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PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 1 Patent Engineering IEOR 190G CET: Center for Entrepreneurship &Technology Week 3 Dr. Tal Lavian.

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Presentation on theme: "PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 1 Patent Engineering IEOR 190G CET: Center for Entrepreneurship &Technology Week 3 Dr. Tal Lavian."— Presentation transcript:

1 PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 1 Patent Engineering IEOR 190G CET: Center for Entrepreneurship &Technology Week 3 Dr. Tal Lavian (408) Haviland Mondays 4:00-6:00

2 PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 2 Some administrations Sign up for your presentation date Subject line on your s to me: “IEOR 190G” – your subject line Dyslexia

3 PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 3 Today’s Student’s Presentations

4 Recognizing Intellectual Property 10,000 foot view Patents Invention that is new and useful Trademarks Logos & symbols Copyrights Right to reproduce an idea or information Includes software Trade Secrets Non-disclosed information that is valuable PatentEng-Berkeley-Lavian 4 Week 3: Patents & Corporations

5 PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 5 Example of a patent Cover page Diagrams Writing description Claims

6 How Patents Are Used Corporate Product protection Corporate Value Defensive portfolio Licensing Consultant Entrepreneurial Professional credibility PatentEng-Berkeley-Lavian 6 Week 3: Patents & Corporations

7 How Patents Are Used by Corporations Product protection Traditional use for patents Blocks competitors from using invention Corporate Value Part of the “book value” of a company Return on R&D investment Some small companies are acquired just to get the patents. Defensive portfolio (war chest)‏ Have patents to “trade” if a competitor accuses company of infringing their patents. Licensing License to customers or for non-competitive applications PatentEng-Berkeley-Lavian 7 Week 3: Patents & Corporations

8 PatentEng-Berkeley-Lavian 8 Promote Innovation Strengthen corporate community by focusing upon internal networking and information sharing Augment sources of innovation by promoting an environment of creativity –Create a simple and supportive environment that builds on ideas heard from any employee and encouragement/mentorship by subject matter experts Supplement corporate strategy - what exists beyond Transformation - by discovering ideas to invest in now for the future Week 3: Patents & Corporations

9 PatentEng-Berkeley-Lavian 9 How Can A Patent Provide Business Value? Can exclude others from using Company innovations Can be licensed for income Can be utilized for other business value (e.g. cross- licensing, if appropriate) Can be used defensively to avoid or deter litigation Can enable “freedom to operate” Demonstrates technology leadership Business Value/Return on R&D Investment Business Value/Return on R&D Investment Week 3: Patents & Corporations

10 Offensive patent strategy Small portfolio of pioneering patents –Market leadership & advantage –Licensing –Deal & merger leverage Small to medium size companies Reasonable cost Market monitoring PatentEng-Berkeley-Lavian 10 Week 3: Patents & Corporations

11 Defensive patent strategy Large portfolio of patents of various scope –Protect products from copying –Cause competitors to design around –Reduce risk of patent infringement suit by competitors = mutually assured destruction –Cross licensing - market entry Medium to large size companies High cost PatentEng-Berkeley-Lavian 11 Week 3: Patents & Corporations

12 International patent strategy International patent protection is very expensive Cost / benefit analysis Strategically select countries and patents to maximize value PatentEng-Berkeley-Lavian 12 Week 3: Patents & Corporations

13 PatentEng-Berkeley-Lavian Week 3: Patents & Corporations 13 Recent Patent Verdicts & Settlements Or – Why it is really important? Alcatel/ Lucent v. Microsoft. - (2007) - $1.5 Billion NTP – Settled with RIM for $612M (plus $53M litigation plus verdict) Intergraph – over $880M in settlement from patent litigation with Intel, HP and others Eolas v. Microsoft (2003). $506M Jury verdict Immersion v. Sony (2004). $82M jury verdict plus royalties –increased (2007) to $150M –vibration game controller - Microsoft settlement on $26 Freedom Wireless v. BCGI (2005) $128 jury verdict Finisar v DirectTV (2006). 103M (79+24)Jury verdict plus injunction Tivo v. EchoStar (2006). $74M jury verdict plus injunction Acacia - $60M in licensing revenue (2004-2—6) Forgent - $100M in licensing revenue

14  Licensing Company: A company with no products and little infrastructure that amass patents with the intention of prosecuting offending companies  NTP is considered by many to be a patent troll  Co-founded by a Chicago Engineer and his patent attorney in 1990 to protect his inventions.  Main attraction was a system to send s between computers and wireless devices NTP PatentEng-Berkeley-Lavian 14 Week 3: Patents & Corporations

15  Late 90’s, RIM hit the market with the BlackBerry  Had around $850 worth of sales that was considered to infringe upon NTP’s patents  NTP contacted RIM and offered to license their patent, RIM didn’t respond  NTP and RIM at first agreed to settle for around $450 million, but the agreement disintegrates over the summer The NTP Case PatentEng-Berkeley-Lavian 15 Week 3: Patents & Corporations

16  US Patent Trade Office decides to reexamine the patents that NTP held after RIM presents evidence of prior art.  After dragging their feet in court, RIM agrees to a settlement of around $650 million, and to license the technology from NTP.  Agreement is that the money will not be returned even if the US PTO finds the patents held by NTP to be invalid  RIM was losing customers and companies and law firms were delaying Blackberry upgrades until the case was resolved, so it was in their best interest to resolve it quickly. The Case PatentEng-Berkeley-Lavian 16 Week 3: Patents & Corporations

17 Bell Labs Case - The Technology  Late 1980’s, Inventors James Johnston and Joseph Hall (Bell Labs, division of AT&T)  Quantizing noise – approximation of continuous range by values by relatively small set of discrete values.  Invented method and apparatus to produce quantized audio signal using interpolated scale factor. Advantage - Data compression – Same or similar signal can be represented with less data PatentEng-Berkeley-Lavian 17 Week 3: Patents & Corporations

18 Bell Labs Patents Filed: Dec 1988 Assignee: Bell Laboratories U.S. Patent No. 5,341,457, Perceptual Coding of Audio Signals, to Joseph L. Hall and James D. Johnston (Dec 1988) U.S. Reissue Patent No. RE39,080, Rate loop processor for perceptual encoder/decoder, to James D. Johnston (Dec 1988, Reissued Sep 1994) PatentEng-Berkeley-Lavian 18 Week 3: Patents & Corporations

19 Bell Labs Patents PatentEng-Berkeley-Lavian 19 Week 3: Patents & Corporations

20 Bell Labs MS Case In 2003, Lucent files suit against Gateway, Dell, and eventually Microsoft in U.S. District Court, San Diego, CA. Claim: Infringed two patents developed by Bell Labs in MP3 compression and playback within Microsoft Windows Media Player Sought 0.5% royalty of total Windows computers sold PatentEng-Berkeley-Lavian 20 Week 3: Patents & Corporations

21 The Case Microsoft claims: Received license for MP3 technology from Fraunhofer Institute (Bell Lab’s parent research organization) for flat $17 million. Loop processor not applicable for WMP application. 0.5% rate exorbitant! “Only one of 10,000 features”. PatentEng-Berkeley-Lavian 21 Week 3: Patents & Corporations

22 The Results Ruling agreed that patents were developed by Bell Labs before joining with Fraunhofer to create MP3 Rights to patents exceeded value of $17 million paid for license February 22, 2007, Alcatel-Lucent awarded record $1.5 billion in damages from Microsoft. Jury unable to find ‘willful’ infringement for $4.5 billion damages. August 6, 2007, Microsoft granted retrial. Verdict overturned based on insufficient evidence by Judge Rudi Brewster. PatentEng-Berkeley-Lavian 22 Week 3: Patents & Corporations

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