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A recent study on R&D vitality, Measuring Innovation by Michael Cooper et al, reports that only about 50% of companies with R&D operations file patents. Another recent study focusing on patent litigation, The Layered Patent System by Michael Risch, reports that on a percentage basis more patents asserted by non-practicing entities (so-called “patent trolls”) are invented by small entities, and more of such patents are at least partially invalidated in the field of computer architectures, than similar patents asserted by companies that manufacture/sell products.

Taken together, these studies may suggest to some folks that small entities (be they individual inventors or startup companies) should avoid the patent system, particularly if they are in the technical field of computer architectures (and related fields where patents are increasingly invalidated, such as software). But they would be wrong.

First, potential investors are increasingly looking at the patent portfolio of startups as part of their financial due diligence. Investors are more willing to risk funds for startups with patent portfolios that at least partially circumscribe a “zone of exclusion” that prevents competitors from capturing the marketplace value add of the startup. Even if 50% of entities with ongoing R&D don’t participate in the patent system, that simply means a patent portfolio has a greater chance of differentiating a startup from other potential recipients of investment.

Second, at the end of the day patent validity depends primarily on how the invention differs from the prior art and how the application is prepared and prosecuted. That is true for any invention from any entity.

A worthwhile portfolio of patents is made up of individual innovations, some more valuable than others, that provide value as an integrated whole.

It includes patents for which investments are made to create additional embodiments or other offshoots to build a portfolio, and it includes strategies to prepare and prosecute applications with an eye toward building a “zone of exclusion.” Building a portfolio that provides integrated value…as opposed to simply obtaining patents…is the best way to realize a return on patent investment. And that remains true regardless of patent litigation results. Indeed, as reported by Professor Risch, the vast majority of patents asserted in litigation don’t ever get to the point of a court ruling on validity or infringement, because the parties settle. So, while the results of patent litigations are interesting, they are not determinative on the value of an integrated patent portfolio.

Can your social media contacts be a trade secret of your employer? Maybe.

March 31, 2015
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This is a relatively new legal subject, so there isn’t much law out there.  In December, 2011, a Pennsylvania federal court answered this question in the negative.  In the case of Eagle v. Morgan, Linda Eagle, the founder of a company, Edcomm, had developed a significant LinkedIn presence closely connected to Edcomm.  In 2010, Edcomm […]

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Second Strike Out for Alleged Patent Troll

January 19, 2015
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Alleged “patent troll” strikes out for second time in its efforts to have the Vermont AG’s “unfair patent enforcement” lawsuit adjudicated in federal court. In May 2013 the State of Vermont sued MPHJ Technology Investments, LLC for alleged consumer fraud arising from its letters sent to Vermont businesses claiming patent infringement.  Since then, the parties have […]

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Oracle v Google: Are APIs Copyrightable?

November 12, 2014
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Last month, Google asked the Supreme Court to hear its appeal of an appeals court ruling that certain application program interfaces (APIs) are copyrightable.  Oracle’s response is due in December, and the US Government may weigh in, so we may not know until January 2015 whether the Supreme Court will accept the case.  I expect they […]

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Software Patentability – The Supreme Court Speaks. Turn Down the Volume.

June 23, 2014
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On Thursday, June 19, 2014, the US Supreme Court issued its decision in Alice v CLS Bank, a court case dealing with the patentability of software.  See our earlier post on the lower court rulings. What is Patentable? In the US, we have a law (35 USC §101) that lays out what kinds of subject matter are […]

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Tesla Patent Pledge….Too Good to be True?

June 15, 2014
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On Thursday June 12, Elon Musk, CEO of Tesla Moters, posted a blog post that said “…Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”   At first glance, a good thing.  It is certainly better than having no such pledge.  But before folks gleefully download all […]

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EU Court of Justice Rules Web Browsing is not Copyright Infringement

June 12, 2014
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Whenever we view content on the Internet, our web browsers (Internet Explorer or Firefox, for most folks) make temporary copies of that content on our computers.  Amongst the rights reserved by copyright holders is the right to prevent others from making copies.  So do those copies constitute copyright infringement?  On Thursday, the European Court of […]

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Pun Marks are Fun Marks! Then Why is Chewy Vuiton OK, But Not Ben & Cherry’s?

November 25, 2013
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by Jamie Fitzgerald Last year a California porn studio, Caballero Video, paid dubious homage to Ben & Jerry’s®   (“B&J”) when it launched a “Ben & Cherry’s” film series.  Even the less explicit titles in the series, such as BOSTON CREAM THIGH and HAIRY GARCIA, (a la B&J’s BOSTON CREAM PIE and CHERRY GARCIA®), evidence an […]

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Alleged Patent Troll Targeted by Vermont Attorney General

September 25, 2013
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Previously, we posted about Governor Peter Shumlin signing into law Vermont’s first-in-the-nation (and so far only-in-the-nation) patent troll legislation helping Vermont businesses protect themselves from bad faith patent infringement claims. 9 V.S.A. §§4195-4199 (effective July 1, 2013). In the meantime, the Vermont Attorney General is pursuing patent troll claims against MPHJ Technology Investments, LLC under […]

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3D Printing and Utility Patents: Will 3D Printers Lead to Widespread Infringement of Utility Patents?

September 11, 2013
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by Kevin McGrath This article is the next in a series of posts discussing IP issues surrounding 3D printing.  As discussed in the last post, some types of 3D printing technology have become affordable enough for home use.  This has led to increased concerns that the printers’ capability to make “perfect replicas” will lead to […]

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