Tag Archives: Jay Walker

A responsive patent system requires time and participation: a response to Jay Walker’s IPAS 2018 speech

GUEST COLUMN:

At the IP Awareness Summit held at the Columbia University on November 29 Jay Walker, entrepreneur, prolific inventor, TEDMED curator and founder of Priceline.com, spoke about a “broken” patent system and need for a Constitutional Convention to fix it. In the following response to Walker’s speech, Brenda Pomerance takes a different view. 

 

Improving the Patent System:

Independent Inventors Need Apply

By Brenda Pomerance

At the IP Awareness Summit held by the Center for Intellectual Property Understanding on November 29, 2018 at the Columbia School of Journalism, Jay Walker gave a keynote presentation asserting that the Patent System was irreparably broken for individual inventors lacking “deep pockets.” He based his position on five problems, and called for an entirely redesigned Patent System.

In fact, two of these problems are features, not problems. The existing Patent System can be tweaked to provide individuals with a fairer playing field for the other three problems.

First, clarity: Walker says that patent claims are impossible for him to understand.

Lack of clarity, for laypersons, is due to the need for a claim to only distinguish from the prior art, not to explain how to make an invention and to distinguish that invention from the prior art.  Walker can eliminate his clarity problem by telling his patent attorney to write claims that are essentially a production specification for the invention, but the scope of these claims will be much narrower than is needed. Examiners will love these production specification claims and prosecution will be faster.

Also, the Patent System enables a claim to encompass something that the inventor did not specifically think of when the patent application was filed, if claims are suitably written and there was no discussion of this issue in the prosecution history, but an inventor can relinquish this flexibility via clearer claims that are limited to exactly what the inventor invented.

Second, reliability: Walker says that because so many patents are invalidated, a patent is not a reliable property.

Walker can hugely improve validity by telling his patent attorney to write claims that will survive most litigation challenges (a very high standard), rather than claims that an examiner will allow (a lower standard). But, the inventor will have to (a) do the comprehensive prior art search that litigation defendants do (costing up to $100,000 for the search), then (b) figure out why it would not be obvious-to-try to combine this prior art to arrive at the invention, and finally (c) explain non-obviousness in the disclosure, which requires a detailed in-context understanding of each piece of prior art and vastly more care expended on the background section of a patent application.

An excellent prior art search along with an explanation distinguishing the claims from the prior art will speed up prosecution, but will substantially increase the cost of patent application preparation, possibly making it too costly for shallow pocket individuals.

Third and Fourth, cost and time: Walker says that it is too expensive and takes too long to enforce a patent.

Here are some tweaks to address enforcement cost and time problems:

(A) Require that all prior-art based challenges to a patent be presented in an IPR Request that is filed within nine months (not one year, to reduce gamesmanship of multiple IPR filings) of the lawsuit’s filing, unless plaintiff consents to addressing prior art invalidation in litigation, with a prohibition on staying the lawsuit for the IPR until the IPR Request is granted, and an automatic lawsuit stay after the IPR Request is granted unless the parties agree to concurrent litigation.  During litigation, this would leave mainly inequitable conduct available to invalidate a patent during litigation unless and until defendant negotiates for prior art, perhaps via accelerated discovery or payment.  It requires that the PTAB consider as prior art more than merely printed publications.

(B) If PTAB denies the IPR Request (the current PTAB denial rate is 40%), the patent is presumed valid over prior art against the challenger in all Patent Office and court proceedings.   This will speed up enforcement against defendants who make only small changes but keep infringing to force patent owner to file new lawsuits.

(C) If all claims, asserted in litigation at the time of IPR Request filing, are invalidated in an IPR based on a prior art rejection (references and motivation to combine) that the patent owner was notified of by the patent challenger at least three months prior to the filing of the IPR Request, then the patent owner has to pay the challenger’s attorney fees for preparing and filing (but not prosecuting) the IPR Request.  This encourages defendants to quickly share their most relevant invalidity arguments, and punishes plaintiffs who ignore relevant prior art and waste defendants’ resources in an IPR, but the punishment is limited by not including prosecution costs so as not to be too scary for good faith plaintiffs.

(D) After an IPR Request has been disposed of via denial or an IPR, a deep pocket defendant must begin paying half of the monthly cost of litigation attorney fees for a shallow pocket plaintiff based on redacted attorney invoices.   If the judge or jury finds the defendant is not liable for any infringement damages, then the plaintiff must repay the attorney fee payments.

(E) For a patent that has survived IPR, via IPR Request denial or an IPR, and that a defendant has been shown to infringe, restore the presumption of irreparable damage for patent infringement that was destroyed by eBay v. MercExchange, 547 U.S. 388 (2006), leading to an injunction absent exceptional circumstances, regardless of whether patent owner licenses or practices the patent.

(F) Provide a rebuttable presumption that the patented technology is frequently used by all accused products and services of an infringer, and require that damages be based on how often a technology is actually used to provide a product or service, so that rarely used features have relatively small damages awards, while frequently used features can have large damage awards.   The incentive of rebuttal should encourage defendants to provide discovery, instead of the current gamesmanship of withholding discovery.

(G) For a prevailing shallow pocket individual plaintiff, a deep pocket defendant must pay 200% of the plaintiff’s attorney fees absent exceptional circumstances.  This penalizes deep pocket litigants for litigation gamesmanship.

Fifth, price discovery: Walker says that it is difficult to predict what infringement damages will be.

The pre-litigation part of this difficulty is because parties like to keep confidential the cost of licenses and settlements; but confidentiality should be their right.

The litigation part of this difficulty is because defendants are extraordinarily reluctant to provide discovery on what portion of their business infringes and the revenue associated with doing so; D-G above, especially F, will reduce such reluctance.

Conclusion

I agree with Walker that, at present, the enforcement part of the Patent System is hostile towards under-funded individual inventors.  However, the Patent System is still quite viable and can evolve to be friendlier towards individuals. Independent inventors are a fabulous source of ideas and patents reflect the diligence to make the fruits of their ideas available in commerce, which benefits all of us.

_____________________

The audio file for Jay Walker’s speech can be found at https://www.ipawarenesssummit.com/recorded-speakers

Brenda Pomerance has almost 30 years of experience in prosecution of approximately 2,000 patents, including Appeal, Ex-parte Re-examination, Reissue, Inter Partes Review and Interference. Clients have included Research in Motion (now Blackberry), MIT, AT&T, Lucent, IBM, Sony and Canon. Ms. Pomerance has represented clients in licensing, in several patent infringement lawsuits and in a software copyright infringement lawsuit. She is a solo patent attorney in the Law Office of Brenda Pomerance in New York City. b.pomerance@verizon.net

Image source: canadaipblog.com

IP Dealmakers Forum will Connect Investors with Patent Holders

2014 IP Dealmakers Forum is the first to place equity, venture and debt investors in front of patent holders, private and public.

IP deals are no different from other asset transactions. The best informed and networked are often in the best position to succeed.

That’s what the organizers, all-star speakers and investor attendees are banking on when it comes the first IP Dealmakers Forum, which takes place in New York on November 7th and 8th.

An impressive line up of speakers and panelists have been assembled, including prominent private equity and public investors, IP licensing companies (both public and private), IP services providers and a select group of law and consulting firms.

ip-dealmakers-logo-vPriceline.com founder and CEO of Patent Properties, Jay Walker, the 11th most prolific living inventor, will be the key note speaker. Walker’s company is promoting a “no fault,” market-based licensing model.

Other presenters include CEOs and senior IP executives from the top investment firms, IP-rich operating companies, non-practicing entities (NPEs), and public IP companies (PIPCOs). They include:

Cantor Fitzgerald,  MDB Capital, Fortress Investment Group, Opportunity Fund APG, InterDigital, IP Navigation Group, Qualcomm, Personalized Media Communications, Freescale Semiconductor, Marathon Patent Group, Blue Sea Investments and American Express.    

“Developed by investors and IP holders, and vetted by market participants, the inaugural IP Dealmakers Forum is a groundbreaking event designed to connect investors with intellectual property information and opportunities,” says conference organizer Wendy Chou.

“Although the IP market has evolved over the past several years, the lack of data, information, and transparency pose serious challenges to market efficiency. At the same time, this can mean opportunities for investors that understand how to leverage the information available, manage risks and connect with the right players.”

$300 Discount for IPCU Readers

IP CloseUp readers have until September 30 to receive $300 off of the standard registration. Mention registration code IPCU29 for the discount. IP CloseUp is a media partner of the 2014 Dealmakers Forum.

Venture capital, private equity, institutional and individual investors will all be attending, as well as several hedge funds. The conference aims to bring together investors, IP practitioners and advisers to discuss the challenges and opportunities in the rapidly changing IP marketplace. Event participants will have ample opportunity and space outside of the sessions to meet presenters and other attendees.

The venue is Apella, an impressive event space on Manhattan’s East River at the Alexandria Life Sciences Center.gallery0

The IP Dealmakers Forum is not only for current IP investors, but for wouldbe investors, too,” notes Chou.

“We have found that many investors are interested in IP rights but are often overwhelmed by the complexity. The Forum provides an opportunity to sort things out and to learn from the people on the front lines. It will be a conducive atmosphere for buyers, sellers, investors and licensers.”

The agenda and speakers list can be found here. Those wishing to register can do so here.

 

Image source: http://www.ipdealmakersforum.com; apella.com

 

 

 

“Patent Licensing is Totally Broken,” Priceline Founder Tells Investors

Inventor and entrepreneur Jay Walker says new ideas are needed to make innovation less contentious.

He wants to make “no fault” patent licensing a reality.

Earlier this year Jay Walker merged remaining parts of Walker Digital, his invention company, into Patent Properties (OTC: PPRO). Patent Properties will continue to license his patents and soon introduce a potential game-changer, “a disruptive licensing solution for the mass market of patent owners and users.”

Walker sees huge untapped licensing potential in patents if the pricing is right. In the November IAM, out shortly, I look at Walker’s recent proposal to create a better environment for patent licensing in the U.S. Walker bloomberg Interviews with him on CNBC, Bloomberg and the PPRO home page (linked), and the video on his firm’s website, provide revealing glimpses at what he hopes to achieve, and how he plans to achieve it.

A Clearing House for Invention Rights

No doubt Patent Properties hopes to own a  piece of each “no-fault” transaction, similar to how Priceline profits from travelers demand of available airline seats and hotel rooms. He sees the company as  potential copyright clearing houses ASCAP or BMI, only in this case Patent Properties would be monitoring inventions, not songs.

“Of today’s 2.1 million active patents, 95 percent fail to be licensed or commercialized,” wrote Walker recently in a Forbes guest editorial. “These unlicensed patents include over 50,000 high-quality patented inventions developed by universities.  More than $5 trillion has been spent in the U.S. alone on research and development over the past 20 years, much of which went to create the very patents that remain unlicensed.”

Walker home pgWhile the much-licensed Walker Digital portfolio has generated since 2011 $65 million in revenues from licensing and litigating its patent portfolio as well as from patent sales, the immediate future for PPRO investors lies in the company’s 19 on-going litigation matters.

Walker, who  has never been accused of lacking vision or the energy and skills to convey a new idea, is a successful entrepreneur who founded Priceline.com (NASDAQ: PCLN), an early online auction business that was slow to start but now has a market value of $40 billion.  

“We must develop an affordable and voluntary alternative that facilitates licensing for the vast majority of patents at fair, market-based prices, benefitting both sides of the patent equation,” says Walker. “And it is safe to say that Congress is not the right place to go for this solution.”

A more liquid market for patent licensing would help patents to lubricate the innovation machinery rather than throw a monkey wrench in it, as they have been known to. However, it will be difficult to achieve broad buy-in Walker cnbcfrom companies who see little upside in taking a license before they have to, and inventors who may see “no-fault” as little more than a compulsory license. 

Availability Pricing Model

You have to admire Walker for moving the ball forward with an innovative, market-based solution, presumably not unlike Priceline’s availability demand pricing mode that makes it easier for more holders to profit from inventions and avoid running afoul of them.

Walker may be on to something. At the right price it becomes difficult (nay, imprudent) for businesses not to take a license.  Indeed, if anyone knows that establishing the right to practice a patent is not that different from bidding to buy an available airline seat, it is the Priceline founder.

Who knows? Market-based pricing — a reflection of how quickly and safely a business needs to get from here to there — may turn out to be among the more viable measures of what a business should pay and an inventor receive for the right to practice a patent.

 

Image sources: Bloomberg, CNBC, Patent Properties

 

 

IP CloseUp 30 Index is Updated

Exclusion of two prominent patent holders will make the IP CloseUp® 30 index of publicly held IP companies (PIPCOs) more relevant.

ARM (ARM.L) and Qualcomm (QCOM), while strong, patent licensing companies with excellent IP portfolios, have been removed from the IPCU 30 because their large market cap, $14 billion  and $131 billion, respectively, dwarfs the others in the index and can cause a weighting issue. Most of the companies in the index are public patent licensing companies that are much smaller. Modest settlements and licenses, or even a good day in court, can move their shares dramatically.

In contrast, a recent trial loss by Qualcomm to ParkerVision (PRKR) for $173 million, the largest patent award of 2013, caused barely a ripple at the San Diego-based chip maker, which has $45 billion in assets on its balance sheet. (Ironically, PRKR shares were down significantly because of pumped-up expectations leading up to the decision.)

We also removed RWS Group (RWS.L), or Inovia, which is primarily a patent filing company, and barely trades, with an average ipcu30-blurb2-21of just 3,287 shares trading hands daily.

Measures of Performance

It is our hope that a wider range of IP-centric companies will eventually be included in the index, including those that do not out-license but nonetheless generate good returns on their patent portfolio and enhance overall performance. (Maintaining market share and profit margins ought to count somewhere other than on the bottom line.)

For now companies that will be included fall in the range of approximately $1 billion market value or lower. These are the IP businesses that — for better or worse —  will tend to be hyper sensitive to their patent licensing and enforcement activity, to the extent that it is understood by investors.

Removal of the three companies will make performance comparisons easier. Suggestions for additions or changes to the index are welcomed. We are planing a more quantitive look at some of the companies in the index in the 2Q.

Patent Properties, formerly GlobalOptions Group, Inc. (GLOI), can now be found under the symbol PPRO. It’s CEO, Jay Walker, previously founded Priceline.com.  


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