IP News & Transactions

Workforce Reduction and Employee Downsizing

First, a quick apology from your author: as I have been ridiculously busy over the last 4 months, I have been unable to update the blog.  If there is a recession, I have yet to locate it! 

That being said, with the recent tumult caused by the recession, many operating companies have found themselves in the unenviable poisition of having to reduce their workforces.  Particularly for technology-oriented companies, such downsizing often brings with it concerns about protection of enterprise IP in the context of departing employees.  From the possibility of an employee failing to properly assign a patent, to outright trade secret theft, companies in the midst of downsizing activities need to pay attention to those IP issues attendant to employee layoffs.

Louis Dienes of Troy Gould PC recently contributed an article to IP Frontline regarding protection of IP in the context of workforce reductions.  It is an excellent article, and your author highly recommends it.  It can be accessed at http://ipfrontline.com/depts/article.asp?id=23557&deptid=3.

Small Business Patents and Their Importance

An excellent report recently released by the SBA Office of Advocacy (www.sba.gov/advo) discusses in detail the importance of small business innovation in the context of patent disclosure and development.  The report details the findings of a review of the patent development practices of 1,293 small firms.  2 findings were of particular note:

 

1)      Even adjusted for differences in size relative to larger companies, smaller firms with patent development strategies disclosed more patents per employee than larger companies within comparable industries.

2)      Most significantly, patents associated with smaller firms reflected a higher patent “quality,” when measured by citation impact, patent originality, and patent generality. On this point, the report states that these findings “…suggest[ ] that the patents of small firms in general are likely to be more technologically important than those of large firms…” Bad news for IBM, I suppose…

 

In short, the report provides an excellent basis for understanding why small and mid-size companies should actively pursue IP asset development and management strategies.

 

The report may be found in full at http://www.sba.gov/advo/research/rs335tot.pdf.

IP Asset Maximizer - A Great New Blog!

From time to time, I am fortunate enough to meet fellow bloggers out there who provide great content and comment regarding IP asset development and management.  Recently, I made contact with Ms. Jackie Hutter, a self-described "recovering patent attorney" (is there a cure?) who maintains a great blog called IP Asset Maximizer (found at www.ipassetmaximizer.com).  Jackie possesses over 13 years of experience with IP asset managment issues, and her posts are excellent in terms of providing readers with solid, practical advice about IP development and management. As you may surmise, I do recommend Jackie's blog as a great stop for IP advice along the ever-stretching internet highway... 

More on Intellectual Property Valuation

As noted in previous posts, perhaps one of the most important – and challenging – aspects of IP asset management is understanding how to correct value assets under management.  There are many different approaches to the subject of valuation, perhaps suggesting that valuation of IP assets remains more art than science under current practice.

 

That being said, a recent article by Simon Rowell in IP Frontline provides a very good overview of methodologies used to value intellectual property assets.  Simon’s article may be found at http://www.ipfrontline.com/depts/article.asp?id=20361&deptid=3&mkt_tok=3RkMMJWWfF9wsRojsrqVJ6jptjGdKc%2F54%2B87BPbv3sYw3mx7dMXLZRC9.

Tactics for IP Management

Aside from fairly predictable “professional” reading, from time to time I enjoy reading books and articles related to other disciplines, with the goal being to take from those sources useful ideas for application to issues related to my work in the field of intellectual property development and management.

 

Quite randomly, I received a copy of “The Challenge of Command,” written by Roger H. Nye.  The title of Mr. Nye’s book precisely describes its subject matter: it provides an interesting narrative regarding the considerations military commanders should undertake as they assume command of military personnel or missions.

 

Without getting into the pros and cons of the military or the attendant politics of the day, I found the book to actually be quite interesting, especially when applying some of the concepts Mr. Nye discusses to the business of developing and managing a portfolio of intellectual property.  Probably most interesting in this regard was Mr. Nye’s discussion of “field tactics” – that is, the things you do to achieve a greater strategic goal by actual movement through a battlefield.  Mr. Nye breaks down field tactics into 3 main areas of focus: terrain, hardware, and doctrine.  In short, Mr. Nye suggests that a superior military tactician understands the physical terrain in which he/she operates; the mechanical hardware that the tactician uses to travel through the terrain; and the strategic doctrine that guides use of the hardware within the terrain.

 

Mr. Nye’s view on military field tactics seems to be somewhat instructive as to developing a framework for intellectual property management (or perhaps ALL flavors of business management). To wit:

 

Doctrine: What is your enterprise’s overall business strategy? What is your enterprise’s intellectual property strategy? How do these two strategies intersect or diverge from one another?

 

Hardware: What are the products and services marketed by your enterprise? What are the strengths and weaknesses of these products?  How does your intellectual property program fit with these products and services? Does the IP program sufficiently provide for protection of product strengths, and does it also provide ways to encourage (by patent or otherwise) correction of product weaknesses? In short, does the total product and IP “hardware” of your company give you a way to travel through competitive “terrain”?

 

Terrain: What is the competitive “landscape” of your industry? Where does your enterprise fit in, in terms of size, market share, and/or capitalization? How do you use your company “hardware” to guide your company through this competitive “terrain” to achieve its strategic goals?

 

Food for thought…

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 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

Considerations in Branding and Trademark Development

To date, this blog has focused primarily on issues relating to patent development and licensing.  Of course, the world of intellectual property consists of more than patents – for an enterprise, attention must be paid to all sorts of intellectual property, including a company’s trademarks and associated branding strategy.

Undoubtedly, there is value in thoughtful trademark and brand management – Nike and Coca-Cola are but just two examples of firms whose core value rests primarily on the strength of their branding efforts.  And it is probably accurate to say that trademark and brand management has historically created more enterprise value than patents. (I hope my friends in the patent community don’t count this comment against me…)

For IP professionals who are interested in learning more about trademark and brand management, the Branding Strategy Blog (http://www.brandingstrategyinsider.com/) – is an excellent resource.  Within the blog, there is a very useful article regarding the legal aspects of trademark and brand management (found at http://www.brandingstrategyinsider.com/2008/03/branding-and-tr.html).  It’s definitely worth the read.

Patent Filings – And Issuance Delays

A current issue within the patent prosecution community relates to the delay between application filing with the PTO, processing of office actions reviewing the patent, and final issuance.  It is well-known that a combination of increased patent filings and fairly static Federal funding of the PTO has lead to increased delay in issuance. For example, in the telecom equipment industry, it is not uncommon for several years to pass between the time of patent application and final issuance.

Section 154(b) of the U.S. Patent Code (35 U.S.C. 154(b)) provides provisions for the PTO to extend the effective life of a patent to the extent that the patent application is unnecessarily delayed.  Perhaps not surprisingly, the PTO in recent years has increased its recourse to this provision because of the enormous growth in patent applications filings.  An interesting article on the Patently-O blog discusses this trend in depth.  The article may be found at http://www.patentlyo.com/patent/2008/03/extending-the-p.html.

For licensing professionals who oversee corporate patent disclosure and licensing programs, it is wise to be aware of this trend, as a) participants in a patent disclosure program are often incented by some form of cash payment upon patent issuance, so thought may be given to changing (or even accelerating) such payments in light of existing delays in issuance; and b) from the standpoint of assertive licensing, it is not uncommon for inventors to have found new employment prior to patent issuance – meaning that utilizing their assistance in claims analysis may become much more difficult. On this last point, it is thus wise to keep up good contacts (and relationships) with your inventors, to help assure their assistance in the future.

Monetization of Trade Secrets – An Emerging Practice?

Most current discussion regarding the issue of IP monetization focuses on “registered” IP rights – that is, rights that are formally recognized by and registered with a governmental agency.  Traditional registered rights include patents, trademarks and copyrights.  In a sense, such registration helps to create a market for IP assets, because it serves to provide some sense of validity of the existence of property rights ascribed to IP assets.  (Of course, most IP professionals who have been around the block a couple times know that registration of IP rights is not a per se guarantee of the value of such rights.)

But within a company, there is frequently a great deal of know-how that is central to the company’s competitive ability that CANNOT be registered under existing regimes of IP registration.  This sort of know-how is generally categorized as “trade secrets” – knowledge or know-how that a company relies upon to be competitive, that the company acts to keep confidential from the rest of the marketplace.

As suggested above, there has not yet been a great deal of effort in attempting to specifically monetize trade secrets.  However, a very intriguing article by Scott Lebson of Ladas & Perry discusses the legal nature of trade secrets as a property right, and the possibility of monetizing them.  Non-attorneys may find the article a little dry, but it is a very interesting article worth the read.

Scott’s article may be found at http://www.ipfrontline.com/depts/article.asp?id=17703&deptid=4.