Lynn’s Picks: Foresight’s Patent of the Week – US Granted Patent 9,601,033: Pop-Up Greeting Card with Tab Support of a Laser-Cut, Slice-From Pop-Up Element (LovePop)

Disclaimer: This blog was created for informational purposes only and does not represent Foresight’s or the author’s opinion regarding the validity, quality or enforceability of any particular patent covered in this blog.  Foresight is not a law firm and no portion of the information contained in this blog was intended to serve as legal opinion.

In honor of Valentine’s Day, the patent pick of the week is related to a trusted method of expressing your love and admiration to that special someone or secret admirer. This method of expression is rarely viewed through a technical, nor patent, lens; however, the use of written Valentine’s messages dates back to 1415 when the oldest known valentine poem was written by Charles, Duke of Orleans, to his wife while he was imprisoned in the Tower of London. Fast forward to 2024 and many of us view Valentine’s Day cards as an exercise of searching through rows of cards at the local grocery store in the hopes of finding one that captures a moment or provides a laugh, but what does this have to do with patents? This week’s pick is from a company that got its big break in 2015 when LovePop was selected to appear on Shark Tank and managed to secure an investment from Kevin O’Leary (aka Mr. Wonderful), who invested $300,000 for a 15% of the company. Since that investment, LovePop has sold over 55 million cards.

While you may not recognize the LovePop name, you will likely have seen their cards on display for every major holiday. The images below should refresh your memory of the unique design of these cards.

LovePop has built its business around 3 dimensional fold-flat cards, with designs covering every major holiday, event and even custom designs for large brands such as Marvel, Star Wars and even The Office. While LovePop can attribute some of its success to the exposure generated from Shark Tank, the reality of their lasting success and the reason you do not see an abundance of similar 3D cards is due to the intellectual property portfolio held by LovePop. The first application filed by LovePop occurred the same year as their Shark Tank debut, and since that date, the company has grown their portfolio annually with multiple applications filed and granted every year since 2015 for a total of 31 granted US patents as of the writing of this article. The patent that started it all for LovePop is the pick for this week, patent number 9,601,033. This patent was granted in 2017 from the 2015 filing mentioned above and is titled “Pop-up greeting car with tab support of a laser-cut, slide-form pop-up element.”

As seen in the images below, the patent relates to the process and article of creating and combining slice forms (combining 2D slices of an object to form a 3D final product) in a manner that would allow the card to lay flat when folded and open into the desired design when unfolded. The patent claims are primarily focused on the use of multiple slice forms, arranged in such a way and coupled to the card in such a way to create the 3D final form when unfolded.

This seemingly simple process has morphed into blank canvas onto which the only limitation is the creativity of the designer and the tolerances of the laser cutting machine. Next time you find yourself pacing the card aisle in the desperate, usually last minute, search for the perfect card, think about the combination of intellectual property on display. From patented pop-up cards, to trademarked cards from companies like Hallmark and copyrighted material from movies or famous artists, this relatively non-technical space found in every grocery store is a microcosm of intellectual property protection and monetization.

Have you come across any interesting patents you would like us to feature in future blogs or did you invent a technology you would like featured? Please send us an email at media@foresightvaluation.com or call our office at (650) 561-3374.

Lynn’s Picks: Foresight’s Patent of the Week – US Patent Application 17/852,089: Spare Wheel Containers for a Vehicle (Rivian Automotive)

Disclaimer: This blog was created for informational purposes only and does not represent Foresight’s or the author’s opinion regarding the validity, quality or enforceability of any particular patent covered in this blog.  Foresight is not a law firm and no portion of the information contained in this blog was intended to serve as legal opinion.

In this week’s blog, we are kicking off the Lynn’s Picks blog series by highlighting a recent filing by Rivian Automotive carrying the US patent application number 17/852,089 titled: “Spare Wheel Containers for a Vehicle”. Rivian Automotive, Inc. designs, develops, manufactures, and sells electric vehicles and accessories. The company offers several models of electric pickup trucks and sports utility vehicles. It provides Rivian Commercial Vehicle platform for Electric Delivery Van with collaboration with Amazon.com, Inc. The company sells its products directly to customers in the consumer and commercial markets. Rivian Automotive, Inc. was founded in 2009 and is based in Irvine, California.  In fiscal Year 2023, Rivian reported $3.8 billion in revenues, based on the company’s most recent annual report.

As seen in the images below, the patent application, which was filed in June of 2022, relates to a container built into a spare tire holder that would enable the user to utilize the space inside the tire that is typically used exclusively to simply hold the spare tire. In the system seeking patent protection, this traditionally unused space would now provide storage through a “plurality of containers each comprising a respective container type” and electrical components that would allow the vehicle to identify the container type. The patent specification includes a variety of different applications for these containers including, but not limited to: fluid container configured to transfer water, coolant, lubricant or other fluids between the vehicle and the container; a storage container that could hold a first aid kit or toolbox; an identifier tag such as RFID as well as an auxiliary battery coupled to the vehicle’s electrical system. As you review the specification of the patent, you will see a number of potential applications to this technology and probably can come up with a few that you would like to see in your vehicle.

It is important to note that this is a pending patent application that has no guarantee of issuance and even if a patent is issued, the final claim language may look very different from the proposed claim language due to the existence of prior art that may require modifications to the proposed claim language.  That being said, we selected this application for the first of this series because it highlights the relative simplicity that often is tied to innovation. In this case, an engineer likely saw an open space that is rarely used for anything other than to cover the spare tire (for example, any Jeep Wrangler you see on the road is either displaying the tire or the tire cover with either JEEP or some personal message being displayed) and sought out to create a use for that empty space. The fundamental concept here is to make use of available space, a concept we all can relate to. It is a great example of finding way to improve things you interact with every day and finding ways to protect those improvements.

Have you come across any interesting patents you would like us to feature in future blogs? Please send us an email at media@foresightvaluation.com or call our office at (650) 561-3374.

The SEC – Impact Theory Settlement: Are NFTs Considered a Security?

The SEC announced last week that it had reached a settlement with Impact Theory following the SEC’s first enforcement action against the sale of Non-Fungible Tokens (“NFTs”) which the SEC charged were unlicensed securities. The first step in attempting to understand the SEC’s position on this matter is to go back to the beginning where Impact Theory sold the NFTs that are the subject of this enforcement action. Between October and December of 2021, Impact Theory, a Los Angeles based media and entertainment startup, raised approximately $30 million worth of Ethereum through the sale of NFTs that Impact Theory named “Founder’s Keys”. Impact theory made certain statements related to the Founder’s Keys offering and the use of funds. These statements included that Impact Theory would deliver “tremendous value” to NFT purchasers and that they would use the proceeds for “development,” “bringing on more team,” and “creating more projects.” The SEC determined that Impact Theory was offering and sold these NFTs as investment contracts, and therefore they should be deemed as securities, based on the Howey test (see explanation below).  Since the purchasers of these NFTs had a reasonable expectation of obtaining a future profit based on Impact Theory’s managerial and entrepreneurial efforts, they qualify as ‘securities’ under the Howey test.

Examples of statements that were made by Impact Theory in the run up to the sale of the NFTs include some of the following, which were selected by the SEC for inclusion in their public filing regarding the settlement of this matter:

  • Statement indicating that investors would profit from their purchases if Impact Theory was successful in their efforts
  • “If you’re paying 1.5 ETH, you’re going to get some massive amount more than that. So, no one is going to walk away saying, ‘Oh man, I don’t think I got value here.’ I’m freakishly bullish on that. I will do whatever it takes to make sure that this is true.”
  • “But yea, I will make sure that we do something that by any reasonable standard, people got a crushing, hilarious amount of value.”
  • “NFTs are the mechanism by which communities will be able to capture economic value from the growth of the company that they support.”

According to the SEC, the above statements, and others, led purchasers to believe that their purchases of the NFTs would enable the company to develop the various projects with the end result being the appreciation of value, over time, of their purchased NFTs. Ultimately, 13,921 NFTs were sold by Impact Theory to hundreds of investors, including investors in multiple US states. Additionally, these NFTs could be sold on the secondary market and Impact Theory would receive a 10% “royalty” on each secondary market sale. These secondary market sales generated nearly $1 million in royalty payments to Impact Theory.

Impact Theory entered into a settlement with the SEC that included approximately $6.1 million in disgorgement of profits and penalties, as well as the destruction of any NFTs in their possession and an update to the smart contract associated with the NFTs that would eliminate the 10% royalty on secondary market sales. While the facts of this case and the outcome are noteworthy due to it being the first time that the SEC has brought an enforcement action involving the sale of NFTs as unregistered securities, it is the potential impact of this action on the NFT market and the SEC’s broad interpretation of the Howey test that has the crypto community’s attention.

Under the Howey test, an ‘investment contract’ is any contract, transaction or scheme whereby a person (1) invests his/her money (2) in a common enterprise and (3) is led to expect profits (4) solely from the efforts of the promoter or a third party. Based on this definition, and its application to the Impact Theory NFTs, the logical conclusion is that many of NFTs being offered today would fall within the definition used to initiate an enforcement action against Impact Theory. A large percentage of NFTs purchased are not purchased for their collectible value but are instead purchased to provide some benefit to holders based on the efforts made by the company selling the NFTs. Those holder benefits are typically provided in the form of expectation of profits which can be derived from a multitude of options that are constantly changing.

Years ago, when profit driven NFTs began to be introduced into the market, those expectations of profits were through the marketing efforts of the NFT issuing company to continually drive up the value of the NFTs as well as collaborations that would provide NFT holders with access to partner NFTs for free or at a reduced price that would yield additional profits through the sale of those partner NFTs. The NFT and Crypto landscapes adapt extremely fast as one value driver trend peaks followed closely by the next value driver trend. Today, expectations of profit take the form of dividends from investment projects where the NFT sales are used to fund investment vehicles operated by entity selling the NFTs and each NFT represents a certain percentage of trading profits. Expectations of profit also take the form of higher yields from staking the NFT (as well as the connected cryptocurrency) where an NFT holder may receive 10% Annual Percentage Yield (“APY”) while the non-NFT holder is able to stake either underlying cryptocurrency for 5% APY. There are endless mechanisms through which current NFT issuers entice individuals to buy their NFTs based on the reputation or historical performance of the team selling the NFTs and these mechanisms change far faster than what is possible for the SEC to keep up with. A quick review of projects on Telegram or Discord will show the variety of mechanisms through which projects with no funding launch the sale of NFTs to fund the development of the project, which could range from creating a trading robot to launching a full video game, where there investor is taking the risk of early investment for the sole purpose of realizing profits in the future.

These issues are why two of the SEC Commissioners dissented to the application of the Howey test to the Impact Theory NFT sales. These Commissioners outlined 9 pending questions that they believe the SEC should have addressed and offered guidance long ago when NFTs started proliferating. A discussion of those 9 questions will be discussed in a later blog, but at a high level they address questions that go to the core of the SEC’s view of NFTs with the goal being for the SEC to issue guidance rather than enforce without guidance. While it is unlikely that a decentralized ecosystem with participants around the globe will adhere to the guidance provided by the SEC, projects that seek to raise millions through a US registered entity will greatly benefit from such a guidance. These projects that seek to adhere to rules and regulations will drive the next wave of blockchain innovation and it is imperative that the SEC provide a framework for this innovation to occur.

Insights from WIPO’s “World IP Indicators 2017” Report: Key Patenting Trends Around the Globe

The World IP Organization (WIPO) has recently published its annual report titled: “World Intellectual Property Indicators 2017”, covering world IP filing activity for 2016.  The report is a comprehensive coverage of global patent and trademark filing trends, comparing and ranking the world’s leading regional patent and trademark offices (“IP Offices”) by their level of activity in the various categories.

At a high level, it seems like many of the trends observed in 2015 continue into 2016: the global number of filings and grants keeps trending up; China continues to dominate in terms of annual filings and grants (breaking another record of 1.3 million filings this year); and the top 10 filing companies worldwide are all Asia-based multinationals.

Patent Filing Trends

A record number of 3 million patent applications were filed worldwide in 2016, up 8.3% from 2015, as seen in the figure below:

Source: World IP Indicators 2017, WIPO

Driving the strong growth in global filings was an exceptional number of filings in China. The State Intellectual Property Office of the People’s Republic of China (SIPO) received 1.3 million patent applications in 2016 – more than the combined total for the United States Patent and Trademark Office (USPTO; 605,571), the Japan Patent Office (JPO; 318,381), the Korean Intellectual Property Office (KIPO; 208,830) and the European Patent Office (EPO; 159,358). Together, these top five offices accounted for 84% of the world total in 2016.

Below is a summary table showing the activity in the top 10 IP Offices in 2016:

Source: World IP Indicators 2017, WIPO

When it comes to understanding China’s continued explosive growth in new patent applications – over 1.3 million filed in 2016, an increase from the 1.1 million in 2015 (the first year the 1 million filings barrier has been exceeded in any country) — the circumstances surrounding the increase in Chinese patent filings are unique and should have come as no surprise to anyone following the Chinese government’s five-year plan of 2011. As explained in an article published in Nov. 2016 in the EE Times by Foresight’s president, Efrat Kasznik, over the last 50 years the Chinese Communist Party implemented a series of five-year plans which guided China’s rapid economic growth.  The 2011 five-year plan’s themes of sustainable growth included some specific targets for patent filing per capita.  The increased filing activity over the last five years is the direct result of a calculated government effort, enabled by an unprecedented allocation of legislative and administrative resources to support China’s State IP Office. Thus, the sharp rise in Chinese patent filings between 2010 and 2016 is very unique to China’s political circumstances, and is not necessarily correlated with the natural progression of innovation.

When reviewing filing trends by country, one of the most critical observations is the ratio of resident to non-resident filings.  A higher ratio of non-resident filings in any given country, is usually an indication not only of the size of that market for the underlying innovations, but also of the strength of the IP enforcement regime in that country.  Here, the trends from 2015 are repeating in 2016: as explained by Ms. Kasznik in her article, ratio in China is about 90% resident filers to 10% non-resident filers, a reflection of the relatively weak enforcement regime in China.  Conversely, the USPTO and the European Patent Office exhibit a ratio of resident to non-resident filings of about 50/50, attesting to the strength of IP enforcement regimes in those regions.

Patent Grants Trends

In 2016, an estimated 1.35 million patents were granted worldwide, up 8.9% on 2015.

Source: World IP Indicators 2017, WIPO

SIPO granted 404,208 patents in 2016, followed by the USPTO (303,049), the JPO (203,087), KIPO (108,875) and the EPO (95,956). The top five IP offices issued more than 1.1 million combined, accounting for 83% of the world total.

Not surprisingly, the number of new grants is trending upwards over time along with the number of new filings.  The WIPO report also includes statistics related to the operational efficiency of IP offices, such as: the number of examiners, application pendency times, and patent examination outcomes.  The workload of IP offices as measured by the number of incoming patent applications has increased over time, but so has their examination capacity to process those applications. The WIPO data show there has been no significant increase in application-to examiner ratios, and for a number of IP offices, growth in numbers of examiners has outstripped the increase in applications.

Another interesting metric reported is the number of patents in force in 2016: the estimated number of patents in force worldwide rose from 7.8 million in 2009 to 11.8 million in 2016. The USPTO leads with 2.8 million patents in force in 2016, followed by the JPO (2 million), SIPO (1.8 million) and KIPO (1 million). These four IP offices account for 63% of all patents in force worldwide.

Filing by Company

The top 10 patent applicants worldwide are Asia-based multinationals: Canon Inc. (Japan) was the top applicant for the period from 2011 to 2014, with 30,476 patent families worldwide, followed by Samsung Electronics (Korea) with 26,609 patent families, and Japanese companies Panasonic (22,899), Toshiba (22,627) and Toyota (22,190). Robert Bosch of Germany (16,582) was the highest-ranking non-Asian company at number 12.

Only 9 countries of origin comprise the top 100 list of applicant companies for the period from 2011 to 2014: Japan (40), China (26), Korea (15), U.S. (9), Germany (6) and one each from France, the Netherlands, Sweden and Taiwan.

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