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Southwest Florida Attracts Manufacturers, not just Retirees

Tuesday, November 3rd, 2015

During my recent trip to southwest Florida as the guest of the Lee County Economic Development agency, I learned that in recent years, there has been an increasing number of business owners that have been regularly vacationing in the area who have decided to either move their business or set up a business where they like to play.

Lee County is on the Gulf of Mexico side of Florida about 125 miles south of Tampa and about 50 miles north of the Everglades National Park. There are five incorporated cities in the country: Cape Coral, Ft. Myers, Bonita Springs, Ft. Myers Beach, and Sanibel. The county population grew 63% from 1994 to 2014, but 55% live in the unincorporated area.

My tour host, Shane Farnsworth, Manager of Business Development for the Lee County EDO, told me that Cape Coral was a planned “bedroom” community, but many people never built homes on the lots. So, Cape Coral offers the greatest area of growth for industrial development through the purchase and combining of these parcels into industrial sites. Ft. Myers is the oldest of the five cities, so there is very little undeveloped land and new industrial sites will occur through redevelopment. During my visit, I met with executives of several manufacturing companies in three of five and the city of Naples to the south in Collier County (most of Collier County is taken up by the Big Cypress National Park.).

My first interview was with Bill Daubmann, founder and Senior V. P. of KDD, Inc. dba My Shower Door and a member of D3 Glass LLC. Bill originally had  established a closet organization business in Springfield, MA in 1986 and obtained a license agreement with Mr. Shower Door in 1989. After visiting the Lee County region for several years on vacation, he decided to move to Naples in 2001 and opened a showroom in 2003. His son, Doug, moved also and joined the company. He took the Fast track entrepreneur course by the Kaufman Foundation with one son in 2007 to “hone” their management skills, and took it again in 2011 with his other son.

Bill said, “It was a tough struggle from 2008 – 2010 due to the Great Recession, as southwest Florida was “ground zero” for the decline in the new home building market. We survived by mostly doing home remodeling.”

In 2011, they were informed that their Mr. Shower Door license would not be renewed for 2012, so they explored setting up their own manufacturing plant to make the tempered and glazed needed for shower doors. After analyzing how much glass they were buying out of the state and the problems they had with breakage and defective glass, they set up D3 Glass LLC in 2012 when new home building started coming back in a building they had bought during the recession. Bill’s oldest son, Keith, became President of KDD, Inc. dba My Shower Door. Bill said that the ovens for tempering the glass cost one million and everything else cost another million. They had to buy two custom-outfitted trucks to deliver the glass to their showrooms and customers.

Since Florida requires a license for the glass and glazing business, Bill and his sons took the test and got their licenses. Bill said, “We hired a consultant to do a “SWOT” analysis for our shower door business to make sure that our business model worked in all parts of the country. We wrote a business plan and did a beta test site. We are now selling our business model to others and running an academy on how to run a shower door business. We have four affiliate stores: Oklahoma City, OK, Grand Rapids, MI, St. Paul, MN, and York, PA. We also sell the specialized hardware for shower doors to our affiliates and other shower door companies.”

In the last two years, they expanded from just doing shower doors into other markets for tempered glass and recently finished providing all of the tempered glass for the new Hertz headquarters building that will open next month. Bill said, “We went from 22 to 50 employees in 18 months and are now up to 64 employees. We just made the INC magazine list of 5,000 companies at #2,085 and will be going to the big event next month.”

After I told him that I am part of the Reshoring Initiative to promote bringing back manufacturing to America, he said, “We were buying aluminum extrusions from China, but just switched to a vendor in the United States.”

In answer to my question about the advantages of being located in the region, he responded, “It is easy to deal with the people in the local government agencies, there is good transportation available on I-75 and Rt. 41, the new airport has flights going to our markets, and there are good local colleges for preparing the future workers we will need.”

My second interview was with Brian Rist, President and CEO of Smart Companies, of which Storm Smart is the largest subsidiary. Storm Smart is Florida’s largest manufacturer & installer of hurricane protection products and is the ninth largest manufacturer across all industries in Lee County. Brian is the inventor of the innovative Storm Catcher Wind Abatement Screens. He also moved from the northeast to southwest Florida to run his business. Brian said, “I started out with a couple of partners in a general contracting business and wound up as the sole owner. The first three years were a struggle to find a niche. The building codes were changing and I became the expert in the new codes, even teaching architects. After Hurricane Ambrose came in 1994, I tried to find a fabric that would replace plywood for covering windows. We talked with people in energy management and got everyone’s opinion. I founded Storm Smart in 1996 to manufacture fabric window protection. We became known as who to talk to about window protection. If you fail to plan, then you plan to fail. We did a CD on what businesses could do for emergency planning because 83% of businesses that have a disaster never recover.”

Brian explained that the building codes changed in Florida for developing sites in 1997 requiring window protection to be part of building a home. In 2001 new codes came out and insurance regulations changed also. Everyone has to have separate hurricane insurance. Insurance companies offered special rates for homes that had protection, and the State of Florida offered a rebate program.

“We started making polypropylene window protection by hand cutting the material, but we needed to ramp up to higher production. Getting a sales tax credit helped us to be able to buy a laser cutting machine in 2013, and it eliminated the bottleneck in our business helping us develop new products.”

They work with the biggest companies in the world that use fabric for hurricane protection. While their products protect homes from hurricanes, they also reduce energy costs. Brian said, “You can build a business based on a known market of saving energy and not just protection from hurricanes. Impact-rated windows are a fast growing part of our business. Most new homes come with impact rated windows.”

He added, “The building codes changed again and they are much more about retaining heat rather than saving heat. International codes are also changing. We watch what percentage of our business is with builders. We went to Cancun and set up small operation during recession in Mexico. We are currently doing work in Los Cabos, Mexico also. We sell to Caribbean countries like Bermuda, Jamaica, and wherever else there are resorts.

We have experienced fast growth and have been picked by Inc. magazine four times as one of the 5,000 fastest growing companies. We went from 26 employees to 100 employees after Hurricane Charlie. We went from five to six jobs per month to about 100 jobs per month.

We looked at all of their jobs and decided to really go back into the customer service business to be a sustainable business. We started to invest in our people and getting to know who they were. We had to make sure they were doing things right. We have to ‘walk the talk.'”

After we discussed some of the articles I have written on developing and recruiting the next generation of manufacturing workers and my involvement with the Coalition for a Prosperous America, he added, “‘ Walking the talk” also involves working with students and getting involved with the Southwest Regional Manufacturers Association [for which he is in the current Vice-President.] He said, “We won the manufacturer of the year for the local region last year. We work with five different academies related to construction. Only about 20% of kids go to college and only about 20% of them graduate from college. We had a tour of our plant during Manufacturing Day and had about 13-14 students come on the tour. Florida is too reliant on tourism and construction. Manufacturing creates more different opportunities for good-paying jobs. Our Governor was at our plant three weeks ago, and he understands manufacturing. By partnering with government and education, we can be more effective in growing manufacturing in Florida. In order to grow, we have to develop the next generation of manufacturing workers. Team building, time management, and ethics are the same regardless of the industry.”

In answer to my inquiry about Lean training, he said, “We have been very involved with lean manufacturing and are working with the Florida Manufacturing Program. We are going through a program for an ERP system in order to continue to grow. We have a plan to develop the company over the next three years. Part of it will involve having licensed dealers.”

The outlook for business in Lee County is very good according to the Lee County Business Climate Survey Report, Third Quarter, 2015 prepared by The Regional Economic Research Institute, Lutgert College of Business, Florida Gulf Coast University, released on August 27th, 2015. The key findings were:

  • 74 percent of executives stated that the current economic conditions have improved over last year
  • 66 percent of the executives stated that the current economic conditions for their industry have improved over last year
  • 67 percent of executives expect economic conditions for their industry to improve over the next year
  • 68 percent of companies expect to increase investment next year and none expect to reduce investment levels
  • 61 percent of executives reported increasing employment over the last year, while four percent reported reducing employment
  • 57 percent of executives expect to increase employment at their companies during the next year

While manufacturing represents only 2% of the economy of Lee County today, the staff of the Lee County Development agency is working with the economic development offices of the five cities and members of the Southwest Regional Manufacturers Association to grow the manufacturing industry and expand that percentage. Their work will be aided by the fact that Florida ranks 5th in the 2015 State Business Tax Climate Index with a score of 6.91. The corporate income tax rate is only 5.5% for C corporations only. There is no inventory tax for businesses, and there is no personal income tax. There are nine universities and colleges, and the two largest, Florida South Western State College and Florida Gulf Coast University have a combined enrollment of over 30,000 students. There is good technical training at the two-year community college level as well as at the Fort Myers Institute of Technology, Cape Coral Institute of Technology, and at the ITT Technical Institute. The Ft. Myers airport (RSW) is served by 15 air carriers offering nonstop flights to 46 destinations, most of which are east of the Mississippi.

The stories of these two companies are good examples of innovation to develop new products, becoming a lean company, creating a new business model, and expanding into new markets. These are some of the recommendations I made in the chapter “What manufacturers can do to save themselves” in my book, Can American Manufacturing be Saved? Why we should and how we can.

Having no corporate and personal income taxes and providing a friendly business climate are ideas I discuss in the chapter on what government can do to save manufacturing in my book. My next article will tell the stories of other companies I visited in Florida.

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Posted in Economic Development, Education, Innovation, Lean, Manufacturing, Reshoring, Technology, Workforce Development | No Comments »

Entrepreneurial Spirit Molds Success of Plastic Technologies Inc.

Tuesday, September 22nd, 2015

During my tour of manufacturing plants in the Toledo, Ohio region last month, I decided to write an article about Plastic Technologies, Inc because of the interesting story about Dr. Tom Brady who founded the company in 1985. When I interviewed Dr. Brady last week, he told me that when he worked for Owens-Illinois, Inc. from 1971-1984, he had become the VP and Director of Technology and had led the development of the first PET (polyester) plastic soft drink container and had directed the technical activities for all of O-I’s plastic product lines.

When I asked him what led him to start PTI, he said, “In late 1985, I happened upon a unique opportunity to start the company. Several of the major Coca-Cola bottlers were seeking to expand their already successful PET bottle manufacturing operations and to develop new and innovative PET plastic soft drink packaging products. The four largest Coca-Cola regional bottling cooperatives agreed to jointly sponsor and fund product development and engineering projects, and they approached me to manage those project development efforts. Not having an interest in just changing jobs, I made a counter offer to those Coca-Cola cooperatives to establish a separate independent company for the purpose of managing their projects. When they agreed, I left O-I to start Plastic Technologies, Inc. and signed long term contracts with all four Coca-Cola cooperatives.”

Dr. Brady also said, “Because of my industry experience, I was quickly able to identify additional customers that were non-competitive to Coca-Cola and I hired a small, but highly experienced professional staff, to do the technical development for the Coca-Cola Cooperatives and for other customers. Because of our professionalism and experience, we were quickly able to establish a reputation in the industry as a high quality PET R&D and technical support company. As our technical staff expanded and our revenue grew at compound annual rates of 35%, we moved to a larger facility in 1989 and set up both analytical testing and process development laboratories, with the capability of prototyping and testing PET containers and preforms. We founded Phoenix Technologies International LLC in 1991 in nearby Bowling Green, Ohio and have since then expanded the plant three times to produce recycled PET using proprietary technology.

Because PET had become the material of choice for new packaging during the 80’s and 90’s, we were able to quickly expand our customer base and to become involved in developing many different products and businesses, including health care packaging, plastic recycling, specialty compound development, and even leisure products. Our experiences outside the PET packaging field provided a basis for us to hire additional technical professionals to staff our laboratories and establish a reputation in the plastics industry as a substantial technical development company.

Since those early days, we have developed relationships with most major manufacturers, resin suppliers, machinery builders, brand owners, and converters. Today, we even supply preforms for blow molding to customers needing specific quantities or unusual designs. We have also learned how to work effectively with competitive customers andwe have become recognized for our excellence in protecting customer intellectual property and confidentiality. Today, our customers are involved in every step of the PET value chain from raw material supply through end of life recyclability.”

I asked if they were affected by the Recession of 2008-2009 and if so, what did they do to survive it? Dr. Brady said, “The recession did have a big effect on PTI’s business, but the recession, per se, was not the most significant issue. Rather, the recession just added to the challenge of changes that were already happening in the world at large. As is true for almost every business today, one of the challenges for PTI today is to redefine its business going forward. Dr. Brady said that what PTI has done successfully for 30 years is no longer as different and special as it once was. The challenge for PTI, and for every business today, is to find the “gaps” in the markets of the future that can be filled by employing the experience and knowledge that has been developed over many years.

Mr. Brady did say that “we had to do some things differently during the recession. We had to get more professional about sales because there are many more companies selling the same technologies and services now. The biggest impediment to our continued growth is that there are more competitors, so that staying ahead of the competition is a bigger challenge.” When he started the company, he was working with the top levels of management at his major customers. Now, he says that business is being done at a different level. More business is handled today by professional purchasing agents, so you have to be more price competitive than in the past. They also went through formal training in Lean, which has been beneficial to their manufacturing businesses, because, he says, “You have to be more efficient to be competitive in every aspect of your business today.” However, the Lean initiative didn’t affect PTI’s testing lab. Rather, becoming ISO certified has had more of an impact on that lab.”

Since I had seen a whole wall of patents PTI had been granted on display at their headquarters, I asked if the change in patent law under the America Invents Act of 2011 affected his company. He replied, “We have to take the steps to be “first to file” instead of being able to rely on being “first to invent.” We have to file more provisional patents than we ever had to in the past, which adds another big burden and costs that we didn’t have previously. Our number of patent applications has shrunk now that we can’t depend on being first to invent. Anything that adds bureaucratic activity becomes a burden on business.”

After my visit, I had emailed Dr. Brady information on the proposed patent legislation (H.R. 9 and S.1137) and asked if these bills would have an effect on his company.” He responded, “You don’t have time to fight everything that comes up. You try to work around it. In fact, we find that patents are less valuable than they used to be. It is more important to be first to the market and to be innovative. Our growth hasn’t been about becoming a bigger and bigger company. We started Phoenix Technologies and our other companies so that those teams could be more entrepreneurial themselves. Our growth model has been to expand by creating our own “Intrapreneurs,” by offering those intrapreneurs ownership and by growing as a family of companies. Our PTI family of companies now includes two manufacturing companies, two technical development and engineering service companies and three joint venture companies that license technology or sell specialty services to the packaging industry (Preform Technologies LLC, Phoenix Technologies International LLC, PTI Europe SARL, PETWall LLC, Minus 9 Plastics LLC and The Packaging Conference). Today, many PTI employees are owners and are in a position where they can truly feel it’s their company. Any employee can be considered by the management team for an opportunity to buy an equity stake, and 40% of PTI employees are owners today. We have more than 200 employees worldwide and many of the products you buy every day are sold in plastic containers designed by one of our companies.”

During my visit, I was astonished to learn that there are only 11 states that have bottle deposit programs to encourage recycling ? California, Connecticut, Delaware, Hawaii, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont. In these states, about 80% of bottles are recycled, while in non bottle-deposit states only about 20% of bottles are recycled. I asked why more states didn’t have bottle deposit programs, and Dr. Brady responded that many major companies oppose the programs because they say it would add to their costs. Dr. Brady explained, “You have to have an infrastructure in place to get enough material to make recycling profitable. However, he emphasized that everybody, even those who think deposit systems cost more money, would win if there was more recycled material, because the costs for virgin material would go down. He also pointed out that a lot of the recycled material goes offshore to China and other Asian countries because it is cheaper to ship the material in the empty containers that are going back to Asia than it is to ship the material to Ohio. We are a big enough company that we can buy recycled material from other sources in Mexico, Canada, South America, and even Iceland, and, we also benefit because we put it back into the highest value end-use products ? food and beverage containers. Dr. Brady pointed out that when China and India get to our standard of living, there isn’t going to be enough of all raw materials to go around. That means that reusing all materials will eventually become necessary and that recycling will become a significant industry, rather than to remain a “nice thing to do.”

During our interview, I learned that Dr. Brady had taken a leave of absence from the company in 2009 to become the Interim Dean of Education at the University of Toledo. He said, “At first, I was judged by the faculty and staff at the college to be a poor choice as the interim dean. However, I actually had the advantage of being completely dependent upon the expertise and experience of the faculty and staff at the college. I made a personal commitment to get to know each and every person in the college and to understand the personal and professional backgrounds of everyone. As a result, we were able to work together to craft a mission and strategy for the future and to create a climate of success going forward.”

Therefore, I wasn’t surprised to learn that Dr. Brady’s grandfather founded the University of Toledo’s college of secondary education. His mother, an aunt, his two sisters and both grandmothers all taught school. He doesn’t just “talk the talk”; he “walks the talk.” When he was interviewed by Plastic News prior to being inducted into the Society of Plastics Industry Hall of Fame in, 2012, he said, “My goal is to help anywhere I can to make education better. If we don’t educate our kids in this country, we’re lost. Our only competitive advantage is being able to be entrepreneurs. The rest of the world can catch up in everything else, so we better figure it out. And, there are not going to be enough unskilled jobs in the future, so you better educate people so they can go out and create their own jobs.”

Dr. Brady emphasized the importance of education and training in the whole economic development equation by saying, “In a sense, I think I could reduce the entire economic development issue to just this one issue. That is, if we spent every one of our economic development dollars on building a world class K-16 education and training system, I truly believe that economic development would happen naturally as a by-product of that initiative.” He reiterated a point that he had made to the mayor of Toledo a few years earlier:

  • Higher per-capita income is a by-product of higher-paying jobs
  • Higher-paying jobs are a by-product of knowledge-based commerce
  • Knowledge-based commerce is a by-product of education and talent
  • Talent and education are by-products of a superior K-16 school system, substantive trade and skill development institutions, and a superior teaching and research university.

I completely concur and made similar points in my book, Can American Manufacturing be Saved? Why we should and how we can, as well as the several blog articles I have written about workforce development and attracting the next generation of manufacturing workers. Manufacturing jobs are the foundation of our economy and the middle class. We must strengthen our manufacturing industry to create more jobs if we want our children and grandchildren to have an opportunity to live the “American Dream.”

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Posted in Cleantech, Environment, Innovation, Manufacturing, Patent Reform, Technology | No Comments »

San Diego’s Invention Contest Showcases Innovative Products and Technology

Saturday, August 29th, 2015

The San Diego Inventor’s Forum held its 9th annual invention contest on Saturday, August 15th at Coleman College’s Kearny Mesa campus to see which product would come out on top as the best technology or consumer product invention of 2015. San Diego is no stranger to innovation. In 2013, the Organization for Economic Co-Operation and Development (OECD) ranked San Diego as the second most innovative city in the world and the most innovative in America. This contest kept the innovation momentum rolling.

Adrian Pelkus, President of the San Diego Inventors Forum, said “Over two dozen patented or pending inventors entered the contest this year. Further proof how inventive San Diego is! All the inventors that exhibited were super creative and ready for market. Thanks to all that entered and congratulations to the winners. I wish all of you the best on your ventures, and we look forward to seeing your product on the store shelves soon!” Ten finalists were selected to compete for best consumer product and five finalists were selected for the technology category.

The event was lively this year after the second inventor, Shane Cox, demonstrated that questions posed to the inventors by members of the 150-person audience could be broadcast over the PA system as the QBall was tossed from person to person. Cash prizes were awarded to the first and second place winners in each category. There was a tie for second place in the consumer product category. The winners were:

First Place

  • Consumer Product: REMEDI™ – a new antibiotic that Dissolves Airborne Diseases
  • Technology: Blue Marble, Inc. – Individually app-controlled solar sprinkler heads, drip valves, and sensors (don’t need batteries)

Second Place

  • Consumer Product:
    • QBall: a throw-able ball containing a wireless microphone designed to encourage audience participation by voice amplification
    • IR SkullCap – a high performance, smart-foam insert for hats or beanies to reduce impact to the head
  • Technology: Intruder IDTM Camera System – a solar-powered, easily-installed, self-contained wireless system including a motion sensor, noise maker, and camera to deter and catch intruders bent on burglary, property damage, or graffiti “tagging”

The Solamatic ® Solar Technology in Window Treatments came in as a close third in the Technology category. The Solamatic ® automatically opens and closes blinds with sensors that detect daylight and weather. Inventor Marin Caspa, President and CEO of VSI Technologies Inc., demonstrated how the technology works by darkening the auditorium while simulating the rising sun with a spotlight. As the “sun” rose and set, the device opened and closed window blinds in sync with the cycles of day and night. For further information, contact Martin Caspar at caspa1@solamatic.com.

David Horrigan of Horrigan Labs is celebrating his fourth win at San Diego Inventors Forum annual contest for his REMEDI™. Mr. Horrigan discovered this formula when he was developing biocides for nail fungus as part of his CoolToes™ treatment for onychomycosis. Another formula made the cut for that treatment, but this product was very effective for other things. “The patent pending formula is made from two natural oils extracted from food. The vapors from this formula dissolve the wall of fungus, mold, bacteria and viruses. Because it is the vapors that do the work, the antibiotic can attack pathogens in places where other antibiotics can’t go like the sinus cavities and lungs. A client was looking for a fungicide suitable for removing mold on fruit,” stated Mr. Horrigan. “I tried it on strawberries and grapes, and it proved effective at controlling those molds. I then tried it on numerous other pathogens, and surprise, it controls the microbes that cause eight of the 12 diseases on the president’s list of Fast Track diseases, or diseases that are out of control or cause great financial hardship to the country ? diseases like howlie rot, ringworm, tuberculosis, influenza, and antibiotic resistant or flesh-eating diseases.”

REMEDI™ will be going to market as a consumer home fungicide available through direct response and through dealers. Horrigan Labs is seeking licensors for distribution for the consumer medical applications under the name Neomycosin™. These products will be manufactured in the USA. For further information, contact Horrigan Labs at davehorrigan@cox.net.

The big winner for 2015’s technology invention was Blue Marble, Inc., with its intelligent irrigation system. Founder of Blue Marble, Paul F. Sabadin, showed off the system of app and weather-connected individual sprinkler heads, drip valves, and soil sensors. California’s drought accentuates the value of this impressive technology, which works directly with existing irrigation systems to enable precise control, turning on only individual heads and valves that indicate a need while leaving other heads and valves off, conserving water, saving money, and lessening irrigation’s environmental impact. The devices are solar-powered and were touted as being 100% battery-free and therefore expected to last for decades on agricultural farms or in residential gardens. “We envision a day where Blue Marble will deliver the perfect drink to every plant on every farm, every apple in every orchard, and every blade of grass on every lawn,” said Sabadin. The company has launched a crowdfunding campaign for the technology at Kickstarter.com.

Mr. Sabadin had referred to his product as an “Internet of Things” startup and when I asked why, he said, the “Internet of Things” is perceived by many to be the next social/industrial movement with respect to the integration of the Internet into the fabric of global society. As differentiated from the social Internet, or “Internet of People” where peoples’ data, communications, affairs, and accounts have been subsumed into the global Internet, the “Internet of Things” does the same for physical devices, essentially making devices first class citizens of this global network, having implicit identity, voice, and interacting with other physical “things,” in addition to being controlled by and exchanging data with the Internet of people. For me, being an “Internet of Things” developer means that my systems and devices leverage connections to the Internet to optimize benefit for the end users of our products … to use the internet to manage the physical world to optimal benefit. For example, I use both wireless and wired connections to retrieve Internet weather to optimize irrigation and water savings while, at the same time, I enable system users (people, of course) to monitor and control their systems over the Internet. It is an extremely exciting field and capability that I have imagined and wanted to work in all my life. Technologies, society, and economies have reached a nexus where implementations of this interconnected world are being quickly realized. Blue Marble is smack-dab in the middle of this movement.”

He stated, “Winning the SDIF contest is a great honor. For tech startups it is a great challenge to garner visibility in a crowded world and this honor both validates and adds welcome momentum to our work. While I sat in the audience watching the other contestants demonstrating their creations, I thought, “Wow, that device is clever. I could use one of those.” When I was announced as the winner, I was both surprised and flattered. And then I thought, “Wow, this audience and the other creative inventors were thinking the same thing, ‘Wow! Blue Marble! I could really use one of those!’ For a product developer and inventor there really is no better feeling!”
Second place winner in the consumer product category, Shane Cox, founder of PEEQ and inventor of the Qball, said “We were so excited to participate in this competition. We are even more excited that we won second place in the consumer product category!” The Qball, is a throw-able wireless microphone designed to encourage audience participation. Originally designed for the classroom as a fun way to get students to engage and interact, we quickly realized the need for this type of system in everything from Q&A at events, to Skype calls in the boardroom, and even Karaoke. At only $150 everyone can be a part of it. Keep an eye out for our upcoming Kickstarter campaign. You know you want one!” For further information, contact Mr. Cox at shane@peeq.us.

The other second place winner George Flint, founder of Impact Reduction Technologies and inventor of the IR SkullCap, said “We developed the technology to reduce impact for people across all walks of life. Using high performance, smart foam technology, we are developing products that help reduce impact to the head and body when added to apparel. The first retail ready product is the IR SkullCap, which can be inserted in any type of hat or beanie. Initial testing has shown that it reduces impact to the head by 60%. “For further information, contact Mr. Flint at info@irapparel.com

Second place winner in the technology category, John Baranek, inventor of the Intruder Id, said “Winning second place was a big boast to our team efforts to develop an easy to install, affordable intruder system using the latest advances in solar power and wireless technology. We’ve done proof of concept, but now need to make a working prototype system to do a beta test in conjunction with a local law enforcement agency. In these days of budget cuts for law enforcement, it will be a great aid for law enforcement to have a picture of the intruder to make it easier to catch repeat offenders. We want to make the system so easy to install and affordable that a “grandmother” can do it herself.” For further information, contact John Baranek at jwbaranek@verizon.net.

Other consumer product contestants were:

Rodolpho Brasolin for his collapsible, portable rack for all types of boards, such as surfboards, snow boards, kite boards. It is easily attached or removed from a wall when changing residences. A standing rack not requiring attachment to a wall is in development for athletes who travel.

Joe Buttici for his Pand-A-Choo stuffed doll with a movable right arm and sound to train children to cough or sneeze into their elbow.

Michael Kadie for his Pocket Rocket – a dual USB port that can charge two devices at the same time, featuring a car adapter, Lithium battery, and LED flashlight.

Dean McBain for his wall outlet and light switch gaskets to help prevent the following: Bed bug infestation, Toddler electrocution & choking, saves on heating and cooling costs, makes the wall outlets vanish, helps prevents home and office fires, prevent exposure of toxic gas, cigarette smoke exposure and toxic mold exposure through the wall outlet.

Houman Nikmanesh for his Bixpy Aqua Booster – a portable water jet with modular capabilities to act as a hand-held diver propulsion device, a paddleboard or kayak motor, and even a water pump with available attachment.

Anna Vasquez for her patented spotlight built into the front of a portable iron.

The other technology category contestants were:

Michael Kadie for his Simple Solutions Inclusive Lithium-ion master battery management system with a wide variety of potential applications for the safety and longevity of battery packs.

Dean McBain for his patented Alive Biometric Authentication Identification Security System Solutions, which combines one or more biometric signature sensing identification sensor(s) to authenticate the operator, coupled with physiological sensing sensors to verify the individual is “Alive”. The system then analyzes their physiological condition. If the individual’s condition is within their set parameters, then operation/access is granted through the device or system to the individual.

This was the sixth invention contest that I have attended, and the products and technology presented by the contestants were the most technically developed and market-ready of any previous contest. The availability of Kickstarter and other crowdfunding mechanisms is providing the opportunity for inventors to get their products into the marketplace faster than ever. It was exciting to see the progress of so many of our San Diego Inventors Forum members. Our meetings are held at the conference facilities of AMN Healthcare in the Carmel Valley area of San Diego the second Thursday of every month at 6:30 PM. Our meetings cover topics such as harnessing creativity, patents, trademarks & copyrights, licensing, how to select the right processes and sources for manufacturing (which I give), video and internet marketing for inventors, finding funding, and planning and giving presentations. Meeting presentations are recorded and can be viewed on YouTube.

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Posted in Innovation, Technology | No Comments »

New Textile Dyes and Fiber Could Generate Paradigm Shift

Tuesday, August 11th, 2015

It is rare to encounter a technology that is so disruptive that it has the potential to generate a paradigm shift, and I had that opportunity last month when I interviewed Suzanne DeVall, founder and president of PBO, Inc. Her patented technology for utilizing the bi-product from tobacco plants to create a new textile fiber and natural dyes could generate a paradigm shift in the textile and leather industries.

I first met Ms. DeVall over four years ago when I was a managing member of a small business incubator for startup companies in the “clean technology” field. She was too early stage for our program, as she was going through a lengthy R&D stage, but I kept in touch with her to keep informed of her progress because I thought her technology had great promise.

In my recent interview at her office in Palm Springs, I asked how and when she got the idea of utilizing tobacco plants. She said, “I’ve been involved with the textile industry for over 30 years and have been a champion for organic materials. From 2007 to 2009, I was part of a small team who traveled to growing areas in Europe and the Middle East to set controls for certified organic textiles. In Turkey and Syria, I saw organic tobacco fields near cotton fields. Tons of plant material was going to waste since they only harvested the leaves for tobacco products, and I thought it would be interesting to see if a textile fabric and natural dye could be produced out of the tobacco plant bi-product. I began working with scientists in the Carolina Research Triangle along with key scientists in the tobacco agricultural and harvesting industry to verify that there was a large amount of raw material resources to support a large scale industrial project.”

I told her that I had written about the devastation of the southern textile industry in my book due to mills closing after transferring textile manufacturing to China, India, and other Asian countries. The textile industry lost 57% of it jobs from 2000 – 2010, and North Carolina had a large number of textile companies, so was the state most impacted by job losses in that industry. It was no wonder that North Carolina scientists were interested in a new textile fabric and dyes made from one of the state’s major crops.

Ms. DeVall continued, “With the assistance of leading scientists, we began converting the tobacco plant bi-product into a viable textile dye. After thousands of trials, our work led to the AvaniTM Color System to be sold under our wholly owned subsidiary, Dimora Colours, Inc., and I was issued a patent on April 8, 2014. We convert our extracted liquid base to a one-step and two-step powder process that is water-soluble. Our research also resulted in a “spinable” fiber that could be woven into fabric, but you can’t patent a fiber any more than you can patent fabrics made out of cotton, silk, flax, hemp, or wool.”

I asked why organic dyes are important, and she said, “The apparel industry is a seven trillion dollar a year industry that uses an astounding 8,000 synthetic chemicals, so it has a big pollution problem. The World Bank estimates that 17 – 20 percent of industrial water pollution comes from textile coloration and treatment. They have identified 72 toxic chemicals in our water solely from textile dyeing, 30 of which are permanent. This is a serious environmental issue for the industry. The U. S. EPA and other national and international agencies have placed increasingly strict regulations on the manufacture and use of synthetic colorants. The pigment and dye industry has had to develop the technology necessary to analyze and remediate pollutants in wastewater.”

She added, “Consumers have the mistaken illusion that synthetic fibers and dyes in clothing are safe. Your skin is the largest organ of elimination and absorption—what goes on the skin goes in the body. When toxins are absorbed through your skin, they are taken-up by the lymphatic system, then into the blood stream and eventually the liver to remove the toxins from your body. Your skin also keeps you healthy by actually eliminating about one pound of toxins daily.”

Our process doesn’t need the pre-treatment, washing, soaping and adding of enzymes, so it only takes three hours compared to the 8 to 10 hours of the traditional dyeing process. With our organic materials, we do not require harmful chemicals for processing the fibers and dyes. Our one-step and two-step powder process is a key development for saving energy, water, time labor and shipping costs. Our dyeing process saves about 60% of labor, energy, and water.”

 

I asked how she came up with that figure. She said, “We have been in clinical trials with major dye houses in the United States, Japan and Europe over the past 18 months with great success. We ran dyeing trials using our dyes at three companies, and these companies told her that it saved them about 60% of labor, energy, and water. They don’t have to heat water for so many different batches to do the pre-treatment, dyeing cycle, soaping, washing, and enzyme treatment.

She added that they use a water filtration system prior to delivering the colorant to the fibers in the final stages. “The water required for our closed loop system does not have to be of a high quality as our process purifies the water. The remaining water is then reused for the next batch. Our water system utilizes the content of the discharge and neutralizes it to a PH of 7.0; which is alkaline not acidic. As this discharge is neutralized during our process, the water is not only safe, it is also drinkable. This is a very attractive and cost-effective major benefit to third world countries where water is a scarce resource.”

 

Ms. DeVall then showed me many different samples of fabric, household textiles, and leather that had been dyed using her proprietary dyeing process. She showed me samples of cotton, hemp, silk, cashmere, and her tobacco fiber in addition to combinations of all of these fibers. The colors were so rich and vibrant that I wanted something made out of every different fabric. The colors ranged from a soft butter yellow to a rich dark purple. The leather was so soft that I thought it was deerskin, but she said it was just normal cowhide. The natural properties of her tobacco plant based dyes have a softening effect on leather that reduces the amount of tanning required.

I next inquired about the industries that could benefit from the AvaniTM Color System. Ms. DeVall responded, “In addition to the apparel industry, our dyes could obviously be used by companies producing household linens and textiles. But there are several other industries that could benefit from using our dyes, such as the leather goods industry, furniture manufacturers for fabric and leather upholstery, paper and packaging, and cosmetics. Our dye powders could also be added to PET material that comes in a powder to make colored bottles and containers without any added chemicals.” This made me think of the company I visited on my plant tour in Toledo, Ohio, Plastic Technologies, Inc., because they make clear and colored bottles and containers out of PET material.

This led me to ask how they plan to market their products. Ms. DeVall replied, “We plan to obtain licensing agreements with companies in different industries and regions of the world. We have discussed a license agreement with several dye manufacturers to process all our major orders. We would provide the technology and they would provide the processing facility and produce the dyes on a royalty arrangement. We have secured our first license agreement with a company in Japan to sell in Japan, Korea, and Taiwan.”

On my drive back home to San Diego, I felt as if I had been given a rare gift of an encounter with a visionary whose knowledge, experience, and tenacity had given birth to a new technology that could indeed generate a paradigm shift in more than one industry and make our global environment better in so many ways. I look forward to writing a future article about PBO’s success.

 

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Patented Technology is Key to RoadLoK’s Success

Tuesday, July 14th, 2015

There is no lack of ingenuity and innovation in the U. S. today. Each year, thousands of new products are invented, and but most are never produced. Knowing how to use technology to create a product doesn’t mean you know how to manufacture it and get it to market. Obtaining a patent is a key factor in achieving success, but you also need to recognize the limitation of your knowledge and expertise and utilize experts in fields you need, such as product design/engineering, patent/licensing, material/process selection for prototyping and production manufacturing, and marketing.

I recently had the opportunity to interview Adam Xavier, founder and CEO of New Hampton Technologies dba RoadLoK Security, who is an example of an inventor and entrepreneur who successfully got his product patented and into the marketplace.

His company distributes products worldwide under the brand name RoadLoK. The company specializes in the design and production of model-specific vehicle locking systems for motorcycles, scooters and off-road power sports vehicles. The RoadLoK is the only locking system that safely and effectively prevents rollaway theft. The system is designed to be permanently mounted on a motorcycle, thereby eliminating the need for storing the lock while riding. The system’s permanent mounting eliminates all momentum, making it virtually impossible to damage calipers and fenders. This is accomplished while also protecting the rider, should the rider forget to unlock the system before attempting to ride off.

I asked how he got the idea for his product, and Adam said, “My twin brother Eric and I were sitting in the outside seating area of a bar the summer after we graduated from college and saw a man forget to take off his lock and tip over his motorcycle. We started talking about a better idea for a lock and drew a sketch on a napkin. The next day, we searched to see if there was a lock similar to our idea, but didn’t find one. We took our sketch to a CAD designer to turn our idea into a design that could be manufactured. A friend from college, Matt Tomosivitch, who had become a machinist, made our first prototype. Matt is now the chief engineer of our company.

Continuing, Adam said, “We made a video of our lock that showed how it worked. We wrote a comprehensive 60-page business plan. We filed for a provisional patent in July 2005. Then, we sent our video to local investor network group in New York and were kicked down to the group in our area, Orange County. The director contacted us, and we gave our pitch in December 2005. We got our first investment check from the Orange County Capital Development Group on February 16, 2006. This investment was enough to get us to our first trade show in March, the International Motorcycle Show in Atlanta, GA.

Adam said that they set up their first office in Middleton, NY and later moved to Newburgh, NY. They spent two years of R&D to finalize the design and raised another $3 million over three years to get into full production. They used 3D printing to make new prototypes as they improved the design. They received a lot of mentoring and hands-on help from their angel investors.

Their first utility patent was granted on December 23, 2008 after their third attempt at an “office action” at the patent office. They got their second patent in 2010.

When they started the company, Adam said that they wanted to keep everything made in the U. S. They used www.thomasnet.com to find all of their vendors. They have seven major vendors for all of the different parts of their product, and they are located in Illinois, North Carolina, New York, and Texas. Their mission is to produce a high quality product, so all of their vendors are ISO 9001-2008 certified to meet the exacting requirements of their customers.

They later moved to California because they needed to have face-to-face communication with their two biggest customers, one located in Murrieta and one in Corona, CA. California also has the biggest population of motorcycle riders.

The executive offices are now located in Santa Monica, CA, but their product is manufactured in Salisbury, North Carolina and assembled to order at their plant in Torrance, CA. Since the RoadLoK is produced to order, production is not automated and does not utilize any robots. They are looking at doing more vertical integration of parts manufacturing. Their screw-machining vendor in Chicago makes two parts, and the patented design of their locking pin has 5 components made by three different vendors.

They started to implement lean principles in 2009 and changed one component from a square rod to an extrusion, which reduced material waste by 62%. They have been working towards reducing other material waste and time since then.

Their original plan was to focus on after-market sales of the product for the first two years and then license the product to motorcycle manufacturers on a non-exclusive basis similar to how the airbag is licensed to car manufacturers. Now in its 9th year of operations, RoadLoK’s largest customers are KTM Sportmotorcycle and Ducati with others to be announced within the next year.

When asked how his company has been impacted by competition from offshore in Asia, Adam said, “We don’t have any direct competitors offshore, just cheaper substitute locking mechanisms. We are selling in Australia, Japan, and China and recently selected a company to partner with to produce parts in China to sell to the Chinese market. We have started the process to file a patent in China. We need to have manufacturing plant in China to sell to the Chinese market because of the high import duties. Brazil is another county we are looking at to set up a manufacturing plant because of the high import duties. There would be a win/win benefit of jobs to the community and provide a much-needed product for the people.”

I naturally asked how the recession affected his company when they were only a little over two years old when it started in late 2008. Adam said that they were spending about 85% of their time setting up a distributor network and program to sell to dealers utilizing direct sales persons. But, motorcycles are purchased with discretionary income, which dried up during the recession as people lost their jobs. So, their direct sales to motorcycle riders through distributors/dealers dropped drastically. To survive and grow, Adam said, “We had to reduce our direct sales staff and reduce our travel costs. We changed our sales model to online retail sales and direct sales to motorcycle manufacturers. This model has helped us grow and succeed. We have also started R&D on the next generation of vehicle immobilizers to other two or more wheeled vehicles that do not have a transmission.”

Adam had read my article on “Which Patent Reform Bill Doesn’t Destroy the American Patent System?” and said, “Our having a patent pending was key to getting investors and having a patented product has been the key ingredient to our success as a company. Investors want the protection of a patent, but they wouldn’t take the risk of being made personally liable. There is no way that we could have gotten investors if our investors had been personally liable for defending our patent in a patent infringement lawsuit.” Note: Adam was referring to the “Loser Pay’s provision of H. R. 9 and S.1137.

If we want to have more successful companies manufacturing products in America, then we need to protect our American Patent System and stop H.R. 9 and S. 1137 from being passed. Instead, we need to pass the Strong Patents Act of 2015, S. 632, which will “Enact balanced reforms to reduce abuse while sustaining American leadership in innovation.”

 

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Fight to Stop Fatal Patent Bills Heats up

Tuesday, July 7th, 2015

Thanks to support from inventors and inventor groups all over the country, Randy Landreneau and Paul Morinville of US Inventor and Independent Inventors of America are continuing their fight to stop the bad patent bills: The House’s Innovation Act, H. R. 9, introduced by Rep. Bob Goodlatte (R-VA) on 2/05/2015, with the “Manager’s Amendment” version passed by the House Judiciary Committee on 6/11/2015, and the Senate’s PATENT Act, S.1137, introduced by Senator Grassley (R-IA) 4/29/2015, with the “Manager’s Amendment” version passed by the Senate Judiciary Committee on 6/04/2015.

In the latest email update from Mr. Landreneau, he reports that he held 65 meetings with House Congressional staff in the last two weeks of June to educate them on why H.R. 9 would crush American innovation. He attached his latest paper, The Innovation Act is Fatal to the American Innovation Ecosystem and Mr. Morinville’s latest paper, We’ve Been Googled.

In his paper, Morinville states, “H.R.9 creates a Patent System without Inventors. Over the last decade, Google and others have spent hundreds of millions of dollars to lobby Congress and produce an ingenious ‘patent troll’ narrative, which distorts the reality of invention in America. In this decade long war on inventors, H.R.9 is the Google lobby’s latest accomplishment. Not surprisingly, H.R.9 is not directed to fixing the fictional problem of ‘patent trolls.’ Instead, H.R.9 mounts its considerable damage on the patent system in general, specifically harming inventors and small patent-based businesses.”

Morinville explains, “If this bill becomes law, inventors will not be able to enforce their patent rights against moneyed corporations like Google. However, moneyed corporations like Google will still be able to enforce their patents against small businesses with even more devastating consequences to those small businesses. Patent litigation is about risk and cost versus reward. If risk or cost is too high in relation to reward, a patent cannot be enforced.”

In is paper, Landreneau states, “With presumptive Loser-Pays, regardless of the merit of any case, the party that does not prevail will automatically owe the other side its legal costs, which could exceed $1,000,000. To avoid this, the non-prevailing party will be forced to re-litigate the case to prove each point objectively reasonable.” He further explains that in addition to making every case more expensive, there will be an additional, even more damaging effect on independent inventors.

The independent inventor will almost always require a contingency attorney to stop the theft of his or her property. Under presumptive Loser-Pays, his attorney will have to be willing to go the extra mile, after losing, for no pay. This will cause many independent inventors to not be able to find representation and have any access to justice.”

Why is this important? Because most new technologies, especially break-through or disruptive technologies come from individual inventors who either start a company or license their technology to companies that are more able to take them to the market.

As a director on the board of the San Diego Inventors Forum, I see new consumer products and break-through technology introduced at our monthly meetings, and the best compete of these compete in our annual inventors’ contest for best new consumer product and best new technology. Our next inventors’ contest will be held on August 15th. All contestants must have applied for a patent before they can participate. The future success of their product or technology is contingent upon their having a patent they can protect from infringement. Their ability to raise the financial investment they need to bring their product to the marketplace depends upon their being able to protect their patent. No investor will take the risk of investing in a product or technology that cannot be protected.

I will not repeat a discussion of what is wrong with H. R. 9 and S.1137 that I discussed in a previous article, “Which Patent Reform Bill Doesn’t Destroy the American Patent System?” but suffice it to say that these bills would essentially destroy the American Patent System. The Loser-Pays clause would make it virtually impossible for independent inventors and small businesses to protect a patent and get investors. Only large corporations would be able to absorb the costs of patent infringement litigation. The economic benefits of patents granted in different metropolitan areas of the U. S. could come to a screeching halt if either of these two bad patent bills is passed. Either bill would squash the American innovation that is so essential to our national prosperity and the prosperity of many metropolitan areas.

In a February 2013 Brookings Institution report, “Patenting Prosperity: Invention and Economic Performance in the United States and its Metropolitan Areas,” an analysis of national and metropolitan area invention from 1980 to 2012, revealed:

  • “The rate of patenting in the United States has been increasing in recent decades and stands at historically high levels.
  • Most U.S. patents—63 percent—are developed by people living in just 20 metro areas, which are home to 34 percent of the U.S. population…the metro areas with the highest number per capita are San Jose; Burlington, VT; Rochester, MN; Corvallis, OR; and Boulder, CO.
  • Inventions, embodied in patents, are a major driver of long-term regional economic performance, especially if the patents are of higher quality.
  • Research universities, a scientifically educated workforce, and collaboration play an important role in driving metropolitan innovation.
  • Patents funded by the U.S. government tend to be of especially high quality, and federal small business R&D funding is associated with significantly higher metropolitan productivity growth.”

Of interest to those of us in California is the fact that when comparing the average granted patents per year and the patents per million residents from 2007-2011, California ranks very high. The report states “… a few large metros notably changed their share of U.S patents. At the top, San Jose moved up from ninth to first, and San Francisco moved from seventh to fourth, moving ahead of Chicago, Philadelphia, Detroit, and Boston. Seattle and San Diego moved up 15 and nine places, respectively, to become seventh and eighth. Meanwhile, Austin and Raleigh moved up 41 and 55 places, respectively, to become 11th and 20th. Cleveland fell 10 slots from 13th to 23rd, while Philadelphia fell from fourth to 13th.”

In his paper, “The Innovation Act, H.R.9 is Fatal to the American Innovation Ecosystem, Randy Landreneau explains why H. R. 9 would be harmful, saying, ” A key reason that America has out-innovated the rest of the world for 200 years is the way the unique American Patent System has not only encouraged individuals to innovate, it has also facilitated the flow of capital into the resulting innovations. A key ingredient in this successful recipe has been the ability to stop the theft of the intellectual property represented by a patent, which results in a valuable patent asset that can be used to attract venture capital and build a successful enterprise… An early-stage investor in a start-up that fails often ends up with little more than the patent. If he then has limited patent rights and significantly greater risk in defending the patent, as is being proposed, then the patent asset loses significant investment value. In a scenario that is already high in risk, the changes proposed by The Innovation Act will severely reduce investment, and the incentive for American innovation will be lost. What is being proposed destroys the innovation ecosystem that has enabled America to be the world leader in innovation.”

 

It is expected that the House will vote on H.R.9 the week of July 13th, so it is critical that we add our voices to its opposition now. The Senate’s S. 1137 will be on the Senate floor soon as well. More attention seems to be paid if you call the Washington, D. C. office of your Congressional representatives and senators than their local office. If you don’t know the names of your representative or senators, search online or call the main switchboard number 202-225-3121 and ask for your representative or senators. Tell your representative to oppose H. R. 9 and tell your senators to vote “no” on S.1137. Ask your senators to support the Strong Patents Act of 2015, S. 632. Don’t let them destroy the goose that lays the golden egg ? the American Patent System that fosters American innovation, which provides jobs and prosperity to our country.

 

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Which Patent Reform Bill Doesn’t Destroy the American Patent System?

Tuesday, May 19th, 2015

In 2011, the Leahy–Smith America Invents Act (AIA) changed our patent system from a “first to invent” to a “first to file.” It also created easier ways to invalidate patents, called Post Grant Opposition procedures (PGOs). These PGOs are now invalidating 76% of the patents at which they are directed. Now, there are three patent reform bills in consideration by the House and Senate that are all purporting to fix some of the problems generated by AIA Act. They are:

The PATENT Act, S.1137, sponsored by Senator Grassley (R-IA), was sent to the Judiciary Committee on April 29, 2015 and would “amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections…”

The Innovation Act, H. R. 9, sponsored by Rep. Bob Goodlatte (R-VA) was sent to the House Judiciary Committee on February 5, 2015 and would also “amend title 35, United States Code, and the Leahy-Smith America Invents Act to make improvements and technical corrections…”

The Strong Patents Act of 2015, S. 632, sponsored by Senators Chris Coons (D-DL), Dick Durbin (D-IL) and Mazie Hirono (D-HI) to “Enact balanced reforms to reduce abuse while sustaining American leadership in innovation.”

The first two bills are the result of the expenditure of hundreds of millions of dollars to lobby Congress by large corporations such as Google, Microsoft, Oracle, etc. over the last 8 years to produce a “patent troll” narrative and then fix the fictional problem of “patent trolls” with these bills.

Many consider the worst provision of both bills the “Loser-Pays with Joinder clause,” which means that 1) a patent holder who tries to defend a patent and does not prevail is potentially liable for the infringer’s legal costs (easily $1,000,000+), and 2) interested parties are joined in the liability. This means that the inventor could be liable for millions of dollars if he is unsuccessful in defending his patent against infringement, and an investor could be personally liable as well. With the odds of losing so high, Loser-Pays makes it impossible for almost all inventors to enforce their patent rights against patent pirates or ever get outside investment.

Under The Innovation Act (H.R. 9), a university could be liable for millions of dollars if patents created and licensed through university research were unsuccessful in defending against infringement. The university could be held liable for the legal costs of the infringer if the patent holder did not prevail in the patent infringement case because of the Loser Pays with Joinder clause.

The PATENT Act (S. 1137) exempts universities and pharmaceutical companies from the Loser Pay with Joinder clause, but makes it worse for small inventors. There is now a requirement that a patent holder certify that he has the funds for the Loser Pays liability before he can sue for infringement (easily $1,000,000 plus). This will eliminate the ability of virtually every independent inventor to defend a patent. And, if an investor provides the funds, he will be personally liable for the Loser Pays (piercing the corporate veil and throwing away hundreds of years of corporate law).

Randy Landreneau, founder of Independent Inventors of America, states the following regarding the exemptions: “It is shameful that we have a political system where groups with political influence get favored while the rest of us suffer. Universities and drug companies will still have patent protection, but the independent inventor, the individual the American Patent System was created for, will be destroyed. This is an all-out attack on a most basic and important part of America. This is arguably the worst and most damaging legislation in American history.”

Both of these bills would do considerable damage to the patent system, specifically harming inventors and small patent-based businesses. If either of these bills becomes law, inventors and small businesses will not be able to enforce their patent rights against large corporations with deep pockets while corporations like Google, for example, would still be able to enforce their patents against small businesses with devastating consequences to those small businesses.

Paul Morinville, Founder of US Inventor stated, “For the last two years, inventors have lost the large majority of patent cases. Post grant opposition procedures (PGO) created in the America Invents Act (AIA) invalidate patents at rates above 75%. Article III courts invalidate patents at similar rates under the indefinable “abstract idea” category of subject matter ineligibility. Today, inventors are losing more cases than at any time in the 224-year history of the U.S. patent system.”

He added. “Patent litigation is about risk and cost versus reward. If risk or cost is too high in relation to reward, an inventor or a small business cannot enforce a patent. This bill creates enormous risk and cost, and consequently it creates a patent system without inventors. An infringement suit can cost millions of dollars for each side. Prior to the American Invents Act (AIA), it was possible to protect small inventions from patent infringement. But, with the huge increase in inventor losses due to the AIA and the indefinable “abstract idea,” only inventions with exceptionally large damages can be enforced. It’s simple math, damages must exceed the cost of the case plus the cost of risk. Thus, the high damages bar would make the vast majority of patents unenforceable by inventors.”

In an opinion article in The Hill, Robert Schmidt, co-chair of the Small Business Technology Council, wrote, “H.R. 9, purported to solve a patent troll problem, is instead the next step in crushing competition from new small firms, creating “Big Tech Patent Ogres” that can ignore smaller players and their patents. This new bill makes it almost impossible for small technology startups to enforce their patents… H.R. 9 will retard innovation and cost America jobs and wealth. H.R. 9 is contrary to the Founding Fathers’ Constitutional intent, contrary to the policies of 220 years of patent law, and contrary to stated intention of the President and Congress to stimulate innovation.”

In contrast, The Strong Patents Act, S.632 would be good for all inventors ? individual, small businesses, universities, and large corporations. It would “would effectively crack down on the abusive practices of so-called patent trolls without weakening the U.S. patent system” according to the Association of Public Land Grant Universities.

The Biotechnology Industry Organization (BIO) “supports the STRONG Patents Act of 2015 and will continue to advocate for passage of legislation to curbing abusive patent practices, while not undermining the ability of patent owners to defend their inventions and businesses against infringement.”

Landreneau states, “The Strong Patent Act would rein in the Post Grant Opposition procedures so that they are more like federal court procedures used in invalidating property rights, rather than administrative procedures designed so that 76% of patents they are directed at are invalidated.”

Another advantage of this bill is that it “Eliminates fee diversion through the establishment of a new USPTO revolving fund in the U.S. Treasury.” It also “Empowers the Federal Trade Commission to crack down on abusive patent-related demand letters.”

Senator Coons’ website makes the following convincing argument for the importance of preserving a strong patent system:

  • “IP-intensive industries comprise one-third of U.S. GDP ($5.5 trillion), generate 27 million jobs, and pay employees over 30% more than other industries.
  • 75% of venture capital investors consider the value of patents when making funding decisions in small businesses (97% in the biotech industry).
  • Patents inspire innovation in fields that require long-term investment in R&D: from life-saving therapies to new generations of wireless technologies.
  • Patents allow us to benefit from the genius of small inventors. With a strong patent right, individuals create inventions that disrupt dominant companies. 
  • U.S. leadership in innovation is due in no small part to an unrivaled patent system. Strong patents today provide for game-changing inventions tomorrow.”

There is no question in my mind that the Strong Patents Act is the only bill that truly protects American innovation. As a director of the newly incorporated San Diego Inventors Forum, I join our board President, Adrian Pelkus, in urging everyone to contact their Senators and Congressional representatives to urge them to oppose the House’s Innovation Act (H.R.9) and Senate’s PATENT Act (S.1137) and vote “yes” on the Strong Patents Act of 2015 (S. 632).

Pelkus said, “We could lose everything if either of the two bad bills were passed by Congress. It could usher in the end of innovation as we know it and make it impossible for individual inventors to raise the money they need from investors to get their new products into the marketplace.”

Now is the time to fight with us to keep innovation alive and well in America and not allow large corporations to squash individual inventors.

 

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Additive Manufacturing is Making Rapid Technological Advances

Tuesday, April 7th, 2015

Advances in additive manufacturing and 3D printing are occurring so rapidly that there is now a daily newsletter on 3D printing for which I recently subscribed. Design News, Industry Week, Manufacturing.net, and many other publications are also publishing frequent articles on additive manufacturing, and most trade shows are now scheduling one or more sessions related to the topic of additive manufacturing/3D printing.

The latest e newsline from Manufacturing.net had the headline, “Liquid Printer Turns 3D Manufacturing Upside Down” and describes the new 3D printer introduced by Carbon3D at the TED conference on March 16. The new “3D printer can print up to 100 times faster than conventional additive manufacturing thanks to its ability to ‘grow’ materials upward from a pool of liquid,” using “their Continuous Liquid Interface Production (CLIP) technology, which builds material upward in a continuous stream.” The Carbon3D printer uses UV light to trigger “polymerization, the creation of three-dimensional polymers, while oxygen inhibits the reaction” and “can be used with a broad range of polymeric materials.”

Dr. Joseph DeSimone, the CEO and co-founder of Carbon3D, said “Our CLIP technology offers the game-changing speed, consistent mechanical properties and choice of materials required for complex commercial quality parts.”

A couple of weeks ago, I was contacted by Zach Simkin, Co-President of Senvol LLC, a company that does analytics exclusively for the 3D printing industry, letting me know that they recently launched a tool, the Senvol Database, which is the first and only searchable database for industrial 3D printing machines and materials. Simkin said, “Users are able to search the database by over 30 fields, such as machine build size, material type, and material tensile strength. The database is online and free to access. The database already has thousands of regular users since launch, many of whom are engineers across a variety of verticals.”

A few days later, I interviewed Annie Wang, Co-President of Senvol LLC, and she said, “Additive manufacturing is never going to replace 100% of subtractive manufacturing.” She emailed me the Video link to their presentation from the RAPID Conference last year ? “Determining Cost-Effectiveness of Additive Manufacturing.” She also emailed me the write up from the Wohlers report (“Cost-Benefit Analyses for Final Production Parts”), which gives an overview of two case studies that they did for GE and Johnson Controls. She said, “We used the Senvol Algorithm to determine whether or not it’s cost-effective to switch from conventional manufacturing to additive manufacturing.”

While the results of the analysis are proprietary, Wang and Simkin provide guidelines in the introduction of their study, writing, “However, just because a part can be produced using AM does not mean that it should be. Prior to implementing the technology, it is essential to conduct a thorough cost-benefit analysis. Generally speaking, it is often stated that AM is economically suitable for parts that have the following features: low volume, complex, and small. Although this can be true, it is not sufficient to only consider features of the part. Rather, when trying to determine whether a particular part can be cost-effectively produced using AM, it is critical to analyze the entire supply chain.”

In the report, they provide “… the seven supply chain scenarios that tend to lend themselves well to AM. If a part falls into one or more of these scenarios, then that part may be cost-effective to produce via AM. If a part does not fall into any of these scenarios, then the part almost certainly will not be cost-effective for AM given the current AM technology.” They are:

Scenario Description
 

Expensive to Manufacture
Do you have parts that are high cost because they have complex geometries, high fixed costs (e.g. tooling), or are produced in low volumes? AM may be more cost-efficient.
 

Long Lead-Times
Does it take too long to obtain certain parts? Are your downtime costs extremely high? Do you want to increase speed-to-market? Through AM, you can often get parts more quickly.
 

High Inventory Costs
Do you overstock or understock? Do you struggle with long-tail or obsolete parts? AM can allow for on-demand production, thus reducing the need for inventory.
 

Sole-Sourced from Suppliers
Are any of your critical parts sole-sourced? This poses a supply chain risk. By qualifying a part for AM, you will no longer be completely reliant on your current supplier.
 

Remote Locations
Do you operate in remote locations where it is difficult, time consuming, or expensive to ship parts to? AM may allow you to manufacture certain parts on-site.
 

High Import / Export Costs
Do you pay substantial import/export costs on parts simply because of the location of your business unit and/or your supplier? On-site production via AM can eliminate these costs.
 

Improved Functionality
AM can enable a part to be redesigned such that its performance is improved beyond what was previously possible.
© Senvol LLC

Just like a Total Cost of Ownership analysis is beneficial to determine whether or not to offshore the manufacturing of a particular part or product or return manufacturing to America from being manufactured offshore, Simkin and Wang state, “For parts that fall into one or more of the above scenarios, a detailed, quantitative cost-benefit analysis is warranted. To conduct such analyses, an algorithm, courtesy of Senvol, was used to determine what types of parts can be more cost-effectively manufactured using AM versus the status quo. The algorithm analyzes an array of variables that span the entire product life cycle.”

I told Wang that 3D printing is greatly accelerating the development of new products by the inventors that I advise as part of the San Diego Inventors Forum, but there are many times that a part can be made by 3D printing that can’t be replicated in a production process. For example, you can produce “chunky” plastic parts using 3D printing that cannot be made in the production process of injection molding. The use of 3D printing is enabling inventors to have a sample part to show/demonstrate in person or by means of a video to secure potential investors, but the inventor needs to do a careful analysis of the best manufacturing process to use for production, depending on where it will be used (home, office, or outdoors), product certifications required, and projected life cycle volumes, among other considerations. A 3D printed sample can be the essential ingredient of a video to do a crowdfunding campaign via Kickstarter, Indiegogo, or GoFundMe.

I told her that I give a presentation each year at our meetings on “How to select the right manufacturing process and sourcing location for your product,” which incorporates the Reshoring Initiative’s Total Cost of Ownership analysis. We agreed that companies could benefit from doing a cost-benefit analysis of comparing conventional manufacturing to additive manufacture as well as doing the Reshoring Initiative’s Total Cost of Ownership analysis when making the decision to manufacture in the U. S. vs. offshore.

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Has the America Invents Act been Beneficial or Harmful?

Monday, February 23rd, 2015

In September 2011, Congress passed and the president signed the Leahy-Smith America Invents Act (AIA) that changed the U.S. patent system to the party “first to file” instead of the “first to invent to bring the U.S. in line with other countries who adopted first to file patent systems years ago, supposedly to simplify the patent process for companies that file applications in multiple countries. Its central provisions went into effect on September 16, 2012 and on March 16, 2013. Let’s examine whether or not the America Invents Act has been beneficial or harmful to innovation by America’s inventors and small businesses.

At the time, supporters said it would improve patent quality by creating a new process for reviewing patents after they have been issued and allow third parties to provide information on other parties’ applications. Rep. Lamar Smith, who chaired the House Judiciary Committee (R-TX) said, “This bill is designed to help all inventors. The current system “seriously disadvantages small inventors and companies” because it can lead to years of costly legal challenges to their patents.” Another supporter, Rep. Mike Michaud (D-ME), said, “We need to make it easier for companies to innovate and make things here at home, and this bill does that.”

Opponents argued that there was no reason to change the U.S. system, and inventors and small businesses complained that switching to a “first to file” system would give large companies an advantage and hurt individual inventors.

Rep. Sensenbrenner (R-WI) and Rep. John Conyers opposed converting the U. S. patent system to a “first to file” system, but their amendments to strike this language were rejected. Rep. John Conyers (D-MI) said the legislation would “benefit large multinationals at the expense of independent inventors and small businesses” and would “harm jobs, harm innovation and harm our nation.”

Rep. Don Manzullo (R-IL) voted against the bill and stated, “This bill would weaken our strong patent system that has protected American entrepreneurs for centuries from overseas companies trying to pirate their inventions.” Manzullo said. “Any patent reform we undertake should focus on reducing the backlog in patent applications, not dramatically altering the system and giving multinational corporations advantages over American innovators. The last thing we should be doing right now is giving foreign companies an even greater opportunity to take our ideas and our jobs.”

What has happened in the last two and a half years since the American Invents Act went into effect?

Paul Morinville of www.USInventor.org, wrote, “An inventor is the odds on favorite to lose in today’s patent system. Since the America Invents Act created post grant opposition procedures (PGO), inventors have lost the large majority of patent cases. PGO’s invalidate patents at rates above 75%. Article III courts find patents invalid under the indefinable ‘abstract idea’ at similar rates. Today, inventors are losing more cases than at any time in the 224-year history of the U.S. patent system.”

He added, “An infringement suit can cost millions of dollars for each side. Prior to the AIA, even small inventions could be enforced. With the huge increase in inventor losses due to the AIA and the indefinable “abstract idea,” only inventions with exceptionally large damages can be enforced. It’s simple math, damages must exceed the cost of the case plus the cost of risk.”

Patent Agent David B. Waller, J.D. M.S., Patent Success Strategies, LLC, commented, “Recent changes in the United States Patent Laws under the America Invents Act have had beneficial effects for some and significant disadvantages for others. In particular, changing from a first-to-invent to a first-to-file system, while conforming U.S. patent law to a worldwide standard with respect to ownership, has significantly impacted the exclusive rights granted to inventors through the U.S. Constitution and simultaneously impacted collaboration among research groups. The new Post Grant Opposition (PGO) procedures now provide an avenue to invalidate issued patents with resulting costs significantly lower for the challenger than the patent holder. This presents a distinct advantage for those with substantial resources to challenge patents that may directly compete with their technology.

To compound an already problematic system, the Innovation Act that passed the House last year proposed provisions that while seemingly helpful to independent inventors, would have been detrimental. The provision that provided a losing party pay for an infringement suit created a substantial advantage for a party having the greater financial resources. This bill never passed the Senate, and in view of other potentially detrimental provisions of the AIA, it will be important to make changes in this law to readjust and balance the benefit for all inventors.”

Patent Agent George Levy explained some of the harmful effects of the America Invents Act: “The new law presents a terrible dilemma for the small inventor. He can’t talk about his invention until the invention is filed (any competitor could simply publish the inventor’s idea under the competitor’s name, thereby locking the inventor out, or even worse, file a patent in their own name, with or without improvements) – The so called grace period is worthless. He can’t file until he is funded, and he can’t be funded because potential investors are scared of post grant reviews invalidating the granted patent. He does not have the funding to protect himself from a post grant review.

The whole “troll” idea is a red herring. In fact the biggest trolls or non-practicing entities are the large corporations whose legal department make a point of erecting a picket fence around competitors. Note: “A well-known tactic to devalue a competitor’s patent is to create a “picket fence” around it. Using this tactic, a competitor attempts to surround the pioneering patent with many patents covering incremental innovations, thereby hindering freedom to operate or freedom to advance the technology along logical trajectories.”

Mr. Levy added, “A single patent is granted to an inventor who cannot practice it because of lack of funding, and large corporations won’t license the patent from him. However, if the patent interferes with the business of a corporation, the inventor is called a troll and his patent is subjected to post grant review…A large number of patents, called “picket-fence,” are granted to a large corporation and grouped around a competitor’s technology. The patents are specially designed to interfere with the competitor’s business. Such strategies are commonly used by corporate legal teams.”

At our San Diego Inventors Forum on February 12th, President Adrian Pelkus, said, “We are a nation of creators and builders living at a time when science and technology is exponentially enriching our quality of life. Disturbing the evolution of ideas disrupts our development as a society, and changes to our patent laws are doing just that. American inventors create new products and jobs. The more we enable inventors, the more our country prospers and the better our lives become. We can expect only the opposite if we if we stifle inventors by allowing laws to be passed by corporations pressuring our representatives to protect only their interests.”

Thus, my answer is that the American Invents Act has been harmful to American innovation, and the consequences demonstrate that once again our elected representatives in Congress sold out to the interests of multinational corporations at the expense of inventors and small businesses.

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Anti-Inventor Legislation Being Proposed in Congress

Tuesday, February 3rd, 2015

Sometimes it seems we have to play “Whack-a-mole” against well-meaning legislation that would have harmful, unintended consequences. Last year, the Innovation Act, H.R. 3309 passed the House of Representatives by a 325 – 91 vote on December 5, 2013. It seemed like a comparable bill would easily pass the Senate until a concerted effort to defeat this bill was undertaken by Randy Landreneu, Founder of the Independent Inventors of America, and another inventor, Paul Morinville, by visiting key people in the offices of about 60 Senators.

Their efforts were aided by such organizations as CONNECT and Biocom in San Diego, the Biotechnology Industry Group, and the Independent Inventors of America. Because of the opposition by these groups and other groups not cited, the bill ended up being dropped in the Senate.

Why did these organizations oppose this effort on patent reform? Gary Klein, V. P. Public Policy, of San Diego’s CONNECT organization, stated: “A startup company’s main asset is its intellectual property. Most investors’ first question to startups is about how their technology is protected. The Innovation Act that passed the House has several provisions – fee shifting, covered business methods, joinder rules, discovery and customer stay – that will have some very serious adverse consequences for small/startup companies, universities and research institutions, as well as companies who use licensing as a business model.”

Joe Panetta, President and CEO of Biocom, stated “Not only does H.R.3309 fail to adequately address the abusive litigation practices it aims to curb, but it would place burdensome and unnecessary requirements and penalties on all patent holders. The bill is likely to inadvertently harm the world’s greatest innovation system by limiting legitimate patent holders’ ability to assert their rights.”

The Biotechnology Industry Group (BIO) was concerned that it would undermine biotech research and innovation. Daniel Seaton noted on BIO’s Patently Biotech blog, “the Act would ultimately make it more difficult for patent holders with legitimate claims to protect their intellectual property…Provisions in the legislation would erect unreasonable barriers to access justice for innovators, especially small start-ups that must be able to defend their businesses against patent infringement in a timely and cost-effective manner, and without needless and numerous procedural hurdles or other obstacles.”

The Independent Inventors of America against Current Patent Legislation, representing independent inventors and small patent-based businesses across the country, disputed the claim that patent infringement litigation had escalated. They initiated a petition stating “The Government Accounting Office Report required by the America Invents Act finds that there is no ‘patent troll’ problem. Data supporting the claim of billions of dollars of reported cost cannot be verified and actually represent primarily voluntary and court directed license agreements for valid patents. In addition, analysis of patent litigation shows that the number of patent suits relative to the number of patents issued today remains consistent over the 200 plus year history of the patent system with the exception of a short period prior to the Civil War when the rate was higher than it is today. The reports supporting this latest round of legislation are simply not valid.”

They argued that “what is being characterized as a “patent troll,” and the target of the proposed legislation, is really an investor. As individual inventors and small patent-based businesses, we need investors to practice and protect our inventions. A patent is sometimes the sole asset we can leverage to attract that investment. Damaging investors therefore damages inventors.”

The petition stated, “This legislation will levy grave harm upon independent inventors and small patent-based businesses, as well as the investors we need to help commercialize new technologies and to protect our inventions.” They “stand firmly against the proposed legislation and any future legislation that would weaken the American Patent System.” The governing body of the San Diego Inventors Forum, of which I am a member, signed the petition along with many of our members.

The main reasons why inventor organizations opposed the Act were:

Loser Pays – would significantly increase the risk and cost of defending a patent and “could be fatal to a large percentage of inventions.”

“Joinder” clause – allows investors to be personally liable for legal fees if inventor loses lawsuit, so this would severely limit investment in new technologies.

Patent Term Adjustment – eliminates a patent adjustment for a delay in patent issuance caused by the U. S. Patent Office (Note: Patents are granted for 17 years, but if it takes five years to get a patent, the patent term would be only 12 years instead of 17.)

New Bill in the Works

Now, Washington, D. C. insiders are indicating that legislation very similar if not identical to the Innovation Act will be introduced in the House of Representatives as early as February.

Why is a new version of the Innovation Act being proposed? The stated purpose is to curb frivolous lawsuits for patent infringement by so-called “patent trolls,” a derogatory term defined by Wikipedia as “a person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question, thus engaging in economic rent-seeking. Related, less pejorative terms include patent holding company (PHC) and non-practicing entity (NPE).”

Proponents of the Innovation Act said that” in the two years since the AIA was enacted, patent litigation has exploded. More and more firms are acquiring broad patents not to use the technology but rather to extract licensing fees from companies that infringe the patents accidentally…so a number of industry groups that weren’t traditionally involved in patent debates have begun agitating for patent reform.”

However, the Patent Freedom organization states, “NPEs are not all cut from the same cloth. Some inventors choose not to pursue the development, manufacturing, and sales of their inventions. They may lack the resources to do so, or the interest, passion, and commitment that such an effort requires. Instead, they may seek to license their inventions to others who can use them to deliver better products and services, often with the assistance of those with experience in this area. Or they may choose to sell the patents outright…. some entities buy patents with the express purpose of licensing them aggressively. For instance, about 25% of “parent” NPEs tracked by Patent Freedom are enforcing only patents that they had acquired. Another 60% are asserting patents originally assigned to them, and the remaining 15% are asserting a blend of originally assigned and acquired patents”

If new legislation is crafted to be similar to the Innovation Act, it would create additional requirements as part of the legal process associated with patent infringement under United States law. Some of the provisions that were in the Innovation Act are paraphrased below:

  • Requires specificity in patent lawsuits – requires specified details concerning each claim of each patent that was allegedly infringed.
  • Makes patent ownership more transparent with a “Joinder” clause requiring patent plaintiffs to name anyone who has a financial interest in the patent being litigated. This would include investors.
  • Makes the loser pay – “if a losing plaintiff cannot pay, the bill would allow a judge to order others who had a financial stake in the plaintiff’s lawsuit to join the lawsuit and pay the costs of an unsuccessful patent lawsuit.” This could force investors to participate in paying the legal fees, which would discourage investment.
  • Delays discovery to keep costs down – gives time to allow the courts to address legal questions about the meaning of patent claims with the goal of reducing legal costs and allow more frivolous lawsuits to be resolved before defendants have incurred large legal bills.
  • Protects end users – allows technology vendors to step into the shoes of their customers and fight lawsuits against trolls on their customers’ behalf in cases where restaurants, supermarkets, airlines, casinos, real estate agents and other brick-and-mortar businesses are being sued for using technology such as Wi-Fi instead of the manufacturers of the equipment.

Randy Landreneu, Independent Inventors of America, stated: “There were a number of provisions fatal to independent inventors, like Loser Pays (if you sued a corporation for patent infringement and did not prevail, you would be liable for their legal costs, which could be over $1,000,000). The Innovation Act also had the provision that an investor with an interest in your patent would be personally liable for these legal costs. This would have eliminated the ability to defend a patent for the vast majority of inventors, as well as greatly reducing any investment in patent related startups.”

Adrian Pelkus, SDIF President, states, “A new version of the Innovation Act horrifies me in the way that it would allow corporations to beat up on small inventors. Financial ruin for inventors would be extremely easy due to the nature of startups, meaning most inventors could lose their fledgling businesses disputing challenges to issued Intellectual Property. If we increase the risk that their IP will be challenged (perhaps even frivolously just to stop them from progressing to market), innovation will grind to a standstill.

At a time when we need American ingenuity and investors to rebuild our economy, taking steps to diminish our rights as inventors is un-American, economically dumb and intellectually suicidal. Stifling innovation in a technologically based society is a sure path to economic ruin which is why the USPTO system was originally designed to reward not punish the inventor. We are a nation of creators and builders living at a time when science and technology is exponentially enriching our quality of life. Disturbing the evolution of ideas disrupts our development as a society, and changes to our patent laws are doing just that. American inventors create new products and jobs. The more we enable inventors, the more our country prospers and the better our lives become. We can expect only the opposite if we if we stifle inventors by allowing laws to be passed by corporations pressuring our representatives to protect only their interests.”

I urge everyone to contact your Congressional Representative before the new bill hits the floor. Tell them that you are against further weakening of patent rights. Tell them that current efforts at “patent reform” will greatly hurt inventors and innovation in America. We must not stifle innovation if we want to create more American jobs and maintain our technological advantage in the global marketplace.

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