Tag Archives: prior art

Rich values for IP services providers defy investor expectations

Prices for companies that support and sell IP services and analytical software remain surprisingly strong, even as patent licensing and sales continue to decline.

Their success appears to be fueled by the very problems facing patents: lower values and lack of certainty.

IP tools providers are the proverbial sellers of picks and shovels; the “miners” take the primary risk. Most are satisfied with the steady cash flow, while their clients make the big bets in R&D and litigation. Uncertainty makes investing even more dangerous and the information premium more valuable.

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For the full IP services deal story, “Defying the monestisation market” in the September IAM magazinego here. In this issue the Intangible Investor explores recent IP service firms transactions and their prices.
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Examples of IP services successes include CPA Global’s 2017 acquisition by private equity firm Leonard Green & Partner’s for 2.4 billion pounds ($3.1B USD). Cinven had acquired the firm in 2012 from Intermediate Capital Group for around £950 million ($1.3 billion), backed
by $555 million of debt financing.

In 2015, CPA Global – with approximately $12 million in revenues and no profit – acquired Innography for an undisclosed amount. An industry-insider told IP CloseUp it was likely between $80 and $90 million, or about seven times revenue. Innography, with a strong reputation, had raised $14 million in venture capital.

AI Driven

Thomson Reuters sold its IP and Science business in 2016 to Onex and Baring and Private Equity Asia for $3.55 billion. The company is now Clarivate Analytics.

Among the newer and more interesting entries in the IP services space is ClearAccessIP, a Palo Alto, CA-based firm “that indexes patents, looks for vulnerabilities in a corporation’s patent strategy, and finds opportunities in a patent collection for further value.”

Founded by Nicole Shanahan, a young patent attorney who served as a researcher for IP scholar Colleen Chien at Santa Clara University College of Law. Professor Chien is a member of the Clear Access IP Advisory Board, along with former AIPLA president Wayne Sobon.

“I am essentially trying to build and democratize a marketplace platform because not all patent holders and sellers can afford the large transaction firms,” she says. “I’m also solving a very old problem and putting docket management in the cloud.”

An extensive interview with Shanahan appears in Software Engineering Daily. The audio can be found here; the written transcript, here.

Ms. Shanahan, it seems fair to inform readers, has been living with Sergey Brin, founder of Google and President of its parent company, Alphabet, Inc., which, historically, has been dubious about strong patents.

New Wave

IP services and software providers, especially those using the latest algorithms, may represent a new wave for beleaguered IP holders and their law firms seeking to manage patent risk. The computing strength and analytics capability they offer may be just what some IP holders and margin-conscious law firms need to compete, or these companies may simply be repackaging the outsourcing mantra for the AI age.

These relationship-driven, technology-focused service providers are likely to grow in value as global patent applications and portfolios increase and uncertainty lingers. An improved outlook for patent licensing will make them even more attractive.

Image source: softwareengineeringdaily.com; clarivate.com; cpaglobal.com 

“All Prior Art” algorithm won’t stop bad patents or actors

Stopping new inventions dead in their tracks by making them “automatically” unpatentable might sound like a good idea to some.

However, programming a computer to disclose an endless combination of dubious inventions is more effective at stopping bad patents in theory, not practice.

At least that is what three experienced patent attorneys told me recently. Publishing millions of pieces of supposed prior art will not stop bad patents (really, unpatentable inventions)  from being issued or make legitimate invention-ownership less difficult to discern.

More Style than Substance

All Prior Art is a project that attempts to “algorithmically create and publicly publish millions of pieces of possible new prior art, thereby making the disclosed concepts unpatentable.”  All Prior Art is trying to take highly obvious ideas out-of-play. Unfortunately, preventing patents from being granted, even those that do not deserve to be, is not a simple fix.

In order to be admissible, prior art must be enabling; i.e. the disclosure must describe how the invention can be produced — not something that All Prior Art addresses.

Cf2sxeUWEAE864bThe brainchild of Alexander Reben is a self-described engineer and artist with a background in robotics and applied math.  Mr. Reben’s random configurations have been described to me as “a mishmash of questionably inventive ideas.” Even if there are millions of combinations, it is highly unlikely that they will serve to invalidate a perspective patent, let alone one that an NPE may be enforcing.

All Prior Art may be more style than substance. Sure, inventions that do not meet the appropriate tests of novelty should be prevented from issuing or invalidated if they are enforced (or, maybe, even if they are not). Even if this scheme were to work, it would weaken the prospects of many inventors, universities and SMEs, and dissuade investment in innovation.

Missing Description

The theory behind Mr. Reben’s invention is that if a computer can spew out enough combinations of prior art — i.e. publish millions of pieces of data that describe inventions — the subject matter disclosures will preempt patent issuance. It’s just not that simple.

The problem is that for any prior art reference to serve as an invalidating disclosure, it has to be enabling. And the fact that no human being has come up with the combination is a pretty good argument against enablement.

The means it must be described so that a “person of ordinary skill in the field of the invention can practice the subject matter based on the reference, without undue experimentation.” (Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1082 (Fed. Cir. 2008).

When it comes to All Prior Art’s prior art, the “description” is missing, according to Bloomberg BNA’s Tony Dutra.

“The virtually infinite number of combinations will generate over 99 percent dreck,” chides Mr. Dutra. “But, like the ‘infinite monkey theorem’ that predicts a monkey hitting typewriter keys at random for an indefinite time will almost surely, eventually type a given text, Reben believes his project will generate at least some combinations that someone, someday might try to patent. It’s that someone [Reben] aims to stop.”

Patent the Universe

NPLThe tech media, notably the DailyDot, encouraged by with the idea of that patents can be neutered, has taken an ill-conceived idea and made it worse with a misleading, inaccurate headline: “One man is trying to single-handedly create every patent imaginable.”

A sister website All The Claims is attempting to achieve a similar objective, but with the use of claims and a more verbose alternative.

“Hard to Take Seriously”

“Bruce, this approach is hard to take this seriously, especially with an admission that most of the inventions generated will be nonsensical,” one patent attorney wrote to me. “Pertinent excerpts from the Patent Office Examiner guidelines illustrate that:

‘In determining that quantum of prior art disclosure which is necessary to declare an applicant’s invention ‘not novel’ or ‘anticipated’ within section 102, the stated test is whether a reference contains an ‘enabling disclosure’… .’”

“To be invalidating prior art as to make a meaningful contribution,” a former USPTO examiner, inventor and Fortune 100 Chief Patent Counsel told me. “If utility is missing, it will not be seen at invalidating. Prior to be taken seriously by an examiner or in litigation needs novelty and utility, or specific application.”

“There are billions of combinations, but so what? There needs to be novelty and utility to qualify as prior art. This scheme might be well intended bu ti hurts the little guy more than the big tech player. I doubt that courts will take it seriously or that automated generation of inventions will have a meaningful impact.”

Trivial Variations

“Is Mr. Reben really attempting to automate the generation of trivial, random variations of existing stuff?” asked another patent attorney. “It is already difficult to patent trivial variations, as they are ‘obvious’.  The term ‘automated generation of patentable’ is kind of an oxymoron. This approach  should be titled ‘automated generation of trivial variations of existing inventions’.”

Non-Patents

So for now, at least, bad patents (really, non-patents) will continue to be issued by the USPTO and other major patent offices in large numbers because they lack the resources to prevent them.

Inter Partes Reviews and other mechanisms will continue to try to eliminate or to help fix erroneously issued patents, and litigation will remain the only reliable, albeit, costly way to determine if a patent is valid and infringed.

If it were easy to solve patent problems algorithmically with a PC, mathematicians would be higher paid than patent attorneys. That’s not likely to happen anytime soon.

Image source: ttconsultants.com

IBM Files Patent on Patenting Process

Is Big Blue Co-Opting Innovation?

It was reported in early 2011 that an application has been published for an IBM patent that apparently attempts to secure rights on the patent process.

As best I can determine the original source of the story is Wolfgang Gruener in Conceivably Tech.  Douglas Perry of Tom’s Hardware amplified it.

Aside from the audacity of such a broad patent, what I find interesting is the timing of the publication. Was the application filed in late June of 2009 (June 24 to be precise) so it would publish 18 months later, post-Christmas 2010, when business news and browsing are way down?

Click here for the published application, Intellectual Property Component Business Model for Client Services.

If IBM’s process patent issues, it will have symbolic if not literal value for a while. That it should issue at all is another matter. Can the company be faulted for trying?

Below is a reply from an IBM employee to Gruener’s post:

Chris@IBM says:

Wolfgang, I work for IBM and I’m glad you see some ingenious ideas in this patent application. We have thousands of inventors who file for and receive patents every year, backed by a $6 billion investment in R&D. Of course, you can’t receive a patent on filing for a patent because there’s obviously nothing new or novel about that. What this application is for is an IP management system, and how a company goes about making strategic decisions that may or may not lead to an application for a patent being filed, as well as for managing an IP portfolio. We’ve had many clients ask us for this kind of service, and since IBM actually practices its inventions, it is only natural that we’d file for patent protection so no one can prevent us from serving our clients.

Reply this comment (to Conceivably Tech).
To reply to this IP Insider post, see below.

Illustration source: kara.allthingsd.com


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