1 TRUE PATENT VALUE: Defining Quality in Patents and Patent Portfolios Larry M. Goldstein LES C3X Audio Presentation October 23, 2013 © Larry M. Goldstein, All Rights Reserved, 2013

2 This presentation is based on the book TRUE PATENT VALUE: Defining Quality in Patents and Patent Portfolios (July 5, 2013) More information and sample pages available at or at Patent-Value-Defining-Portfolios/dp/ Patent-Value-Defining-Portfolios/dp/

© Larry M. Goldstein, All Rights Reserved, Outline of Presentation I.General Information: 1. Areas of Technology. 2. Methods of Valuation. 3. Standard Financial Methods. 4. Intrinsic Methods. 5. Hierarchy of Patent Value. 6. Gateways to Value. II.Examples: 1. A billion dollar word. 2. A single essential component. 3. Confusion both side to side & up and down. III.CONCLUSION: What is a “good patent”?

© Larry M. Goldstein, All Rights Reserved, Areas of Technology  Bio-technology, Chemical and Pharmaceutical (BCP)  Information & Communication Technology (ICT)  The Main Difference: Networked economy => fragmentation of ownership.

© Larry M. Goldstein, All Rights Reserved, Methods of Valuation  Financial  Intrinsic

© Larry M. Goldstein, All Rights Reserved, Standard Methods of Financial Valuation  Cost to Avoid/Replace/Design Around  Comparables  Income

© Larry M. Goldstein, All Rights Reserved, Intrinsic Methods of Evaluation  Proxy Fundamental Analysis (“PFA”): Automated factors.  Expert Fundamental Analysis (“EFA”): Human review.  Every Intrinsic Method Based on “VSD”: - Validity of the patent and the claims, - Scope of coverage, and - Discoverability/Detectability of infringement.

© Larry M. Goldstein, All Rights Reserved, The Hierarchy of Patent Value

© Larry M. Goldstein, All Rights Reserved, Gateways to Value  Victory in court litigation  Victor in ITC litigation  Sale for a significant sum  Placement in a patent pool  Hundreds of non-self forward citations

© Larry M. Goldstein, All Rights Reserved, Example (1): US 6,714,983, Claim #1 (In this claim, a single word was worth $981 Million. Which word?) 1. One or more circuits adapted for use in a mobile computing device comprising: a terminal adapted to receive battery power for at least one of the circuits; communication circuitry comprising a reduced power mode and being adapted to use a first wireless communication and a second wireless communication different from the first wireless communication to transmit data to access points, the communication circuitry reducing power by controlling the frequency of scanning for the access points; and processing circuitry arranged to process data received from the communication circuitry.

© Larry M. Goldstein, All Rights Reserved, Example (1): US 6,714,983, Claim #1 (In this claim, a single word was worth $981 Million. Which word?) 1. [Preamble] One or more circuits adapted for use in a mobile computing device comprising: [1] a terminal adapted to receive battery power for at least one of the circuits; [2] communication circuitry comprising [a] a reduced power mode and [b] being adapted to use a first wireless communication and a second wireless communication different from the first wireless communication to transmit data to access points, [c] the communication circuitry reducing power by controlling the frequency of scanning for the access points; and [d] processing circuitry arranged to process data received from the communication circuitry.

© Larry M. Goldstein, All Rights Reserved, Example (1): US 6,714,983, Claim #1 (In this claim, a single word was worth $981 Million. Which word?) Element #Claim Term Interpreted by Administrative Law Judge [1] “terminal” [1]“a terminal adapted to receive battery power for at least one of the circuits” [2a]“communication circuitry comprising a reduced power mode” [2b]“communication circuitry…being adapted to use a first wireless communication and a second wireless communication different from the first wireless communication to transmit data to access points” [2c]“reducing power by controlling the frequency of scanning for access points” [2c]the communication circuitry reducing power by controlling the frequency of scanning for the access points”

© Larry M. Goldstein, All Rights Reserved, Example (2): US 5,606,339, FIG. 2 (A single element determines the patent’s value. Which element?)

© Larry M. Goldstein, All Rights Reserved, Examples 3a and 3b: A Few More Terms (From the Glossary) Claim Parallelism: This is a particular kind of claim mix in which a single Point of Novelty is protected by multiple types of claims, in which the mix is achieved by using the same claim structure and same claim terminology in method, apparatus, and component claims of the same patent. When done properly, claim parallelism provides very strong protection for a single Point of Novelty. However, claim parallelism requires the same terminology in the various kinds of claims. If different terminology is used, the parallelism is lost, and maximal protection is not obtained. We saw imperfect claim parallelism in US 5,414,796, and particularly in lesson (Individual). See also “Claim Mix”, “Horizontal Claim Confusion”, and “Shifting Terminology”.

© Larry M. Goldstein, All Rights Reserved, Examples 3a and 3b: A Few More Terms (From the Glossary) Horizontal shift: Also called “horizontal shifting terminology”, this is what happens when the usage of a key claim term shifts between different independent claims in one patent. When this happens, “horizontal claim confusion” occurs. The minimal result is that the possible protection of “claim parallelism” fails and the resulting protection is less than what the patentee wanted. In other words, claim scope is almost certain to be reduced. In addition, claims may be invalidated, but that is not an inevitable result. See also “Claim Parallelism”, “Horizontal Claim Confusion”, and “Shifting Terminology”.

© Larry M. Goldstein, All Rights Reserved, Example (3a) US 5,414,796, Claims (In these claims, one phrase creates horizontal claim confusion. Which phrase?) Independent Method Claim #1Independent Apparatus Claim #18Independent Circuit Claim #29 1. [Preamble] A method of speech signal compression, by variable rate coding of frames of digitized speech samples, comprising the steps of: 18. [Preamble] An apparatus for compressing an acoustical signal into variable rate data comprising: 29. [Preamble] A circuit for compressing an acoustical signal into variable rate data comprising: [1] determining a level of speech activity for a frame of digitized speech samples; [1] means for determining a level of audio activity for an input frame of digitized samples of said acoustical signal; [1] a circuit for determining a level of audio activity for an input frame of digitized samples of said acoustical signal; [2] selecting an encoding rate from a set of rates based upon said determined level of speech activity for said frame; [2] means for selecting an output data rate from a predetermined set of rates based upon said determined level of audio activity within said frame; [2] a circuit for selecting an output data rate from a predetermined set of rates based upon said determined level of audio activity within said frame; [3] coding said frame according to a coding format of a set of coding formats for said selected rate wherein each rate has a corresponding different coding format and wherein each coding format provides for a different plurality of parameter signals representing said digitized speech samples in accordance with a speech model; and [3] means for coding said frame according to a coding format of a set of coding formats for said selected rate to provide a plurality of parameter signals wherein each rate has a corresponding different coding format with each coding format providing a different plurality of parameter signals representing said digitized speech samples in accordance with a speech model; and [3] a circuit for coding said frame according to a coding format of a set of coding formats for said selected rate to provide a plurality of parameter signals wherein each rate has a corresponding different coding format with each coding format providing a different plurality of parameter signals representing said digitized speech samples in accordance with a speech model; and [4] generating for said frame a data packet of said parameter signals. [4] means for providing for said frame a corresponding data packet at a data rate corresponding to said selected rate. [4] a circuit for providing for said frame a corresponding data packet at a data rate corresponding to said selected rate.

© Larry M. Goldstein, All Rights Reserved, Example (3a) US 5,414,796, Claims (In these claims, one phrase creates horizontal claim confusion. Which phrase?) Independent Method Claim #1 Independent Apparatus Claim #18 Independent Circuit Claim #29 Preamble“digitized speech samples” “acoustical signal” Element [1]“digitized speech samples” “digitized samples of said acoustical signals” Element [2]“speech activity”“audio activity” Element [3]“said digitized speech samples”

© Larry M. Goldstein, All Rights Reserved, Examples 3a and 3b: One More Terms (From the Glossary) Vertical Shift: Also called “vertical shifting terminology”, this is what happens when the usage or meaning of a key claim term shift between different elements of the same claim. When this happens, “vertical claim confusion” occurs. The results of vertical shift are often catastrophic, invalidating both the infected claim and all claims dependent on the infected claim, because a reader of the patent cannot be certain what the infected claim means. In Chapter 7, there was vertical shift in independent apparatus claim #18 and independent circuit claim #29 of US 5,414,796. Although only a court or the ITC can render a final decision, the likely result of vertical shift in this case is that more than 50% of the patent’s claim would be invalidated in litigation. See also “Shifting Terminology” and “Vertical Claim Confusion”.

© Larry M. Goldstein, All Rights Reserved, Example (3b) US 5,414,796, Claims (In these claims, one phrase creates vertical claim confusion. Which phrase?) Independent Method Claim #1Independent Apparatus Claim #18Independent Circuit Claim #29 1. [Preamble] A method of speech signal compression, by variable rate coding of frames of digitized speech samples, comprising the steps of: 18. [Preamble] An apparatus for compressing an acoustical signal into variable rate data comprising: 29. [Preamble] A circuit for compressing an acoustical signal into variable rate data comprising: [1] determining a level of speech activity for a frame of digitized speech samples; [1] means for determining a level of audio activity for an input frame of digitized samples of said acoustical signal; [1] a circuit for determining a level of audio activity for an input frame of digitized samples of said acoustical signal; [2] selecting an encoding rate from a set of rates based upon said determined level of speech activity for said frame; [2] means for selecting an output data rate from a predetermined set of rates based upon said determined level of audio activity within said frame; [2] a circuit for selecting an output data rate from a predetermined set of rates based upon said determined level of audio activity within said frame; [3] coding said frame according to a coding format of a set of coding formats for said selected rate wherein each rate has a corresponding different coding format and wherein each coding format provides for a different plurality of parameter signals representing said digitized speech samples in accordance with a speech model; and [3] means for coding said frame according to a coding format of a set of coding formats for said selected rate to provide a plurality of parameter signals wherein each rate has a corresponding different coding format with each coding format providing a different plurality of parameter signals representing said digitized speech samples in accordance with a speech model; and [3] a circuit for coding said frame according to a coding format of a set of coding formats for said selected rate to provide a plurality of parameter signals wherein each rate has a corresponding different coding format with each coding format providing a different plurality of parameter signals representing said digitized speech samples in accordance with a speech model; and [4] generating for said frame a data packet of said parameter signals. [4] means for providing for said frame a corresponding data packet at a data rate corresponding to said selected rate. [4] a circuit for providing for said frame a corresponding data packet at a data rate corresponding to said selected rate.

© Larry M. Goldstein, All Rights Reserved, Example (3b) US 5,414,796, Claims (In these claims, one phrase creates vertical claim confusion. Which phrase?) Independent Method Claim #1 Independent Apparatus Claim #18 Independent Circuit Claim #29 Preamble“digitized speech samples” “acoustical signal” Element [1]“digitized speech samples” “digitized samples of said acoustical signals” Element [2]“speech activity”“audio activity” Element [3]“said digitized speech samples”

© Larry M. Goldstein, All Rights Reserved, CONCLUSION: What is a “good patent”? (From Chapter 8 Summary: Question & Answer Number 1) Q1: What is a “good patent”? Recall Introductory Chart 1. A “good patent” has two basic characteristics: Good claims Good support for the claims in the written description A patent that meets these two criteria is a well-drafted patent, with coverage as reasonably broad as possible given the subject matter of the patent. However, a “good patent” alone is not a “valuable patent”. A valuable patent is a good patent that, in addition, is infringed now or will be infringed in the very near future. Also, there has been no “external event that destroys patent value”. A patent that meets all of these criteria – good claims, good support, infringed, and no external events destroying value – has “true value”. If a marketing and financial study shows that there is very significant infringement of the claims, then the patent is, in addition, a “very valuable patent”.

© Larry M. Goldstein, All Rights Reserved, Larry M. Goldstein U.S. Patent Attorney & Expert in Patent Quality Web Site: Cell Phone: Author of: (1) TRUE PATENT VALUE: Defining Quality in Patents & Patent Portfolios (True Value Press, July 5, 2013): Portfolios/dp/ Portfolios/dp/ (2) TECHNOLOGY PATENT LICENSING: An International Reference on 21 st Century Patent Licensing, Patent Pools and Patent Platforms (Thomson Reuters, 2004): Patent-Licensing-Larry-Goldstein/dp/ X. Patent-Licensing-Larry-Goldstein/dp/ X

© Larry M. Goldstein, All Rights Reserved, THANK YOU!!!! QUESTIONS or COMMENTS?

© Larry M. Goldstein, All Rights Reserved,