Business Recipes for Success

Patent Trolls -Patent Law Obsolete?

When I was in high school, my Physics teacher applied for a patent for a technology he designed. It was rejected. The reason for the rejection is a patent of a technology which closely resembled his.

What is a patent?

Patent should not be confused with trademarks, brands/service marks or copyright.

A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. Generally, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. Under certain circumstances, patent term extensions or adjustments may be available.

The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. Once a patent is issued, the patentee must enforce the patent without aid of the USPTO.

This means that the patent holder may use or may not use the patent that he applied for BUT that does not give anybody the right to use even a part of the formula or technology that has been patented.

So companies can sue other companies that use their patented technology or design even though they have not used or are not using it. The companies that sue for infringement of patents they own but don't use are called patent trolls.

e-Bay was made to pay millions of damages to MercExchange for violating two of its patents. The US District Office did not shut down eBay on the basis that it would not harm MercExchange since it does not use its patented action operation claimed to have been infringed by e-Bay. See the news about this hot patent suit.



Is there a need to amend the Patent Law? The article further discussed that although the infringement is only a part of the product covered by the patent; the automatic injunction covers the whole product. This forces the defendant to settle to the patent holder even with atrocious amount instead of totally losing the product.

Is there a need to require patent for every component of the design/ formula or technology?

I did not understand fully well when my teacher said that his design was not entirely a replica of a product that has been patented and which was not even introduced in the market.

To some, patent is a protection, to others, it is restriction for applying an innovative product that can benefit many people.

Next discussion is copyright.



business,financial statements ,balance sheet ,statement,assets,shareholders+equity,liabilities,patent,patent troll,eBay

posted by cathy at 2:57 AM 0 comments

Financial Statements-Balance Sheet-Business Series

The Balance Sheet

One of the basic financial statements required by the SEC and other regulatory agencies is the balance sheet shows the assets, liabilities and equities of a business at a given moment in time.

Assets which are either presented on the left side or the top portion, list down the resources of the company. The right hand side or the bottom portion shows the liabilities which represent claims against these assets by various creditos of the firm. The difference between these resources and claims is the networth of the owner or owners known as partners if it is partnership or shareholders/stockholders, if it is a corporation.

Since most of the balance sheets show comparative statistics, the top-to-bottom presentation is commonly used as shown below.








The pro-forma balance sheet above shows the assets, liabilities and shareholders' equity as of December 31, 2006 and December 31, 2005.

The purpose of comparative balance sheet is to show the changes that occurred between the two accounting periods.

Total assets amounted to $ 1,571.6 million in 2005. It increased to $ 1,843.1 in the year 2006.

Total assets equal total liabilities and equity so that the balance sheet shows the same amounts of the liabilities and equity for the two-year periods.




Next is the discussion of each item in the balance sheet.

Related articles:
1. The Financial Statements

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business,financial statements ,balance sheet ,statement,assets,shareholders+equity,liaiblities ,common stock

posted by cathy at 1:57 PM 0 comments

Starbucks Lower Earnings Per Share (EPS)

Starbucks Corp. the world's largest coffee shop chain reported a lower quarterly net income for the fiscal fourth quarter ended Oct. 1. Compared to last year's $123.7 million, or 16 cents per share, Starbucks net income this quarter was $117.3 million, or 15 cents per share despite the following:

1. the increase in the total revenue by 20.7 per cent
2. the lower effective tax rate (from 38.2 to 33.2 per cent)

The earnings per share is derived by dividing the Net income after tax by the number of outstanding shares of stock.

Thus, when lower net income is posted without a substantial decrease in the number of outstanding shares of stock, the Earnings Per Share is likewise reduced.

In the case of Starbucks, the lower net income did not result due to decline in total revenues. On the contrary, there was an increase by 20.7 per cent compared to last year's figures.

The lower earnings per share was attributed to compliance to FIN 47 which took effect on December 31, 2005. FIN 47 is accounting for conditional asset retirement obligations. Without this accounting requirement, the Earnings Per Share is pegged at 17 cents.

Conditional asset retirement obligations refer to the liabilities that should be recognized in the course of retiring assets that were acquired, developed or constructed. The liabilities are legal obligations because the entity has no choice but to settle the obligation that arose from enacted laws, ordinances, statutes and oral or written contracts. A good example of this is the law about asbestos which requires entities to remove or retire assets that are asbestos-laden.

Before December 31, 2005, there were diverse practices in treating this retirement activity. One of these practices is to take up the liability before it is settled.

The FIN 47 requires the business entities to recognize the liability when the fair value of the liability can be estimated.

But why does the liability decrease the net income? Liabilities are incurred either because of assets acquisition, purchase of goods and services on account and or loans acquisition. The examples have no impact on expense accounts not until the assets are depreciated and the goods are disposed. The conditional obligation is a cost on the part of the business entity to be settled to certain parties at the time the assets are retired.

Another cause of the decline in the net income is the expensing of stock compensation. Stock Compensation includes stock options. Lately, several firms were found by the SEC to be backdating their stock options to benefit the stockholders receiving the stocks. In one corporation, it was found to have been charged to reserve instead of charging it to expense resulting to overstatement of net income.

business,financial statements ,balance sheet ,statement,stock options,earnings per share ,liabilities ,assets

posted by cathy at 11:10 PM 0 comments

The Financial Statements

The Financial Statements

When we were students, our class performance was reflected in our classcards as our teacher recorded our grades in different subjects/projects or exams. Either we got an A, B or C.

Businesses are also evaluated according to their performance for a period and their financial condition as of a given date.

Because it is the management teams ’ responsibility to adopt and implement strategies that spell the success or doom of a business entity, the performance of these management people is likewise assessed in the results of the operations which are reported in the financial statements.

There are two basic financial statements; the balance sheet and the income statement,however a cash flow statement is also prepared to show the sources and the uses of cash during a month, a quarter or a year.

You might ask, what is the importance of these financial statements if you are a marketing manager or VP for Marketing or Sales Manager?

The first item in the income statement is sales or revenues from service activities or products sold. The increase or decrease in the figures presented in the statement for a particular period as compared to the past year or previous years assesses how the marketing people did their job in generating revenues for the company.

The costs and operating expenses are responsibilities of the managers of the cost centers.

The Human Resources will always have to work within the budget for recruitment, selection, training, benefits management and other expenses related to personnel management.

If it is a manufacturing concern, the materials, the labor and the overhead are primary concerns of the manufacturing executives. These costs have a lot to do with profitability, competitiveness with rival products in the market and the feasibility of a project.

The marketing people can not just dictate the sales price nor draw the commission schemes for dealers, agents, distributors without conferring with the manufacturing department.

In short, the figures that the financial statements particularly the income
statement guide these executives on the strategic decisions they make.

Module 1 Financial Satements Part 1

business,financial statements ,balance sheet ,statement

posted by cathy at 8:53 AM 0 comments