Random Musings:

IP Strategies - 4 - Value Checklist

[Nothing in this article is or should be construed as the giving of legal advice and/or the practice of the law.]

So you think you have patents that might be valuable if licensed and/or litigated. Don't rush out to celebrate.

Value is contextual; it depends. Value depends on numerous factors, of which these are just a few:

• Do you have clear, unambiguous ownership of the patents? Was it developed on the job or while at a university? Did someone contribute to the patent who was not named an inventor?
• Are the patents likely to stand up in court or are they likely to be held invalid? A patent attorney can be most helpful here.
• Do the patents cover products or services offered by the patent holder, which is to ask, is the patent holder an operating company that's actually using the patents?
• Do the claims (statements that define the inventions) address systems or methods in use by others?
• Did the inventors, owners participate in any standards setting processes?
• Do the claims pertain to a big industry, segment, product group, etc.?
• Can you show using publicly available information that one or more parties infringes one or more claims? It's difficult for lay persons to make this determination with out the help of a qualified patent attorney, preferably one who has depth knowledge of the industry, technology, etc.

Even if you have the right answers to these and related questions, the value may ultimately--some would say only-- be determined in a court of law.

Be aware that many US patents are not valuable at all, especially software patents. In this regard, see the writings of Greg Aharonian, who provides a lively usefully opinionated newsletter on patent validity and a broad range of other patent-related topics.

IP Strategies - 3 - Licensing & Assertion

[Nothing in this article is or should be construed as the giving of legal advice and/or the practice of the law.]

A broad range of strategies are available to patent owners to realize value from assets that are not strategic to the company or that cover inventions the company declines to bring to market. These include licensing and/or funding litigation, putting the patent portfolio up for auction, litigation through a law firm that is willing to work on a contingent fee basis, and licensing or sale to one of the patent licensing and assertion companies.

Here are a few examples of such firms.

• Acacia. One of the better known and I believe the only publicly traded company among this group is Acacia Research Corp (ACTG) whose business includes acquiring patent portfolios and the licensing the patents to relevant parties. In some cases, Acacia has used litigation as a tool to enforce patents. Consequently, most take them seriously.

• Altitude Capital Partners. ACP is a hedge fund based in New York that specializes in funding patent licensing and related litigation. They currently have at least 15 different portfolios, principally in high tech.

• Intellectual Ventures. Founded by Nathan Myhrvold (former CTO at Microsoft),  Intellectual Ventures creates and/or acquires patent portfolios which are then licensed to third parties.
  

• Rembrandt Fund. Led by Dr. Paul Schneck, the Rembrandt Fund also acquires, licenses, and asserts when necessary patents that have significant commercial value.

IP Strategies - 2 - Triage

[Nothing in this article is or should be construed as the giving of legal advice and/or the practice of the law.]

One of the points made by the Rembrandts book is that companies may own valid patents that are no longer useful to them. For example, maybe the discontinued a product line and have no plans to resurrect anything similar. Maybe some of the engineers created innovations that may not be useful to the company.  Nevertheless, in some circumstances subsets of a larger patent portfolio may have value that owners can realize.

These no-longer-useful patents can be licensed to others who are practicing the inventions. If the potential financial rewards and financial resources are sufficiently attractive, the company can consider litigation, especially when the potential licensee is being recalcitrant.

Alternatively, companies such as Ocean Tomo provide a patent auction service to help patent owners unlock the value of their IP. It's unclear whether this approach provides the best return on patents, especially when a portfolio may apply to large markets and large participants. Nonetheless, Ocean Tomo and similar companies deserve credit for helping to organize and shape a market.

In addition to undertaking litigation to enforce patents, IP owners may turn to patent licensing and assertion firms or to certain law firms who undertake patent litigation on a contingency fee basis. If the case for infringement is strong, if the patents are of the highest quality, and if the parties believed to be infringing have deep enough pockets, the contingency firms may ask for a third of the proceeds if successful. Since there are a multitude of factors, financial arrangements differ from firm to firm and case to case.

I'll address patent licensing and assertion firms in the next installment.

IP Strategies

[Nothing in this article is or should be construed as the giving of legal advice and/or the practice of the law.]

Back in 1999, the book Rembrandts in the Attic was one contributor  to increasing awareness that Intellectual Property considerations should be an important part of most company's business strategies. IP generally refers to patents, trademarks, copyrights, and trade secrets, but Rembrandt authors (and numerous others) focused on patents and patent strategies. In addition to promoting a tool for patent analysis, the authors describe how in certain instances companies can create patents that block their competitors, anticipate future technology developments, and create a stronger foundation for defensibility.

For example, a growing patent portfolio is a valuable resource when competitors show up demanding that the company take a license to the competitors patents and pay royalties. A company approached in this manner can counter-sue, offer to cross-license, and usually avoid payment (and collection) of royalties. For large technology-based companies, cross-licensing is a useful strategy that can be practiced with all but their most serious competitors.

But what about small companies? Inventors? Companies with patents pertaining to products they have abandoned? Good topics for the next installment.