Jay Walker’s No-Fault Patent Licensing System Takes Shape

On Monday, May 12, 2014, Patent Properties, Inc. (OTCQB: PPRO), the brainchild of Priceline.com founder Jay Walker, announced the appointment of Robert Stoll, former Commissioner for Patents at the United States Patent and Trademark Office, to Chair the Patent Properties Advisory Board. Joining Stoll on the Board will be Mona Sutphen, former White House Deputy Chief of Staff for Policy for President Obama; Vinit Nijhawan, Managing Director, Office of Technology Development and Lecturer in the Entrepreneurship Programs Office at Boston University; Louis Foreman, CEO & Founder of Edison Nation; and Stephen Merrill, former Executive Director of the National Academies’ Program on Science, Technology, and Economic Policy.

The purpose of the Board is to advise Patent Properties’ senior leadership on business, policy, regulatory, and legal issues related to the development, launch, and growth. Board members will serve in an advisory capacity without operational or decision-making responsibilities.

But what is Patent Properties?

The company develops and commercializes its unique portfolio of assets and has created a unique licensing solution for the mass market of patent owners and users. It was formed in September 2013 with the completed merger of GlobalOptions Group, Inc. and Walker Digital Holdings, LLC, which was a wholly-owned subsidiary of Walker Digital, LLC. Initially, the newly formed entity consisted of the patent portfolio created by Walker Digital, which included 379 granted patents, 93 pending patent applications, intellectual property in development and 19 litigation matters. As of today, according to the Patent Properties website, the number of patents is up to 401, with 79 pending applications and still 19 litigation matters pending.

Jon Ellenthal, CEO of Patent Properties, has described the thinking behind their new licensing model this way:

We believe the biggest problem is the sheer expense of patent litigation. Many companies cannot afford to defend themselves even when the merits are on their side. But it’s also true that many legitimate patent owners cannot afford to avail themselves of the court system because of the very high costs…

The crazy thing is that any industry that does all of its deals in the court system is not in good shape. And that’s how the IP marketplace works today. So for us to really unlock the full economic value of this asset class which I do believe is very important to the economy we need to figure out how we’re going to do deals in a simple and affordable way outside of the court system. We need to figure out how to do business outside the court system because the court system is inaccessible to almost everybody…

So if we’re going to continue to do deals based on a legal standard, all we’re going to do is argue over how to split the pie as its exists today. If we’re going to figure out how to create a commercial standard for deal making, licensing, that’s scalable then we can start to talk about how to diffuse patented innovation into the economy and grow the pie.

The way that Patent Properties proposes to fulfill this vision is through the creation of  a neutral entity called The United States Patent Utility, which will administer a new kind of licensing deal designed to work for both inventors and companies. It’s called a No-Fault Patent License.

The Patent Properties Patent Utility patent licensing system is expected to launch in the second half of 2014.

More on Advisory Board Appointments

Bob Stoll is a Partner at Drinker Biddle & Reath LLP and Co-Chair of the Intellectual Property Group. In October of 2013, he was appointed by Chief Judge Rader to a three-year term on the Court of Appeals for the Federal Circuit Advisory Council. As the former USPTO Commissioner for Patents, he was instrumental in the passage of landmark patent legislation, the America Invents Act.  Mr. Stoll said: “I am excited about having the opportunity to help Patent Properties and The United States Patent Utility realize the critical mission of its No-Fault system. Jay Walker is right to devote his thinking and resources to removing the commercialization barriers faced by America’s innovators, be they small inventors, mid-sized companies, or even our largest and most globally active companies.”

Mr. Stoll further added: “Throughout my career, I have been devoted to improving America’s intellectual property and patent system, primarily through traditional means such as patent reform and regulation. Patent Properties, through the creation of the Patent Utility is working on something completely new and innovative: a voluntary and commercially sensible alternative to the court-based patent licensing system. I look forward to contributing to this unique opportunity by offering my guidance and expertise as they work toward an innovative solution to fix our nation’s patent licensing system.”

Mona Sutphen is currently a Partner in Macro Advisory Partners. She also is a member of the President’s Intelligence Advisory Board and serves on the Boards of the International Rescue Committee, Drilling Info Holdings, and Human Rights First. Prior to this she spent three years at UBS AG as Managing Director, covering geopolitical and regulatory/policy trends. Mona served as White House Deputy Chief of Staff for Policy for President Obama from 2009 – 2011, working on a range of policy matters including technology initiatives and regulatory strategy.

Vinit Nijhawan is Managing Director, Office of Technology Development, and Lecturer at EPO (Entrepreneurship Programs Office) at Boston University. Vinit has over 30 years experience building five startups: as CEO of three, five were acquired. Vinit was Venture Partner at Key Venture Partners and over two years sourced over 200 deals and made one investment that was acquired for $430 million. He is an advisor and board member to several technology startups and was a Mass High Tech All-Star in 2005.

Louis Foreman is currently Chief Executive of Enventys, an integrated product design and engineering firm. He is also CEO of Edison Nation and Edison Nation Medical. Over the past 20 years Louis has created nine successful start-ups and has been directly responsible for the creation of over 20 others. He is the inventor on 10 registered US patents, and his firm is responsible for the development and filing of well over 600 more. In addition, Louis serves on the Board of Directors of the James Dyson Foundation, the Intellectual Property Owners Association (IPO) and is President of the Intellectual Property Owners Educational Foundation (IPOEF). In 2013, Louis was appointed by the SBA Administrator, Karen Mills, to serve a three year term on the National SBDC Advisory Board. In 2008, Louis was appointed by United States Secretary of Commerce, Carlos M. Gutierrez to serve a three year term on the Patent Public Advisory Committee (PPAC) of the United States Patent and Trademark Office. In 2013 he was asked to serve as Chairman of PPAC until the end of his term in December, 2014.

Stephen Merrill founded the National Academies’ Program on Science, Technology, and Economic Policy (STEP) in 1992 and served as its Executive Director until March 2014. Among other projects, he directed the study that led to the Academies’ 2004 report, A Patent System for the 21st Century, which laid the foundation for reforms incorporated in the America Invents Act of 2011 and changes adopted by the federal courts. Dr. Merrill continues to serve as a consultant to the National Academies’ STEP Program. For his work on patent reform he was named one of the 50 most influential people worldwide in the intellectual property field by Managing Intellectual Property magazine and received the Academies’ 2005 Distinguished Service Award.