Z-Band's success hinged on patents, fierce expansion
Carlisle-based Z-Band Inc.'s vice president, Dick Snyder, recently gave a tour to U.S. Small Business Administration officials highlighting the company's success as a small business exporting its video distribution electronics to 10 countries.
But would Z-Band's successes over the years have been possible without its patents?
That's debatable, but certainly all its patents have contributed significantly, Snyder said.
Intellectual property protection is so crucial to small companies that it has some attorneys urging entrepreneurs to file patent applications before the U.S. transitions March 16 to a "first-to-file" system. Doing so will likely save a lot of headaches for small companies and entrepreneurs, attorneys said.
Conquering Z world
Z-Band relied heavily on its patents for small video electronics, known as GigaBOBs, that help deliver high-definition television signals with crystal clarity whether you're on the 12th floor of a hotel or right next to the distribution hub.
"That little box is what allows us to get (much more power)," Snyder said. "Without those patents, we couldn't get there."
The GigaBOB was crucial for Z-Band's HDTV second-generation electronics release in 2007. It wasn't long after that its business took off. By 2009, when many companies were wondering if they'd be around in 2010, Z-band had about 50 percent growth.
Z-Band grew sales about 30 percent in recent years, slipping slightly in 2012 as prospective clients feared the "fiscal cliff" and federal budget cuts, Snyder said. Overhaul of government offices and facilities with faster, more powerful video electronics for recreation, information and operations — particularly in the defense sector — is a key part of Z-Band's business.
The company has provided electronics and wiring for Hollywood Casino at Penn National Race Course in Dauphin County, Kandahar and Bagram Air Force bases in Afghanistan, Dow Chemical and Goldman Sachs buildings in China, two National Health Service hospitals in London and will soon wire the California headquarters of SanDisk, the maker of memory cards for smartphones, digital cameras and computers.
That heavy world presence for a company with 14 people impressed SBA Regional Administrator Natalia Olson-Urtecho when she visited Jan. 31. There are about 12,000 small companies exporting their wares and services out of 700,000 companies in the Mid-Atlantic region, she said. And half of exporters ship only to Canada.
"If we become more entrepreneurial around the world … we'll have a better society for our grandchildren," Olson-Urtecho said, praising Z-Band as a model for others.
If small companies want a chance at growing foreign markets — 95 percent of the world's consumers reside outside the U.S. — then patent protection for their inventions will be crucial. Some attorneys don't see the March 16 switch from a "first-to-invent" system to a "first-to-file" one as beneficial in that regard.
"It creates a lot more bullets for them to use against small inventors," said Kurt L. Ehresman, a patent attorney with Rhoads & Sinon law firm in Harrisburg.
For starters, current law requires ideas to be in existence for a year before being used to challenge a patent, he said. First-to-file will allow challengers to use publicly known information from any point before the filing. Post-patent reviews also will allow anyone to challenge patents within the first nine months of issuance.
President Barack Obama signed the Leahy-Smith America Invents Act in September 2011. Many of the provisions, promoted to streamline the patent process, went into effect last year. The law includes reduced fees for small businesses, and if you file the patent first, it's yours, barring a substantial and successful challenge.
The fear is that small companies will be at a disadvantage to larger ones that can file often and have money to challenge patents that might cut into their business, Ehresman said.
Whether that happens is yet to be seen. Previous changes sparked similar fears, but it took two years for people to start using such provisions, he said. Still, he's advising clients to file before March 16 to avoid problems.
"It's certainly more favorable," Ehresman said.
Companies shouldn't rely on proving claims of first-to-invent, said Charles Hooker, a patent attorney for Hooker & Habib in Harrisburg. Filing first is a good start to protecting and defending your intellectual property, he said.
But with the changes, even the most diligent inventors could see costs increase, especially if they file many provisional patent applications before going to a trade show or developing a product, he said.
"At the end of the day, every business has to figure out if the candle is worth the burning," Hooker said, "if they want to go through the full patent process, because it's expensive."
Z-Band is aware of the patent law changes but isn't overly concerned, Snyder said. Patents are not always easy things to monetize and defend, but Z-Band stays on top of such issues.
Other companies aren't as diligent, Ehresman said. He's seen too many companies that have great parts and ideas, but no patents. That can cost them business in the long run.
"You can hide your head in the sand for a little while, but eventually you need to address it," Ehresman said.