Posts Tagged: "Patent Licensing"

The greatest long-term threat to the U.S. patent system does not come from its professional opponents – those large businesses and their political allies who stand to profit from enfeebled patent rights. A deeper harm is caused by unscrupulous patent trolls who use extortionist “demand letters” to victimize small businesses. Yet even as damage caused by demand letters spreads, most legitimate patent licensors whose businesses depend upon continued legislative and public trust stand idly by, doing little or nothing to address it. Well-insulated within the patent industry’s cozy professional bubble, we are, in effect, fiddling like a modern-day Nero while innovation’s Rome burns.

“Our promise to the small or medium size operating company is we will give them a simple and affordable way to understand the patent environment they’re doing business in, to find the hundred patents that are most statistically relevant to their product line. And provide them with either a license or a warranty that allows them to reduce the risk they’re facing on those one hundred patents. And if you’re a small or medium size operating company who is coming to understand that every business needs an IP strategy these days as IP becomes a more important part of markets and the economy then this is a very affordable and simple entry level strategy for understanding and dealing with patent risk. And that puts you in a much better position arguably than the position that you’re in right now which is you know very little about the risk you’re facing and you can do nothing about it.”

Recently I had the opportunity to interview Jay Walker, the founder of Priceline.com. Walker, with over 700 patents and pending patent applications, is one of the most prolific living inventors in the world. He is embarking on the monumental task to commoditize patent licenses in a way that streamlines the process, keeps costs down, maximizes the number of licenses and charges a low flat fee. A daunting task no doubt, but his methodology is unique and seems to me to be more likely to succeed than any other efforts, which really bear no resemblance to the Patent Properties model. Still, to call the task difficult is an understatement, but if anyone has the ability to pull it off it would be Jay Walker.

Simply stated, Jay Walker is one of America’s best-known business inventors and entrepreneurs… Recently I had the opportunity to interview Walker, along with the CEO of Patent Properties Jon Ellenthal. While nothing was ruled out of bounds for the interview we spent much of our time discussing his attempt to create a no-fault patent licensing system that will help innovators monetize patents through a uniform licensing regime that offers a variety of peripheral benefits to those who take licenses… In this interview with Jay Walker we discuss his effort to monetize patents, patent trolls, patent reform and the importance of patents in general.

Recently I visited a Congressional office with a friend who led technology transfer at a public institution located in a mid-level city not normally associated with innovation. By skillfully using the authorities of Bayh-Dole and the patent system combined with good business judgment the program was very successful in start up formation and licensing, making it a driver of the regional economy. The Congressional staff were effusive in their praise of the results, which are well known in the state, vowing to do everything they could to support continued success. However, just before the meeting my friend confided that their new leadership made it clear that they did not consider technology transfer a profession requiring special skills and experience. The staff that labored so long and hard building the program got the hint and was leaving. Luckily their achievement is recognized by other institutions that are happy to snap them up. Unfortunately, the economy of the area they left behind will pay a high price for this boneheaded mistake.

Jane Muir, AUTM President: “[U]niversities are not the next patent troll because at the end of the day, university tech transfer offices were put into place to ensure that the new discoveries that happen in the research laboratories ultimately get out into the marketplace by way of product and services that improve the human condition. The big difference is with patent trolls. They’re not interested in commercializing discoveries. They’re interested in using those patents to sue legitimate companies who do want to move those products into the market. From the commercialization standpoint that really is the fundamental difference. Patent trolls have no real interest in commercializing. Their interest is in litigating.”

The license agreement grants Reckitt Benckiser Pharmaceuticals Inc., a wholly owned subsidiary of Reckitt Benckiser Group plc, rights for the development and commercialization of XenoPort’s promising oral treatment for alcohol use disorders, a condition affecting more than 140 million people worldwide. Under the terms of the agreement, Reckitt will receive exclusive rights to develop and commercialize arbaclofen placarbil worldwide for all indications, subject to certain rights by XenoPort to negotiate with Reckitt Benckiser Pharmaceuticals on collaborations for non-addiction indications.

This No-Fault licensing system will price its license products based on the likelihood that a company is using a patented technology rather than on a legal standard of absolute certainty… In order to accomplish the ultimate goal, the Patent Utility will select statistically relevant patents for No-Fault licensing by using sophisticated software. The software compares the terms and concepts in millions patent claims in currently unexpired patents against the terms and concepts in the specifications of a company’s specific product line or service. It then scores all 2.1 million unexpired U.S. patents on a scale from 1-100 depending on their statistical relevance to the product or service.

And the game goes on, with sophisticated tactics and subterfuges. Some patent holders obfuscate their patent ownerships behind shell companies, including some large technology companies who find it useful to play the part of the NPE to harass competitors. Others use negotiations as fishing expeditions with the intent to prepare stronger cases in the court room – making escalations go even faster. Complaints are prepared before a first contact is made. Even those who would prefer to negotiate rather than sue are forced to sue to capture the attention of the accused infringer, many of whom simply refuse to discuss licensing or settlement unless they are sued. The IP game becomes a race to the courtroom. There are no obvious winners (except for the attorneys representing the parties) as legal fees keep escalating. Litigation could be avoided in many circumstances, but the IP game fosters a power struggle in which each party assumes the worst from the other and defends itself, at high legal expenses, against imaginary threats. Both sides, the users and owners of patented technologies, are antagonized.

First of all, congratulations! You made The Washington Post and they even spelled your name correctly. Unfortunately, AUTM was specifically called out in an article titled Patent Trolls Have a Surprising Ally: Universities… For a profession that keeps a low profile and goes out of its way not to antagonize people, you may wonder what in the world’s going on that you are gaining such notoriety. The answer is that you are in the sights of several groups who do not wish you well. Some want to weaken the patent system for their short term benefit, some believe society would be better off if inventions were freely available without patents; some don’t think it’s moral for universities to work with industry, and others believe they should determine who reaps the rewards of innovation. While operating on diverse belief systems, they all have one thing in common: they don’t like you.

InterDigital CEO William Merritt writes: “It’s no secret that the regulatory environment is challenging for companies that license patents – in our case, patents that are deemed essential to wireless standards… One of the greatest frustrations for me is that so much of this rests on a bedrock of total miscomprehension of how standards are developed… I met with a reporter for one of the primary tech websites in the world, and he dismissed standards development. It became apparent he didn’t understand how the process worked at all… He didn’t realize that it was private sector companies – companies like ours – that committed significant engineering time and resources, and competed to develop the best solutions, and in so doing committed to licensing them fairly.”

Unfortunately, I’ve known for a couple of weeks what this month’s column was likely to be about. After a brief illness, my friend Howard Bremer died last Friday… Working through WARF, Howard’s efforts were critical in our eventual success enacting Bayh-Dole despite long odds. Over the years, he remained a steadfast defender pushing back against the critics of the patent system… Howard attended the Association of University Technology Managers meeting this year—an organization he helped found in the 1970’s to foster the profession. Howard knew it was his last as he was not physically able to travel any longer. But there was no sadness; he enjoyed seeing many of his friends for what he knew was the final time…