1. IP Trends
History and Current Activities
December 12, 2013
Ozer Teitelbaum, Alcatel Lucent
Marina Cunningham, McCormick, Paulding & Huber
2. IP TRENDS
Scope of Presentation
• History
• Current Activities
• New Developments
• Global Trends
• Protection
• Quality vs. Quantity
• Growing Portfolio
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3. IP MONETIZATION TRENDS
Taking the Long View
• Patents are a financial asset subject to price fluctuations driven by market
forces
• While they have intrinsic economic value, calculated from replacement cost,
freedom to operate, and licensing income, extrinsic forces can cause the
market value of a patent to deviate, often substantially, from its base value
• There have been several periods where external factors have led to sharp
swings in valuation:
— The “sewing machine war” of the 1850’s concluded with a patent pool among
manufacturers Grover, Baker, Singer, and Wheeler & Wilson
— In 1878, the U.S. Supreme Court limited damages ―sharks‖ (i.e., trolls) were able to
pursue in monetizing IP
— The semiconductor industry’s aggressive use of patents in the 1980’s-1990’s caused a
substantial increase in litigation and licensing, leading to the formation of the Court of
Appeals for the Federal Circuit
— After a long period of high damage awards, U.S. courts began to diminish the value of
patents in the early-2000s
• Prices later reverted to their “rational” levels, even dipping below market value
at times
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4. IP MONETIZATION TRENDS
Recent Activity
• The market for patent sales/licensing has appeared to reach a cyclical low
— In 2012, an asset bubble was created by Rockstar’s acquisition of Nortel’s portfolio
via auction and Google’s purchase of Motorola Mobility, largely for their patent assets
— This bubble appears to have deflated with the recent failures of InterDigital and
Kodak to realize their targeted patent sales prices
• There is no reason to believe that the present patent bust following the
smartphone boom and increased activity by Non-Practicing Entities will be any
different than other periods in history
• We can be sure that pricing will stabilize and again increase at some future
time due to economic, technological, or legal/legislative influences
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5. IP MONETIZATION TRENDS
U.S. Legal and Legislative Developments
• Popular opinion is swinging towards curbing litigation abuse by ―patent trolls‖
and improving patent quality
— These initiatives run the risk though of excessively curbing patentee rights
• In June the Obama Administration issued five executive actions and seven
legislative recommendations ―designed to protect innovators from frivolous
litigation and ensure the highest-quality patents in our system,‖ as the White
House said in a statement
• The ―Innovation Act‖ (H.R. 3309), introduced by House Judiciary Chairman
Bob Goodlatte, passed the House 325 – 91 on Dec 5
— Requires inventors to be more specific in pleadings to the court, awards attorney fees
to the prevailing party, and limits discovery early in an infringement proceeding
— Specifies that the USPTO use methods similar to those used in district courts to
evaluate the validity of a patent and requires the agency to develop new databases
to make information about patent ownership and litigation available on its website
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6. IP MONETIZATION TRENDS
U.S. Legal and Legislative Developments – cont’d
• 3 bills are currently in Senate Judiciary Committee, and the bill that passes
the Senate will need to be reconciled with the House bill
— S.1013 ―Patent Abuse Reduction Act of 2013‖ introduced in May
— S.1612 ―Patent Litigation Integrity Act of 2013‖ introduced in October
— S.1720 ―Patent Transparency and Improvements Act of 2013‖ introduced in
November by Chairman Leahy of the Committee
— Hearings to be held later this month
• The U.S. Supreme Court has agreed to hear a closely watched case involving
software patents that will help draw more clearly the boundary lines of
patentable subject material
— Alice Corp. vs. CLS International concerns patents on a software-driven method to
reduce the risks in certain types of financial transactions
— The Court of Appeals for the Federal Circuit found Alice’s patents ineligible for
protection under Section 101 of the federal patent code, which establishes the broad
outlines of what is patentable
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7. IP TRENDS
Global IP Issues -Patents
• America Invents Act (“AIA”)- is an attempt to
align US patent laws with the rest of the world
• First to file (as opposed to first to invent)
• Opposition proceedings in the USPTO
• Moving Litigation into the USPTO from District Courts
•Preissuance Submissions
•Ex Parte Reexamination
•Inter Partes Review
•Post Grant Review
•Derivation Proceedings
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8. IP TRENDS
Global IP Issues -Protection
• EXPENSIVE:
• Filing fees, translation costs, local attorney fees
• To minimize (or defer) costs:
• Can file a PCT patent application-allows 18 months to
defer decision where to file
• Can file under Madrid Protocol for Trademarks
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9. IP TRENDS
Global IP Issues -China
• Have made significant strides forward
• Established patent courts with technical judges
• Have technical experts
• Should have protection –
• Lasts 20 years
• Not overly expensive relative to other countries
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10. IP TRENDS
Protection
• Quantity vs. Quality
• Buyers not buying in bulk
• Budgets – where to file vs. how many
• Growing Portfolio
• Pursue Divisionals/Continuations
• Keep alive for many years
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