Hello all,
In our last two columns, we covered several mistakes made by inventors and their legal counsel when drafting or prosecuting patents, as well as the many tools that defendants have at their disposal to invalidate them or otherwise emerge unscathed from an assertion claim.
With this backdrop in mind, one could legitimately ask: Why even bother? This is especially true when looking at how “efficient infringement” has permeated the landscape, becoming the modus operandi of most large implementers and led in turn to a very inefficient patent market. I will try to answer that simple question below. But more importantly, I will discuss how patents are often the wrong type of protection when trying to protect newly developed innovations. I also provide some guidelines as to when trade secrets actually may be more appropriate.
I also discuss the latest developments on the ill-designed attempt by the European Commission to tackle the treatment of Standard Essential Patents which could make asserting patents in court even more costly than it already is, and a rather surprising and worrisome development that calls into question the credibility of the proposal. Finally, I cover a rather unusual situation in the US where a patent plaintiff has just been asked to post a considerable bond to even advance its case through the court system.
As usual, as I focus on the macro picture in this newsletter, I want to remind everyone that we track everything that is going on in this world and for those who need their regular dose of news, once again you can follow me on either LinkedIn or Twitter where I post almost daily about some of the most newsworthy events.
Happy reading!
Louis
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Tangible IP News
On the deal front, we announced a few weeks ago the successful sale of 10 of 17 patents on offer in the digital content storage, distribution & protection technology area. There are still 7 high quality assets (with EoU) available for sale or licensing for a limited time.
We are also pleased to formally report that we have closed another round of voluntary licenses with Fortune 500 companies related to a patent portfolio originating this time from the Korea-based Sungkyunkwan University and related to the semiconductor industry. The portfolio covers several technologies (including some standards) and is now available for sale.
This brings us to one transaction closing every 3 weeks on average since the beginning of 2023, with some others already in closing and many more to come!
For more details, please email us at info@tangibleip.biz. Similarly, if you’d like to be added to our distribution list in the future so that you are the first to receive new opportunities, please email us at info@tangibleip.biz.
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Featured Portfolios For Sale
Given our audience, we felt it prudent to start sharing a few particularly interesting portfolios available for sale. This issue, we will focus on two unique portfolios which have just hit the market.
MetaSepia: This portfolio is a unique opportunity to acquire a turnkey mobile payment technology. The Metasepia unique patented technology is the fruit of years of R&D efforts. It relates to a novel method of mobile point-of-sale transactions, either online or offline, via secure optical transaction data sharing without the need for dedicated hardware (e.g., NFC, Bluetooth, WiFi, etc.) or static codes (e.g., QR). With unprecedented growth in the mobile digital transactions and payments, we are we are excited to make available this innovative and potentially disruptive technology. For further information including a nonconfidential executive summary and details relating to the software, know-how and patents, and potential applications please reach out to info@tangibleip.biz and reference MetaSepia.
BioMarker Strategies: Biomarker Strategies LLC is a biotechnology company founded in 2005 that specializes in the discovery, development, and validation of novel biomarkers for use in drug development, predictive tests, clinical trials, and disease diagnosis. This portfolio consists of 47 assets across 4 families with open continuations in each family and broad global coverage. The portfolio primarily relates to predicting therapy response in cancer. The technical solutions described in the portfolio patents have been widely adopted by biotech companies trying to predict the effectiveness of targeted therapies and evidence of use is available upon request. For further information, please reach out to info@tangibleip.biz and reference BioMarker.
For more information, please reach out directly to us at info@tangibleip.biz.
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Patents Wanted
Call for high quality portfolios!
We are always open to reviewing high quality portfolios. Some of the areas of most interest to our buying network right now include:
- Automotive (ADAS and other safety related technologies)
Medical Device technology – particularly wearables and IOT health monitoring
- Patents applicable to RFID tags, RFID Antennas, RFID readers and Near Field Communication (NFC) devices.
- SEPs (Declared or not) relevant to any of the following: 3GPP, 802.11, LTE, 5G
You can review our criteria here but if you own a patent portfolio with at least two issued US patents and have knowledge of others using your technology (infringement), we are happy to review for potential brokerage. We will also look at larger portfolios where evidence of use is uncertain.
Please reach out to info@tangibleip.biz with any assets that may match these requests.
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Recent News:
Europe’s Fall Out with SEP (Part 2)
In our last column, I gave a complete background of the European Commission’s recent attempt to call for the adoption of a new, highly-interventionist regulatory framework for Standard Essential Patent (SEP) licensing, which was released – a bit ironically – on World IP Day, April 26. The proposals of the EU’s agency could have significantly adverse repercussions for SEP owners. According to the draft, the Commission will seek to establish a new EUIPO-based competence center, where rights holders will be required to register patents they consider standard essential, and will undertake mandatory essentiality checks, as well as administering a new process for reaching FRAND rate determinations.
These proposals have been broadly decried by many industry players and pundits alike as putting another nail in the coffin of patent owners trying to receive a reasonable and non-discriminatory (RAND) royalty from their vast SEP portfolio. The undertone of the whole report looks as if it has been designed by the infringement lobby, but even the camp that stands to benefit from it doesn’t like the proposals.
It now turns out the “empirical studies” that led to the various proposals were in fact prepared by a subsidiary of Lexis Nexis called IPlytics, which relied on a very thin set of data, and who’s methodology has now been called into doubt. Furthermore, some of its contributors, hailed as independent economists or jurists, apparently have some corporate affiliation with IPLytics or are pushing their own commercial interests. According to a well-respected author who commented at length on this: “The proposal that is on the table now is ill-conceived, and part of the reason is that the Commission relied on a “consortium” led by a company with business development interests instead of proper consultation with stakeholders on specific ideas.”
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When States Mess with Patent Owners’ Rights
Some of you may remember that a few years ago, in the midst of the “patent troll” craze, some US states introduced legislation to make it harder for so called “bad actors” to file a patent lawsuit, on the premise that their claims were essentially based on frivolous ground meant to extort money from law abiding individuals or small corporations domiciled in their State. For the most part, these bills were never used since the assumption on which they were passed never materialized of course. Until now, that is… Last week, a District judge in the State of Idaho (mostly known for being Micron Technology’s home base) issued an order requesting that patent owner Katana Silicon Technologies, a subsidiary of well-known NPE Longhorn IP, must post a whopping $8M bond to litigate its patent claims in view of the “Idaho Bad Faith Assertions of Patent Infringement Act”— an Act the court said “is designed to discourage patent trolls.”
We had heard about bonds in patent cases in Germany once an injunctive relief has been granted, in case the plaintiff might not succeed on the merits. But $8M (Micron was asking for $15M) is quite the price tag for merely asserting a claim (especially when a court can issue sanctions or attorney fees later on), and it amounts in my opinion to no less than a denial of justice in order to protect a local flagship company. The case had started in Western District of Texas, but Micron successfully had it transferred to their state. No wonder Idaho is not renowned for the patent expertise of its court.
No doubt the Federal Circuit will be interested in this one, especially from a federal-preemption angle. To be continued…
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Why Bother?
We do a fair amount of strategic IP advisory work and a recurring theme with clients is always how and where to draw the line between patent and trade secret protection. If you read through this and our recent columns, you are probably asking yourself the same question. Is there even a time nowadays when it makes sense to favor patent protection over keeping things internal? It is a legitimate ask. But remember that patent protection lasts for 20 years and there will always be ebbs and flows over a two-decade period as to how well (or not) these rights can be protected. For instance, there was no impact from the PTAB and no “Alice” doctrine just 10 years ago, and no one knows what the legal environment will look like in 3-5 years.
So I tend to look at patents the same way I have looked at my – now adult – kids over the last 20+ years. There were times where I would probably have preferred to deny being related to them (mostly during their teenage years)… only to show them off with a beaming smile a few years later after they had accomplished some important milestone, such as their graduation. Similarly, one needs to take a long-term view when building a patent portfolio and I have commented in the past on the fact that most patents that are being transacted (and later litigated) are actually between their 12th and 17th year of patent term.
Conversely, and although trade secret protection is in theory indefinite in time (think Coca Cola recipe), it is extremely difficult to keep something really secret nowadays and once that secret it out – whether by accident or through some nefarious act – you simply cannot put that genie back in the bottle and it is now part of the public domain for anyone to use for free.
Below is a score card I have used for years with our clients. It provides a useful scoring system that helps to rapidly determine which protection might be the most appropriate in specific circumstances: (Note: I didn’t create it and I honestly do not remember when I first saw it 10+ years ago)
1) Is development itself likely to be a commercial product or the subject of licensing?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Likely Unlikely
2) How much of a competitive advantage would be provided if the company maximized exclusivity?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Very Great Very Little
3) How much of a competitive disadvantage would it be if a competitor obtained exclusivity?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Very Great Very Little
4) Is it likely the commercial significance of the development would be limited in time?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Yes No
5) Is it likely one could develop alternatives (“design around”)?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Unlikely Likely
6) Can the nature of the development be ascertained from the commercial product (“Reverse Engineered”)?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Likely Unlikely
7) Would disclosure of this development require or permit access to other, unprotectable information?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
No Yes
8) Is it likely others will independently arrive at the same development?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Likely Unlikely
9) If a patent were obtained, what are the chances of validity being upheld by a court?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
High Low
10) Will dissemination of the development from within the company be difficult to control?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Difficult Not Difficult
11) Would it be difficult to determine if competitors are using the development?
1 2 3 4 5 6 7 8 9 10
_ _ _ _ _ _ _ _ _ _ _
Not Difficult Difficult
Total _ _ _
Once you add the scores, you usually end up with either a very low or very high score. If the sum approaches the higher end of the scale (above 75), trade secret protection would seem favorable; a sum at the lower end (below 45) would suggest that patent protection would be more advantageous.
In my experience, the choice between the two ultimately hinges on detectability. Remember that a patent is a negative right, i.e., the right to exclude others from practicing the invention (though in the US, it is more akin to a right to sue infringers for damages). Therefore, you can only police what you can detect. If you cannot observe what an AI engine or some other cloud-based black box service is doing, for instance, or if your patent covers a manufacturing method and you cannot access your competitor’s site (unlikely), then maybe it makes little sense to disclose to the world via a patent application how your years of trials and errors have led to a given invention.
Each situation is unique and there is no “one size fits all” advice. Having said that, the closest thing in my view that one can do to protect most rights and keep all options open while deferring costs, gathering information and gaining clarity on the right long-term path is as follows:
- First, document each innovation (which you should do if you want to prove later than something was proprietary to the company);
- Convert it to a provisional patent and file it as soon as possible (and file revised versions along the way);
- Refrain from disclosing it to anyone (even after filing) who is not under NDA and give yourself up to a full year to refine it, add new subject matter, gather data points and conduct a patentability assessment via a prior art search;
- Before the 1-year deadline, make the determination whether to keep it as a trade secret (in which case there is nothing to do as the provisional filing is deemed abandoned before publication) or file a non-provisional patent either as a US nonprovisional or in conjunction with or solely as a PCT (to allow for non-US filings as needed), while preserving the earliest filing date as priority against intervening prior art and pushing most prosecution costs by a few years.
Do not take this as legal advice of course as circumstances vary and always consult with a professional beforehand; but there is a good chance he/she will agree with that suggested path in most cases. If you are being told to simply file a non provisional patent (which they will be happy draft and prosecute for you for a fee) and forego any prior art search, I suggest you look for a different firm!