Monday 11 November 2013

Generating value from patents: a conference report

The second session of today's  'From IP to NP'conference, organised by the Israel branch of the AIPPI, offered a break-out section on "Generating Value from Patents", convened by Ilan Cohn (Senior Partner, Reinhold Cohn Group, Israel) and Andrew Ramer (Co-Founder and Chief Executive Officer of Marqera).

First to speak was Eran Zur (Head of the Intellectual Property Finance Group, Fortress Investment [the firm supporting controversial European is-it-a-troll IPCom GmbH]), on "Leveraging your IP: An alternative to patent monetization".  Said Eran, the value of a patent is based on its enforceability; by selling one, you may receive cash but you lose the opportunities and flexibilities in changing the behaviour of competitors that patents offer.  For small companies, litigation is always risky and dangerous: Google bought Motorola for its patents: if a small operating patent owner sues Google, its obvious response is to turn its patents on the threatener.

Fortress does not take equity: it's a debt provider that furnishes a lifeline for small debt-heavy companies by taking a lien over their patents ahead of litigation. If the client company wins, it gets its patents back; if it doesn't, Fortress will seek to monetise the value of those patents and share the yield with the client company.  Said Eran, we help clients leverage their patents by mortgaging them, rather than by suing on them.  If an infringement claim is good and Fortress underwrites it, no contingency payments are incurred. He concluded by observing that Fortress has a pet peeve about patent brokers and patent contingency fee lawyers, who make so much money from other people's patents.

Andrew Ramer (Co-Founder and Chief Executive Officer of patent brokerage Marqera) spoke next, on "The evolution of patent commercialization options". He observed that, in the innovation finance ecosystem, there's very little innovation.  However, there are very large sums of money at stake when patent portfolios are at stake -- and patents are increasingly not seen as being tied to a particular product; they are now being viewed as assets in their own right.  The past eight years, in patent transaction terms, have seen a change from an inability to do almost anything to an ability to achieve a great deal.

Andrew listed the classic possibilities for each patents: sell, license, litigate or build a company. That's great, but each of these options is available for every patent owner.  In this context, trolls are no big deal: what's the problem? If there are no trolls, there's no market. And if you can't sue, why buy? Andrew then waxed lyrical on the US Supreme Court decisions in eBay v MercExchange and Medimmune v Genentech and the impact of those decisions on the value of patents and the development of the asset market. Now people are buying a few patents, putting them into a corporate shell, going public and making a fortune.

Barry Schindler (Greenberg Traurig, USA) then tackled "Building patent value from the start: global patent strategies". As a patent lawyer, he explained that it was important to consider patents as individual assets in order to understand their asset value, and that's what patent lawyers are for.  This means looking at the patent's claims: everything starts and ends with them. Also look at the extent to which that patent is cited and used as a reference in other patents.  What about patent types? Sectoral spin-off should be understood: for example, a software programme developed for use in the pharmaceutical sector may be applicable outside it too.  Within each patent too, the number of claims can be multiplied so as effectively to embrace several inventions in one go.

Barry then listed various offensive pre-grant strategies, taking account of expedited examination, non-publication requests in the US and the patent prosecution highway, it being important to avoid the worst-case scenario of publishing one's invention and then not getting a patent.  Defensive strategies include the submission of third-party statements that point to published prior art.  Post-grant strategies were reviewed too, bearing in mind that it's far more difficult to knock out a killer claim when it's spread across a number of patents, given the cost.

Even without paying for
SEPS, you can still make
Last to speak was Koenraad Wuyts (Head of the Intellectual Property Group, Royal KPN), on "The evolution of FRAND options". If you have a patent for a standard [ie a 'standard-essential patent', or SEP], Koenraad noted, you get business pretty well from the beginning -- which makes them highly attractive. They do however cause patent pools with stacked royalties [where a licensee pays aggregated royalties to lots of different patent owners], and patent owners are selling their SEPs to patent trolls.  Does this mean that profitable patenting will not exist from the 4G generation? Capping of royalties per product is one possible solution.

Koenraad then reviewed some case law from the Netherlands and Germany, in which it has been shown that injunctive relief may be available to a patent owner even when a patent has been offered for FRAND licensing -- and that interim relief may be obtained where there is no indication that the defendant was seriously intending to take a FRAND licence. The outcome of the reference to the Court of Justice of the European Union in the Orange Book case is keenly awaited.

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gershonj said...
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