1. Maximizing patent value – minimizing cost: EU & IP & U
David Healey Fish & Richardson Houston, TX
a/k/a “Patentmath.com”
Erick Robinson, Senior Patent Counsel, Red Hat Inc.,
Raleigh, NC
University of Texas Technology Law Conference, May 26-27, 2011

2. But first a word from our GCs
U.T. Tech. Law Conf. - For Discussion Only
But first a word from our GCs
These slides and this speech are not legal advice
No attorney client relationship is formed by this talk
These ideas and thoughts are for discussion purposes only and to promote academic dialogue
These ideas, thoughts, and positions do not represent the views of Red Hat, its affiliates, customers, suppliers, distributees,etc., Fish & Richardson, its attorneys, clients, or even of the authors
We don’t know whose ideas or views these are….

3. How to think about IP– Think Ahead
U.T. Tech. Law Conf. - For Discussion Only
How to think about IP– Think Ahead
Value is driven by size of market + cost of enforcement + predictability of result.
Value can change over time: Must think ahead 5 plus years
Utility patents, design patents, trademarks & copyrights, last a long time – think long range.
20 years for patents from first application.
Copyrights 50 years or more & trademarks perpetual…
Where will your markets be in 5, 10, 15 years?
Where will your competitors come from in the future?

4. Think Like A Business Person
U.T. Tech. Law Conf. - For Discussion Only
Think Like A Business Person
Infringing sales
Lost sales/ market
Price Erosion
VERSUS
Attorney and Expert fees
Internal litigation expense
Drain on internal business functions
Total out-of-pocket cost
What is probability of positive result?
How long and how much before return on investment?
What is risk of loss? Money? Invalid patent? Publicity?
What is risk of Countersuit? “Blow-back”?

5. U.S. Litigation Landscape
U.T. Tech. Law Conf. - For Discussion Only
U.S. Litigation Landscape
Trial court litigation 1 year to 3 years (or more)
No pre-trial injunction (as a practical matter)
Most final injunctions suspended on appeal
No injunctions where cannot meet market demand for product – e.g., NPE, Research Cos., Start-ups.
Trials decided by Juries chosen at random with no floor competency (other than ability to understand English).
Appeal is 18 months-2 years post-trial.
45% reversal rate at Federal Circuit Court of Appeals.
Reversal can result in second trial.
Risk of loss of IP: 75% of mechanical patents obvious.
EXPENSIVE AND INTRUSIVE DISCOVERY:
Depositions, document production, source code production

6. U.T. Tech. Law Conf. - For Discussion Only
Why Think Europe?
Injunction – is still main relief – for NPE or others
Faster – 1 year in first instance (trial court)
Cheaper – 250,000 to 1,000,000 dollars
No discovery – No distraction of employees/inventors
More predictable results – Judges not Juries

7. EU TODAY Obtain EPO patent, then must convert to National Patents.
U.T. Tech. Law Conf. - For Discussion Only
EU TODAY
Obtain EPO patent, then must convert to National Patents.
Each country enforces its own patents.
Today, no EU country has comparable population to US.
But Germany and UK are EU distribution points; and,
EU is working toward a unified patent and enforcement system (which would exceed US market).

8. U.T. Tech. Law Conf. - For Discussion Only
Time Matters

9. Recent Steps Towards Unified European Patent System
“London Agreement”
Entered into force on May 1, 2008 = Cost reduction through a cost-attractive post-grant translation regime:
States with national language = one of EPO’s official languages (France, Germany, LI, LU, MC, CH, UK): No translation necessary!
States with national language # EPO’s official languages:
Translation of claims, Spec in English: Netherlands, Sweden, DK;
EU patent is growing out of expansion of membership in London agreement.

10. London Agreement (EU) Patent – 300-500 MM Consumers
Italy and Spain are now hold-outs

11. EU Today: Germany 1 yr to Trial Decision
U.T. Tech. Law Conf. - For Discussion Only
EU Today: Germany 1 yr to Trial Decision
Germany is large EU distribution center and consumer market.
Until 2009, Germany, not China, was biggest exporter to US in dollar volume.
Pro-enforcement (pro-patent) bi-furcated system.

12. U.T. Tech. Law Conf. - For Discussion Only
EU Today: Germany 1 yr
German enforcement expense in typical patent case (including separate infringement and invalidity cases and appeals):
Legal fees $300,000-$500,000
Court Costs (filing fees) up to about $200,000-$400,000
No discovery
No common law defenses – e.g. inequitable conduct
Loser pays is limited (capped) risk for court costs and statutory schedule of attorney fees: Approx. your own spend up to cap

13. EU Today – Germany 1 yr German system:
U.T. Tech. Law Conf. - For Discussion Only
EU Today – Germany 1 yr
German system:
Infringement case almost always decided first;
Infringement has no common law defenses (e.g., equitable estoppel, inequitable conduct);
Infringement – only defenses are license and non-infringement;
Judge not jury – court not private experts;
Decision 1 year (did I mention no discovery?);
Validity case allows patent owner to amend claims, but takes longer due to both, “lag time” in filing after infringement case and slower forum: Favors patent owner in negotiation as injunction will come first in time.

14. EU Today – UK County IP Court
U.T. Tech. Law Conf. - For Discussion Only
EU Today – UK County IP Court
UK County IP Court in London Went “On Line” Oct 2010.
Very streamlined process.
Goal is case disposition under 6 months at low cost.
Max on loser pays is under $100,000.
No depositions, no or limited document exchange, 1-2 days trial, no or limited testimony (also Judge no jury).
Best uses:
Design patents and trademarks,
Avoid transfer motion to UK High Court.
Avoid typical narrow or invalidating UK rulings on EPO patents.
Judge is experienced “Q.C.” IP Lawyer.

15. …. And “EU Seizure Proceedings”?
Fast
Inexpensive
Simple
Typical EU Entry points:
Port of Rotterdam
Airport of Frankfort
Port of Hamburg

16. U.T. Tech. Law Conf. - For Discussion Only
EU - Seizures
All EU countries allow seizure pre-suit of goods alleged to infringe:
No court order needed, request to customs only;
Must file suit in days after seizure but only if goods claimed;
Many “copy cat” goods not claimed;
France and Italy permit for confiscation by police of sample products from stores or factories for evidence:
Rambus seized masks from Micron Avenzzano Italy semiconductor plant as “evidence”;
Usually creates “buzz” for enforcement.

17. Avoid Problems with US Proceedings
Shorter times – Much more predictable
No discovery (interrogatories, depositions, requests for admission, production of documents, electronic discovery)
Continental countries: No equitable defenses
Injunction regardless of “equities”

18. Comparison US v EU US EU No pre-judgment relief (generally)
U.T. Tech. Law Conf. - For Discussion Only
Comparison US v EU US EU
No pre-judgment relief (generally)
Pre-suit seizure without court order
Jury trial
Discovery
No jury
No or little discovery (varies)
45% or more reversal rate from trial
(often requires 2nd trial)
Low reversal rate
Judge only/Court appointed experts
Injunction only where equitable
Suspended pending appeal
Injunction as matter of course
Injunction enforceable pending appeal
3-6 years/3-10 million dollars
1-2 years/1,000,000 or less per side/Loser pays (can be capped)

19. Foreign Patent Filings - PCT
U.T. Tech. Law Conf. - For Discussion Only
Foreign Patent Filings - PCT

20. Foreign Patent Filings - PCT
U.T. Tech. Law Conf. - For Discussion Only
Foreign Patent Filings - PCT

21. Foreign Patent Filings - PCT
U.T. Tech. Law Conf. - For Discussion Only
Foreign Patent Filings - PCT

22. Source of Change in Total Patent Applications by Office (%), 2008-09
U.T. Tech. Law Conf. - For Discussion Only
Source of Change in Total Patent Applications by Office (%),

23. Trend in Patent Applications
U.T. Tech. Law Conf. - For Discussion Only
Trend in Patent Applications

24. Share of Top 5 Offices in Total Applications
U.T. Tech. Law Conf. - For Discussion Only
Share of Top 5 Offices in Total Applications

25. Patents In Force By Destination and Source, 2008
U.T. Tech. Law Conf. - For Discussion Only
Patents In Force By Destination and Source, 2008

26. Cost-Effectiveness of Enforcement
U.T. Tech. Law Conf. - For Discussion Only
Cost-Effectiveness of Enforcement
TaylorWessing Global Intellectual Property Index 2011,
Available at

27. Foreign Patent Filings – U.S. Patentees
U.T. Tech. Law Conf. - For Discussion Only
Foreign Patent Filings – U.S. Patentees
Inovia U.S Global Patent & IP Trends Indicator

28. Foreign Patent Filings – U.S. Patentees
U.T. Tech. Law Conf. - For Discussion Only
Foreign Patent Filings – U.S. Patentees
Inovia U.S Global Patent & IP Trends Indicator

29. Patent Indices U.T. Tech. Law Conf. - For Discussion Only
TaylorWessing Global Intellectual Property Index 2011,
Available at

30. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China
System is unpredictable.
Gravitating toward adoption of equitable defenses.
Highly formalistic in submission of proof.
No independent judiciary.
BUT CHINA IS AN ESSENTIAL MARKET for patenting
Chinese companies are applying for patents in China, US and EU at rates many times their past rate of applications
Chinese companies now in top ranks of patent applications worldwide.
5-10 years how will Chinese use their patents?
Exclude competition?
Will you need Chinese patents to trade for space in China market?

31. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China

32. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China

33. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China

34. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China

35. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China

36. Other Countries – China
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – China
Source: EPO

37. Other Countries -- Japan
U.T. Tech. Law Conf. - For Discussion Only
Other Countries -- Japan
Narrow claim scope in patents.
Long and expensive enforcement system.
But Japanese companies negotiate for Japanese licenses based on number not quality of patents.
If you want to do business in Japan, you need Japanese patents…
Otherwise, slow, expensive, processes make this an unattractive way to spend your money…

38. India – “Danger Will Robinson”
U.T. Tech. Law Conf. - For Discussion Only
India – “Danger Will Robinson”

39. India – “Danger Will Robinson”
U.T. Tech. Law Conf. - For Discussion Only
India – “Danger Will Robinson”

40. India – “Danger Will Robinson”
U.T. Tech. Law Conf. - For Discussion Only
India – “Danger Will Robinson”
Huge population.
But patents last a long time – value unknown 5-10 years from now…
Very corrupt patent application/PTO.
Very corrupt government.
Presents problems under FCPA and UK Anti-bribery Act.
Unpredictable system due to corruption & need to police your patent firm to avoid criminal problems with U.S. or U.K. authorities…

41. Other Countries – the Up and coming
U.T. Tech. Law Conf. - For Discussion Only
Other Countries – the Up and coming
For oil exploration, software, electronics, pharma:
Brazil
Australia (much like UK High Court)
Mexico – Administrative enforcement, trade zone by border exempt, corruption and violence unattractive, depends on long-term play
Russia – BIG QUESTION MARK??????
Israel – Small market but lots of R&D
Ireland – Small market now, but pharma and medical devices manufactured there for both EU and US markets, fast and cheap time to trial (as little as 6 weeks)

42. Visit PaTENTMATH.com Blogging on the business of patent assets…
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