PATENT TROLLS But let’s return to Obama’s objective—his
administration’s move to shackle aggressive trolls. We need to recognise that part of the problem lies within the patent system itself, and the poor quality of patents granted in many cases. Trolls love to feed on broad-brush patents because ambiguity, the scope for interpretation and misinterpretation, and grey areas are all part of their staple diet. Improvements in patent quality, better definitions for examiners and stronger, more effective prior art searching can help reduce the ‘food supply’ and make the environment less conducive to the activities of trolls.
Meanwhile, IP disputes continue to be a dominant presence in business litigation: you can’t open a newspaper or log on to a business site without reading about the latest major infringement ruling. Clearly companies are dismayed by the huge costs involved in litigation.
Obama’s anti-troll campaign is chiefly aimed at curbing their more aggressive assertion tactics, with the legislation directed primarily at discouraging harassment and costly litigation. But take away an NPE’s ‘ugly’ side—its ‘troll’ persona—and what do you have? Some industry observers would suggest that, in certain cases, you have an essentially constructive entity which can be a key facilitator of business development.
Indeed, it could be argued that by licensing use of unproductive, non-core patents, an NPE is helping a business to in-source a form of open innovation. Te end user is being given access to protected technology, which it can then enhance and take to market. Yes, the NPE is profiting from the licensing deal, but the purchaser is also making money, hopefully via additional product sales, with these earnings helping to support the economy by maintaining and, potentially, boosting employment.
A force for good
Te idea that an NPE can be a force for good is exemplified by the emergence of ‘sovereign’ NPEs, state-owned enterprises dedicated to protecting a country’s innovative capability. Tese initiatives—South Korea’s Intellectual Discovery is a typical example—acquire IP rights which can then be accessed by national SMEs. It will be interesting to see whether state-sanctioned NPEs will be targeted by US regulators.
It would also appear that even the largest of the NPEs, Intellectual Ventures, may be leavening its predatory stance with more positive activities around licensing (while still baring its teeth at times through the threat of assertion). In some respects, then, its approach is not too dissimilar from the open innovation opportunities provided by sovereign NPEs: partnering with
organisations by enabling them to tap into a bank of IP assets which can then be advanced.
Understandably, for companies that have been defending themselves against trolls, it’s difficult to see the beneficial aspects of NPEs. However, where NPEs are genuinely playing a part in the spread of open innovation in IP, it may just help some of the players to be viewed in a new light.
Open innovation is certainly momentum, providing companies with
gathering the
ability to trade ideas, share technology and bring in external innovation to complement and bolster their internal efforts. It is addressing an objective which should be common to all innovation: securing close alignment between IP strategy and the broader business strategy. A lot centres on the way business addresses IP creation via R&D and the subsequent management of IP assets.
Te overriding concern for all companies should be to avoid waste at all stages of the IP development process. Clearly IP-based litigation is inefficient, but waste is not confined to the courtroom—it oſten starts at the very beginning of the R&D process, where there’s a presumption that multinationals need large R&D budgets. However, this expenditure needs to be managed with much
150 World Intellectual Property Review September/October 2013
Haydn Evans works with a range of clients in sectors such as technology, telecommunications, electronics, chemical, pharmaceuticals, and biotechnology. Clients include multinational corporations and smaller technology organisations as well as law firms.
“CAN A COMPANY BE CONFIDENT, FROM A COMMERCIAL PERSPECTIVE, THAT EACH ONE OF ITS IP ASSETS HAS JUSTIFIED ITS DEVELOPMENT COSTS AND THAT IT WILL NOT LIE DORMANT AND UNPROFITABLE?”
greater rigour and, ultimately, more closely tied in with commercialisation of the assets.
Waste can occur when an original idea in the form of an ‘invention disclosure’ is submitted to the company’s patent committee, where there may be a lack of understanding about the relationship between innovation and cost lifecycles. Te waste can continue when the invention disclosure is translated into a formal patent application. True, the idea might get through the patent office’s prosecution procedures, but is the now-protected IP genuinely aligned with the company’s core business? Is it supporting cash flow or key products? In short, can a company be confident, from a commercial perspective, that each one of its IP assets has justified its development costs and that it will not lie dormant and unprofitable?
Maybe this is where NPEs can be seen to be playing a more positive role. Let’s say you’re the head of R&D or chief financial officer in a big company. You’re looking to get a new product into a space where you have yet to establish a presence. You could throw money at R&D and hope you strike lucky but, potentially, there’s a much more cost-efficient alternative. Someone may already have solved your development problem and the solution may be readily available by licensing or purchasing that third party’s technology, perhaps from an NPE.
So, instead of being confronted by a prowling, threatening troll, you’re suddenly working in harmony with a genuinely helpful ‘innovation broker’, which is a very different story—with a very different ending.
Haydn Evans is vice president of IP Service Solutions at CPA Global. He can be contacted at:
hevans@cpaglobal.com
www.worldipreview.com
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