The Importance of Patent Enforcement to a Patent Owner
Inventors have played a significant role in making America what it is today, but it has never been easy to be an inventor. Today, it is harder than ever.
Patents can be a fantastic business asset. They can provide inventors with credibility to obtain venture funding. Patents protect to core company functionality and features (e.g., Google's PageRank patent). They can also provide value to a company through licensing (e.g., IBM) or as an exit strategy for a company (e.g., Nortel, Nokia, Kodak).
However, there are many pitfalls when turning an idea into a patent. It takes a significant amount of time and money to obtain a patent. Then, once you have a patent, the enforcement process can be expensive. Furthermore, arguably in today’s patent environment, the rights can be clouded, revoked, or ignored more readily than ever before. This uncertainty is due to many factors including many companies that elect to "efficiently infringe" the patents instead of agreeing to license them amicably. As Joe Nocera explained in the New York Times:
As it happens, thanks to the 2011 America Invents Act and [recent court] rulings, big companies can now largely ignore legitimate patent holders.
Of course, they don’t call it stealing. But according to Robert Taylor, a patent lawyer who has represented the National Venture Capital Association, a new phrase has emerged in Silicon Valley: “efficient infringing.” That’s the relatively new practice of using a technology that infringes on someone’s patent, while ignoring the patent holder entirely. And when the patent holder discovers the infringement and seeks recompense, the infringer responds by challenging the patent’s validity.
Should a lawsuit ensue, the infringer, often a big tech company, has top-notch patent lawyers at the ready. Because the courts have largely robbed small inventors of their ability to seek an injunction — that is, an order requiring that the infringing product be removed from the market — the worst that can happen is that the infringer will have to pay some money. For a rich company like, say, Apple, that’s no big deal.
Joe Nocera, "The Patent Troll Smokescreen," NYTimes (Oct. 23, 2015). Thus, if a patent owner Thus, if a patent owner has exhausted its resources obtaining patents and cannot afford to enforce them, it may be hard to realize any benefit from the patents.
One way that patent owners can ensure that they will be able to enforce their patents is by creating high-quality patents of a specific nature that a lawyer will consider enforcing them on a contingent fee basis.
Early in my career, I was fortunate enough to meet and begin working with Steven G. Lisa and Victoria G. Curtin. Both had worked with Gerald D. Hosier on contingent fee licensing programs that had generated over $1 Billion. They taught me the lessons learned about patent prosecution as informed by their licensing and enforcement efforts including those on behalf of Jerome Lemelson.
Using these litigation inspired patent prosecution techniques, I obtained patents on my inventions. These patents ultimately developed into an extensive patent portfolio. I filed many continuation applications to claim the inventions disclosed in the specification fully. As time went on, examiners at the USPTO recognized that my patent specification pre-dated patent filings by large companies, and cited to my patent applications while rejecting the third-party patent applications. I prosecuted this patent portfolio with litigation and enforcement in mind. Third-party patent enforcement companies reached out to me about acquiring these patents. Now, my patent portfolio is assigned to a large operating company.
Also, during the past decade, I have also worked with co-counsel to represent clients on a contingent fee in patent licensing, and enforcement cases with high quality issued patent portfolios. I have also helped clients improve pre-existing patent portfolios through prosecution of continuation applications on a contingent fee basis. For these clients, they would not have had the ability to afford representation otherwise, and they would not have been able to realize a return on their investment in the patents.
I hope to share lessons, like those early ones I learned from Steven G. Lisa, Victoria G. Curtin, and Gerald D. Hosier, to help patent owners understand the entire patent process through enforcement. That way more patent owners can avoid mistakes, minimize risk, and create high-quality readily enforceable patent portfolios like I have been able to do for myself as well as clients.
Through this and subsequent articles, I will provide a clear high-level practical and engaging walk-through of the critical phases of a typical patent enforcement life cycle. I will discuss issues that arise during the creation of the first patent application through the licensing due diligence, improvement of the portfolio with continuation applications, and the beginning of amicable licensing efforts.
In my next post, I will discuss the concept of contingent fee patent representation further and why patent owners should consider contingent fee patent representation.