Tag Archives: patent strategy

Google’s patent giveaway is not really about saving startups from predators

The Patent Starter Program announced last week by Google may be less about how the company can help protect young companies from patent “trolls” than re-thinking how patents are most effectively used.

 A provocative article running on the Fortune blog by Jeff John Roberts, Google’s new patent plan: how it will and won’t help startups,” suggests that Google is packaging incentives to discourage companies from enforcing patents or selling them to businesses that do.

Roberts believes that the Patent Starter Program could create big long-term ripples in how the tech industry views and deploys patents, and leverages brand recognition. It is an indication of Google’s growing sophistication in the IP space, and shows its willingness to participate in patent transactions (buy and release, similar to Allied Security Trust) if they can help to achieve the tech leader’s business goals.

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“The real significance of the Google Patent Starter Program,” writes Roberts,”is instead more subtle, and should be seen against the backdrop of other moves wpid-google-inc-offers-to-sell-patents-to-startups-as-company-fights-patent-trolGoogle is undertaking to change the economic incentives that have made patents such a problem for the tech sector in the first place.”

“Perhaps the search giant is actually tempted to follow the example of older companies like Microsoft and Qualcomm which, as their capacity for product innovation fades, have turned to their patent portfolios as a new revenue stream.”

Google lawyer Kurt Brasch said that was not the case and that the goal of the purchase program was in part to create more realistic expectations about the actual value of patents in the secondary market.

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The new starter program obliges the startups who receive Google patents to sign up for the LOT network, “a condition that’s easy to accept,” says Fortune, “since Google will pick up the first two years of the membership tab.”

Image source: techno-stream.net

New Book Takes a Hard Look at How Businesses Profit from Patents

‘The Intangible Investor’ scrutinizes how to generate the best returns in innovation — Why some significant holders would rather see patents weakened, including their own.

What is innovative? Who owns it? What are the best ways to generate a return on new ideas? These are among the most vexing questions facing businesses today.

The Intangible Investor, by IP CloseUp contributor Bruce Berman, shines a light on the controversies surrounding innovation rights, including patents that protect inventions and copyrights that cover music and books.

It also helps readers to differentiate between patent “trolls,” who rely on the high cost of litigation to secure quick settlements with questionable patents, and legitimate holders that wish to license quality rights for a market price. The motivation of parties who fuel the debate with mud-slinging and half-truths is also scrutinized.

The Intangible Investor – Profiting from Intellectual Property: Companies’ Most Elusive Assets (CloseUp Media, ISBN-13: 978-0615952352) goes to the heart of what constitutes the innovation economy: ideas, performance and utilizing intellectual property rights to generate value.

The book’s website here provides more information, as well as a sample that includes the Introduction and Foreword. 

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“Bad Actors?”

Bruce Berman’s fifth book provides businesses, investors and general audiences (1) a basis for understanding how IP can generate hidden value, (2) a foundation for what is meant by patent quality, and who, in fact, are the IP systems’ bad actors, and (3) a context to discern IP developments of the recent past in the hope of providing a clearer vision of the future.

“One of the most remarkable things about this collection is how these 64 essays written have weathered the test of time,” says Gene Quinn, editor of the popular IP Watchdog and a patent attorney who wrote the Foreword

“They are as relevant today as they were when they were written for IAM beginning in 2003, which is a testament to Berman’s forward thinking and understanding of the issues.”

The Intangible Investor is available in print and digital editions for under $20, and can be purchased on Amazon.com here.

Image source: CloseUp Media

O Canada, Ontario Rocks When it Comes to Patent Holders, Advisors

Ottawa, Toronto and Waterloo together comprise a leading center for valuable patents and IP expertise.

To most people Ontario conjures an image of ice hockey and maple leaves, not intangible assets. But the province bordering the U.S. on the north is among the most abundant areas globally for invention rights, strategists and investors.

Among the notable patent businesses in Ontario are UBM Tech Insights outside of Ottawa, an information services and consulting firm for technology companies that wish to leverage their IP assets. Chipworks, also in the Ottawa area, specializes in reverse engineering products like computer chips to identify infringement and difficult to identify prior art.

Canadian BoyAnother Ottawa company, MOSAID Technologies Inc.,  is a leading intellectual property management company. MOSAID, with 5,400 patents, monetizes IP in the areas of semiconductors and communications, and develops semiconductor memory technology. MOSAID was taken private in 2011 for $590 million by Sterling Partners, a U.S. private equity firm. Like UBM, and Chipworks, MOSAID has offices worldwide.

WiLAN (NASD: WILN) is an Ottawa-based, publicly traded IP licensing business. In 2011, it failed in an attempt at a hostile bid to acquire MOSAID. Both MOSAID and WiLAN (3,000 plus patents) are built on a tradition of R&D, and sell or have sold products, file patent applications, and acquire them from others.

Waterloo-based Research in Motion which makes the Blackberry, once the leading smart phone in the world.  Research in Motion (NASD: RIMM), has an extraordinary portfolio of some 3,600 patents said to be worth over a billion dollars.

Nortel, based in outside of Toronto in the western part of the province, in Mississauga, Ontario, filed for bankruptcy protection in 2009.  In 2011 it sold 6,000 of its patents for $4.5 billion to the Rockstar Consortium, comprised of Apple, Microsoft, Research in Motion, Ericsson, EMC and Sony.

Rockstar, located in Ottawa, is run by John Veschi, former Chief IP Officer of Nortel, and is actively licensing its lucrative portfolio. Recently Apple bought 1,024 patents from it.

In a case that made international headlines Toronto-based i4i, Inc., a leader in the design and development of collaborative, XML-based content solutions and technologies, won a patent infringement decision against Microsoft for damages in excess of $300 million. It was appealed to the U.S. Supreme Court, which rarely hears appeals of patent disputes, and affirmed 8 to 0.

Also Toronto-based, Northwater Capital (Northwater Patent Funding or NW IP Fund), helped to finance the i4i dispute against Microsoft. Northwater is a private investment company with offices in Toronto and Chicago. Northwater invests proprietary and client capital in intellectual property based investments, green energy endeavors and proprietary trading.

Canadians active in U.S. IP activities include Terry Dalzell (Quinn Pacific), Kent Richardson (former head of IP for Rambus), Kevin Rivette, formerly of IBM and Boston Consulting and Boyd Lemna, Senior Vice President of Licensing at Personalized Media Communications. Peter Misek at Jefferies & Company (and prior to that JP Morgan), one of the leading equity analysts in IT and storage, is from Toronto. (Apologies to the many people not mentioned.)

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What’s up with Canada? At one time the cheap Canadian dollar was attractive to U.S. businesses that required expertise-intensive reverse engineering, such as patent defendants and some plaintiffs. With the Canadian and U.S. dollars now worth about the same, there is still good reason to rely on Canadian IP talent.

Canadians appear to be less conflicted than their U.S. neighbors about monetizing intangibles, their own and others’, and they have many with the right combination of technical, legal and business experience to do so — a hat trick if there every was one.

Illustration source: youthsareawesome.com

Leading Brands Increasingly have the Most Valuable Patents

Patent portfolios associated with strong positive reputation appear to enjoy better performance, or so it seems.

It is no coincidence that many of the world’s best known and most valuable brands have other IP traits in common: Their reputation for quality, innovation, and consistency not only facilitates product sales and shareholder interest, but to enhance the value of their patents, trade secrets and authored content.

At the same time known expertise in securing and managing intellectual property rights and handling patent disputes (e.g. Microsoft (5), IBM (3), Intel (8) and Philips (41)) can add value to overall brand reputation. Good patents held by high-profile brands often appear to be worth more.

It is clear that the reputation of high-value brands for quality and reliability can help to a good patent portfolio to perform even better.

Interbrand’s “best brands” survey for 2012 includes many of the usual world-class names. Note how many of these brand giants are also patent powerhouses in their own right. Nine of the top ten have significant portfolios, and at least five out of the top ten very large ones. For 2012’s top 36 brands see the chart below. For the 100 best with an explanation of each, click here.

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In an article for Managing Intellectual Property that I wrote in 1998 with Dr. James E. Woods, an economist, we suggested that associating patents and patent strategy with positive reputation frequently results in enhanced value both for the patents and trademark. A well-known business brand that does not hold least some relevant patents and a strategy to generate return on them, is likely leaving value on the table.

Smart companies are learning how to use brand equity and reputation to leverage their reputation for innovation and importance of their invention rights. Perceived value plays a significant role in intellectual asset management, and a strong brand can make a good patent portfolio even better. Valuable IP rights, notably trademarks and patents, feed off of each other.

Intel Inside® was part of an aggressive advertising campaign launched by Intel (8) in 1991 to stimulate demand for its (patented) Pentium® processor. Whether there was a qualitative difference between it and comparable devices was unclear. Heavy branding in 130 countries via a five note, tone-based, jingle, served to provide the Pentium with margins up to three times higher than its competitors’. Without it the patent on the Pentium would have meant far less.

Functionally, Intel’s PC processor was not that different form AMD’s less costly one, but its venerable branding from an aggressive retail advertising campaign, paved the way to ubiquity. It’s no accident that a semiconductor maker is the eighth most valuable brand in the world, ahead of BMW (12) and Tiffany (70). Does anyone outside of a small circle of techies, lawyers and investors know who Micron is?

Of the Interbrand’s top ten, the only company that I am aware of that is without a respected patent portfolio is McDonald’s (7). Coincidence or intelligence?

Businesses with extensive patent holdings and reputation for generating return on innovation, benefit from branding their IP success. Nortel and Hitachi  are a examples of patent-rich businesses whose IP success and value may have been somewhat undervalued because of their clear brand identify. IP without brand recognition, I believe, leaves money on the table for well-known companies that fail to take advantage of leveraging their intangible assets.

Consumer products companies Disney (13), Nestle (57), L’Oreal (42), and Gillette (16), all have significant numbers of meaningful patents. (Global cosmetics maker L’Oreal, for example, has received 500 to 700 patents per year for the past decade, or about 6,000 patents.) Iconic eBay (36) has very few patents and seem to be uncertain what to do with those they hold. Google (4), until its purchase of Motorola (unrated), and rival Facebook (69) were in a similar boat. Both have yet to leverage their IP rights and strategy in context of their name recognition. Recently, AOL did leverage its reputation for early Internet success with a billion dollar sale to Microsoft. How these transactions are perceived publicly has become increasingly important.

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Apple (2), second only to “low tech” Coca-Cola (1), which supports it renowned trade secret with numerous patents, also has not done enough to leverage its highly valuable brand in context of its small patent portfolio. Spending a fortune to defeat Samsung (9) in a very public suit helped to enhance its perceived patent value and validate its strategy.

Large public companies with complex assets have the ability to leverage them in innovative ways: Patents certainly can benefit from the glow provided by a top brand, even those that are essentially geared to consumer products, like P&G’s (41,000 global patents).

At the same time, even the most highly regarded trademarks (brands) can enhance their importance though association with other valuable intangibles, such as patents. Branding patents is a win-win; so are brands with patents.

Illustration source: BrandMagazine.com


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