Patents as a Defense to Freemium – Part 2

See here for Part 1.

It has never been easier to create and scale a software company. Young entrepreneurs no longer have to buy a server as they did in the 90’s but can rent server space with just a credit card (‘Dude, the cloud’.) Freemium means a business may not even need a staff accountant to handle revenues, further reducing StartUp costs. The number of StartUps being formed in 2013 is at an all-time high, and continues to increase.

Freemium companies also grow faster than ever. Marketing has changed: all prospective customers and users are now online. Notably, there are a lot more people online today than during first generation of tech StartUps: an estimated increase from 100 million people in the late 90’s to 2-3 billion today. Social networks help good products and services spread faster than they ever have. Social and viral marketing have also eliminated the need for multi-million dollar marketing budgets, further reducing growth and StartUp costs, and further democratizing StartUp access.

New Companies with a $1B valuation, who arrived there in 2-4 years, with no real revenue, less than $10 million in funding, and 10 people under the age of 35 manning the ship, are becoming a lot more common.

Displacement by Freemium software has arrived. And the pace of Freemium usage is only growing. In hindsight, which dead Incumbent Companies should be our proverbial ‘canary in the coal mine’ here? Kodak, who refused to cannibalize its own hardware film revenues with Freemium software imaging in the 1990s? RIM, who watched its email-focused hardware device get whacked by Freemium mail software on more versatile iOS and Android phones? PDAs, which were dedicated hardware devices for planning, who were eradicated once their functionality became a free software app on all smartphones? Ectaco and dedicated language translation devices, which is also free via the software these days? The pile of dead canaries is becoming a mound. Put another way, in five years since Apple democratized software on mobile phones, Freemium software on Smartphones has devastated several industries, at least a dozen F500 companies, and hundreds of years of company growth when combined.

Welcome to the New World Order of Freemium software. As a consumer, this is great. Who doesn’t love free stuff? As a capitalist, it is dangerous to invest in a business that can be crushed when someone else gives a competing product or service away for free. As an economy, it is not good for companies to invest years of resources into pioneering a product, only to die quickly when a competitor gives a competing product away for free.

Patents as a Defense to Freemium

Which brings us to the fun part: what can an Incumbent Company do when their neutered patents cannot obtain injunctions, and damages are meaningless when a product has no revenues?

Hit below the belt! The easiest solution is to watch for small disruptive Freemium StartUps, and sue early, and hard. The defense costs alone will drown the fragile Freemium StartUp, who does not have enough money for a proper defense. Fighting 101 says to go after your opponent’s weaknesses. For a new StartUp, one weakness is a lack of battle experience. A bigger weakness is cash, or lack thereof. Worse still, the Freemium StartUp will not get new Round A or B of VC funding with the pending lawsuits soaking up most of the new Round A or B funds. This practice of big companies choking StartUps is not new. It has been happening for years. I will hereby label this tactic “Killing the Cub before it becomes a Lion” (A message to my beloved Silicon Valley StartUp Community: I will spend an entire blog post later on how to defend from Big Company patent lawsuits. In the meantime, suck it up, this is just business. Did you really expect the Incumbent Company in your space to roll over without a fight? Execs at these companies have a fiduciary duty to defend their turf.)

When attacking a Freemium StartUp, this proactive and aggressive cost-of-defense attack has to be done with certainty – Altera used four separate lawsuits to crush ClearLogic in defense fees, where the cost of each was projected to be $3-5M – and done quickly before the Freemium StartUp reaches $100M in valuation. There is the challenge: the Incumbent Company might not act in time. Freemium StartUps move faster than their predecessors with rapid consumer-driven product design and viral social marketing. Most do not come above the radar until a product hits the market. Some companies get to $100M in valuation in less than three years from company launch, and two years from product launch. After this, the Freemium StartUp can likely get the $10-20 million in funding, afford a decent defense for a single patent, or parry defense costs until another and larger funding event, and well, survive long enough to get the resources to fight back. In other words, the Incumbent has to kill ‘em before they grow strong.

If the product is truly just a Freemium knock-off, then the patent system is working just as it should: the knock-off has been denied and the incumbent has protected its turf. Some less informed people will pretend to be pro-consumer advocates and cry that the patent system is compromising innovation and consumer choice. I call bullshit on this defense: there is no innovation in giving someone else’s product away for free.

If the product is truly new, then the company becomes the villain. Incumbent Companies frequently crush StartUps whose products are not knock-offs as a frugal means of avoiding an expensive M&A or to keep an aging product from being displaced in the market. The StartUp will righteously cry foul, but large companies have much better press access and longevity to rewrite history.

Here’s the rub: very few assertions are so cleanly assessed in terms of whether the StartUp’s products are truly new or a knock-off. With so much subjectivity in the viewpoints, and so much money at stake, emotional bias takes over. It naturally leads to and name-calling. StartUps call anyone that sues them a patent troll. So do companies. This enables pseudo-informed professor-journalists and the mass media to start inflating the patent troll problem with bad data (Colleen got her data from RPX, who is incentivized to create the image of a large patent troll problem, duh.) Anyone who asserts a patent is now a patent troll. Adding the ample room for abuse, on both sides of the fight, to the skyrocketing number of StartUps, and one can see the growing Freemium chaos coming. Hidden in the chaos are the companies, who now use shell companies to attack StartUps, which prevents the bad press, and confuses those observers who lack the experience to see through the veiled attacks.

So let this be a heads up: the number of Freemium StartUp vs. Incumbent Company patent fights is about to go through the roof. Enjoy the fireworks.

Patents as a Defense to Freemium – Part 1

There is a subtle and incredibly disruptive revolution happening at the intersection of software and capitalism: Freemium.

What is Freemium? In short, StartUps in the 2010s have learned (arguably from Facebook) an explosive way to rapidly grow a business: (1) develop a great and useful product and (2) give it away for free. This enables StartUp, with great product design and social marketing, to grow their user base at ridiculously fast rates, and historically little money. StartUps acquiring millions of users and morphing into $500M companies using less than $5 million in funding – with no or scant revenues – are becoming increasingly common. Here are two good examples: Instagram and Pinterest. There are dozens of others. While there are countless Freemium StartUps that do indeed pioneer new services and products, one common type of Freemium is a knock-off product, which has become part of the teachings of the top incubators (see slide 13.) With the help of the incubators, who act as StartUp boot camps to help young and hungry entrepreneurs build disruptive businesses, Silicon Valley is launching more StartUps than ever, and more Freemium business models than ever.

The Old Guard in the business world, who were trained according to 1950s business school pedagogy and mantra, does not understand Freemium. Whenever the discussion comes up, a baffled look arises in their faces with the eventual question: “How is this Freemium business going to make money when it gives its product away for free?” There are three answers.

1) The StartUp will figure it out later. See: Twitter and Facebook. (I call this the ‘cocaine dealer business model’ – they only monetize after the user is addicted.) Figuring it out later also includes adding a paywall or fees for premium services. See Pandora for example where users can pay a premium to avoid ads.

2) They will add some related product that generates cash. See: PInterest and affiliate links.

3) The StartUp does not even plan to make money from selling its product, and currently has no plan or intent to. They don’t need to. Hunh? This drives the Old Guard nuts. This is a unique disruptive paradigm shift in the Freemium model: a StartUp does not need revenues to build a successful business and make founders rich. See: Instagram, who were bought for $1 Billion USD, making Instagram’s founders very rich.  In yesteryear, executives learned businesses are created for profit and margins. Now? StartUp focus on product development that creates value for customers – regardless of revenue. Then they sell the users/customers. Facebook’s users were gravitating to mobile photos, and Instagram had an inside track on mobile photos and young users (who love the word ‘free’). Facebook now considers paying $1 Billion for Instagram a ‘deal.’ It’s just business in the new world.

These product-centric Freemium businesses can be incredibly disruptive. They are started by hungry and very talented 20-something year olds. Some want to make a lot of money, many want to change the world, others just want to see their free product being used by millions. None of them shed a tear when an Incumbent Company gets destroyed in the process.

Patents as a Defense to Freemium

Freemium products are also uniquely resistant to the patents of an incumbent company whose products and revenues are threatened by the new Freemium product. Let’s explore this in a few scenarios.

A) If the Freemium product IS a new product (such as Twitter or Instagram) then there theoretically should not be a scared Incumbent Company about to be displaced, so there is far less threat of a large Incumbent Company patent portfolio suing on the basis on valid infringement.

B) When the Freemium product is NOT a new product but instead a new, usually better and free knock-off of an existing product. What happens? Hell breaks loose. Here is one example: Mobile Android. In three years, Google went from zero mobile O/S market share to number one in the global mobile O/S market. In the process, Android devoured the market share of Nokia’s Symbian, Windows Mobile, and RIM’s whatever. If not for Apple, Google’s market share would even be higher.

Let’s step back from the patent/business intersection and put Freemium in perspective from a consumer standpoint. When I was an undergrad in college in 1994, I needed a CD player. Here were my choices: a) a top Sony or Panasonic CD player with a 6-disc changer for $300, or b) a cheap knock-off that plays one CD for $89. Now THAT is a consumer decision: a better product for more money, or a crappy product for less money. Most professionals pay the $300; most students and other cheap people pay the $89.

Operating systems?  Choice (a) costs $100, has about 47 apps, and crashes more frequently than a drunk driver.  Choice (b) is free (FREE!), has 150,000 apps, performs faster, and never crashes. What is the rationale consumer behavior in this instance? The better product for free, of course! Only a fool buys a crappier product that costs more money.

Microsoft’s initial response to Chrome and Android: sue Google and use Microsoft’s phenomenal patent portfolio to put an end to … wait a second…

This won’t work. Courts are less and less granting injunctions for patents. EBay was just the beginning. Instead, courts are now handing out larger damages or using FRAND for essential patents with even weaker damages awards on compulsory licenses. However, with Freemium, court awarded damages do not work. The exercise of finding a percent for damages on an infringing product is moot there are no revenues on a Freemium product. Any royalty percentage (e.g., 2% of revenues) times zero (revenues) equals zero in damages. With Injunctions becoming increasingly rare, Freemium thus undermines damages, and neuters the patents. (Whatever happened to using “irreparable harm when damages alone will not suffice”?)

So as the courts continue the trend of making injunctions a thing of the past, and Freemium continues to grow in popularity for young fast StartUps, then some F500 company’s patent portfolios are about to get collectively disarmed, and we will watch a major company die as customers rationally rush to get for free that which they used to pay for.

Are there other fallback possibilities for the incumbent company and its large portfolio? Sometimes… But the answer better come fast: once customers get a product for free, they don’t like paying after that.

Microsoft got a little lucky in its Freemium war. The lucky break is that Android needs a revenue generating partner to carry the O/S – the smartphone, which introduces revenue bearing products (and damages) into the fray. Deftly and desperately, Microsoft approached and licensed the smartphone manufacturers and now makes more from Android than Microsoft’s own mobile O/S sales. Newsflash: this attack-the-partner-fallback has some serious limitations. First, those Microsoft patents will eventually expire. Second, and worse, when it comes to the word ‘free,’ customers-who-change-to-a-better-product-to-avoid-paying are as predictable as gravity.

If there is no revenue generating partner to a Freemium product, then damages will not suffice, and the patents are neutered.

So, as long as courts are pushing injunctions into extinction, then Freemium presents a very dangerous threat to any Incumbent Company and existing product revenues.

In Part 2, I will go into what companies can do.

Monitoring Prosecution Dollars

Today at the talk on Measuring Success at IPBC Boston, I promised to post my notes on objectively monitoring prosecution spending. The main message that arose from all four panelists: data alone is not enough; the data is simply a tool and requires skilled hands to use effectively.

Where is the Money Going

Any company from a StartUp to a F500 spends most of its prosecution budget on legal fees for preparing and prosecuting applications.After reviewing over 10,000 assets, I have seen assets prepared by countless prosecutors and law firms across the planet and have learned one undeniable truth: weak prosecutors neuter the protection of strong inventions, while great prosecutors are worth every penny. A patent owners needs to replace substandard prosecution counsel, immediately. If you can’t tell the difference between great and weak prosecution (note: size of the law firm means nothing in this regard), then here are some indicators.

Assessing Prosecutors

First, take a look at the work product. Read the issued claims. Do they map on the intended products that the application was intended to read on? If the answer is no, then little else matters. But this is not a reliable exercise to objectively compare prosecutors.

The goal then is to obtain objective data on the performance of those prosecution dollars. The objective data is then used to: 1) assemble a feedback loop that enables prosecution measurement, 2) facilitate a decision making process that uses the objective data in connection with prosecution goals and strategy, 3) communicate expectations based on the data, and 4) create accountability against those expectations.

What Data to Collect?

Today’s data-rich world offers an abundant amount of prosecution data, much of which was not even available fifteen years ago. There is too much data. The trick is in collecting objective and meaningful data that facilitates IP strategic decision making.

Here are a few examples of Good Data.

1) Time to File, calculated as the number of days from an outside counsel receiving a disclosure to filing the regular application. Theoretically, this number should be lower, but not zero; a good prosecutor needs some time to perfect good work product. But I have seen prosecutors take 180 days to file an application from receiving the disclosure. It happens a lot. In the old days, this was bad prosecution. With the new first to file system, this is simply unacceptable. What I like about this number: it is measurable, objective, and meaningful to the work product. It can be used to compare individual prosecutors, averaged for a firm and all its prosecutors, and therefore used to compare prosecutors and/or firms. Even more uses for this number are outlined below.

2) Number of days of Patent Term lost due to Applicant delays per issued patent – attributable the law firm. This is another objective and very meaningful number since one can readily argue that every day of patent term lost hurts the patent owner.

3) Number of extensions during prosecution of a patent. Ideally, there should not be any, but even good prosecutors will find an instance or two where it makes sense to delay a month. That being said, fourteen months of cumulative extension in a single application smells bad. Again, this number can be averaged per prosecutor and/or per firm for comparative purposes.

4) Total dollar amount in paid extensions. Some clients refuse to pay if extension fees are law firm based. When totaled for a firm, this is a telling number. I have seen firms 20X their neighbor firm for the same client. For a large client that uses multiple law firms, the firms stacked against each other will vary more widely than one might imagine in these last three stats.

5) Ratio of in person or telephone interviews to the number of Office Action responses (not including restrictions). In reviewing thousands of assets, I can say that the best prosecution occurs when the practitioner and Examiner get on the phone and/or meet in person. There is minimal prosecution, fewer office actions and amendments, far less estoppel, etc. Every million dollar patent that I have sold was prosecuted with a phone call or in person interview. While one can set aside some variance for style, a ratio below 15% is generally bad. The best prosecutors average above 50%.

6) Normalized stats via PatentAdvisor.com. If you have not seen PatentAdvisor.com, then take the free trial and explore what it is there. The data don’t lie. It is tough to take some stats such the number of Office Action Responses or number of amendments on their own given how much effect an Examiner or Art Unit can have. Thanks to Patent Advisor.com, we can normalize the data for a prosecutor or firm against an Examiner or Art Unit. For example, when one prosecutor or firm averages 4.5 responses per allowance for a set of cases in a first Art Unit that averages 5 responses per allowance, compared to another firm’s 4 responses per allowance for a set of cases in a second Art Unit that averages 3 responses per allowance, normalizing the data shows that the first firm is actually doing better. PatentAdvisor.com offers abundant data that can be collected in normal prosecution for sake of comparing prosecutors; I’ll leave it to you to figure out which data you deem best for your program.

Putting all of these numbers together will collectively generate objective feedback on how your prosecutors are doing. You may be amazed when you see the stats. Crappy prosecutors will not like this exercise since it creates accountability and they will get exposed for substandard work. Great prosecutors will only be affirmed.

Bad Data

I left off many common numbers often used to assess prosecutors. My least favorite is cost per application. I strongly advocate finding a good prosecutor and paying them well. Irrespective if Jane is at a large law firm or working out of her home office, her data on the above stats will shine – except cost per application (where it may actually be less for the latter.) Flat fee billing is a red herring since it is a cost control and accounting measure; it is not meant for delivering patent quality. Just hire great prosecutors with integrity, and pay them well. Any professional services falls under the axiom of you get what you pay for. One does not want cheap legal representation in a defense lawyer, or a patent prosecutor.

I also left off number of words in a claim and a few other commonly overused stats since these are ultimately snake oil stats. Let expert eyes assess a claim relative to company or competitor products and impacted revenues, not easily duped metrics.

WHAT TO DO WITH THE DATA

1) Show it to your prosecutors. If you have multiple outside counsel, let them know where they stand relative to the competition. Provide a quarterly ranking using the stats. This affirms the good behavior, e.g., prosecutor Jane was #1 out of 16 practitioners in terms of time to file, while flagging and punishing bad behavior, e.g., prosecutor Jim was #16 out of 16 practitioners for taking extensions. Put him on the spot; let him know. I’ve seen this done and it was VERY effective every time.

2) Use the data to throttle provision of new applications to outside counsel. Time to File is especially useful here. A slow acting firm sitting on old disclosures simply receives fewer new disclosures, and their billable hours suffer proportionately. In reality, a large firm likely has multiple prosecutors working on a large client and there is probably one slow actor, which either the firm or the client can reprimand or jettison as desired to preserve case flow for the others.

3) Use as a metric to replace underperforming prosecutors. A bad prosecutor will be bad on most of the stats. Release the worst one and get a new one, or add more work to the prosecutor or firm with the best data. Create a prosecution meritocracy based on objective data. Repeat as desired.

How Companies Used Patent Transactions to Undermine M&A – Part 2

See here for Part 1.

Back in the day, I did M&A acquisition work for another F100 company, who we will call ‘BigCo W.’ Between 1998-2002, they did over 50 acquisitions. In 2003, they did an autopsy that boiled down the spoils of their acquisitions down to four categories: people, technology, market penetration, and patents. After dissection, results of the autopsy were summarized as follows.

People. In most acquisitions, the key employees of the acquired company are locked up for some duration after the acquisition, typically from 1-4 years. BigCo W then looked at how many of these key employees were still around one month after the lockup period expired. The answer? 25%. One quarter! 75% of the talent that they spent billions acquiring was gone! BigCo W was saddened, to put it nicely.

Market Penetration: BigCo W was the 800lb gorilla in their space, so they needed a StartUp’s market penetration like an Eskimo needs ice. While there are exceptions, such as Facebook and Instagram, most times an incumbent heavyweight does not need the market penetration of a StartUp. BigCo W accumulated no significant market value on 95% of their acquisitions studied.

Patents: IF the patents were good, then BigCoW gained quantifiable value from the acquisition via the patents. Statistically, patents were the most frequent value proposition in the 50+ deals, albeit never remotely justifying the full acquisition price in any deal, and not even close. In some cases, the continuations practice went 20+ family members deep. (I would say Intellectual Property, but in the vast majority of cases, acquirers do not care about the Trademarks and Copyrights from a StartUp.)

Technology: If BigCo W got the people, then they got the tech. Usually software gets re-written in the acquirer’s language or architecture. And the patents, with their written description, were also cited as enabling technology in many cases, and in lieu of the StartUps people in a few instances.

As a result of this study, BigCo W learned that the two most important pieces of their 50+ acquisitions were: people (when they stuck around and contributed), and the patents (when valuable). They have done far fewer acquisitions since then.

So have other F500s. While the multi-billion dollar M&A deals such as YouTube and Skype are sexy and grab wide media attention, the dirty secret is that those huge transactions rarely work, and corporate America has figured that out. One Fortune 500 M&A lead explained the shift away from big deals this way: “We (big companies) know we aren’t good at new ideas or start-ups. We basically suck at building business from zero to $20 million in value. But we think of ourselves as really good at growing values from $20 million to $200 million or more.”

So, at some point in the last decade, big companies went looking for smaller deals, and started avoiding the big ones. While motivated, the mechanisms for incumbent companies to reduce M&A expenditures did not fully materialize until ….

1) Enter a liquid patent market in 2008, and intermediaries. While the market really started in 2003, it did not gain enough momentum to affect M&A until 2008. Since then, companies remain the dominant buying force in the patent transaction space, whether they do the deals directly or through a shell company.

2) Acqui-hires. Much like corporate patent purchasing, acqui-hires were unheard of in 1999. To reflect this growing trend in 2013, a fantastic young outfit called Exitround debuted to help transact StartUp teams. There is now liquidity on the people in a StartUp, too. Not surprisingly, Exitround launched with the support of several big companies.

In other words, the two pieces that were most valuable in an M&A have become liquid, a la carte. 1000 years ago, people owned cows to get milk and steak. Now? Bovine shoppers buy what they need a la carte at a store – because they can. And in amounts that do not spoil. Why buy a cow for $10K when you can buy the milk you want for $3?

And people wonder why M&A numbers plummeted?

Look, soft landings are very important to the tech community in Silicon Valley, which is why I fully support Exitround. So are patent transactions; just ask any solo inventor who has sold his patents after he could not get funding or after his company got crushed by an incumbant.

But large M&As have been the casualty. Prudent business sense for executives at Big Companies dictates not to pay $300M to acquire a company when they can buy the desired pieces for pennies on the dollar. Want the people and not the patents? Just keep your eye on Exitround. Want the patents and not the people? Just wait; the money will dry up if the StartUp is not a smash hit. (And that is without suing the StartUp with patents to financially push them off a cliff.) I don’t fault the executives at big companies for this behavior. Buying StartUp pieces a la carte is just rational consumer behavior in a system that has evolved to permit such behavior.

The point is to educate StartUp Founders on what is happening, and shed some light on these transactions. What is good for the big companies might not be healthy for StartUps, or innovation.

How Companies Used Patent Transactions to Undermine M&A – Part 1

Fifteen years ago, when a big tech company wanted to acquire a smaller company, they bought the whole company. According to Mergerstat, the median M&A was over $100M in 1999.

M&A has suffered since the dotcom boom, particularly in more recent years. Since 2008, the number of deals and the average price per deal have both steadily dropped.

02_Volume_deal_size_2010

In 2013, Mergerstat now reports the median price of private company acquisitions under $25 million. And that is an optimistic number. Most small deals are not announced, and price is not usually disclosed in smaller transactions, so the real average is likely to be under $20 million.

What happened?

A liquid patent transaction market unquestionably affected this drop, along with other factors. I will provide more depth to this evolution in Part 2, but for now, kindly allow me share a little story (true, albeit with confidences protected) to provide some color.

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Back in 2009, a Senior Director from Business Development at BigCo X called StartUp Y and basically said “We would like to acquire you.” After numerous diligence calls, negotiations, and eight weeks of back and forth, BigCo X offered to buy StartUp Y for $50M. BigCo X is an F100 high tech company, they do a handful of acquisitions every year, and so everything looked rosy for the StartUp.

StartUp Y did what every StartUp does at this point: 1) partied, and 2) went looking for a better offer. There were only two other major companies in this particular tech space that would be interested in the little company at a price tag north of $10M, let alone $50M, so the number of alternate buyers was notably limited. Much to the surprise of the StartUp CEO, a valiant first timer, the other two potential suitors said ‘No thanks’ at $50M, and promptly.

Here is where I come in. I call StartUp Y and say “I have a Buyer for your patent!” StartUp Y naturally asked me for $60M for the patent. I offered $500K, and backed up my offer with patent transaction data that was much lower than that. StartUp Y then went back to BigCo X and claimed that they were having acquisition discussions with someone else (me), and immediately tried to use me as leverage in their acquisition discussions.

How did I know all of this? BigCo X told me. You see, I was contracted as an anonymous patent buyer for BigCo X the whole time. We talked daily.

Two weeks after I offered $500K for the patent, BigCo X withdrew the acquisition offer. Surprise! The M&A offer was a set up to scare away any other interested parties, and to learn financial details on StartUp Y.

I thus knew that StartUp Y was having funding trouble; they could not raise a new round, and their lead VC was already extending financing to the team just to keep the team intact in hope of the M&A.

We also learned that there was a bank lien on the company and all patents of $350K. Most VCs want to preserve their banking relationships, which persist over the life of their fund, so the lead VC (who had control) was willing to sell at $500K after learning that the M&A suitors were all gone.

You can do the math as to how this turned out: we bought the patent, using a shell company of course.

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Was this a freak event? A rare trick played by BigCo X? Hell no. This happened at least fifteen times for BigCo X – in 2009 alone. We used a similar play book each time. Many times, the little fish got away, but rarely without BigCo X polluting the acquisition waters. While I no longer operate on behalf of BigCo X, I see countless similar plays every year, for dozens and dozens of the F500.

Founders and VCs will frown on these aggressive tactics. But rationale consumer behavior begs the question: why should any big company buy a StartUp at an inflated price when they can get its desired pieces a la carte for a fraction of the price?

Patents are one piece in an acquisition. I discuss the others in Part 2.

An Introduction to the Patent Transaction Space

Fifteen years ago, the notion of selling a patent was sacrilegious. An IP manager at Kodak didn’t walk up to their boss in 1998 and say ‘Hey, let’s sell a few of our patents.’ That manager would have instantly been laughed at, or thrown out of the building.

Times have changed.

Now, there is a thriving – but non-transparent – marketplace where patents are bought and sold in a secondary market. While the vast majority of patents are still worthless, and the bar on quality needed for a sale has risen significantly, the market has continued to double in size since 2006 into a multi-billion dollar market, despite a global recession and a struggling economy. In other blogs, I detail the history of this space, what is currently selling, and future trends.

The Introductory Track of this blog illuminates the patent transaction market for beginners and patent owners curious about the space, or other tech execs and media wondering what the blue hell is really happening in the quickly evolving patent industry.

In this regard, I will shed much needed light on the opaque patent transaction marketplace – its methods, players, pitfalls and clandestine shenanigans. The patent monetisation space is unlike any other industry out there. For better or worse, the industry is shrouded in secrecy; Confidentiality hides the vast majority of transactions from market visibility; many buyers operate with cloak and dagger tactics that would make James Bond blush.

As an arms dealer for the patent wars, it is my job to know things that 99% of the patent industry does not. I’m often privy to developments and insights before they become public, if they ever do. While I will never break confidences, or compromise a competitive advantage, there is still plenty to illuminate aspects of this industry for the benefit of patent owners and innovation.

Many patent problems arise because of the industry darkness. This darkness is intentional; many actors in the space benefit from the lack of visibility. Such imbalances should not exist in a fully transparent and healthy market. The patent monetisation industry is still relatively new, and like the stock market in its early days, it will take years to evolve and correct the early issues.

These Introductory Track blogs will also provide insights regarding how the patent monetisation industry enables and impacts innovation in general, particularly as patents play an increasing role (good and bad) in high tech while mostly misunderstood by the vast majority of investors, media, and high tech execs.

Given my background as a Silicon Valley StartUp Founder, a connected patent transaction intermediary who sees almost everything in a space with no transparency, a serial inventor, a patent owner, a registered practitioner before the US patent bar since 1998, and a Silicon Valley veteran, I have visibility into the intersection of patents and innovation that very few have.

Times have changed. Kindly allow me to illuminate.

About

My name is Will and I lead PPI, a top tier patent transaction firm in Silicon Valley. Over the years, we have individually reviewed the claims in 10,000+ patents, done deals with every major buyer in the patent space, and become a global leader in patent transactions.

Personally, I am an inventor on over 60 patents and applications, a Founder of several Silicon Valley StartUps, an engineer who has built countless inventions (including original robots, power conservation software for mobile devices, a social commerce platform, infectious disease defense technologies, ballistic protection equipment, and pico-projectors, to name a few), and a patent prosecutor registered before the USPTO with over 9 years serving Silicon Valley companies both large and growing. I am fortunate to have monetized the majority my own inventions, and have the battle scars to show for it. Founding a Silicon Valley StartUp is an experience like no else, and gives me unique insights to the innovation community.

This blog intends to shed light on the patent industry, particularly the transaction industry which remains cloaked in secrecy, and its role in modern innovation. The blogs will separate into tracks that handle topics for novices and those more experienced in the space. We are going to have fun. Heaven knows, the patent industry could use a laugh or two.

Thank you for reading.