play-Doh).
Soy-Yer Dough’s Patents
Very early in the negotiation (2m 25s into the clip below), the Sharks begin to discuss the patents covering the Soy-Yer Dough product. This conversation highlights the importance of using the patent system. In this case, Mr. Sparks claimed his invention as a composition of matter, which is extremely powerful because it covers all uses of the composition.
Mr. Sparks notes that he has been courted by a variety of investors because they want his patent. He notes that Hasbro (the makers of Play-Doh) have contacted him multiples times because they want his patent. The Sharks are very interested in that patent. When Mr. Sparks discloses that his patent excludes all others from making, using, or selling his invention, Kevin O’Leary concludes that the situation is “outstanding.”
Because Mr. Sparks filed a patent application, the Sharks begin selling to him. The negotiation becomes a seller’s market. Mr. O’Leary boasts, “my whole business career is built around licensing properties.”
Notably, the above situation could have been completely different had Mr. Sparks not used the patent system. For example, HasBro (the makers of Play-Doh) could have simply made their own gluten-free children’s play dough. With Hasbro’s resources they would have easily pushed Mr. Sparks out of the market.
Mr. Sparks makes his Soy-Yer Dough product in his mom’s kitchen. Hasbro has a factories, distribution channels, and a full sales team. But, because Mr. Spark’s patent provides him with the right to exclude competitors from making his invention (as claimed in US 20110302887 A1), his negotiating position is completely different. Because he used the patent system, he will likely receive what he deserves for improving the children’s modeling clay space.
Soy-Yer Dough Patent Claim
Mr. Sparks’s patent claims:
1. A soy-based modeling product, comprising:
a quantity of water;
a quantity of a salt;
a quantity of an oil; and
a quantity of a flour;
wherein at least one of the oil and/or the flour is derived from soybeans.
Accordingly, in order for Hasbro to make a product falling within that claim, they must receive Mr. Sparks’s consent, either through purchasing the patent or by licensing it. Here, the critical limitation appears to be the inclusion of a soybean-derived flour.
The above scenario should be a lesson about chemical inventions. Using the patent system to protect the idea provides important protections against copyists. Here, it gives the true inventor the opportunity to benefit from his insight rather than being ripped off by a larger company with more resources. Good job Mr. Sparks.
Pink Shutter Photo Booths recently went on Shark Tank to pitch their photo booth company to the Sharks. See Shark Tank S04E24 Episode 425 (May 10th, 2013). This episode illustrates the importance of acquiring patent protection for a new and useful technology (here atleast a larger, more versatile photo booth).
Notably, the entrepreneurs get off to a good start by getting the Sharks interested in their product. Their financials also appear to be headed in the right direction. The company is profitable. They own all of their assets. They have no debt. But, then things take a turn for the worse. The Sharks inquire about patent-related features of the technology.
First, the Sharks ask about what makes the Pink Shutter Photo Booth different. See embedded video below at 2m 26s.
Notice how this question gets to the issue of what gives Pink Shutter a lasting advantage over their competition. Although Pink Shutter is enjoying success, the company has nothing to prevent competitors from entering the market and undercutting them. They have no property right. They have not ownership of their invention. This point is really driven home about a minute later, when Kevin O’Leary points out that Pink Shutter has nothing proprietary. See embedded video above at 3m 30s.
On account of Pink Shutter failing to protect their invention by drafting patent claims and filing a patent application, the Sharks immediately devalue the company. Ultimately, Pink Shutter does strike a deal. But the critics posting on their blog feel that it was not a good deal:
Man, I think you got screwed. 33% split three ways is going to be tough. Not to mention giving Groupon and Living Social up to 50% commission. In 5 years when you start to make your money back from the investments, the competition will be 10 times what it is now. The mom and pops photo booth companies run by one person will be able to make the same income as you guys because you are splitting your money too many ways. Just my opinion.
Lesson learned: if you have something new and better than the competition, keep it that way. Use the patent system to protect your invention.
The hit ABC television series Shark Tank has brought patents to the mainstream. In each episode of Shark Tank, small entrepreneurs pitch their businesses to a panel of five big time investors (the “Sharks”). The entrepreneur asks for an investment in exchange for a percentage of the business. Before investing, the Sharks ask an array of probing questions, aimed to uncover the risks and opportunities inherent to the business.
Shark Tank Illustrates the Importance of Patents for Start-ups
In practically every episode of Shark Tank, a Shark inquires about the entrepreneur’s patent protection. Here are a few examples of questions that probe the entrepreneur’s patent position:
“Why do I need you?”
“Why can’t I just go an make this myself?”
“Is there anything proprietary about your product?”
“What’s your secret sauce?”
These questions illustrate the importance of filing a patent application at the United States Patent and Trademark Office. Without claiming an invention as property by drafting patent claims and filing a patent application, the inventor risks being scooped. For example, a large investor could compete with the inventor (rather than investing). The large investor would probably win on account of having more resources. Accordingly, an inventor is well advised to protect the invention before disclosing it to anyone . . . especially savvy business people like the Sharks.
The Shark Tank Application Stresses the Importance of Patents
Shark Tank is a reality TV program. Notably, in 2012 “Shark Tank” received an Emmy nomination for Outstanding Reality Program and a nomination for a Critics’ Choice Television Award for Best Reality Series. As a reality TV program, the contestants are members of the public. Each contestant must submit an application, describing various aspects of the business. In the application for season 5 of Shark Tank, the “Application Packet” includes an entire section entitled “Intellectual Property Questionnaire”.
The Intellectual Property Questionnaire includes questions like these:
“Describe the circumstances surrounding how you conceived and developed your business.
Is your business in any way related to your past employment? If yes, please describe the relationship and provide a copy of the applicable employment agreement.
Is your business an improvement upon any current product, service and/or idea? If yes, please list the specific product(s), service(s) and/or idea(s) and how you have improved upon it/them or what differences exist between them.
Describe any third parties … that offer products or services similar to or competitive with your business, including the differences between them.
List any third party intellectual property (e.g., patent, trademarks and copyrights) that you are aware of that relate in any manner to your business or may otherwise impact your business.
Have any records or logs been kept with respect to your development of your business . . . inventor logbooks, etc?
Do you own or have you applied (or intend to apply) for any patents and/or copyright and/or trademark registrations in connection with you business? If so, explain (include filing date, application type (e.g., provisional/utility/ITU, etc.), application number, serial number, publication number, jurisdiction(s) filed in, assignments, status (pending, published, issued, expired, abandoned, etc.) and/or issued patent number/registration numbers, as applicable).
Are you the sole creator, inventor …?
Have any of the products or services ever been manufactured, offered for sale and/or marketed? If yes, please give details and dates….
Has a patentability search or a trademark or copyright search been performed and/or a legal opinion rendered in connection with your business? If yes, please provide the name of person/entity performing the search and/or rendering the opinion and the date of the service.
The above-listed questions emphasize how important intellectual property is to a start-up business. Each of these questions (especially the italicized terms) probes facts that are important to determining the strength of the inventor’s intellectual property. Often the inventor’s idea is the most valuable part of the start-up business. Accordingly, owning that idea should be a high priority.
Shane Pannell of SweepEasy filed a patent application on his invention
In Season 2 Episode 5 of Shark Tank, Shane Pannell pitches his SweepEasy Scrape and Go Broom to the Sharks. As expected, the Sharks quickly asked about Mr. Pannell’s patents on the SweepEasy device. When he explains that he has claimed the SweepEasy invention, the Sharks become considerably more interested.
Mr. Pannell describes how prior art brooms “fall short of solving a common problem.” Namely, conventional brooms only sweep. They do not perform other functions. Inspired by his work as a stay-at-home dad, Mr. Pannell had an idea for a different and better broom: the SweepEasy. (Shane describes his moment of conception at 2m 50s in the episode). By adding a telescoping scraping mechanisms, Mr. Pannell’s SweepEasy broom cleans floors “like never before.”
Shark Tank’s Response to SweepEasy
About 2m 20s into the episode, the Sharks ask about the SweepEasy patents. See video below.
Kevin O’Leary asks “Shane, do you have a patent on that.” Shane answers that he does have a provisional patent application pending. (A provisional patent application preserves an inventor’s priority to the invention for one year before filing a non-provisional application. See Patent Prosecution.). At that point in the conversation, the Sharks begin to brainstorm about ideas for monetizing the invention.
The Sharks discuss manufacturing brooms on the large scale. They also discuss licensing the technology as well as selling the product directly to the consumer. Two of the Sharks argue over which would make more money: licensing; or selling direct to the consumer.
Notably, after Mr. Pannell discloses that he has a protected his invention by filing a provisional patent application the Sharks engage in (what the announcer calls) a “feeding frenzy.” The situation would have been completely different if Mr. Pannell and not protected his invention. In that case, the Sharks probably would have asked why they needed to deal with Mr. Pannell at all.