Download presentation
Presentation is loading. Please wait.
Published byDevin Maher Modified over 10 years ago
1
What Patent Trolls Can Teach TTOs about Extracting Value From IP Mary Anthony Merchant, Ph.D. Lawrence K. Nodine April 30, 2009
2
WHY ASK THE QUESTION? What have trolls taught us about IP Should Universities use trolls or their methods to exploit their IP?
3
WHY ASK THE QUESTION? Universities have vast IP resources University IPs value not fully extracted Litigation is costly and controversial Aggressive enforcement feels contrary to University mission
4
Where are we now? –Increased Patenting Activity by Universities and others –Increased value in IP –Certain types of patents are more vulnerable to trolls –Scope of improvements may be incremental SET THE STAGE
5
RISE IN UNIVERSITY PATENTING Universities obtained 16X as many patents in 2004 as in 1980 –250 in 1980 –3933 in 2003 Tech transfer offices 100X Bayh-Dole $1 Billion/yr 12% nanotech patents go to universities 18% of biotech patents to U.S.
6
VALUE OF IP In 2006, 75% of the value of publicly traded companies was linked to intangible assets Up from 40% in 1980
7
UNIVERSITY LICENSING REVENUE o In 2000, Universities collected $1.1BB in license royalties from 13000 patents o Reinvested in education o University IP not fully exploited o Less than 1% of licenses generated more than $1MM.
8
COMPARE TO OTHERS When compared to others, It seems like trolls are doing better
9
Examples- Blackberry v RIM Threat of injunction significant Plaintiff NTP (troll) demanded 6% of sales through 2012-- $1BB Settled for $600MM
10
MORE EXAMPLES ACACIA Traded on NASDAQ In 2006 revenue over $50MM LEMELSON Lemelson Medical, Education & Research Foundation earned estimated $1.2BB in licensing revenue since 1988
11
SHOULD UNIVERSITIES EXTRACT FULL VALUE OF THEIR IP? Are troll methods compatible with University culture? Should Universities use trolls or troll methods to extract value? If the answer is mixed, –Whats good? –Whats bad?
12
UNIVERSITY CULTURE Is there a contradiction? TTOs often isolated Larger University communitythe Academy– not sure it wants to play hardball TTOs increasingly viewed as revenue centers
13
PROBLEMS w/ LITIGATION FOR UNIVERSITIES Discomfort with aggressive enforcement Discomfort with litigation Resources for litigation Concern about the mission
14
Are Universities comfortable with litigation? Evolving……. Litigation Cost Patent litigation has median cost of $2MM for suits with 1-$25MM at stake
15
EVOLVING…. University patent Infringement Lawsuits Since 2000 139 lawsuits with licensees 51 by Universities alone
16
UNIVERSITIES, LIKE ALL LITIGANTS, HAVE WON AND LOST U. CALIFORNIA AND EOLAS: –$521M verdict for U. California and EOLAS in 2003 –Settled in 2007 after appeal remanded for new trial ARIAD (HARVARD AND MIT) V. LILLY –$65M verdict in 2008 –Reversed April 2009; patent invalidated for lack of written description
17
LITIGATIONS INDIRECT COSTS/ISSUES Patent litigation takes time and attention of licensing managers from marketing, search and negotiation activities Litigation at the expense of licensing may reduce the amount of technology licensing that would have occurred At larger or more experienced TLOs, the risk perception of litigation is reduced More royalty income makes a TLO able to fund litigation and to convince Administration that litigation is worthwhile DMEAST #10226950 17
18
LITIGATIONS INDIRECT COSTS/ISSUES When levels of industrial funding are low, universities have less to lose with damaged industry relationships- leading to more litigation When universities rely more on exclusive licenses, which makes it easier for their licensees to bear the cost and risk of patent litigation, universities engage in lower levels of litigation DMEAST #10226950 18
19
THE QUESTIONS Can trolls help? Should troll methods be adopted by Universities? Should Universities act like trolls? Should Universities let trolls do their dirty work?
20
What is a troll? Are Universities trolls? ORIGIN OF THE TERM Intels Asst GC in 2001 Referred to Plaintiff in action against Intel as Patent Troll ALTERNATIVE TERMS Non-producing patent owner Non-Producing Entity (NPE) sounds nicer That extracts licensing fees Or, worse, dares to litigate
21
TROLL CHARACTERISTICS-BAD ACTORS Patents are bought by an opportunist at a low price Enforced after public treats innovation as if its in the public domain Delay issuance Delay enforcement Enforced regardless of true value Wielding injunctive threat
22
TROLL CHARACTERISTICS-Litigation style Trolls cynically exploit high cost of litigation Trolls exploit uncertainty of litigation Routinely settle at less than cost of litigation As do all plaintiffs
23
HISTORY Old issue Thomas Edison obtained and sold hundreds of patents And tried to control the marketplace
24
AGRARIAN DESIGN PATENT TROLLS 1870s Patent Office allowed patents for design improvements to standard tools, like shovels The was a gold rush for these patents Patent sharks extricated license fees from farmers Congress got mad, but –Other inventors (Thomas Edison) objected to reform (innocent purchaser exemptions) –No reform passed
25
HISTORY REPEATS ITSELF- 2X THEN Scapegoat-US Patent Office Change in law changed landscape Substitution Effect-hard to remove patented item Marginal Improvement in Technology Low cost patents NOW Scapegoat-US Patent Office Change in law changed landscape Substitution Effect-hard to remove patented item Marginal Improvement in Technology Low cost patents DMEAST #10226950 25
26
HISTORY What stopped the last Patent Shark/Troll plague? The change in the design patent law (not Congressional action) Now- the courts, and maybe Congressional action DMEAST #10226950 26
27
REMEMBER One mans troll…..
28
Is another mans…
29
Trolls have their defenders Provide capital to extract rent from squatters Fund enforcement that undercapitalized IP owners cans afford
30
The problem is changing
31
Troll power decreasing eBay Eliminated absolute entitlement to permanent injunction –Reduced leverage of all plaintiffs, including trolls –Viewed by many as an anti-troll opinion Bilski and LabCorp signal weakening of business methods patents
32
Trolls evolving Troll Armies Emerging
34
IV as new troll Peter Detkin coined the term patent troll while fighting patent assertions against Intel, for whom Peter was a self-righteous wage slave at the time. But now, being the managing director of a patent troll, Intellectual Ventures, which "invests in pure invention", Peter's pointing the finger elsewhere, to smellier trolls. Intellectual Ventures Detkin trilled that patent trolls are different from patent licensing companies, such as his now-beloved Intellectual Ventures, because patent trolls buy patents to: 1) game the system, 2) are quick to litigate, and 3) assert patents of highly questionable merit. Patent Prospector 2005 http://images.google.com/imgres?imgurl=http://www.patenthawk.com/blog_images/troll.jpg&imgrefurl=http://www.patenthawk.com/blog/2005 /03/dc_patent_troll_hoedown.html&usg=__IFuMW-ok47NfllZK1so- pQEscsY=&h=527&w=451&sz=67&hl=en&start=15&tbnid=FjShXB7ZcQTZtM:&tbnh=132&tbnw=113&prev=/images%3Fq%3Dtroll%26gbv% 3D2%26hl%3Den%26sa%3DG
35
Intellectual Ventures Has amassed 20,000 patents Says litigation not objective, but not ruled out University participation uncertain
36
Intellectual Ventures (IV) Investors get rights to portfolio Investors get license to the portfolio Irony: Peter Detkin, who coined the term patent troll, worked for IV
39
Aggregators as anti-trolls Troll blocking strategies
40
Blocking concept Good guys buys the distressed assets before the bad guys
41
Aggregators Good guys pool patents so that members get defensive licenses Opposite of trolls Examples –Linux Open Invention Network –AST –RPX
43
Aggregators: A force for Good?
44
Or Evil?
45
Choices? Should Universities act like trolls Should Universities cooperate with holding companies like IV or aggregators like RPX?
46
What works for trolls? Are there any lessons
47
What is good troll patent? Patent rights in area where there is commercial competition Broad rights Vague rights Cheap to acquire; bankruptcy auctions
48
Factors affecting troll patent value Target cant change (because invention is incorporated into complex device) –E.g. integrated chip component Incremental innovation area, which makes it hard to show non-infringement –Old isnt much different from new
49
Factors affecting troll patent value Strict Liability Patents easy to overlook; enforcement (or absence of it) signals existence of rights No enforcement=no problem
50
Troll targets Companies that cannot afford stigma or cost of litigation High revenue products where downside risk unacceptable Companies that cannot take injunction risk –Multiple component products especially vulnerable
51
Target areas Technology Software Pharma Biotech
52
High tech patents are broad Why? Areas of rapid innovation? Overworked examiners: average time spent on patent application? –25 hours High approval rate: 66-90% Quality concerns greatest in business method and genomics
53
Patents inexpensive Trolls often buy patents at bankruptcy auctions
54
Asymmetry Trolls not vulnerable to counterclaims for infringement of defendants patents
55
Are Universities patent trolls?
57
Which troll techniques useful Universities do not buy patents; they are not holding companies –However, universities could license companies that have acquired complementary patents –Universities might buy related patents –Third party ownership of related technology could block exploitation of Universitys patents Asymmetry –Universities have little counterclaim risk –However, relationships suffer Universities have IP in troll markets –Pharma, Bio and IT
58
Which troll tactics wont work for Universities Cynical enforcement of bad patents Nuisance value lawsuits –Exploiting the cost of litigation to extract settlement for bad patents
59
Dos and Donts Do License broadly Litigate if necessary Delegate enforcement to good faith actors Dont: Abdicate Sue for bad patents Exploit judicial process defects Block use Demand excessive compensation
60
Is there a better way? Goal: Maximize Social Impact of Technology
61
Alternatives How could Universities co-opt trolls to do good?
62
Exclusive v. Non-exclusive AUTM report: 60% U. licenses are exclusive Appropriate in Pharma Not appropriate in IT For enabling technologies non-exclusive better –Opens up many areas to improvements
63
Instead of outright transfer to trolls Field specific exclusivity Exclusive for limited term Exempt research Dissemination goals as condition of exclusivity Override rights
64
TTO Cultural Changes End TTO isolation Treat TTO as part of larger U. mission; not just revenue Retain march in rights Require compulsory license to publicly funded research
66
What Patent Trolls Can Teach TTOs about Extracting Value From IP Mary Anthony Merchant, Ph.D. Lawrence K. Nodine April 30, 2009
67
BIBLIOGRAPHY The Effects of Patent Litigation on University Licensing Efforts Scott Shane, Case Western Reserve U. Deepak Somaya, U. Maryland Technology Licensing and Patent Trolls 12 B.U. J. Sci. & Tech. L. 388 (Summer 2006) Blackberries and Barnyards 82 Notre Dame L. Rev. 1809 (June 2007) Santa Clara Law School 2009 PowerPoint http://www.chtlj.org/sites/default Stop Looking Under the Bridge …. 17 Fed. Cir. B.J. 165 (2007/2008) Are Universities Patent Trolls? 18 Fordham Intell. Prop. Media & Ent. L.J. 611, Mark A. Lemley
68
DMEAST #10226950 68 What the Company Can Do Keep good records/files For Patents/applications Trademark app/registrations –Title/ MARK –Filing date –Claimed subject matter –Issue date –Assignment confirmation/PTO record –Type of application –Product relationship to claimed subject matter
69
DMEAST #10226950 69 How to Make $$ from IP Patents – Trademarks – Trade Secrets Sell it (yourself) Sell it (assign) License it Monitor royalty stream Monitor compliance Monitor competition Joint Venture Strategic Alliance Start a spin out to exploit
70
DMEAST #10226950 70 Managing Your IP Portfolio Set up regular review of IP estate – cost reductions –Eliminate unnecessary IP Patents and applications Trademarks and applications –Is application likely to issue as worthwhile patent? –Are patents/trademarks still valuable in current business models –Improve criteria used to decide if you will file application –Review and update standard country filing list
71
Litigation Considerations Keep the portfolio in good shape Delaying costs by choosing forum Rocket docket- more costs earlier in process Regular courts- slower, more time for negotiations File but wait to serve- preserves forum, allows for negotiation without litigation costs Re-examination of patent if possible Cancellation of trademarks DMEAST #10226950 71
Similar presentations
© 2024 SlidePlayer.com Inc.
All rights reserved.