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ThemostimportantthingforaprospectiveinvestortorememberisthatifitseemstoogoodtobetrueitprobablyisnottrueSamChafetzisashareholderintheMemphisofficeofBakerDonelsonBearmanCaldwellBerkowitzPC.Samconcentrateshispracticeintheareasofcorporatesecuritiesmergersandacquisitionsandventurecapital.HerepresentspublicandprivateenterprisesandhascounseledboardsofdirectorsofcompanieslistedontheNewYorkStockExchangeAmericanStockExchangeandNASDAQ.Mr.ChafetzhasextensiveexperienceinSECandstockexchangeregulatorycompliancecapitalformationfrombothpublicandprivatesourcesshareholderrightsandcorporategovernanceandaccountingpublicdisclosureandinvestorrelationsissues.YoumaycontactSamatschafetzbakerdonelson.com.PeterBrewerisOfCounselintheKnoxvilleofficeofBakerDonelsonBearmanCaldwellBerkowitzPC.PeterisinthefirmsIntellectualPropertyGroupandfocuseshispracticeonmattersrelatingtotheprocurementofpatenttrademarkandcopyrightrights.Peterisadegreedengineerandisaregisteredpatentattorney.Hehaspreparedpatentapplicationsinavarietyoftechnologiesincludinghandtoolsmarinevesseldesignmedicaldevicesbusinessmethodsgeomechanicalmodelingsubseaproductionarchitecturehuntingequipmentseismicdevicesandothertechnicalareas.YoumaycontactPeteratpbrewerbakerdonelson.com.Thevalueofthebusinessmaylieinitsmarketexclusivity.Suchexclusivitycanbeacquiredthroughthepatentprocess.HoweverthepatentlawsoftheUnitedStatesgenerallyprovideonlyoneyearforfilingapatentapplicationfromthetimecertaineventsoccur.Thisgraceperiodbeginstorunwhentheinventionisfirstpublishedpubliclyusedsoldorofferedforsale.Insomeinstancesasmallcompanymayhavealreadyishownitsproductatatradeshowiipresenteditsproductorbusinessmodeltoapotentialcustomerortoprospectiveinvestorswithoutanon-disclosureagreementoriiiorderedaquantityofitsproducttobemanufactured.Anyoftheseeventscantriggertheoneyearbar.Thereforeitisimportantfortheinvestortoconductduediligencetodeterminewhethersuchtime-sensitiveeventshavealreadytakeplace.Ofevengreaterconcernmostforeigncountriesdonothaveaoneyeargraceperiod.ThusifanyofthetriggeringeventshavealreadytakenplaceintheUnitedStateswithoutapatentapplicationbeingfiledvaluableforeignpatentrightsmayhavebeenlost.ConsiderationmustbegiventowhethertheprospectivecompanyissellingaproductoroperatingunderabusinessmodelwhichmayitselfinfringeaU.S.patent.ThereforepartoftheinvestorsduediligenceshouldinvolveasearchoftheU.S.patentliterature.Donotrelyonthecompanysbroadstatementthatthereisnothinglikeitoutthere.JustbecausethecompanyinMississippihasntseenitbeforedoesntmeanthatapatentapplicationwasntpublishedlastweekthatcouldmatureintoapatentatanytime.Ofevengreaterconcernthecompanymaybeawareofanissuedpatentormayhavealreadyreceivedaceaseanddesistletter.Thisinformationshouldbeflushedoutandawell-reasonedopinionofnoninfringementorpatentinvalidityshouldbeobtainedfromaregisteredpatentattorney.UndertheU.S.patentlawonesawarenessoftheexistenceandinfringementofacompetitorsissuedpatentmaysignificantlyaffectsubsequentlegalliability.Thecourtshavethediscretionofawardinguptothreetimesactualdamagesplusattorneysfeesintheeventthatinfringementisproventobewillful.Willfulnessmaybeshownbyafailuretotimelyobtainawell-reasonedopinionfrompatentcounsel.Itisnotuncommonforstart-upcompaniestoariseasaresultofjoint-developmentengineeringprojects.Theseprojectsaresometimestheresultofanagreementbetweenoneormoreinventorsandauniversity.Alternativelyasmallcompanymaycollaboratewithalargercompanythathasin-houseRDcapabilities.Sometimesagreementsmaybeenteredintowithoutsideadvisorsorevencustomers.Inanyeventtheagreementtypicallydividesownershipofanyresultingintellectualpropertyrights.TheresultisthattheIPrightsmaybeco-ownedbymultipleparties.Thiscanaffectthevalueofthecompanyasaninvestmenttarget.Aninvestorshouldalsoconsidertheidentityoftheinventors.IsoneoftheinventorsanemployeeThedefaultruleisthatownershipofaninventionrestswiththeindividualwhoconceivesoftheinventionnotwithhisorheremployer.Thereareexceptionssuchaswhentheemployeewashiredtoinventbutpartofdeterminingownershipismakingsurethatassignmentsofpatentrightsareinplace.FinallythemostimportantthingforaprospectiveinvestortorememberisthatifitseemstoogoodtobetrueitprobablyisnottruePointeInnovation22magazineIsittoolatetofileforpatentprotectionIsthereariskofpatentinfringementDoesthecompanyownalloftherightstoitstechnology