How do you determine what it will cost if you wish to hire a professional for your utility patent? We have obtained some ballpark ranges from several patent professionals to give you a feel for what your patent might cost. The cost of obtaining a good, strong utility patent can have a wide range, based on such variables as the complexity of the invention itself, the amount of prior art involved, and the number and complexity of the Office Action responses required. Each time you receive a letter from the patent office, taking some official action on your application, this is referred to as an Office Action. Obviously, if your invention is highly technical, it will require more of the patent professional’s time to write the application. If there are a large number of similar products or patents, it will likewise require more work to prepare the patent application. And, when the patent examiner returns the application for changes in the claims, there is a charge each time for handling the response.
Independent inventors, small businesses and non-profit organizations are entitled to what is known as small entity status. This qualifies you for reduced filing and maintenance fees, usually half of the cost for large entities.
Another potential professional partner is your prototype designer. Again, like the patent attorney and patent agent, this is something that is suggested to prototype designers with some regularity. Unless your invention is that one-in-a-million idea, your prototyper would probably prefer to be paid in money than to bet on the success of your invention.
Almost any professional whose services you will use in the development and marketing of your invention has the possibility of becoming a professional partner. If you choose to pursue this avenue, be cautious not to sign on too many professional partners. This is another area where you could find yourself in the position of becoming a minority investor/owner of your own invention.
In a growing economy, equity can still be threatened. Home equity does not deserve the same confidence as FDIC insured CDs. Neighborhoods can change, hurting home values. Residential neighborhoods become commercial, family neighborhoods get drug infested, single family homes are cut up and become multifamily units eliminating all the parking and reducing values. Soon there will be a massive exodus from family neighborhoods as baby boomers retire and move to retirement communities. Interest rate changes also threaten home equity. Higher mortgage rates make homes less affordable, which hurts home values. When homeowners hear or read about the Federal Reserve, most wonder how this will affect the value of their home. Higher real estate taxes also hurt home values.
Home equity is often disappointing as a savings vehicle. It lacks the utility of other savings systems. Unmanageability is a common occurrence. Just when you need your savings the most, home equity is likely to fail you. Laid-off workers often find they cannot tap their home equity with a second mortgage or refinance because they have no income to support higher mortgage payments. Retirees are often disappointed to find that the sale of their home after Realtor commissions and expenses leaves a much smaller nest egg than hoped for. Reverse mortgages often produce insufficient income for retiree living expenses. Savers relying on home equity must be prepared for sadness and grieving if their retirement plans are unreachable.
Michael tinkers with his portfolio obsessively. In prior years, he read investment magazines and newspapers late into the night. Now he has a fast Internet connection and often signs off after midnight. Susan is freaked out by the paper gains and losses that routinely occur every month. The abstract nature of the account statements, reports, newspaper articles, and Web sites makes her nervous. Her mind cannot grasp what they really own nor does she understand why Michael is constantly playing with it. Ever since the decline of 1990, when they were new to the stock market, there has been a sense of impending doom over their financial security.
Interestingly, Michael and Susan would both be happier with a portfolio primarily consisting of single-family homes. Michael’s tinkering could cut costs and improve rents and tenant quality. He has no guilt about being a landlord. He and Susan have a nice house they are proud to own. They are now living in their third home together. Together they were able to buy two cute cottages in attractive neighborhoods, which they sold for much more than the purchase price. Michael is fair with the many employees he supervises.
There is no reason he would be a poor landlord. Michael is also not likely to trade properties. While he is able to justify many small commissions to a discount broker, having never added them all up, the idea of giving 6 percent of his property to a Realtor every time he sells a building does not appeal to him. Susan could drive by and look at their properties any time she needed reassurance. The children could help out cleaning and fixing up between tenants. Though Michael may lose a major topic of conversation at the office, he would sleep better and be more productive at work. He would also be wealthier. If, in each of the last 10 years, he had bought a new single family home with $50,000 down, putting nothing in his 401(k) or anywhere else, he could potentially have equity of $1,000,000 today.
Simple interest is, well, simple. To calculate simple interest, you would multiply your interest rate by the balance that you owe. Any payment you make, in excess of the interest calculated for that period, is applied toward your balance or “principal.”
Let’s look at an example. Bob takes out a simple interest loan of $1,000, at 12% per year. If Bob makes one payment, at the end of the year, $120 in interest ($1,000 multiplied by 12%) will be subtracted from his payment before it is applied to what he actually owes. If he sends in $500, his balance will drop to $620 ($1,000 balance minus $380 applied to principal).
If Bob waits another full year to make a payment, he will owe $74.40 in interest. That’s his $620 balance multiplied by 12%. Whatever payment he makes will have $74.40 subtracted from it for interest, before it is applied to his balance.
That’s it! It’s that simple! Most auto loans, many mortgages, and most personal loans from credit unions use
simple interest. As you’ll see in a moment, these are far more preferable than loans that use compound interest.
A second critical tool in risk management is hedging, which is greatly facilitated by the global banking system. In the commercial world, if one wishes to buy a fermentation plant from a Swiss supplier with 10 percent down and 90 percent due on delivery 12 months hence, one considers a currency hedge. If the price is quoted in U.S. dollars, the Swiss manufacturer may buy a forward option on dollars. If it is quoted in Swiss francs, the U.S. customer may buy a forward option on Swiss francs. In either case, for a small price, their business plans are not exposed to currency risk. When I joined W. R. Grace & Co. in 1982, I found just such a contract on a fermentation pilot plant in place. In fact, the dollar strengthened dramatically, so we bought the plant far more cheaply than expected, while being fully protected if the currency had moved in the opposite direction.
The bankers offering these hedges can reduce their risks substantially, for example, by finding a counterparty, perhaps a Swiss firm buying computers from a U.S. supplier in the same time frame. This activity is classic hedging. Note that the hedge is against market risk.
Economics is conventionally divided into two types of analysis: microeconomics and macroeconomics. Microeconomics studies how individuals and firms allocate scarce resources, whereas macroeconomics analyses economywide phenomena, resulting from decision-making in all markets. One way to understand the distinction between these two approaches is to consider some generalised examples. Microeconomics is concerned with determining how prices, values and rents emerge and change, and how firms respond. It involves an examination of the effects of new taxes and government incentives, the characteristics of demand, determination of a firm’s profit, and so on. In other words, it tries to understand the economic motives of market participants such as landowners, developers, occupiers and investors. This diverse set of participants is rather fragmented and at times adversarial – but microeconomic analysis works on the basis that we can generalise about the behaviour of these parties. A particular branch of economics known as urban land economics is concerned with the microeconomic implications of scarcity and the allocation of urban property rights. Ball et al. (1998) in the preface to their book state that: ‘The microeconomics of commercial property, proved to be the most difficult [area] to draw together. There simply does not exist an adequate and complete general microeconomic theory of urban property markets.’ This is true and an attempt to develop such a theory is not attempted here! Instead this section brings together and explains the key microeconomic concepts and theories that have a bearing on urban property markets and the important work of authors such as Harvey (1981), Fraser (1993) and Myers (2006) in relating classical economic concepts and theories to urban land and property markets is acknowledged.