The Apple vs. Samsung Verdict Actually Demonstrates that Patents Do Promote Product Innovation

In the time that the Apple vs. Samsung patent fight has been underway, we have been inundated with an untold number of articles on how Apple is stifling innovation in the SmartPhone world.  (Haven’t seen these:  just do a Google search for “Apple stif . . .” you don’t have to type any more than this–the search auto-completes itself.) I often take a contrarian view from that stated by most “expert” commentators–be they members of the press or actual patent professionals, and the Apple v. Samsung verdict is no exception:  I think the result actually demonstrates that the patent system is working just fine in this instance, thank you very much.  But how can this be when Samsung got hit with more than a BILLION US DOLLAR jury verdict last week?!?  Doesn’t the fact that Samsung could not make a product without infringing Apple’s multitude of patents mean that Samsung is effectively prevented from competing with Apple in the Smartphone market? Not necessarily, as is shown by this great post from The Verge entitled:  “How Android has evolved while steering clear of Apple’s designs”.  What is most interesting to me about this article is how we see that while making Continue Reading →

False Marking Lawsuits are Real Problem for Business and Make Little Sense When Applied to Expired Patents

The threat of false marking lawsuits has garnered much attention in the IP business press in the last couple of years.  Companies of all sizes have been hit with qui tam actions (that is, suits brought by an individual or company on behalf of the US government to right wrongs done to the government, not the individual) where the basis of the action is the mis-marking of a product with an incorrect or expired patent number.  Like a gold rush, these lawsuits have resulted in a number of legal entrepreneurs seeking out products that are incorrectly marked–usually by identification of expired patents, which is an easy thing to find–and their bringing suit against the offending companies.  Indeed, there were over 500 false marking lawsuits filed in 2010, making this cause of action seem almost like a way for un- or under-employed patent lawyers to generate income after the rash of layoffs and firm closings in the last few years. For patent lawyers representing corporations, false marking cases may seem like a pain for clients, but something which nonetheless leads to business if a suit is brought against his client.  But, in reality, the uncertainty raised by the current rash of Continue Reading →

Patent “Expert” Opinion on Reasons for Google Tender Offer for Groupon Reveals Fundamental Problems with IP Professionals

After several years of writing about how business leaders need to wrest control of their IP matters from lawyers, today brought a revelation that illuminated why this seems to be such a hard point to get across.  It should be a no brainer:  it has been shown time and time again that when a company aligns its IP strategy with its business strategy, value creation opportunities abound.  So, why is it so hard to get business people to sign onto something that is unquestionably in the best interests of their shareholders?  It’s simple–patent experts wholly lack credibility with business people on these issues.  This lack of credibility is compounded by the fact that these experts are given a forum to trumpet these views through use of their firms’ large marketing budgets, as well as by haphazard journalists who give them a forum to expound their self-interested views without counterpoint. To this end, my realization was caused by a blog post from my friend Patrick Anderson, the proprietor of the great GameTime IP blog.  He posted an excerpt of an article in the National Law Journal, authored by Amanda Bronsted, where Patrick Arnold, a patent attorney at the Chicago law firm Continue Reading →

Business Can’t Hide from False Patent Marking Lawsuits: Here’s How to Predict If You Might be Sued

The take home message:  If your company sells a product that bears a patent number, you need to read this post in its entirety. Much has been written in recent months about false marking lawsuits, most of these in the form of “urgent legal alerts” by law firms that calmly deconstruct the appellate court rulings (this one is illustrative).  At the end of the day, these articles likely do not look very “urgent” to business people like yourself because most business people do not engage themselves with patent law generally, let alone something as arcane as false marking.  So, even though the subject excites us a patent experts, we really cannot expect you to get excited about something that does not seem to affect your ability to conduct business today. However, if your business is a likely target of a false marking lawsuit it will cost you big bucks almost immediately.  These surprise costs could very well derail your ability to turn a profit in the near future, and could even put some struggling companies out of business.  But what if I told you that getting sued for false marking is a highly predictable event?  You might even be able Continue Reading →

Much Ado About Patent Marking: Why It is So Hard for Corporations to Get It Right and Why False Marking Lawsuits Might be a Good Thing Overall

It is fairly rare for patents to make hit the radar screen of mainstream news outlets but, recently, there has been much space allotted to the issue of patent mis-marking and lawsuits being brought by third parties for “violation” of the law requiring that products cannot be marked with an incorrect patent number.  Indeed, the usually substance-free local paper in my mother’s Southwest Florida community reported about the flood of patent mis-marking lawsuits.  And, it is no wonder that the undoubtedly arcane issue of patent marking has reached the status of “news” in a small-town paper given the huge number of cases currently pending in the federal courts.  It seems as if patent marking litigation may be the new business model for trial lawyers who are looking for a new “gravy train” to extract substantial legal fees from corporations whose activities violate the letter (but not necessarily the spirit) of the law. First, an explanation:  U.S. patent law expressly dictates that products should be marked with the number of patent(s) with claims that cover that same product.  If one does not mark the product, the patentee cannot obtain damages for infringement that occurs either prior to its giving “actual notice” Continue Reading →

For Inventor of 21 Patents, Patent Troll Litigation Not Very Lucrative

  Recently, I wrote a post on why I think that patent litigation is not a viable business model for inventors.  Given a realistic deconstruction of the costs and possible damage awards, I concluded that, in most situations, it is not realistic for an inventor to presume that she will “hit the jackpot” by suing infringers and extracting settlement or damage awards.  I obtained some pushback from this post, mostly from patent litigation lawyers, who contend that I am wrong in my view that patent litigation does not pay for inventors.  Of course, everyone is entitled to their opinion, and I respect the views of others, however, no one who objects to my (somewhat) negative view of patent litigation as a business model, has provided me with numbers to discount my economic analysis of patent litigation.  This recent post from The Prior Art blog entitled “Revealed! How Much Money a “Patent Troll” Makes” provides some insight into usually confidential inventor returns when dealing with a patent licensing program.  The underlying patents related to GPS technology and were asserted against several prominent technology companies.  The post gives a rare look into the numbers involved obtained in sending “patent licensing letters” to technology companies.  In Continue Reading →

A Patent Reality Check: Litigation Not a Viable Revenue Source for Most Inventors

The ability of an intrepid inventor to strike it rich from a great idea seems to be embedded in the DNA of many Americans.  Perhaps this view emanates from the presence of patents in the US Constitution, which could create a feeling that US citizens have an “inalienable right” to use patent protection to their advantage.  Alternatively, people may perceive the occasional media reports of successful inventors and substantial patent litigation awards as a signal that patents can serve as a path to wealth for those with great ideas (certainly, this is the Hollywood view).  In truth, however, getting rich merely from a patent is a rare occurrence–maybe not as low a probability as winning the lottery, but the odds are incredibly long that any person can make money from a patented idea alone.  Think about it: if all it took was a patent to make someone wealthy, there would be a heck of a lot more rich people in this country given the huge numbers of patents that are granted by the US Patent Office every year. There are many reasons why the idea getting rich from patenting an idea is overstated, several of which I have discussed before on this Continue Reading →

Is There an Emerging Business Model for IP Lawyers’ Owning So-Called "Patent Trolls"? Only Until Their Corporate Clients Find Out.

Dennis Crouch of The PatentlyO blog recently posted an intriguing tidbit about about well-known IP attorneys Carl Moore (Of counsel at Marshall Gerstein); Timothy Vezeau (patent attorney at Katten Muchin); and Nate Scarpelli (who used to and still appears to be associated with Marshall Gerstein). These prominent members of the Chicago IP community appear to be “moon-lighting” from their respective law practices to act as managing partners at a patent holding company called “Virtual Photo Store LLC” (“VPS”). As reported in PatentlyO, VPS is currently involved as defendant in a Declaratory Judgment action. Here is a copy of the DJ Complaint, also posted at PatentlyO. (Interestingly, the Complaint lists VPS’ address as that of the Marshall, Gerstein law firm.)The Complaint alleges that VPS is a non-practicing entity (“NPE”) owner of several patents that appear to be related to digital image processing. Mssrs. Moore, Vezeau and Scarpelli allegedly own a company that operates under a business model directed toward enforcement of patent rights alone. In other words, VPS is company in that does not actually make, use or sell a product covered by the claims of the patent, which gives rise to the “NPE” moniker. (Of course, NPEs are more pejoratively Continue Reading →

A Response to PWC’s "Starry-Eyed" View of the Value of Litigation as Effective Way to Monetize Patents

I recently became aware of this patent litigation analysis prepared by PriceWaterhouseCoopers (“PWC”) (hat tip: Marcus Malek of the Intangitopia blog). The report appears to be rigorously prepared from data obtained from a large number of reported patent litigation cases dating from 1995. I read this report with interest and think that anyone who is interested in the ROI of patent enforcement should read it also. The data provide a wealth of information for anyone even thinking about bringing a patent case or who is involved in defending against claims of patent infringement. Although the data in the PWC provides informational value, I nonetheless have a big problem with the following assertion that is prominently presented on page 18 under the title “What This Means for Your Business”: “In light of the findings in this study, patent litigation appears to continue to be an effective protection and monetization path for patent holders.” (emphasis added) This unqualified statement gets a big “WHAT?!” from me. Tweet This Buzz This Delicious Digg This Reddit Stumble This

A Consumer Product Company’s Costly Patent Lesson: It’s Not Enough to Protect the Invention, the Innovation Must Also be Patented

A SVP at a large consumer products company recently expressed frustration that he cannot bring a patent infringement lawsuit even when his company holds 18 US patents (and many other foreign patents) on a product that closely resembles a competitor’s product. His annoyance is compounded because his company spent several years developing the product and technology covered by the patents. His company also spent several $MM introducing the product, which turned out to be a failure. The company removed the product from the market after several months, but the many patents remain in the portfolio today, and are still being maintained at considerable expense. I estimate that the patent protection for this failed product cost as much as $500K for patent coverage worldwide. Significantly, the product did not fail due to quality or performance issues. Rather, it failed because it was over-engineered and used many expensive ingredients, a fact which made the plastic product too costly for the target consumer market. The competitor’s knock-off product has been successful because they have removed much of the cost from the product by using less expensive ingredients, while still being able to maintain its desirable performance aspects. Of course, the SVP’s company provided Continue Reading →