HOUSTON, TX, November 30, 2015. Kelemen's Kreations, LLC (“Kelemen’s”) announced today that it had settled litigation with the Emsco Group. As part of the settlement, Kelemen's has agreed to sell its entire patent and trademark portfolio to the Emsco Group. Financial and other terms were not disclosed.
Mike Kelemen, the inventor and majority owner of Kelemen's Kreations, LLC, said that he would like to thank Bob Weber, the Managing Director of Patent Kinetics, LLC, for leading this project and seeing it through to a satisfying conclusion. "I'd also like to thank the legal team that Bob put together: Edward Goldstein, Goldstein Law, PLLP, of Houston, TX, and Peter J. Corcoran, III, Esq., Corcoran IP Law, PLLC, of Texarkana, TX," said Mr. Kelemen.
Contrary to what some patent owners believe, the value of a patent(s) is determined by the market(s). Some patent owners I've encountered think that they can demand a certain amount of money with various terms associated with the transaction and that they will get it if they demand long enough, loudly enough. Ain't necessarily so. In fact, it's seldom, if ever the case.
Those who own but do not practice their patents are sometimes referred to negatively as "trolls" or "patent trolls," especially when they assert their patents against companies who are alleged to be practicing the inventions without a license. Well-known (in some circles) firms that are often identified by others as patent
trolls include Acacia Technologies and Intellectual Ventures.
The term was coined in the 1990s. A Wikipedia discussion of the term's origins can be found here. A more, but not completely neutral term is Non Practicing Entity, or NPE.
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Initiating an infringement lawsuit carries with it many important risks. Patent owners should be aware that litigating their patents may have significant negative consequences, especially against well-funded opponents that may hire law firms to aggressively defend them.
Law firms come in many flavors, sizes, and shapes. Some litigators will work on “modified contingency,” which usually means that the client is expected to pay expenses. In return, the law firm will take a lower percentage of any proceeds.
For the right case with the right client against the right target(s), some litigators will work of “full contingency,” which usually means that they will advance their out-of-pocket expenses. If and when funds are received, typically the first money in will be used to repay the firm’s expenses. The remaining funds will be shared between the firm and the client in accordance with the representation agreement.
Many inventors and small companies may not be fully aware that certain law firms in the US regularly take patent infringement cases on a contingency fee basis. This article reviews key factors that patent owners should keep in mind while evaluating the possibility of approaching a contingency fee litigation firm for representation.
More specifically, this article provides a brief and necessarily incomplete discussion of the following issues: (1) what makes for a great infringement case; (2) how are law firms and patent owners likely to work with each other; and, (3) what are some major risk factors in bringing an infringement case?
The “optics”—the visuals—of patent portfolios are often valued more than actual patent quality. Numbers of patents, patent claims, etc. may be prioritized over patent quality. Big companies are sometimes expert at playing this game. However, those wishing to create valuable patents need to address other factors, including:
Prior Art Searching
Was the patent prior art searched and if so, how extensively?
Was the non-patent prior art searched at all and if so, how extensively?
Did the inventor / assignee leave the searching up to the patent office?
Closely related to market factors are aspects of the inventions themselves. Is the invention narrow or broad? Amazon’s “1-Click” patent notwithstanding, broad inventions tend to be more valuable than very narrow inventions. There are several reasons for this: in the aggregate, royalties and/or damages in infringement cases may be higher for broad compared with narrow inventions and portfolios. Broad patents may make it difficult for competitors to “patent around” the inventions or to find new ways of solving a given problem that are as effective and efficient as the patented technologies. In addition, depending on the evolution of relevant markets, more parties may infringe broad than narrow patents.
Is the invention best thought of as a component of some larger product or service?
Is the invention sufficient to be the basis of a new product or service offering?
If component technology, who makes or would make the whole product?
Do prospective customers have a history of incorporating technologies from other sources or are they a “not invented here” culture?
Do prospective customers have a history of acquiring patents and if so, at what valuation?
Are there competing technologies that solve the immediate problem and if so, are those solutions more or less costly, or easier to manufacture?
How long does it typically take to get a “design win” in the relevant industry?
Patent Kinetics works with inventors, entrepreneurs, and investors to enhance the value of their patent portfolios and then works to monetize these portfolios through their sale, license or enforcement. Since Patent Kinetics works on a contingent fee basis, only a few cases of the many presented to us are accepted. The opportunities that we do accept are those where the prospective client has thought through—as best possible—relevant market, technology, and patent issues.
Many mistakenly believe that simply having pending applications and/or issued patents creates notable value. However, most patents are worthless. Research reports have found that only about 10% of issued patents ever return any value to their owners. Creating real value entails successfully overcoming significant challenges and a bit of luck. These challenges might be best understood by addressing most or all of the questions listed here. These questions can, of course, be used as a checklist for innovators or as a basis for preliminary due diligence by prospective stakeholders.