Real-World Value of PatentsKEITH GRZELAKWIPO-CPIP SUMMER SCHOOL ON IP4 JUNE 2019

Agenda

What is a patent? History of patents How do you use patents? Which approach to patenting? Commercial/customer relevance of patents Shortest path to a customer Financing and patents Commercialization of patented technologies Post AIA challenges Q & A

What is a patent?

Patent – a property right and intangible business asset that secures exclusive use of an invention for a limited period of time.

Legal requirements for a patent:1. New – novelty/originality

2. Useful - utility

3. Non-obvious – non-obviousness/inventive step

4. Disclosure – contract with Federal Government (U.S. law)

Sources of patent law1. Domestic law – statutes and court decisions

2. Treaties – TRIPS, etc.

History of patents

Original patent law developments in ancient Greece (500 BCE) in Sybaris (southern Italy), Athenaeus, and Phylarchus. English first grant in 1331 letters patent issued to sovereign.

Modern patent system evolved in 15th and 16th centuries in Italy (Venice), France, and England.

The English system became the foundation of modern patent systems in the U.S., Australia, and New Zeeland.

Article 1, Section 8 (U.S. patent and copyright) in 1787. First U.S. Patent Act in 1790. 1952 U.S. Patent Act (Giles S. Rich). American Invents Act (AIA) in 2013 and realm of new post grant

challenges and eroded/unpredictable grace period.

How do you use patents?

Protecting commercialization efforts. Protecting research and development efforts. Manufacturing. Licensing. Protection of new technologies with patents facilitates patent pooling

and standards structures. Patents can be used as collateral for investment and business

partnerships. Patents help inventors connect with market opportunities as a result of

risk reduction that increases capital flow, cross-license opportunities that further reduce risk, and licensing and enforcement opportunities that help drive exclusivity and market product differentiation.

Which approach to patenting?

Top down approach – patent portfolio strategy driven by strartegicleadership from the top targeting key strategic areas and placing resources carefully in the target areas.

Bottom up approach – financially incentivize engineering and marketing departments to make formal invention disclosure submissions that are then used to file a broad range of patent applications that will hopefully weave a web of protection.

Commercial relevance of patents

Patented technologies with commercial relevance are generally more valued than protected innovations that do not commercialize – instantiation into real world commercial products is a STRONG correlator of value.

However, patents without current commercial relevance might be important to an upcoming emerging technology development.

Patents without current commercial relevance might also be important in a future patent pooling arrangement or a standards patent pool.

Patents kept alive through continuation practice, although seemingly not currently commercially relevant, may be very relevant if continuation practice enables reaching back to place claims on later developed commercially relevant products/services.

Commercial relevance of patents

Patents create an asset value that reduces risk. Risk reduction is a key to increasing lubricity of capital flow as investors are more likely to invest in projects that mitigate risk.

Therefore, commercially relevant patents that protect commercial endeavors ALSO reduce risk because they provide an ownership interest for the commercial technology.

The ownership interest in the commercial technology (patents) might be important in a technology sector where potential competitors ALSO have relevant patents.

The resulting ownership interest in commercial technology (patents) might be used in a cross-license or patent pooling arrangement that ensures a more-likely commercial platform that minimizes the risk of patent infringement and any resulting injunction issue.

Customer relevance of patents

Find shortest path to a customer with a problem that you solve. If technology is massively disruptive, act like a small mammal in a T-

Rex world and live quietly under the shrubs and bushes (going unnoticed while you grow).

Ultimately, patents that are not used commercially are relegated to second class citizen status. However, they might still have value if they block a competitor to market with a nearly competitive alternative market implementation.

Post AIA patent world

Bottom up versus top down approaches to patent protection Consider bottom up approach, to extent funding is available. Cover multiple inventions in single application. Insidious risk of iterative design coupled with use of provisional

patent application filings. Each increment that is not filed is placed at risk. 18 month publication events create prior art problems. So do prior filings. Consider non-publication requests (where available) and NDAs to enhance trade secret protection and reduce triggering further inventing by others. Prefer one-way NDAs.

Counter IPR risks resulting from lower invalidation standard by prosecuting more diverse sets of claims with both broad claims and IPR proof claims.

Post AIA best practices

Race to USPTO from first-to-file creates false sense of “placeholder status” for idea. You only get priority for what you teach, rendering risk for incomplete and provisional filings.

File early, often, and for each incremental improvement. File more claims of both broad and narrower scope to counter more

aggressive and extreme application of the standard by PTAB with defacto inability to amend the claims.

More reason to disclose under NDA and increase efforts to protect trade secrets, in combination with patent filings.

Choose to exert R&D efforts where you will be rewarded. Maybe software and 101-risky efforts are less likely to be rewarded.

Choose business opportunities where you do not get eaten by T-Rex. Find a customer opportunity where you can be a small mammal hidden under the shrubs.

Post AIA best practices (cont.)

How does a startup fund the extra costs to mitigate AIA and 101 risks? See NYSE Entrepreneur’s Handbook: https://www.nyse.com/entrepreneur

Use care when filing with iterative development. Each increment matters! No longer have clear grace period for mistakes.

Use trade secrets to enhance eroded IP potential from AIA and 101 concerns. However, still file early and often, and share applications under NDA with marked documents.

Disregard talk that patents are worth much less under AIA and 101 scrutiny. Ultimately, naked sales to PAEs are less indicative of patent worth than are acquisition valuations – real business opportunities coupled with reduced risk via ownership can create synergy.

The end – Q&A

Keith D. Grzelakgrzelak@ieee.orgkgrzelak@WellsIP.comSKYPE: patentlakeWIRE: patentlake1-509-981-7912 mobile