IP News & Transactions

IP Matters – Even In A Down Economy!

An article found in the online edition of Black Enterprise provides an excellent discussion of why the business of intellectual property development continues to thrive even with the current slowdown in the world economy.  The article highlights the growing importance of IP assets to companies of every size, and discusses why smart companies are doubling their efforts to develop and utilize their IP assets even as their traditional businesses slow down.  (For those new to IP asset development, the article provides an excellent overview of the current state of global IP law and transactions.) 

The article may be found at http://www.blackenterprise.com/yb/ybopen.asp?section=ybaa&story_id=118487485&ID=blackenterprise.

New Kids on The Block (Big Kids…)

A blog entry recently posted by Larry Dignan of ZDNet discusses the latest and greatest entrant into the world of IP transactions.  Verizon, Google, Cisco, Ericsson and HP have formed a company with the innocuous name of “The Allied Security Trust,” with the purpose of purchasing existing patents to grant the company’s owners non-exclusive licenses to the purchased patents.  Allied would then turn around and sell the patents in hopes of generating revenue for the company.

 

Putting aside concerns about concentrating patent “power” in the hands of a few large tech giants, this development is relevant if for no other reason than Allied presenting itself as another large, well-monetized player in the world of patent transactions.  And we were just getting used to Intellectual Ventures…

 

Larry’s blog entry, and subsequent discussion, may be found at http://blogs.zdnet.com/BTL/?p=9209.

Update on United States Patent Litigation Trends

An interesting article at Filewrapper (www.filewrapper.com) discusses a recently-released report by PricewaterouseCoopers regarding current trends in U.S. patent litigation.  Of particular interest:

 

1)      Median damages awarded for all industries totaled approximately $3.9M, with the highest average awards being in the area of telecommunications ($31.3M), and the lowest being in the area of automotive equipment ($34,108 – your author wonders ‘why bother?’);

2)      Jury trials are increasingly favored over bench trials, as significant growth in the magnitude of infringement awards granted by juries has occurred since 2000; and

3)      Considering time-to-trial and general favoritism towards plaintiff awards, the leading venue is now the Eastern District of Virginia – the well-known (and somewhat revered) Eastern District of Texas has fallen to sixth place overall under these metrics.

The article, as well as a link to the PWC study, may be found at http://www.filewrapper.com/index.cfm/2008/6/11/Patent-litigation-by-the-numbers.

How An Auto Accident Could Change Patent Law

A recent article by Bloomberg News takes an interesting look at the machinations of the U.S. District Court for the Eastern District of Texas.  Specifically, the article discusses a recent decision by the Eastern District’s Judge T. John Ward to deny a change of venue motion by Volkswagen AG to move a case involving an auto accident wrongful death claim to the Eastern District.  Volkswagen has appealed Judge Ward’s decision to a Federal Court of Appeals in New Orleans, and a decision is now pending at the appellate level. 

 

Court observers are watching the case fairly closely to see whether a reversal of Judge Ward’s ruling could spell the beginning of a sea change as to the Eastern District’s dominance in adjudicating patent disputes, insofar as the Eastern District has been statistically stingy when it comes to granting change of venue motions to patent infringement defendants.  The Bloomberg article notes that while the national average for granted change in venue motions is approximately 48 percent, the Eastern District grants such motions at a rate of approximately 29 percent.  (The article also notes that patent infringement plaintiffs who go to trial with Judge Ward presiding win about 70 percent of the time, compared with national average of 23.5 percent.)

 

The article may be found at http://www.bloomberg.com/apps/news?pid=20601087&sid=aigxeYacQ3ls&refer=home.

China Patent Filings – Off the Chart!

China’s State Intellectual Property Office – or SIPO – recently reported that in 2007, nearly 700,000 patent applications were filed in China for the year.  This is an astounding amount of patent applications, easily making China the leading jurisdiction for patent filings in 2007.

SIPO also reported that in the specific area of design patents, of the 270,000 filed there, only 5% of these filings were made by non-Chinese companies.  This is slightly amazing, insofar as non-Chinese companies frequently complain about design infringement within China – yet apparently these same companies have done little to protect their designs under Chinese patent law.

Aside from the idea that China is beginning to find a path to technological leadership in the world (at least as measured by the number of filed patents), it’s also worth noting that as China is a member of the Patent Cooperation Treaty (PCT), it is more likely than not that many of these Chinese patent applications will find their way to the USPTO for United States examination.  If the PTO thinks it’s overwhelmed now, just wait…

Further info on patent developments in China may be found at http://www.ipfrontline.com/depts/article.asp?id=19059&deptid=5.

Clean Water Technology Patents – Next Stop for Compulsory Patent Licenses?

With the overall increase in world population, and the rising living standards in countries monikered as “emerging economies,” it should be no surprise that there is increasing demand for the simplest of all human needs – clean drinking water.  Most of us are aware of the global challenges presented by a lack of potable water, with these issues gaining increased attention by both the press and national governments.  (For an in-depth review of global water policy issues, the United Nations maintains an excellent web resource at http://www.un.org/issues/m-water.html.)

A very unscientific review of the USPTO database by your author revealed approximately 500 issued patents and patent applications relating to the narrow subject of water purification.  Considering all the technologies potentially relevant to the production and distribution of clean water – including those relating to non-water technologies, such as pipeline distribution and chemical distillation – the number of patents arguably relevant to the provision of clean water is potentially quite large.

Which brings us to the point of this note – is it possible that consumers of clean water would have to bear the cost of royalty payments for patented technologies that provide clean water?

There seems to be little online discussion regarding this point; but one has to wonder whether this is a possibility.  After all, most everyone agrees that demand for clean water will only increase over time; and most agree that our current approaches to providing clean water (collection of precipitation; groundwater) will, at some point, fail to provide an adequate amount of potable water for a global population that is living longer and demanding greater accommodation in terms of basic living needs.  The combination of all of these factors seems to suggest that clean water production technologies will be necessary to increase water availability, and as such these technologies, if patented, may become the subject of IP licensing programs.

This brings us to the question of compulsory licensing.  As discussed in a previous post, compulsory licenses are provisions within the patent laws of most nations that effectively allow a country to “issue” a license to patented technology with little or no royalty return to the patent holder, typically for reasons of public health and welfare.  Most of the activity surrounding compulsory licenses to date has been in relation to patents relating to pharmaceutical therapies, such as drugs intended to control HIV infection.  However, it does not seem to be much of a stretch to believe that governments who are responsible for providing for their citizens’ most basic needs may at some point begin to issue compulsory licenses for patents relating to clean water technologies.  Not much has been said or written on this topic, but your author does suspect this will become an important emerging issue in global IP law and management.

The State of the CAFC

On May 15 of this year, Judge Paul Michel of the CAFC provided a presentation regarding the "State of the Court" - that is, how things are currently going with the CAFC, the court most responsible for the direction of judicial decisions affecting patent law in the United States.  The presentation provides an interesting look into the operation and priorities of the CAFC; it may be found at http://www.cafc.uscourts.gov/pdf/State%20of%20the%20Court%205-08.pdf.

Why It Is A Good Thing To Be On Good Terms with Your Inventors!

Previous posts to this blogs have discussed the importance of keeping up good relations with listed inventors on the patents a company pursues.  Besides the obvious reason of needing an inventor’s assistance in drafting the final applied-for patent, an inventor’s input is often relevant when filing continuation patents from the inventor’s original disclosure; and also when interpretation of the patent’s claims require additional background from the inventor relating to the timing, prior art, and “inventive thinking” surrounding the claims when first disclosed.

Just like anyone else, inventors in a company will from time to time leave their current employment to pursue other interests and career opportunities.  Most companies who view IP asset development as a key part of enterprise activity will strive to plan for such departures by contractually requiring inventors to provide cooperation with patent filing and assertion activities, even after they leave their current employer.  Typically, these contractual requirements provide that the inventor receive some sort of market-rate compensation for their efforts.

That being said, the reality is that such contractual requirements are very difficult to legally enforce – presumably, a company could get a court to issue an order to a non-cooperative inventor to assist with these sorts of patent activities.  But an “affirmative” order by a court for a party to “do something” to assist with these sorts of activities is fraught with difficulty, particularly when the action ordered is more of a mental or intellectual effort – how does the court decide if the inventor has really, truly done his/her job in assisting with the patent activity?

The good news is that most of the time, these sorts of disputes don’t arise – all concerned realize that there is more to be gained than lost by cooperating with one another. 

Which is why the current dispute involving INVISTA and DuPont is worthy of note.

INVISTA, which is an amalgam of subsidiaries owned by Koch Industries, purchased a number of tangible and intangible assets from DuPont in April 2004 relating to the latter’s nylon, polyester and spandex operations. (It is strangely comforting to your author that despite the passage of the 1980’s, there are still growth opportunities in the spandex industry…) Among the assets purchased by INVISTA were patent rights to a technology used for manufacturing nylon.

Shortly after this transaction, INVISTA and DuPont came to blows over the transaction, initially over INVISTA’s allegation that some of the manufacturing plants sold to them by DuPont as part of the transaction did not comply with relevant environment, health and safety laws.

In the meantime, INVISTA became involved in an infringement dispute with another party, causing INVISTA to use the patents it acquired from DuPont as part of its defense in the dispute. To fully develop defensive use of these patents, INVISTA needed the assistance of the patent’s inventors – who were still employed by DuPont.  As you might expect, DuPont was apparently in no hurry to assist INVISTA by providing them access to the inventors.

INVISTA has thus filed an action in the U.S. District Court in Manhattan to compel DuPont to “provide” the inventors for INVISTA’s defensive efforts.  DuPont says it has done everything required by the asset transfer agreement to provide INVISTA access to the inventors; but INVISTA apparently thinks DuPont has not done enough.

What will be interesting in this case is to see whether the court, if it decides in favor of INVISTA, can actually put together an enforceable order that INVISTA thinks is sufficient to compel assistance by the inventors.  Your author thinks this will be a bit of a challenge, and perhaps not the last time these parties will be in court over the issue.

More information on the INVISTA case may be found at http://uk.reuters.com/article/companyNews/idUKN0721414220080507?symbol=DD.N.

IP Assets – Centerpiece of M&A Strategy?

Traditionally, the acquisition of IP assets in the context of M&A transactions was more of an after-thought than anything else – M&A has often been thought of more as a vehicle to increase earnings per share, to capture new market channels, or to add new tangible products to existing product lines.  If any useful IP came along with the deal, it was usually more of a happenstance than the result of strategic planning.  However, as IP assets increase in value from both a defensive and assertive standpoint, a growing trend in M&A activity is to focus more on analyzing and capturing the value that such assets may provide as part of an overall deal – or even perhaps, to do a deal just for the purpose of acquiring IP assets.

An interesting note on The Deal (www.thedeal.com) points out that Research in Motion Ltd. (famous for its patent infringement litigation with NTP) recently announced in its periodic financial filings that in the first quarter of 2008, it had acquired $310M worth of “intangible assets.”  What these assets are (or were) is unclear; but the article suggests that as RIMM is “so intellectual-property driven,” these assets may be indeed of the IP ilk.  The note may be found at http://www.thedeal.com/corporatedealmaker/2008/04/rim_310_million_purchase_of_in.php.

IP Development Strategies for Startups/SMEs

Playing off my last post on the subject of trademark and brand strategy, I started to consider the value of patents as part of a branding strategy – the idea that a company can create greater brand value by publicizing its patents and innovation efforts.  Some great companies – like IBM as an example – have done well by this strategy, creating for itself a market perception that their products and services offer greater value partly because of the IP assets that underlie them.  This strategy may have become a bit long-in-the-tooth for other large companies, but it does seem that smaller companies – particularly start-ups and SMEs – may find some value in utilizing a branding strategy that emphasizes their IP development activities.  In fact, one could argue that such a strategy should be THE strategy for emerging companies, insofar as these companies usually cannot compete well on price with larger companies.  They must bring something else other than low prices to the “table” of competition – and perhaps the best way to create perceived value is to emphasize the quality of their innovation and IP assets.

That being said, small companies must think thoughtfully as to how to implement an IP development strategy that is cost-effective and a real value generator for the firm.  On this note, an excellent article by Guy Kawasaki provides some excellent pointers on how emerging companies can implement an effective IP strategy.  His article may be found at

http://blog.guykawasaki.com/2006/11/counterpoint_pa.html