The Customer Is Frequently Wrong

Especially when it comes to patents and trademarks.

Philosophy #1: The Customer Is Always Right.

Philosophy #2: Treat Customers As If They Are Always Right.

Which philosophy does your business follow?

My law firm follows #2.

Wrong Customers And The 80/20 Rule (Pareto Principle)

What? You don’t want all customers?

That’s right, I don’t. Most smart companies do not. You want customers that are in your target market.

Here’s an example. When I worked for Verio (1997-2001), we followed philosophy #2. Verio (at one point the world’s largest web hosting company) bought 50 small business-oriented Internet service providers (ISPs) and rolled them up into one company. Everybody at Verio did the same thing: turned 50 of something into one of something. Whether the something was a billing system, HR system, product offering, or sales methodology. We Verio-ized the companies we bought then sold Verio to NTT (the AT&T of Japan) for $6 billion cash in 2000. The NTT-Verio deal is still the biggest cash acquisition for an Internet company ever.

I helped turn 50 Verio marketing and sales operations into one. Verio’s Boston office was the only one in the country offering dial-up UUCP access. The UUCP offering was going away, there were only a handful of UUCP customers, and those customers used a disproportionate amount of customer support resources. UUNet, the only other provider of dial-up UUCP at the time, charged ten times as much as Verio for its offering.

To solve our UUCP customer support issue, I wrote letters to our UUCP customers, told them that the UUCP offering was going away in 60 days, wrote them checks for 2 months of UUCP service, thanked them for their business, and turned off UUCP 2 months later. The weeding out of the “bad” UUCP customers ended up saving Verio money in the long run. Another solution could have been to raise the price of UUCP tenfold. Verio did increase prices for other offerings that were priced incorrectly. Verio would frequently conduct an 80/20 analysis on its product offerings and terminate the 20% of the product offerings that took up 80% of the support resources.

Verio never wanted 100% of its prospective customers. Or even of its existing customers. Verio wanted customers that were in its target market.

I did the same 80/20 analysis on my firm’s client base a few years ago so that I could focus my firm’s energy on the 20% of our clients that make up the 80% of our revenue.

How IP Clients Are Frequently Wrong

The truth is that Clock Tower Law Group’s clients are frequently wrong. They are wrong about patents, wrong about trademarks, wrong about domain names, wrong about usernames, wrong about branding, wrong about intellectual property (IP) strategy, wrong about IP valuation, wrong about just about everything IP-related. Which is why they’ve hired us in the first place!

  • You want to file a patent just to sue others? You are a patent troll. You are not our target market. Wrong!
  • You want to file a trademark just to send cease and desist (C&D) letters to companies in different markets? You are a trademark bully. You are not our target market. Wrong!
  • You want to register domain names and usernames that are confusingly similar to existing trademarks? You are a cybersquatter. You are not our target market. Wrong!

The above examples are easy. Other examples of how clients (or prospective clients) are wrong are more subtle:

  • Many companies waste money by filing patents on stuff that will be difficult – if not impossible – to patent. Clock Tower Law Group frequently declines to file patent applications that have less than a 50% chance of issuing as patents. You’ll find other law firms who will file anything for you. But we don’t want you to waste your money on stuff that we think is not patentable.
  • Many companies waste money on foreign patent filings. We try to talk our clients out of filing most foreign patents.
  • Many companies waste money by filing patents without doing a patent search. Patent applications that we search issue at 2.5 times the rate of those that we do not search. So we do patent searches as a rule. Most other patent lawyers disagree with me on this point. Most of them are wrong and lack data to support their positions.
  • Many companies file overly broad trademarks. I call this patent-style trademark filing. If you are a gorilla and stand on a tree stump and pound your chest, then you will invite conflict in the jungle. So too with filing overly broad trademark applications. Inviting conflict is great for litigation attorneys, not so great for startups.

Treat Customers As If They Are Right, Teach Them To Make Better Decisions

That said, you should treat customers as if they are always right. Or at least treat the customers you want – your target market – as if they are always right.

Take patents for example. You are the inventor. Our job is to educate you so that you can make the right business decisions to meet your business goals. Your job is to teach us enough about your invention so that we can file the right patents and trademarks at the right time.

Our favorite clients are those who take our advice and have business success. But not all of our clients succeed.

Just like a venture capital firm’s portfolio. Not all VC investments work out. Most fail. That’s why VC firms need to get a 10x return on their investments that do work out.

Apologize When You’re Wrong

What prompted me to write this blog post was an email exchange with a client who questioned an invoice for filing an Information Disclosure Statement (IDS) for a patent application. The patent (and trademark, for that matter) application process involves filling out lots of forms.

The trick, of course, is not filling out the forms. The trick is knowing what to put on the forms and how to file them. For example, here’s my IDS blurb:

IDS. Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith when dealing with the US Patent Office. This duty includes a duty to disclose all information known to each individual to be material to patentability of the claimed invention. This duty is deemed satisfied by filing an IDS. Although it is possible to satisfy this duty without filing an IDS, it is in your best interest to cite all material prior art, because when patents issue, the documents listed in the IDS are printed on the cover of the patent as “References Cited,” and there is a presumption that the patent’s claims are patentable over these references. If any person substantively involved in the filing and prosecution of the application becomes aware of additional information material to the patentability of the claimed invention, then that person has a duty to disclose this information to the USPTO to avoid loss of patent rights. This is a continuous duty that applies to each pending claim of the application.

My firm uses hundreds of templates for emails and various filings. If we gave all of our templates to our clients, it would not help because they don’t know how, when, or whether to use them. In fact, it would make matters worse by overwhelming and confusing them.

In my response to my client, I quoted from one of my favorite books, “Selling the Invisible: A Field Guide to Modern Marketing” by Harry Beckwith:

A man was suffering a persistent problem with his house. The floor squeaked. No matter what he tried, nothing worked. Finally, he called a carpenter who friends said was a true craftsman. The craftsman walked into the room and heard the squeak. He set down his toolbox, pulled out a hammer and nail, and pounded the nail into the floor with three blows. The squeak was gone forever. The carpenter pulled out an invoice slip, on which he wrote the total for $45. Above the total were two line items (1) Hammering, $2; (2) Knowing where to hammer, $43. Charge for knowing where.

My client’s complaint was that we had apparently charged 40 minutes for “filling out a form.” When in fact we had charged zero minutes for filling out the form and 40 minutes for knowing which information was material and needed to be disclosed to the USPTO.

FWIW, the USPTO itself says that it takes four hours to “fill out the IDS form” (two hours for patent documents, two hours for non-patent prior art). “Knowing where to hammer” takes a heck of a lot longer.

Was the client wrong? Yes.

Were we wrong? Yes.

We failed to adequately respond to our client’s billing concern. We failed to communicate what we charge for, and what we do not charge for. We charge for knowing IP law and guiding smart companies through the minefield of IP law to reach their business goals. We never charge for filling out forms.

Summary

Can we improve? Absolutely. No law firm makes zero mistakes. Continuous improvement is our goal.

  • If you’re looking for a law firm that will file whatever patents and trademarks that you want, regardless of their merit, then Clock Tower Law Group is not for you. That’s not how we roll.
  • If you want a law firm that will help you be a patent troll, trademark bully, or cybersquatter, then Clock Tower Law Group is not for you. We have higher standards.
  • If you’re looking for a law firm with lawyers who have to meet billable quotas of 1800-2000 hours/year, then Clock Tower Law Group is not for you. No quotas here.

But if you’re looking for a law firm that will challenge your thinking about intellectual property law, about how patents and trademarks work in the real world, one that thinks differently and has been doing so for years (see links below), one that is not afraid to tell you when you are wrong, or to admit when it is, then Clock Tower Law Group may be for you.


Erik J. Heels is an MIT engineer; trademark, domain name, and patent lawyer; Red Sox fan; and music lover. He blogs about technology, law, baseball, and rock ‘n’ roll at erikjheels.com.

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