G REGORY R OSENTHAL C HAPTER S UMMARY F UNDAMENTS OF P ATENTING AND L ICENSING ( PG ) IEOR 190G A PRIL 20 TH, 2010

O VERVIEW These chapters mainly consist of common strategies carried out by corporate patent holders in commercializing their intellectual property assets Main point: Patents should be business driven Pages covered Chapters 11-15

B USINESS D RIVEN P ATENTS, C HP Using the patented invention in one’s existing products. 2. Continuously improving, testing and perfecting the invention in an effort to create a new product 3. Promoting the invention and diligently seeking parties who may adopt the technology and commercialize it. 4. Diligently watch out for infringers! 5. Selling outright and trading patent for cash should the business shift away from the invention

D EFENSE AND O FFENSIVE S TRATEGY Defense A strong portfolio should be built to prevent injunction or litigation from happening. See section 2.2 for more information A good patent portfolio includes: a mixture of patents covering all product features with different scope of claims Counter assertion is a very common strategy today! File a patent to defend your self against a company! Offensive Actively seek out potential adopters of a patented invention or identify infringers and force them into a license Offensive is also defense, beat your infringers before they beat you!

I NTELLECTUAL P ROPERTY M ANAGEMENT IN S TANDARDS Two major guidelines Each participant should have a binding representation that no patents shall stand in the way of the use of the proposed standard Each individual shall NOT use their patents to block any nonstandard participants from using the standard and developing standardized products Each participant will grant users of the standard licenses on RAND R-Reasonable A-And N-NON D-Discrimnatory

C ONSIDERATIONS IN S TANDARD P ARTICIPATION Future financial return from licensing intellectual property IS certainly the MAIN DRIVING FORCE for a company to participate in a standard body Have a clear vision on the standard Position, features, architectures, designs, and etc. The up-front cost in comparison to the investment return and benefit as discussed on page 191 The risk associated with participating a standard body for the company almost has to donate their patents to the pool for either RAND or RAND-Sero license YOU WANT YOUR PATENT TO READ ON A STANDARD BUT NOT BE PART OF A STANDARD POOL

E XAMPLE AND ISSUES WITH OPEN SOURCE Question: If you develop everything using open source, why would we still need to file patent? Answer: It would be a huge risk for any commercial software vendor to indemnify their users because the content covered under such responsibilities traces back all the way to the beginning of the open source chain, from whoever provides it of modifies it but there are no contributors who will indemnify the license.

U NCOVERING OF I NFRINGING PRODUCTS Major tips The evidence of use must be compared with your claims to determine infringement. You can be aggressive in making assumptions of someone’s infringement and go prove it, but honest! The evidence of use can come from many sources such as the operation of real products, reverse engineering, information from the Internet, patent applications, journals and published papers and product brochures. Work with you legal counsel or management throughout the investigation

C HAPTER 12: PATENT E VALUATION AND P ATENT M AINTENANCE Basic elements of patent evaluation Patent maintenance Is essentially a patent evaluation process with its own special purpose; therefore, patent maintenance will also be discussed at the end of the chapter

P ATENT U SE Refers to whether the technology in the patent under evaluation is being used, See page 196, Table 12.1 Market potential Knowing the market for the patent is vital for patent use Claim Quality An important criteria in evaluating a patent is how much protection the patent will give its owner Determined by the quality of patent claims Claim breadth and claim diversity (pages ) Technical Strength How fundamental the technology in the patent stands in its field. See page 199 for a list of questions

P ATENT M AINTENANCE Paying a series of fees to USPTO during the life of a patent in order to keep the patent in force Each time an owner needs to pay the fee they should decide as to whether or not to continue, evaluate the patent at this point. Patent maintaenance is only required for utility patents At current fee schedule, patent maintenance fees for small entities are: US $465, US $1180, US $1955, for 3.5, 7.5, and 11.5 years respectivilty

C HAPTER 13 P ATENT S ALES, L ICENSING AND C OMMON P RACTICES Common ways of capitalizing a patent asset and are completely different industries from their creations, i.e. patent filing and prosecution. Usual handled by patent attorneys and agents handle patents Patent sales and licensing are usually handled by patent owner himself.

O UTRIGHT SALE OR LICENSING Sell or license? –Major decision Primary factors Is the asset part of the company’s core business? If not, sell it! Otherwise, need be careful There are other financial considerations to take into account Cash up front (sell it out right) Licensing, collect royalties over time Noteworthy ideas (page 206): License grant back Non-exclusive and exclusive license Exclusive license with enforcement rights

P ATENT O WNERSHIP Buyer or licensee MUST verify the ownership (title) of the patent This is extremely important in order to avoid fraud Keep a clear record of Chain of Titles Patents can be sold multiple times Changes in ownership should start with the inventor and all ownership changes should be recorded with the USPTO One key note is Government Regulations with patent ownership If a patent is conceived while conducting research for the government refer to: Bayd-Dole Act, Federal Acquisition Regulations (FAR), and Defense Federal Acquisition Regulations Supplements (DFARS), see page 209

P ATENT V ALUATION C HP.14 Intangible Assets and Why Valuation Patents can be assets! Look for hidden “treasures” from old or inactive intellectual property Launching aggressive licensing program with the attempt to bring in revenue for R&D Donate intellectual property to charity that is NOT seen as useful to the company How to Value this patents/assets? Difficult process Several techniques with pros and cons Next slide defines several ways to value a patent

R EPRESENTATIVE V ALUATION A PPROACHES Cost Approach How much does it cost to develop as asset? Application/registration fees, attorney fees, personnel costs, development of production costs, marketing and advertising costs, other legal fees This approach derives a max to the perspective buyer or licensee, does NOT reflect economic benefit derived from owning patent Income Approach How much are we going to earn in the next ten years? Projection of the size of the market that the patent asset is pertaining to, affected market size attributable to the claims, duration of future income stream, risks associated with the generation of future revenue

R EPRESENTATIVE V ALUATION A PPROACHES CONT. Market Approach Simliar to the traditional comparison sales approach in real estate business: estimates the value of an asset based on previous market sales data. Two challenges May be difficult to find data of patents which are already priced and traded, particularly data for those similar patents that you can compare with. Every patent is unique and there is no definition what a similar patent is. Difficult to apply unless patents for comparison are truly similar and there are mature market data available. For examples see pages

P ATENT S EARCH C HP. 15 Vital in every stage from inventing to strategy and commercialization Very convenient with Internet Two most popular USPTO Google database USPTO  look for patents (there is help)  easy to use (has help)

S EARCH TIPS Start with some different variations of keywords to see if you are getting any reasonable return: how many are returned and whether most of the returned patents are relevant or too far off. Try to use the right truncation feature to cover many variations of a word. Title of patent is NOT normally used in searching, go for the abstract and specification Try combining keywords searchs For more details see page 230 or refer to section 3 of chp. 15 See page 230 for International and European databases