Copyright 2016 Licensing Economic Review. Reprinted In Full With Permission. Thanks to Dave Weiler and Kate Smith for making this opportunity possible.
This “View” is with Robert Weber, Managing Director of Patent Kinetics, LLC. Bob is an experienced intellectual-property professional, inventor, serial entrepreneur, management consultant, and senior executive. Patent Kinetics helps clients to create patent portfolios comprised of strong patents that can be monetized through sale, licensing, or enforcement. He can be reached at Weber@PatentKinetics.com.
[Note from Bob: He is not an attorney, does not give legal advice and does not practice law. However, Patent Kinetics does work closely with top tier intellectual property law firms and trial attorneys.]
LER: What is your background? How did you come to be in your present position?
RW: I am a Ph.D. Sociologist by training and spent 20 years working with computers and quantitative academic work. Eventually I joined NCRI, a 25-person business and information technology consulting boutique based in Boston. We mainly did work for Global 1000 companies. The founders of NCRI created an innovative form of scenario planning called Future Mapping.
At NCRI I focused mainly on the copyright industries who were trying to figure out in the early 1990s how the emerging commercial Internet would affect information creation, access, and distribution. I led public workshops on the future of publishing and information commerce while applying the Future Mapping process and lessons learned to client work.
In 1996, I became Senior Vice President of Business and Technology Strategy at Intertrust Technologies. The company was just starting out in the field of trusted computing and digital rights management. We provided a platform that helped those in the media, information, and software industries to protect their music, video, and software against unauthorized use.
Intertrust was founded by Victor Shear, David Van Wie, and others who were focused on creating a business based, in large part, on a substantial investment in patents. They were applying what were considered “best practices” of the day. I ended up being a named inventor on 28 or so Intertrust patents and learned a great deal about best practices in value creation and patent monetization. After a 1999 IPO, Intertrust failed as a product company, was taken private by Sony and Philips, and has been more recently characterized in the Wall Street Journal as a "once in a generation" billion dollar patent licensing opportunity.
I left the company when it went public in 1999 and became involved in several start-ups, including one eventually acquired by a public company. Patent Kinetics was created in 2007 to leverage my Intertrust and subsequent experience to help build more valuable patent portfolios and to share knowledge and experience with patent owners, entrepreneurs, inventors, litigators, and patent attorneys.
LER: What are your current responsibilities and duties?
RW: All our projects are based on building virtual teams – bringing together the right specialists for the right project. These teams typically include patent owners, inventors, registered patent attorneys, litigators, licensing and business attorneys, and most recently, attorneys who defend patents when they have been challenged at the Patent Trial and Appeal Board (PTAB). Of course, no two projects are the same.
Generally speaking, my efforts are directed toward:
1) Mentoring inventors and startups.
2) Pro bono advising to start ups and investors. Both of these first two activities provide ways for me to give back to the innovation and start-up communities that have provided much of my experience.
3) Infrequently (by choice), I’ve been hired by law firms to do limited litigation support, but I do not work as an expert witness.
4) Helping people apply best practices to develop strong patent portfolios where possible -- to position them to capture value in the future with patents that have a good chance of standing up if challenged at the PTAB or as part of a patent infringement action. This includes portfolio strategy and implementing that strategy in conjunction with patent attorneys, inventors, and patent owners.
5) Helping monetize a patent portfolio through licensing, sales, or enforcement. If people appear to be infringing a strong patent, then I document the alleged infringement and build a “rough cut” damages model. My rolodex includes a number of well-respected and successful contingency-fee litigation firms. If the project warrants, I will join with the patent owners and pitch the prospective lawsuit to various trial attorneys. Always, I am careful of the particular cases I select and as a result have a pretty good track record. Every case, so far, that I have pitched has been litigated by someone. Apart from currently ongoing cases, they all have returned some money to the patent owners. But again, I’m very selective about the projects Patent Kinetics undertakes.
One of the most rewarding things about my current position is that I get to work with people at the top of their craft. At this point, I have a few long-term collaborations on specific projects where we make decisions efficiently and everyone contributes from their particular expertise. There are no raised voices; the right decisions seem to get made and implemented.
Of course not all projects go well. Sometimes I have to “fire” a client. For example, one client said the wrong things to our litigators and by doing so demonstrated that he would be an unreliable witness. The litigators dropped case and I dropped the client. That’s why in projects I do, I go through extensive due diligence – not just on the intellectual property and business aspects, but more importantly, perhaps, on the people aspects. Potentially we’re going to have to live with each other for a while.
In addition to being a patent and licensing professional, my value is in part as the middle person, as the project organizer and manager. In one sense, I am an unofficial mediator—“glueware,” so to speak--between the inventors, litigators, patent attorneys, and business owners. I can help people understand why a course of action may or may not be the best. Consequently, my role most often entails influence rather than control.
Some examples of projects include an owner of several patents, one of which we believed was related to certain security technologies being used in specific consumer electronics (CE) devices. Documenting the alleged infringement took a whole year in elapsed calendar time, almost a half a year in actual time spent. I did it by searching the Internet looking for public documents to demonstrate that it was highly likely that one of the patents in the portfolio was being infringed. In that project we chose to partner with Acacia who filed a patent infringement lawsuit against several CE companies and a major CE retailer. The litigation was resolved early on in favor of and to the satisfaction of the patent owner and Acacia.
While a substantial majority of our projects have the potential to return relatively large sums to the patent owners, I occasionally chose projects for reasons beyond economic potential – because it is the right thing to do. In a recent case, a patent owner felt with some justification that a competitor was infringing his patent. I partnered with some litigator friends to get this patent owner a reasonable outcome and financial settlement, which we achieved by filing an infringement law suit followed by mediation among the parties.
LER: What current issues are you dealing with?
RW: I don’t think there is any question that the value of all US patents has been diminished due to recent changes in patent laws and by the interpretation of those laws by the appeals courts. These changes, for example, affect patentability in diverse technology areas such as inventions involving DNA sequences, medical diagnostics, software and computers, financial services, and business methods. Many innovations that were held to be patentable in the past are no longer considered patentable subject matter.
Although the risk reward ratio changes all the time, many in the innovation community are wondering whether the time and cost required in obtaining a patent is really worth the effort? The answer, of course, is that “it depends.” Patent protection is extremely important to the pharmaceutical and biotech industries and they will continue to invest in patents. However, the bar has been set much higher in the computing and communications industries, especially for software-related patents. Recent court decisions make investment in software patents somewhat questionable. To add value, software patents have to provide a technical solution to a technical problem rather than simply doing what was done without a computer now on a computer.
My own view is that, generally speaking, there are some positive aspects to these developments. Specifically, a lot of weak patents are now dead. And innovators may choose to spend their time and money seeking patent protection on solutions to more difficult problems rather than on apparent trivialities.
Moreover, academic research has shown that most patents are worthless and that only 10% of patents every return any monetary value to their owners. One of the things I spend a lot of time doing is telling people that what they have, in my opinion, lacks any value. There are many reasons why most patents are worthless, but to give an easily understood example, neither the patent owner nor anyone else is practicing the invention. In short, the market didn’t go there.
A related point is that patent owners do not set the value of their patents: markets do. I’ve had patent owners claim that their patent or patents were worth several hundred million dollars, even more than a billion dollars. Yet as far as I know, the relevant markets have determined that the value of these patents to be exactly zero. However, circumstances change: law and markets evolve. That said, I think the likelihood is close to zero that these particular examples will ever show any ROI for their owners.
LER: So what makes patents valuable?
RW: Patents are granted for innovations that are useful and novel. Novelty is judged by what was known at the time the patent application was filed. What was known is shown by patent and non-patent references that were published prior to the filing date of the patent application. One of the other reasons why most patents are worthless is because the patent owner did not do an extensive search to find prior art references and to submit those references to the patent office.
The Intertrust patent portfolio is an excellent example of best practices in developing valuable patents. They searched extensively for prior art and their patents were granted having taken into account long lists of patent and non-patent art that together generally show what was known at the time the application was submitted.
There appears to be slight but discernible movement towards greater patent quality. Some companies who believe that they have created commercially significant innovations are now doing extensive patent searching. For example, consider the recently issued Apple patent, 9,338,493, “Intelligent automated assistant for TV user interactions.” Apple has submitted very long lists of references to the Patent and Trademark office in this instance. If one considers Apple’s apparent “strategic intent,” it seems clear to me that they believe the patent covers commercially important inventions and want it to stand up if its validity is ever challenged.
LER: As you look into the future, what do you see "coming around the curve" with respect to intellectual property?
RW: My crystal ball isn’t infallible, of course, especially given the complexities and contingencies around intellectual property. I see the anti-patent people attempting to get further changes through Congress, changes that might well further deprive inventors and start-ups from ever realizing the value of their innovations. The American Invents Acts (AIA) was a first whack at this. The currently pending so-called patent reform legislation includes the provision that the loser pays the winner’s costs. Such an idea does help prevent crappy patents from being asserted, but makes it harder to get trial attorneys to take legitimate cases on a contingency fee basis.
There are current appeals in front of the Supreme Court that I am watching. One is challenging the constitutionality of Inter Partes Reviews at the Patent Trial and Appeal Board (PTAB). As I understand it, the argument is that Inter Partes Reviews are unconstitutional because the administrative branch is taking away property rights granted by the Patent Office and only Federal courts can take property. A related case on appeal focuses on the standards used by the PTAB in determining how broadly or narrowly to interpret a patent. Using the broad scope rules, the PTAB has become known colloquially as “the place patents go to die.” We’ll see what happens.
It’s my hope, certainly, that the proverbial pendulum has begun to swing back towards a strong view of patents as a constitutionally guaranteed property right along with the ability to enforce those rights.
LER: And finally, as you sit at your desk, what do you physically see? trees, cars, etc. (this is the question for which the column is named "The View From My Desk.")
RW: Current I am in my Boston office -- I divide my time between here and Silicon Valley. Here I don’t have much of a view so it keeps me focused on my work. If I were in my SV location, on a clear day I could see Oracle’s headquarters and the San Mateo Bridge and all the way across the East Bay to Oakland and Berkley.
[The Licensing Economics Review does periodic interviews with thought leaders in the field of intellectual property. Note that we do not censor content or fact check our interviewee's responses.]