​​Patently Strategic - Patent Strategy for Startups

Patent Monetization: Buying and Selling

September 30, 2021 Aurora Consulting Season 1 Episode 6
​​Patently Strategic - Patent Strategy for Startups
Patent Monetization: Buying and Selling
Show Notes Transcript Chapter Markers

In this episode, we take a deep dive into the war games filled world of patent buying and selling. We are joined today by special guest host, Louis Carbonneau, Founder & CEO of Tangible IP. Mr. Carbonneau is a recognized expert in intellectual property with close to 30 years of professional US, Canadian, and international experience in all facets of intellectual property law and business. His firm is the largest brokerage firm in the world and has transacted over 4,500 patents in the past decade.

When we sat down with Louis, we hoped to be able to provide our listeners with a 101 style talk on the ins and outs of patent monetization. What we got was so much more and so very consistent with our mission of helping our audience see around corners and help their future selves. Louis begins with some excellent historical perspective and an overview of the state of the market, but really drives it all home with a plethora of forward-thinking strategies that make for more robust, defendable, assertable patents. Patents are a long game. The little things you do now can have tremendous impact over the next 15 or more years of your business journey and it’s vital that inventors and practitioners start keeping these strategies in mind, if they have any hope of crafting battle ready, commercial-grade patents.

Louis is joined today by our always exceptional group of IP experts including:
* Ashley Sloat – President & Director of Patent Strategy at Aurora Consulting
* Shelley Couturier – Patent Strategist and Search Specialist here at Aurora
* David Jackrel – President of Jackrel Consulting
* David Cohen – Principal at Cohen Sciences
* Amy Fiene – Patent attorney at Vancott and adjunct professor at BYU
* Neil Thompson – Patent agent at Torrey Pines Law Group

***

** Resources **

* Show notes: https://www.aurorapatents.com/blog/new-podcast-patent-monetization

** Follow Aurora Consulting **

*
Home: https://www.aurorapatents.com/

* Twitter: https://twitter.com/AuroraPatents

* LinkedIn: https://www.linkedin.com/company/aurora-cg/

* Facebook: https://www.facebook.com/aurorapatents/

* Instagram: https://www.instagram.com/aurorapatents/ 

And as always, thanks for listening! 

---
Note: The contents of this podcast do not constitute legal advice.

WEBVTT

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Good day and welcome to the Patently Strategic Podcast,

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where we discuss all things at the intersection of business, technology and

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patents. This podcast is a monthly discussion amongst experts in the field of

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patenting. It is for inventors, founders, and IP professionals alike,

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established or aspiring. And in this episode we take a deep dive

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into the war games filled world of patent buying and selling.

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We are joined today by a special guest host, Louis Carbonneau, founder and CEO

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of Tangible IP. Mr. Carbonneau is a recognized expert

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in intellectual property, with close to 30 years of professional

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U. S. Canadian and international experience in all facets of intellectual property,

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law and business. His firm is the largest brokerage firm in the world and has

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transacted over 4500 patents in the past decade. When we

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sat down with Louis, we hope to be able to provide our listeners with a

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101 style talk on the ins and outs of patent monetization.

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What we got was so much more and so very consistent with our mission of

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helping our audience see around corners and help their future selves.

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Louis begins with some excellent historical perspective and an overview

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of the state of the market, but really drives it all home with a plethora

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of forward thinking strategies to make for more robust,

01:10.690 --> 01:14.050
defendable, assertable patents. Patents are a long game.

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The little things you do now can have tremendous impact over the next

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15 or more years of your business journey, and it's vital that inventors and practitioners

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start keeping these strategies in mind if they have any hope of crafting battle

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ready, commercial grade patents. And if you haven't listened to our episode on patent

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Searching, I highly recommend you also give it some ears. In this episode,

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Louis talks a lot about the importance of searching as it pertains

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to drafting valuable patents. How it'll help if you get IPRd and

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also help against infringers. It tees in wonderfully with the context

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and strategy bits Shelley covers in the prior episode, so be sure to check it

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out. Louie's joined today by our always exceptional group of IP

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experts, including Ashley Sloat, President and director of patent strategy.

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Here Aurora Consulting, Shelly Couturier, patent strategist and search

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specialist here Aurora David Jackael, President of Jackrel Consulting,

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David Cohen, principal at Cohen Sciences, Amy Fiene, patent attorney

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at Vanko, an adjunct professor at BYU, and Neil Thompson, patent agent

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At Torrey Pines Law Group. All right, take it away team.

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Does anybody have any strategy tidbits, problems

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issues, technical issues super quick because

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I presented on this months ago. But the after final practice

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stuff we ran into this really weird issue where if

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you after final rejection, you ask the examiner for an interview

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and they say, sure, then you have the interview and then you apply for an

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ACP two point or after that it was rejected because

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they said you've already had an interview and part of ASCP

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two o is your guaranteed. And after final interview.

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And so now what we do, which I just did the

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other day yesterday. If we're in that situation,

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we're going to file an MP two. No, it can be helpful to call the

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examiner and be like, here's our plan.

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Is it going to be accepted? Do you have any advice for us? Whatever we

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call them, and we say, hey, if we have an interview

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first, does that preclude you approving

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an SC? Two apparently different art units have different rules about this

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within the Patent Office. Internal rules? No.

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Interesting. I think that would be a standardized practice. I know.

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Right. But I think it is kind of weird because you're not even,

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like, guaranteed an app. They don't have to give you

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an interview after your final rejection at. All.

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Right. So then they do. And then you're saying a two and they're

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like, really, you want to after final. So I'm trying to get that right.

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I know. Right. But anyway, that was a weird little quirk that were just

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the first time you ran into it, like a few weeks ago. No,

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thanks for sharing. Is good to know, because S examiners

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can kind of be sticklers about stuff like that. So it's good to know.

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Awesome. E else have any issues?

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People have been using patents that are going to ask everybody

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briefly about Patent Center, and we've had increasingly increasing

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issues with EFS web, and that's not being able to get PDF recognized

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and errors and things like that. Has it be experiencing similar to the

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patent center, or is that I've been pretty seamless

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or pretty painless experience?

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Yeah. We've been using Patent Center for a while,

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maybe almost a year, right. When it sort of became

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available, we started using it one of the terms I do a lot of work

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with, and I like it a lot. I like it much better than EFS.

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I don't use private pair anymore either. I go into Patent Center and

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I use that. There's a little search.

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Once you're logged in in Patent Center, you can search any application, and it gives

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you all the information that private pair gives you this private

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pair for years. It's just, like, always hangs up

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or too much traffic or whatever issue.

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This application doesn't exist when you know it does.

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So anyway, I use a center for that a lot, too. All right.

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I'll turn it over to Louis. Okay.

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Well, good morning or afternoon. So who's on the West Coast?

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Who's on the East Coast here or in the middle of in Montana?

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In California.

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I think there's three in Utah.

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Yes, the Michigan. We do

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cover all the most of the time zone. No central time

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zone, I guess. But we will. Kristen will be joining our team in a couple

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of weeks, and she'll be central. So we'll have all the time zones covers.

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And if I recall Ashley from our call,

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you guys all do prep and cross work pretty much,

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right. Yeah, I believe so. Neil, is that correct for your end as well?

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Yeah. Okay. I'm searching.

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So I've been doing more and more searching, but otherwise I think we're all

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kind of a typical patent agent and lining.

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Okay. And I'm the guy who's trying to monetize your work product,

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and it's not easy. I'll tell you why.

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So just in terms of background, so I don't

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draft happen myself. So I'm an IP attorney, obviously by

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profession, but I've doubled and

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prep and pros earlier in my carrier, but I was mostly on the litigation

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side for several years. And then I joined

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Microsoft in 95, I think,

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as a kind of a general console for one of their subsidiaries.

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And then with the modern ship in Seattle, where I stayed until

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2009. And there I was in charge of various

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groups, legal and business functions, but in the

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patent group for most of it and heading a lot of the international

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operations and then essentially general

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manager for IP licensing business. So that's where I started

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to try to learn to monetize IP

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and patents, and it was not easy in the area, and it's still

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not easy here. It's not easy to do it for a very large Corporation,

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because whenever you approach someone and you say we have

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some great patents and great technology, we'd like you guys, maybe to explore taking

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the license on people here. We want to sue you if

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it's Microsoft saying it. So it was pretty hard because of that. Whereas we

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didn't have those intentions at all. I was trying to to get

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rid of some of the non core technology or some

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research stuff that was not going to be productized and try

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to find better conduits for those. So that tells

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you, even if you have the best of intentions, sometimes by nature,

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by the nature of the assets you're trying to monetize,

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sometimes it's hard to even engage in a dialogue,

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but fast forward to today. So basically

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what I did went to Microsoft ended

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up doing some kind of brokerage on the side for some brokers that

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had interacted with when I was at Microsoft

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and they were having a hard time getting their calls return from some

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local aggregator here intellectual ventures where I'm sure you've all

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heard about. So I started doing a bit of that, and then I realized it's

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okay. There's a market. There was a market bag damn in transacting

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patents. So eventually it became a big part of what

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we do. And today we probably

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are the largest patent brokerage firm worldwide, just in terms of being

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the most active one. And we broker over

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to 500 patents now,

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whether mostly sale, but sometimes licenses as well.

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And sometimes both. We close about a deal every

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month or so. We just announced the sale of a small

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financial software portfolio yesterday,

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I believe. And a few weeks ago, we announced the sale of a large portfolio

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from the Japanese company Seco 100

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some patents. So those are kind of typical transactions.

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We do we have a lot of things, obviously in the fire.

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I think what I'd like to do today, and frankly, this is not meant by

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any way to be kind of a master class. It's mostly meant to

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be interactive. And every time I have presentations

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or discussions with guys who actually draft that,

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I learn a lot more from them that they learn from me.

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So by all means, please ask questions and make comments.

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As I said, I'm not in the daily practice of prepping and prosecuting patent,

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but I do see about three to five portfolios

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every single day that people want us to broker. And we

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broke her patents from individual adventures to startups

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SMEs Large Corporation. We represent, for instance, or have

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in the recent past, companies such

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as Google, HP Enterprise, Simons Mikia,

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Honeywell Carrier, Orange Telecom,

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we transfer. We represent people all around the world who reach

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out to us. Tick Togo we

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do work for a lot of people, mostly on the sell side,

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but also on the buy side, helping them acquire patents

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as well. So there's still

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a lot of people looking to sell their patents, and there are a few looks

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to buy them, not as many, obviously.

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So there's a market. And there are two things I like

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to talk about briefly, things that you don't have a lot of control over,

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which are really the forces in the market that

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are essentially making this market

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better or worse, depending on what the

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trends are. And then I'll talk more at length about things that

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you can impact through your

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work that makes you a better work product and easier

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to sell downstream. So as far as looking

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at the market in general, it's like any market.

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It's basically predicated primarily by supply

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and demand. And there was a time ten years ago where you had

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companies kind of priming the pump. Iv I mentioned intellectual

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venture was one basically buying and swooping almost everything

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that people have and buying a lot of patents that

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were forward looking, not Lesly being

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infringed upon. So there was a market that was quite different back then,

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and you had kind of a, I would say,

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an arms race to having patents,

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the case law. The situation was much different

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back then. If you look back about 1012 years

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ago, you know, you have a lot of the men

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for patents. It was considered to be the next kind of commercial weapon.

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You had mega transactions. If you remember the Nortel deal

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where people had a bidding war and paid four and a half billion

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dollars for the north portfolio, that was follow quickly

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because Google lost that bid on. Then they bought Motorola Mobility for

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something like 10 billion and $12 billion, mostly for their patents

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and so forth. That was kind of the golden age or goal of

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the era monetization. And unfortunately,

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that's when I started. So I missed all the

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five years before. That had been great for anyone who was buying or selling

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patterns. Then after 2012, you know,

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it came to a screeching halt. Essentially, I think people

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realized that they were overpaying for assets that

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were sometimes not that clear in terms

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of what demand or what the income has. And then the

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case law change. We had bills key

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and we had Alice and we're still living with the aftermath

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of Alice and it's Progeny Panel. We have the AI

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are American Bands Act, which really through

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Monkey Ranch and the Gear because suddenly people

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discover that IPRs were the new way to invalidate

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patents and it kind of took on a life of its own. So all

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these things contributed to a very different

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marketplace today that we had 7810

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years ago. And as a result, there are a lot of things

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you have no control them, which impact obviously,

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the liquidity of the market. Who's looking to buy.

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It's very hard for companies to acquire a lot

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of patents when they're not sure whether they're

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added or not. It's as basic as that is that try

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to buy some land, if you're not sure that you actually have the

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right to build something on it, and the

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city can tell you, they'll say, well, build something. It will tell

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you if we could issue a permit, but you have to build first.

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That's a little bit the kind of irony we have with patents.

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You have to get them first. I don't

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know. The average, I think, is 50 $60,000, according to the

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latest survey I've seen for a single patent overall,

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including maintenance fees and all this just

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to get the pattern. And then you have to pay another quarter million dollars for

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the PT have to tell you whether it was crap from day

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one or was it actually valid,

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which, if you think about it, your stuff for a second, what industry

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could survive with a business model like this where you have to buy the thing

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and then you have to pay five times more than you paid for the first

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time, just to be told whether you can use it or not into

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that. Working with the government, it works great.

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And the Patent Office, remember, is the most profitable,

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if not the only profitable agency and all the

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US government. So you can see why.

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So supplying the man obviously is not what it used to be. There's a lot

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more people wanting to sell their patents than people wanting to buy. And the

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people who want to buy are always looking for the perfect patent,

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which they can't find. For instance, we have 15 pools

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for sale and we can have access to hundreds of others.

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And we have three clients that have retained us to help them buy

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a portfolio. And we still haven't found anything to like.

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Yeah, not because there's a lack of portfolios

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out there, but they just never like what they see.

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There's always things that there's a risk there there's

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an alist risk here. There's some issues with validity

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or priority. I mean, people can't seem to find

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something they like, even though they have the budget and the

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appetite to buy patents, whereas there's a month, enough patents

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out there that are willing to be picked. So we have a big kind

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of the sun is between what

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people want to sell and what people are looking to buy. So there's

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not a good match. And there's

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a lot of friction between, I would say, what the buyers want

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and what they see on the market and that's,

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frankly, buyers are like, are they typically

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like larger corporations? And your sellers tend to be smaller

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entities, or is that not? It could

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be that. But it could be the reverse as well. And we represent Nokia,

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Simon Newell, and the buyers might be small

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entities who want to pad their

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or bulk up their portfolio in organically because it will take a decade

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to do it organically. It can be another large Corporation,

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although it's fairly rare that

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wants to address maybe a need because they're going into

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a new direction and they're kind of naked and they want to have

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something quickly or they

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have a patent licensing discussion that's coming up in the next

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year or two. And they know who is going to be with and they want

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to have something that reads on that company so they can basically

17:21.040 --> 17:24.740
have some leverage in the discussion. Or even

17:25.010 --> 17:28.250
we have one client that has retained us and is looking for a

17:28.260 --> 17:31.700
patent. And it's funny because they

17:31.710 --> 17:34.700
have a trademark issue with another company,

17:35.100 --> 17:38.520
but they're looking for patterns as a

17:38.580 --> 17:42.390
way to gain leverage, to have a more global discussion with that company and make

17:42.400 --> 17:46.000
the trademark. You should go away. And they can't really find

17:46.010 --> 17:50.020
anything on the trademark side, because it's a bit hard. They're the ones that

17:50.030 --> 17:53.800
came after them. They're looking into patterns

17:53.860 --> 17:58.150
to create some kind of leverage, to have a discussion and have some

17:58.160 --> 18:01.570
kind of settlement with the other firms. As many reasons as

18:01.580 --> 18:05.250
you have buyers. And obviously you have the whole world of

18:05.260 --> 18:08.460
non practicing entities who are buying patents,

18:08.960 --> 18:12.180
essentially to monetize, usually through litigation,

18:12.680 --> 18:16.560
because licensing is just kind of obligated

18:16.800 --> 18:20.380
tour to say you tried. We actually most people

18:20.390 --> 18:23.800
don't even try anymore because they know they're not going to get anyone's attention.

18:23.810 --> 18:27.460
So they just file lawsuits first and then sit

18:27.470 --> 18:29.980
down to discuss it. The other party wants to discuss.

18:31.090 --> 18:34.690
I would say there are more buyers these days who are

18:34.700 --> 18:37.390
not practicing entities that operating companies.

18:38.560 --> 18:42.280
The sellers are usually operating companies. Nps don't

18:42.290 --> 18:45.700
really tend to resell the

18:45.710 --> 18:49.690
patents they bought. They try to squeeze their one lemon

18:49.700 --> 18:53.170
juice. They can, with a few exceptions.

18:53.180 --> 18:56.860
For instance, we've been retained to represent AST, and I

18:56.870 --> 19:00.160
don't know if you guys are familiar with as. It stands

19:00.170 --> 19:04.630
for Allied Security Trust. It is a defensive

19:04.640 --> 19:07.960
aggregator, a little bit like an RP in San Francisco.

19:09.010 --> 19:13.150
They have about 45, 50 members. Most of them are Fortune

19:13.240 --> 19:16.630
500 companies, and what they do is they kind of do

19:16.640 --> 19:20.220
the clearinghouse for a lot of patent acquisitions,

19:20.230 --> 19:23.370
licensing. So there are a lot of companies that

19:23.380 --> 19:26.820
will not even review patents. You want to sell them, they'll signal through as

19:27.320 --> 19:30.510
they'll do our due diligence. And they'll tell us whether we should look at that.

19:30.630 --> 19:35.410
And then if there is any epitype with

19:35.420 --> 19:39.610
any of the St member, either to buy a license, then you negotiate

19:39.620 --> 19:43.360
with St on behalf of one or several members

19:43.660 --> 19:47.870
that will either acquire the patents, or we

19:47.930 --> 19:51.410
have some kind of exclusive licensing program with them where we can

19:51.420 --> 19:55.040
agree on a price per member per

19:55.050 --> 19:58.490
license. And then we will

19:58.500 --> 20:02.570
license their members at a certain previewed price. And if

20:02.580 --> 20:06.440
five members want to take a license and we'll have five licenses, and then

20:06.450 --> 20:09.920
they ask to just act as a kind of the master

20:09.930 --> 20:13.760
license or master of the license, sublicense her will

20:13.770 --> 20:16.640
to their members. So that's a defensive,

20:17.140 --> 20:20.350
non practicing entity, if you will, defensive aggregator,

20:21.100 --> 20:24.460
mostly to represent large companies.

20:25.030 --> 20:28.570
Rp is a bit the same. Although friendly, they don't acquire a

20:28.580 --> 20:32.560
lot of patents. A lot of people realize it's very expensive to acquire patents,

20:33.010 --> 20:36.670
and they prefer to if it's going to be a defensive play, they much

20:36.680 --> 20:40.120
prefer to just license that these days and deal with

20:40.130 --> 20:43.870
the risk. They're not going to use these patents against others. They don't really

20:43.880 --> 20:47.980
need the assertion value of the patent. They just want to avoid

20:48.480 --> 20:52.090
litigation. So you have a lot of those five licenses,

20:52.390 --> 20:55.780
but it's really hard to approach someone. So would you like to take the license

20:55.790 --> 20:59.500
on these patents again? We're a broker. We're not an NP. We're not

20:59.510 --> 21:02.860
a patent Rol. We want to have our calls return. And the reason we

21:02.870 --> 21:06.370
have so many large companies or retain us is because

21:06.380 --> 21:10.030
we're not perceived as a trip by anyone, and that's

21:10.040 --> 21:13.090
important to maintain that. So,

21:13.120 --> 21:17.040
for instance, we represent Semen, a few portfolios,

21:17.540 --> 21:20.910
and we have portfolios where we have clean charts that we created

21:20.920 --> 21:24.240
that read on Semen, and that's fine. And we tell our clients, see,

21:24.390 --> 21:27.660
look, we have another portfolio. By the way, we charted

21:27.670 --> 21:30.840
you guys on such and such products. Do you want to take a look at

21:30.980 --> 21:34.490
and they'll say yes or they'll say no, but, you know, they understand that we're

21:34.500 --> 21:37.400
not there to sue them. We actually doing them a favor by showing it to

21:37.410 --> 21:40.640
them before it's going to be so likely to an end, he's going to sue

21:40.650 --> 21:44.800
them. And sometimes they feel that they

21:45.300 --> 21:48.430
feel embolden enough to say, Well, let's wait to see if they sue and we'll

21:48.440 --> 21:51.730
do with them. Then that's kind of I would

21:51.740 --> 21:55.240
say the and in most cases, it's this wait

21:55.740 --> 21:59.650
and see, nobody ever got fired for not writing a check to a

22:00.150 --> 22:03.280
patent owner right now.

22:03.670 --> 22:06.850
Other things. Well, so basically, supply and demand,

22:08.080 --> 22:11.650
obviously, case law, we know how

22:12.150 --> 22:15.550
hard it is to get clarity on 101,

22:15.840 --> 22:19.860
for instance. And there are a ton of other decisions in

22:20.040 --> 22:23.670
terms of damages, in terms of venue transfer

22:23.790 --> 22:27.450
that play, especially in the litigation world. They have a lot of

22:27.460 --> 22:30.900
impact, whether you can sue in Texas or you can sue elsewhere

22:31.380 --> 22:34.950
or stay there, at least. And then you have all the

22:34.960 --> 22:39.810
usual case law. You could

22:39.820 --> 22:43.800
prove the laity or not, and treble damages inducement.

22:43.810 --> 22:47.670
All these things have an impact on, I would say,

22:47.680 --> 22:51.180
at the end of the day, when you've distilled everything in terms of what's left

22:51.210 --> 22:55.320
with a patent evaluation, changes in legislation.

22:55.330 --> 22:58.710
Obviously, I don't know if you saw the two proposed bills by

22:59.210 --> 23:02.640
Lee signature Lee earlier this week. Well, you can

23:03.140 --> 23:06.600
tell that the big tech the infringement lobby wrote them. I mean,

23:06.610 --> 23:10.560
one is to force patent owners

23:10.960 --> 23:14.050
to record their patent.

23:14.340 --> 23:18.240
I thought by virtue of having paid the agent fee, they were

23:18.250 --> 23:21.510
recorded with the patent office, and if you assign them, you have to record them.

23:21.520 --> 23:24.180
But apparently they want to create another recordation step.

23:24.510 --> 23:28.200
And it's called Pride and Ownership, or Pride and Patent Act,

23:28.210 --> 23:32.170
something like that, which is ridiculous because the whole

23:32.180 --> 23:35.050
premises, if you have a pattern, you should be proud of it. So you should

23:35.060 --> 23:38.860
record it. Otherwise, you won't be allowed to claim travel

23:38.890 --> 23:42.880
damages. So it's such a scam,

23:42.890 --> 23:46.030
and you can tell the road that. And I don't know if it's going to

23:46.040 --> 23:49.330
pass, but it's just a flag or best value

23:49.340 --> 23:52.180
when I see these things, the second package. Even worse,

23:52.190 --> 23:55.960
it's basically a very surgical act to reverse

23:55.990 --> 23:59.770
the current sense from the P tab on the fine rule. So basically,

23:59.980 --> 24:03.340
currently, if they're if there is a parallel

24:04.690 --> 24:08.800
lawsuit on a patent assertion track

24:08.980 --> 24:12.700
and with a district court and it's moving,

24:13.630 --> 24:16.780
let's say they did it just didn't file yesterday. But let's say they

24:17.280 --> 24:20.980
filed six months ago and there's already some motions or maybe a Markman

24:20.990 --> 24:24.490
schedule, and sometimes maybe they have a trial date. Well, if there's

24:24.500 --> 24:28.510
any kind of progress in the case and someone thousand IPR currently

24:28.520 --> 24:31.840
under that rule, the P tab will differ and

24:31.850 --> 24:35.050
say we want to Institute the petition because there's

24:35.060 --> 24:38.680
already a case that is likely to be heard before we're ready, which makes

24:38.690 --> 24:41.890
perfect sense. And two years ago

24:41.900 --> 24:45.580
as a reverse, the court would stay their case because the P tab was

24:45.590 --> 24:48.790
going faster and there was already an IPR, so it's kind of the

24:48.800 --> 24:52.480
reverse. It makes sense. Whoever is going to be ready first to hear the case.

24:52.490 --> 24:56.050
What we're trying to avoid our duplications and

24:56.380 --> 24:59.590
inconsistent decisions where you look at the same pattern and the P

24:59.600 --> 25:03.130
tab says it's embedded in the course says it's valid, so that creates

25:03.630 --> 25:07.060
chaos and uncertainty and so there's a bill that's

25:07.070 --> 25:10.600
trying to do that. So obviously, again, you probably know who wrote

25:10.610 --> 25:14.140
this. It's got to be the same guys wrote the other one because they don't

25:14.150 --> 25:17.950
like that through all because they were having a field day in the

25:17.960 --> 25:21.190
tab with 80% in validation rate

25:21.460 --> 25:25.600
and in the district course, they don't get that. Especially the cases

25:25.610 --> 25:29.200
are in Texas. So these things obviously

25:29.210 --> 25:32.020
influence the outcome and in turn,

25:32.050 --> 25:35.950
influence valuation, because at the end of the day, the price reflects how

25:35.960 --> 25:39.700
the market is behaving it's like the stock market. It goes up

25:39.710 --> 25:43.180
and down depending on how these things are, where these arrows are pointing.

25:43.650 --> 25:47.350
One thing that's computing to raise valuation as

25:47.360 --> 25:50.830
being the influx of cash or from Mitigation funding entities.

25:51.070 --> 25:54.550
Now it's very easy to find money to

25:54.760 --> 25:58.420
finance an assertion campaign against Apple and Samsung,

25:58.430 --> 26:01.660
and all the big guys will make you spend 5 million or

26:01.670 --> 26:05.770
$10 million in a case that you will find the money if you

26:05.780 --> 26:09.430
have a good case. So it's no longer an issue of having

26:09.440 --> 26:12.970
to set over very early or just dismiss your case or not started

26:12.980 --> 26:16.270
in the first place because you don't have the money to do it. So as

26:16.280 --> 26:19.540
a result, there you have seen some decision

26:20.040 --> 26:23.570
with very large awards, the hundreds of millions and even billion

26:23.580 --> 26:26.900
dollars. Well, that insurance contributes to attract more

26:26.910 --> 26:31.190
cases, and it raises valuation. So all these market forces

26:31.460 --> 26:36.140
influence essentially the

26:36.650 --> 26:40.330
value of this asset class. But there's not much you

26:40.340 --> 26:43.150
can do about these things. So let's talk about things that you can do.

26:43.160 --> 26:46.930
So, as I said, we review about three to five ports

26:46.940 --> 26:50.980
every day, and I have to say, first, we probably

26:50.990 --> 26:53.860
take under brokerage, maybe one or 2% of what we see.

26:54.130 --> 26:57.340
And the reason for that is in many cases. Well, first,

26:57.350 --> 26:58.480
if there's no infringement,

26:59.490 --> 27:03.100
we won't take it under a brokerage. Just because the

27:03.110 --> 27:06.700
only reason why people buy patents these days is for the assertion value.

27:06.730 --> 27:10.450
It's like buying accounts receivable. You know, someone owes

27:10.460 --> 27:14.650
you something and you buy it for that reason either because

27:14.680 --> 27:17.980
you say, if this person comes after me, I have something

27:17.990 --> 27:22.210
to throw that or I'm going to basically monetize this kind of accounts receivable,

27:22.710 --> 27:26.410
which is an unlicensed infringer. If you

27:26.910 --> 27:30.880
say, well, I might, you know, like most inventors, when you ask them, is anybody

27:30.890 --> 27:34.510
in infringing on your patent? They proudly respond,

27:35.010 --> 27:38.380
no, we're so much ahead of the curve, you know. Well, that's too bad.

27:38.390 --> 27:41.530
Then we can't sell you. Your patent has no value.

27:41.770 --> 27:44.560
What do you mean? I'm ahead of everyone. Well, yeah,

27:44.980 --> 27:48.700
start a business, sell products, but don't expect

27:48.710 --> 27:52.360
anyone to buy your patents. If nobody's infringing, they don't

27:52.370 --> 27:55.930
need it. And then I have to explain to them. You know, if I

27:56.430 --> 28:00.190
have the best auto insurance policy with the lowest premium and the best coverage,

28:00.440 --> 28:03.650
and I'm trying to sell this and you see, Louie, it's great, but I don't

28:03.660 --> 28:06.890
want a car. It's the same thing with patents. If they don't need

28:06.900 --> 28:10.910
it, it's irrelevant whether it's the greatest invention since

28:10.920 --> 28:14.150
sliced bread. So just think of it from their

28:14.650 --> 28:18.350
standpoint. They don't need this. They don't need to practice these right. If they

28:18.360 --> 28:22.100
do two years from now, be sure either they'll take a chance that

28:22.110 --> 28:25.370
they'll do it, which most people do, or they'll knock at your door then.

28:25.380 --> 28:28.700
But there's no reason for them to write your check now for something they might

28:28.710 --> 28:35.630
only need two, three, five years or maybe be never. So there's

28:35.640 --> 28:39.230
one of those situations where, like you said, companies trying to

28:39.240 --> 28:42.050
just kind of get rid of, like, I know an individual actually in town here

28:42.060 --> 28:46.460
who does a lot of this for Ranker, where he basically has a very significant

28:46.470 --> 28:50.050
pulse on their it not even just patents and

28:50.060 --> 28:54.100
stuff like that, but also just their know how their technical specs

28:54.110 --> 28:58.250
and things like that. And his whole role with Striker is to move it

28:58.460 --> 29:02.210
out of the company, either licensing or selling. So I can imagine,

29:02.220 --> 29:06.450
in some cases, it's kind of like you said with Microsoft, they have this and

29:06.460 --> 29:09.990
it's all pet project that they never took anywhere. In that

29:10.000 --> 29:13.410
case, nobody may be infringing, but it may be of value to

29:13.420 --> 29:16.620
another company. No, you're totally right, Ashley,

29:16.630 --> 29:20.040
but that's not selling patterns. It's just licensing

29:20.050 --> 29:23.670
technology. This is pure technology transfer. What you're describing. It's a

29:23.680 --> 29:26.400
totally different universe. And I've done a lot of that.

29:26.700 --> 29:30.240
Then you have some orphan technology that you're not using

29:30.570 --> 29:34.770
bundle with no how with trade

29:34.780 --> 29:38.910
secrets, patterns, sometimes even trademark. But usually

29:38.920 --> 29:43.140
it's going to be some technology that represents years of R and sunken

29:43.640 --> 29:47.130
investment, millions of dollars, millions of lines of code or whatever.

29:47.140 --> 29:51.180
The technology is a ton of knowhow. And you say, okay, this is

29:51.190 --> 29:55.050
enabling. I can basically sell this or license this to someone

29:55.440 --> 29:59.610
and help them hit the ground running. And in that context,

29:59.640 --> 30:03.450
the patents really only come for the ride. They're not the main factor.

30:03.950 --> 30:07.860
They're not the driving factor behind the transaction, because with

30:07.870 --> 30:11.070
the know how, without the underlying technology, frankly,

30:11.190 --> 30:14.490
there's not much you can do. These patents will not teach you how to do

30:14.500 --> 30:18.630
that. So we're talking about the sale or license

30:18.640 --> 30:21.870
of makeup patents versus technology transfer, where there

30:21.880 --> 30:24.180
might be patents that come for the ride. But they're not.

30:24.320 --> 30:27.800
They're not really the driving factor, but it's

30:27.810 --> 30:31.700
a good point, because some people sometimes say, how come

30:31.760 --> 30:36.110
some people have that company, as I

30:36.120 --> 30:39.650
sold 100 patents to company? Well, you have to look at the deal.

30:39.660 --> 30:42.860
It was really not a sale, a path. And it was a technology transfer deal

30:42.870 --> 30:46.640
where they had to obviously transfer the the underlying IP

30:46.650 --> 30:50.480
to that other company. But believe me, without the underlying technology, that would have been

30:50.490 --> 30:54.170
no deal. So there will always be a

30:54.440 --> 30:57.800
exception you might have we sold one large for full a few years

30:58.300 --> 31:02.630
back to a Chinese company in the automotive space because they

31:02.640 --> 31:06.440
were only in China. They wanted to go global and they were totally vulnerable with

31:06.450 --> 31:09.530
no patents outside of China. And we had a great pro

31:09.540 --> 31:13.400
that was a great fit for them, and they bought it and there was

31:13.410 --> 31:17.300
no claim charge. Nobody was infringing. I mean, I was kind of getting close,

31:17.310 --> 31:21.530
but this was mostly I can afford looking play in their case and

31:21.540 --> 31:25.280
just stopped doing that because we had a similar twit. And we said,

31:25.290 --> 31:29.090
no, we don't do that anymore. We only buy patents. We have immediate

31:29.100 --> 31:32.600
needs. So even they have kind of backtrack a

31:33.100 --> 31:36.230
little bit on what they did, but it's fairly rare that you'll see that.

31:36.240 --> 31:40.070
Then again, it's a very different animal. There are companies who have full

31:40.080 --> 31:43.820
licensing teams trying to do that. And then you have the

31:43.830 --> 31:47.720
large Corporation that are essentially licensing their set patents

31:47.730 --> 31:51.230
and kind of assertion stick licensing way where there's

31:51.240 --> 31:55.430
no other really technology. But it's really standard essential

31:55.930 --> 31:59.510
patents, which is also kind of a third pillar, separate silo

31:59.540 --> 32:03.590
and very different business. And you have the likes of Ericson,

32:03.600 --> 32:05.870
Nokia and others who do that for a living.

32:06.790 --> 32:10.700
And in that case, they're really essentially doing

32:11.200 --> 32:14.900
patent pooling and making sure that people pay their fair share

32:14.910 --> 32:18.590
for practicing a standard that they participated into.

32:18.770 --> 32:22.190
Okay, I kind of asked about you

32:22.250 --> 32:26.150
take about one, two of the portfolios

32:27.620 --> 32:31.700
you review. So other than the question

32:31.710 --> 32:35.750
of infringement, what are the other main things? I mean, you're rejecting,

32:35.760 --> 32:39.590
right? You want to reject it's mainly a question

32:40.090 --> 32:43.660
of dismissing and what remains then it's interesting.

32:43.670 --> 32:46.810
Yes, I was going to come to it.

32:46.820 --> 32:49.630
Thank you, David.

32:50.230 --> 32:54.220
Basically, the first thing I look at is okay. Is there any

32:54.230 --> 32:57.940
potential infringement? I know if there's none, it's going to be really hard to sell

32:58.440 --> 33:00.340
unless there's 500 patents.

33:01.080 --> 33:05.020
So I'm not saying that's the only thing I'll look at, but that's one

33:05.030 --> 33:08.230
of the first thing. The second thing, obviously, is is there's only

33:08.240 --> 33:11.650
one patent or do we have a portfolio? Because if there's only one patent,

33:12.220 --> 33:15.290
it's really, really hard to monetize these one.

33:15.300 --> 33:18.650
One season, two season. People are not interested,

33:19.610 --> 33:22.490
especially if there's no open continuation.

33:22.500 --> 33:26.030
That's where you guys can make a big difference in your practice in

33:26.150 --> 33:29.000
the US. Always leave an open continuation.

33:29.390 --> 33:33.260
Always, always. Even if it's your 8910 pattern in the same family,

33:33.270 --> 33:35.840
just put a placeholder file continuation.

33:37.660 --> 33:41.900
Forget to send some materials we buy

33:41.910 --> 33:44.750
six months before you get it. Missing material,

33:44.840 --> 33:48.380
request, whatever. Frankly, there are little tricks of the trade

33:48.390 --> 33:52.310
there to buy time or buy time. Keep the family open because

33:52.320 --> 33:55.940
the case law changes all the time, as you know, and it's

33:55.950 --> 33:59.660
a lot easier to go back and change claims when you have an open continuation

33:59.670 --> 34:03.590
than trying to follow the exam. If you have an IP and

34:03.880 --> 34:07.610
someone files a bunch of prior art in

34:07.620 --> 34:11.060
your IPR file. You can go back and take all the prior

34:11.070 --> 34:14.900
art and then put this in the prosecution of the continuation

34:14.910 --> 34:17.630
and get a bulletproof pattern.

34:18.560 --> 34:22.610
If there's a new case law, that like an Alice case or what

34:22.620 --> 34:25.790
happened ten years ago when suddenly the means plus

34:25.800 --> 34:29.450
functions claims were out of favor and you have an opened continuation, well, guess what.

34:29.460 --> 34:33.530
You can just go back and change your claims to do anything acrobatic

34:33.540 --> 34:37.760
to try to salvage the portfolio. So that's the very first unforced

34:37.770 --> 34:41.330
error that most people do. And frankly, if you don't do

34:41.830 --> 34:44.930
that, if you don't at least recommend to your client to file

34:44.940 --> 34:48.580
a continuation for me, it's almost mile practicing because

34:49.440 --> 34:52.990
you're really putting your content at a disadvantage.

34:53.510 --> 34:56.910
Another thing we see all the time and again, you can have a big

34:56.920 --> 35:00.540
impact on that is the lack of priority search. There are

35:00.550 --> 35:04.080
still people who operate in, like in the nineties where you would sit to your

35:04.090 --> 35:08.010
client. I don't pay anything to the prior search. It says the examiners job.

35:08.020 --> 35:11.400
They'll do it for free, and then you get a patent sheet and guess what

35:11.410 --> 35:15.690
you said. Look, I told you there's a big I'm

35:15.700 --> 35:21.070
hard sometimes on the patent bar because I think the

35:21.080 --> 35:24.640
interests are not really well, like what

35:24.650 --> 35:28.840
the client wants in most cases is a patent that will

35:28.870 --> 35:32.500
be meaningful for their business. What the patent

35:32.510 --> 35:36.550
agents and patent attorney is have a deliverable as

35:36.560 --> 35:40.120
a metric is to get a patent issue. And as you all

35:40.130 --> 35:43.450
know, a patent can issue. Almost any patent will issue.

35:43.460 --> 35:47.320
If you narrow claim enough so that it becomes meaningless,

35:47.500 --> 35:51.100
you'll get an issuance. And if all the client wants is something to frame

35:51.110 --> 35:54.700
and put them there, well, that may be fine, but I guess that's really not

35:54.710 --> 35:57.940
what most of them are looking for here. And if

35:57.950 --> 36:01.510
you essentially give them a result, which is an

36:01.520 --> 36:06.300
issue pattern, and they think they have something of value that

36:06.310 --> 36:10.440
will support their business when they need to enforce. And 510

36:10.450 --> 36:14.070
years later, when they finally need to enforce it, they realize that all

36:14.080 --> 36:18.000
their business was built on a house of cards because the

36:18.010 --> 36:22.110
foundation is like quicksand, and the minute they want to enforce, they're being told their

36:22.120 --> 36:25.900
patent is Invalid because there was a ton of prior art that should have

36:25.910 --> 36:28.450
been discovered during prosecution and was not.

36:29.420 --> 36:33.230
Then you didn't really do them any favor. So by

36:33.730 --> 36:37.400
all means, go ahead. How do you balance? You know, I think,

36:37.410 --> 36:40.910
you know, I think some of the balance is always interesting with searching,

36:40.920 --> 36:44.530
right? Because I feel like you could search

36:44.540 --> 36:47.920
a few hours and find some stuff, and you could also send,

36:48.400 --> 36:52.330
you know, days searching and never scour

36:52.540 --> 36:56.590
everything right. Somebody who's a better search, a different search for a different database,

36:56.600 --> 37:00.230
different country, different transition, whatever could find something

37:00.240 --> 37:03.800
like where do you do you have a feeling for,

37:04.300 --> 37:08.450
like what that balance is of searching and

37:08.460 --> 37:12.320
finding versus scouring on the one

37:12.820 --> 37:15.930
balance and not searching. Yeah, well, first,

37:16.350 --> 37:19.020
a lot of people don't search at all. I mean, you can see when a

37:19.520 --> 37:22.590
pattern has been issued. You look at the priority site and you see a little

37:22.600 --> 37:26.040
asterisk in front of every single pattern. You know that that means

37:26.050 --> 37:29.400
there was no prior art search done, and they rely completely

37:29.410 --> 37:32.430
on the examiner to do it. And as you probably know,

37:32.610 --> 37:36.330
although the typical prosecution may take two to three years,

37:36.690 --> 37:40.200
on average, a US examiner will spend more than 3 hours

37:40.700 --> 37:43.380
looking for priority, and they essentially search at best database.

37:44.400 --> 37:49.820
It's a completely inadequate

37:50.320 --> 37:54.140
search. And no wonder why so many patents are invalidated after

37:54.150 --> 37:56.810
there'd be an issue. I mean, you look at them and say, come on.

37:57.020 --> 38:00.530
I mean, there's got to be something else and you look

38:00.540 --> 38:04.100
for 3 hours and you find four pieces of prior that are relevant. I mean,

38:04.110 --> 38:07.580
it's not rocket science. The main problem is not doing it at

38:07.590 --> 38:10.970
all as far as the balance is concerned, what you've described.

38:10.980 --> 38:14.240
Ashley, I think there's the good prior

38:14.300 --> 38:17.420
search, and most firms will do that. And we do a lot of those two

38:17.430 --> 38:20.840
or patentability, as you know, for a fixed

38:20.850 --> 38:24.470
price. And they'll look through the main databases and they'll look

38:24.480 --> 38:27.920
through nonpatent literature, and you can pretty much cover

38:28.420 --> 38:31.930
90% of the ground for less than $2,000, essentially.

38:31.940 --> 38:35.350
And then you have the litigation kind of search where you're being

38:35.360 --> 38:39.400
sued, and then you're going to basically spend whatever needs

38:39.410 --> 38:42.760
to be spent until you find something, because it can make the difference between

38:43.260 --> 38:47.110
losing and winning and having a big award to pay or having

38:47.120 --> 38:50.320
an Invalid panel. So I

38:50.330 --> 38:53.890
can say when I was at the search firm, that's exactly how it

38:53.900 --> 38:57.970
played out. I depended on the case. When Intellectual

38:57.980 --> 39:01.510
Adventures was at their height, we would search

39:01.520 --> 39:06.230
for them anywhere from 15 to 25 hours

39:06.640 --> 39:10.580
finding infringers and validating patents,

39:10.590 --> 39:12.290
trying to invalidate patents.

39:14.630 --> 39:18.330
And I think that's reasonable. And there's

39:18.340 --> 39:22.200
so many firms that do that. There's so much competition there. And the

39:22.210 --> 39:25.770
tools are great. Again, you can get this kind

39:25.780 --> 39:29.370
of effort 1520. 5 hours for again, less than

39:29.520 --> 39:33.120
$2,000 for a client. If you look again at the

39:33.130 --> 39:36.540
price of a bad patent, which is the same than the price of a good

39:36.550 --> 39:39.900
patent, which is about 50 $60,000, it's a

39:39.910 --> 39:43.620
drop in the bucket. And not only that, I tell my clients if

39:43.650 --> 39:47.610
you do the patentability assessment and we find all the prior and you've

39:47.620 --> 39:51.510
written a good disclosure invention disclosure before that allows

39:51.520 --> 39:54.850
us to do the search, and you bring that your patent

39:54.860 --> 39:58.450
attorney. You're probably going to recruit those cars because they won't have to conduct

39:58.460 --> 40:01.660
a bunch of interviews to understand what it is about. They'll have a

40:02.160 --> 40:05.410
product right in front of them. You draft much better patents when you know

40:05.420 --> 40:08.890
what the examiner is going to have, and you can preempt some

40:08.900 --> 40:12.100
of the arguments in the way you draft and the way you craft your not

40:12.110 --> 40:15.130
only your spec, but your claims, obviously. So it

40:15.140 --> 40:18.280
makes for a more robust patent more likely to be issued,

40:18.520 --> 40:22.210
less likely to be challenged successfully, and it

40:22.710 --> 40:26.890
costs overall, probably one $502,000,

40:27.310 --> 40:31.300
some of which you'll recruit because you'll probably have a less expensive

40:31.800 --> 40:34.990
prosecution and drafting because you provided more information to

40:35.000 --> 40:38.860
your patent attorney. So I frankly, see no reason why not

40:38.890 --> 40:43.470
doing that. But again, you know, if the answer is you

40:43.480 --> 40:46.770
don't have an invention, right? It already exists. You know, this is

40:46.780 --> 40:50.400
really that's the issue. This is not a good business

40:50.410 --> 40:54.120
model for you guys to tell the client it's a crap. You don't need to

40:54.130 --> 40:57.570
file a Petman that already exists, or that invention is going

40:57.580 --> 41:01.230
to be so incremental. You know, that the claims will

41:01.240 --> 41:04.500
be so narrow by the time it is you three years from now,

41:04.510 --> 41:07.650
the technology will have evolved and you will

41:07.660 --> 41:11.160
have leap way forward your tiny invention.

41:11.170 --> 41:14.820
So don't waste your money on me. So nobody wants to say that.

41:14.830 --> 41:17.970
But frankly, that would be the honest answer. In many cases, when you

41:17.980 --> 41:21.630
look at the part that don't spend your money on this, you know, it already

41:21.640 --> 41:25.400
exists so incremental that it's not worth

41:25.410 --> 41:28.820
it. And the day people do that, you're going to

41:28.830 --> 41:32.720
have a lot less patents that are invalidated because we essentially

41:32.730 --> 41:36.320
they weren't valid in the first place. Believe me, I see a lot

41:36.330 --> 41:39.860
of those. I mean, I'm not doing we see so much volume, I can tell

41:39.870 --> 41:44.050
you it's not just bad patent attorneys.

41:44.060 --> 41:47.830
It's just the business incentives are misaligned.

41:47.950 --> 41:51.910
And that's what's creating a lot of these patterns to be issued because

41:52.410 --> 41:55.240
your metric is not the same as the client, but the client doesn't know it.

41:55.260 --> 41:59.070
The client thinks that you have the same metric and

41:59.080 --> 42:01.290
the same goal, and you don't. Actually,

42:02.040 --> 42:05.620
you have that argument with law firms. I would

42:05.650 --> 42:10.170
match, right? I mean, this sounds like a point of continuous my

42:10.200 --> 42:13.230
attention. I mean, they send me a lot of stuff. I just look

42:13.240 --> 42:18.000
at the work product and say, Guys, you didn't do your job here because

42:18.010 --> 42:21.390
we will do some priority search and we'll find something and we'll tell

42:21.400 --> 42:24.810
the client, look, we can't take this under brokerage because you didn't

42:24.820 --> 42:27.960
invent anything. You should have done a priority search prior to

42:27.970 --> 42:31.470
filing. And you want to save yourself, especially when there's portfol with

42:31.480 --> 42:34.590
five to ten patent. You would have saved yourself half a million dollars,

42:34.600 --> 42:37.740
probably. And seeif, you had only

42:38.240 --> 42:41.430
spent $2,000 in search originally.

42:42.890 --> 42:45.810
Again lost that I'm part of the path.

42:46.080 --> 42:49.680
I just don't like

42:49.690 --> 42:53.320
the fact that the business incentives are not properly

42:53.330 --> 42:56.590
aligned with what the client needs to get a meaningful patent at

42:56.620 --> 43:00.520
the end, and it reflects in the marketplace today because

43:01.150 --> 43:04.780
we can see all the bad things we want to say about the P tab,

43:05.080 --> 43:08.860
about being biased and all this. But the reality is, in a lot

43:08.870 --> 43:12.850
of cases, there were some relevant priority that

43:12.860 --> 43:16.200
made some of these patents Invalid the way they were drafted. And again,

43:16.210 --> 43:19.650
if you have an open continuation, then you can maybe save it if

43:19.740 --> 43:23.220
you don't. And it's well, you can always follow reexam,

43:23.250 --> 43:26.540
but that's another another battle.

43:26.770 --> 43:31.100
One more thing. So with regard to the that

43:31.110 --> 43:34.930
you like, you do

43:34.940 --> 43:38.440
further analysis, I would imagine, depending on how much

43:38.500 --> 43:43.010
the seller gives

43:43.020 --> 43:46.790
you to begin with. So do you

43:46.800 --> 43:50.540
share all that with the potential buyer? That's the question. Do you

43:50.550 --> 43:54.170
share your full with a potential

43:54.180 --> 43:58.370
buyer? Yeah, it depends.

43:58.460 --> 44:01.910
What we do is when we do tree as again,

44:01.920 --> 44:05.270
there are some that we can reject very quickly. Sometimes we'll

44:05.280 --> 44:09.080
reject them because the expectations are just unrealistic.

44:09.580 --> 44:13.280
The guy has one provisional patent and he wants a billion

44:13.290 --> 44:16.810
dollars for it. Those are quickie. You know,

44:16.820 --> 44:20.620
you're not going to get anywhere. So again, we require at least two issue

44:20.650 --> 44:24.250
patterns because we know that just one single pattern is almost impossible to

44:24.260 --> 44:27.790
transact. We're looking for something that's infringe

44:27.800 --> 44:31.150
we want to have obviously as much priority

44:31.650 --> 44:35.920
side of as possible. We want to have claims that are enforceable,

44:36.070 --> 44:40.040
and that's something I should just say a few words

44:40.050 --> 44:43.340
on a lot of the claims we look at are not

44:43.350 --> 44:47.870
enforceable. And again, that's on you guys a lot

44:47.880 --> 44:51.920
of divided infringement issues, people. Sometimes when the draft patent, they don't think

44:51.930 --> 44:55.730
about who's going to be the infringer, and you have to have that in mind.

44:56.470 --> 44:59.780
We have so many patents where we look at the claim

44:59.790 --> 45:02.000
and say, look, there's going to be two agents.

45:03.260 --> 45:07.040
It's like solar panel patent. If it's infringed by

45:07.050 --> 45:10.340
the installer, it's not going to do me any good. I need

45:10.350 --> 45:14.240
something that's infringed by the manufacturer here. The installers are

45:14.250 --> 45:17.360
all mom and pops, and you're not going to start suing the guy who does

45:17.370 --> 45:21.020
a few solar panel installs every month. So you

45:21.030 --> 45:24.770
can see that in the cloud space. You can see that in any kind

45:24.780 --> 45:28.370
of server network where you have the server, the club. Sometimes it's

45:28.380 --> 45:31.760
just a matter of redrafting the claim so that everything happens

45:31.770 --> 45:35.370
at the server level. But I love things we

45:35.380 --> 45:39.030
look at it was done, maybe two hassle, but you have

45:39.040 --> 45:42.090
clear divided in finding issues. And again,

45:42.360 --> 45:45.900
there's not much you can do about Alice in the case, but there's

45:45.910 --> 45:50.220
a lot you can do about drafting claims that won't have these issues in

45:50.230 --> 45:53.650
definiteness lack of support in the specs. I mean,

45:53.660 --> 45:57.280
we see it all the time, frankly. And again, this is all about the drafter.

45:57.970 --> 46:01.390
This is not about the invention itself. It's about how you draft client,

46:01.400 --> 46:04.570
making sure that you have your support and to send it.

46:04.580 --> 46:08.440
You have no indefiniteness, no divided infringement. I mean, just these

46:08.450 --> 46:12.100
three things that I've mentioned probably disqualify

46:12.550 --> 46:15.820
30, 40% of the path to look at. So you can do

46:15.830 --> 46:17.770
a lot of goodness by thinking, okay,

46:18.760 --> 46:22.700
who's the potential infringer or the potential infringers

46:22.710 --> 46:26.390
and make sure we draft some claims that encapsulate each

46:26.400 --> 46:29.810
of them in a way that is whole and will

46:29.820 --> 46:31.730
not create these divided infringement issue.

46:33.330 --> 46:37.180
The lack of support is a very common of

46:37.680 --> 46:40.900
the Cascading CIP driving nuts.

46:42.100 --> 46:44.890
We're trying to sell a portfolio. It's 44 patents,

46:45.140 --> 46:48.620
and they all CIPS are one another. Do you

46:48.630 --> 46:51.800
think anyone in his right Manor Harriman is going to take the

46:51.810 --> 46:55.130
time to look at 43 specs and try

46:55.140 --> 46:58.370
to distill the new subject matter

46:58.870 --> 47:02.060
that was inserted than each of one and then compare the claim

47:02.070 --> 47:05.990
and then trying to basically decipher. Okay, if that word

47:06.000 --> 47:09.830
is there and it first appeared in that CIP,

47:09.840 --> 47:13.640
that means that for this kind of scenario, my priority date suddenly

47:13.650 --> 47:16.910
is three years later. Hence I have to look at intervening

47:16.920 --> 47:20.090
prior art. Forget it. Nobody's going

47:20.100 --> 47:23.270
to do that. So stop these this CIP nonsense.

47:23.540 --> 47:26.690
I mean, you're just shooting yourself in the foot first,

47:26.900 --> 47:30.610
you lose a lot of patent term, and it

47:30.620 --> 47:33.970
might look trivial when you follow a patent. It's going

47:33.980 --> 47:37.180
to be good for 20 years. But the reality is, most patents that

47:37.190 --> 47:41.110
are transacted are in their last five, six years of shelf life.

47:41.320 --> 47:44.500
So most of the patents we take on the brokers

47:44.510 --> 47:48.250
have between, I would say, twelve and 18 years already

47:48.280 --> 47:52.000
passed. So which means that sometimes they have less than two years less. Sometimes they

47:52.010 --> 47:55.510
have six months less than their return. So if you file the CIP,

47:56.080 --> 48:00.310
and for some reason, the actual filing

48:00.320 --> 48:04.000
date for those claims is three or four years later than the parent

48:04.500 --> 48:07.810
one. You didn't do yourself any favor or your count

48:07.820 --> 48:11.080
any favor, because suddenly that patents about to expire

48:11.170 --> 48:14.260
or may have just expired. And that was the one with the good claims,

48:14.740 --> 48:18.730
because we all know the first pattern you're going to get is not the one.

48:18.740 --> 48:21.850
Whether you're going to fall in love with the claims, it's going to be maybe

48:21.860 --> 48:24.990
the third or fourth continuation, but try

48:25.490 --> 48:28.590
to stay away from CIPS because they do more. I can tell you they do

48:28.650 --> 48:32.040
more damage than anything else. I haven't seen anyone in

48:32.050 --> 48:35.760
terms of buyers or litigators that like them, so I have to defer

48:35.820 --> 48:39.060
to them on that. And I can see when we have too many CIPS.

48:39.070 --> 48:42.150
People say, look, it's like spaghetti code. I'm not going

48:42.160 --> 48:46.080
to get into this. It's too complicated. The linear and obviously

48:46.090 --> 48:49.200
sometimes you don't have any choice but to follow CIP and

48:49.210 --> 48:53.820
something. If you do it carefully, you will be able to make sure

48:53.830 --> 48:57.930
you have sufficient support and you're just having some data. So don't take

48:57.940 --> 49:02.310
this as gospel, but for the most part, I've seen a lot more disadvantages

49:02.320 --> 49:05.340
of people finding CIPS than not.

49:06.780 --> 49:10.470
You're better with just finding pretty large on

49:10.970 --> 49:14.760
the patent and doing a bunch of divisional in my experience

49:14.940 --> 49:18.090
and regular continuations to keep the family

49:18.590 --> 49:22.930
open. So that's one thing where you can help.

49:23.440 --> 49:27.430
We see a lot of on necessary restrictions

49:27.940 --> 49:31.840
where people. So if we just add this restriction,

49:32.050 --> 49:35.710
the examiner is going to be happy and issue the patent. Instead of fighting the

49:35.720 --> 49:39.040
good fight, the people surrender too hurtly

49:39.050 --> 49:43.300
sometimes and too easily. And as a result, you end up with unnecessary

49:43.310 --> 49:47.150
restrictions in your claim or limitation in your claims that

49:47.160 --> 49:51.200
when you're trying to enforce are the ones that are not on the corresponding

49:51.210 --> 49:54.450
product, and then you're kind of stuck. So it's okay to

49:54.460 --> 49:57.750
add limitations, independent claims. But please don't do that in your

49:57.780 --> 50:01.230
independent claims just to satisfy the examiner instead of

50:01.500 --> 50:03.480
pushing back when you think you should,

50:04.280 --> 50:08.260
it's better to. So there

50:08.270 --> 50:12.220
is a little bit of a balance, because what I sometimes see and it frustrates

50:12.230 --> 50:15.940
me is that you have firm that try to push for

50:16.420 --> 50:19.840
these broad claims, especially at the outset.

50:19.850 --> 50:23.140
When, you know, when the searching has been done, you have all the

50:23.150 --> 50:26.590
literature and there's just no way in hell that somebody's going

50:26.600 --> 50:29.710
to get those claims. But then you have these firms that say, you know,

50:30.040 --> 50:33.250
will push for this like really broad method. I feel like I see a lot

50:33.260 --> 50:36.490
of method of treatment where they're, like, pushed for this broad method of treatment

50:36.500 --> 50:40.460
claim. And it just, you know, I feel like that's

50:40.470 --> 50:44.420
also setting somebody up for failure to to go in there with this crazy

50:44.430 --> 50:48.080
broad claim to try to kind of almost sleep one by an examiner who

50:48.090 --> 50:51.760
maybe is not reading things as closely or not paying attention as close

50:51.770 --> 50:54.700
as I feel like the overly brought to be just as differ mental as the

50:54.710 --> 50:58.030
overly arrow. You don't want to be really

50:58.040 --> 51:01.420
bad, especially with Alice. You're going to get into a car Curry very quickly.

51:02.050 --> 51:06.790
I think what I'm saying is very often I will see in persecution someone

51:06.800 --> 51:10.210
who will just came into the examiner

51:10.270 --> 51:13.150
by adding a limitation the claim that I need to be there,

51:13.360 --> 51:16.690
and that's going to basically backfire

51:16.700 --> 51:20.890
later on because those are the ones that very often will

51:20.900 --> 51:24.580
not be on the infringing product. And we'll make a difference between an fringe

51:25.080 --> 51:28.600
claim or not. Just sometimes be careful not to

51:28.610 --> 51:32.020
cave in to really thinking that that's just a minor

51:32.520 --> 51:35.980
thing, especially if it's going to be in your independent claim, then it's

51:35.990 --> 51:39.520
going to follow the whole claim set.

51:40.320 --> 51:43.630
So sometimes we personally,

51:43.690 --> 51:47.110
I much prefer to see some scar tissue in prostitution,

51:47.140 --> 51:50.770
then some something that just kind of went by so smoothly

51:50.830 --> 51:54.400
that at the end of the you say, well, the exact didn't really

51:54.410 --> 51:57.820
do his or her job then, because their job is to push back and make

51:58.060 --> 52:02.080
you earn that patent. And if you see just one non

52:02.090 --> 52:06.100
final rejection, and then they allow your claim

52:06.130 --> 52:09.490
set without asking too much, it's almost suspicious from

52:09.500 --> 52:13.000
you. I like to see a few rejection letters

52:13.030 --> 52:16.900
and some good fight, some scar tissue where you didn't make some concession.

52:16.910 --> 52:20.860
But you you basically overcame this because when

52:20.870 --> 52:24.180
you get into a mode, there's an IPR,

52:24.210 --> 52:27.330
you're gonna have the same battle to fight. And if it's already being

52:27.340 --> 52:31.080
fought with the examiner, you have a lot more leverage and

52:31.380 --> 52:35.190
P tab. Then I asked to second guess the examiner, which they don't like

52:35.200 --> 52:38.400
to do as much as when it's silent. When it's time.

52:38.760 --> 52:42.420
It's almost like an appeal. The Noble they say, well, the exact didn't have this

52:42.430 --> 52:45.900
priority or this argument wasn't presented. So we don't

52:45.910 --> 52:49.370
know how he or she would have thought about it. And so we'll

52:49.380 --> 52:52.820
just substitute our in thinking if it's already there.

52:52.830 --> 52:56.710
And there's been some good argument

52:56.720 --> 53:00.350
that's going to help you. For instance, we have a for fall

53:00.380 --> 53:03.770
currenty that's being litigated. And there was during

53:03.780 --> 53:07.390
prosecution and it's over a little swing set,

53:07.450 --> 53:11.800
you know, those swing set that kind of move vertically instead

53:11.810 --> 53:15.790
of swinging or traditionally and great invention

53:16.480 --> 53:19.870
from our guy and all this and during

53:19.880 --> 53:24.680
prosecution, the examiner just seemed

53:24.690 --> 53:27.860
to understand the difference in all this, or I didn't want to see it.

53:28.190 --> 53:30.830
And our guy had to go through an appeal,

53:31.070 --> 53:34.970
fell on appeal, went to the tab as an appeal, not as

53:34.980 --> 53:38.600
IPR, and he won. He won. And then he got the

53:38.610 --> 53:42.290
claim that he wanted and he saw the good fight in one. And I have

53:42.300 --> 53:45.200
to tell you, it made a huge difference in the case because we had the

53:45.210 --> 53:47.950
Mark one a few months ago. And because of that,

53:47.960 --> 53:51.430
we're able to convince the judge that this has already

53:51.440 --> 53:55.650
been kind of litigated and the claim construction was clear and that's

53:55.660 --> 53:59.760
what it meant. And we have won that battle already. And the

53:59.770 --> 54:02.850
judge was differential to the fact that there was

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an appeal and that we fought for this. They didn't want to go with the

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other side's construction, which was basically relitigating

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the appeal during prosecution. So again,

54:14.210 --> 54:17.280
it's always think that the little things you do or don't do now

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will have an impact maybe only 15 years from now, but it will.

54:21.600 --> 54:25.020
And you got to do it right. So all these things

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you can really help. As I said,

54:27.970 --> 54:30.980
prior searches, the claim,

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drafting open continuation support in the spec.

54:35.340 --> 54:38.070
Try not to do the CIP route if you can.

54:39.600 --> 54:42.930
Foreign corresponding patents help as well.

54:43.380 --> 54:46.740
So we always prefer to see a portfolio

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that has some EPO filings or Chinese

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filings, mostly because since Ebay,

54:53.050 --> 54:57.600
we've had to export the injunction leverage

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to other countries. You have to go in countries that will grant

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you an injunction and currently is mostly is Germany and

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China. So if you file a German man, a Chinese

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counterpart. You're giving your client. And again,

55:10.750 --> 55:13.660
five years, ten years from now. Will it be other countries?

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Probably. But there's so much you can guess. But currently

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I can tell you if I have a portfolio that's infringed

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by a phone manufacturer or a multinational company that

55:24.470 --> 55:28.330
has activities elsewhere in the world. And I have an infringe

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German counterpart or an in French Chinese counterpart, I can

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do a lot more damage than I have a ton more leverage to negotiate a

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license for a settlement with the printer than if family have a US ten.

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I may not even have to sue the US.

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I may only have to sue in China or in Germany and

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tell the guy, obviously, we have a US patent. We're going to

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sue in the US for damages if we don't settle. But for

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now, we can get an injunction in Germany or in China that can

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disrupt your supply chain. So why don't we have a conversation?

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And that's how this game is played. So you have to understand

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that these are strategic weapons. So if

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he has any questions or comments like the word scar

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tissue, I'm going to add that to my vocabulary.

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It's good cartis. You know, when you

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work in the field, you get a lot of cases and the skin

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is much thicker. That's the same thing with a patent. You know,

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you want something like this. Sometimes an

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inventor will say we didn't even have a non rejection letter. It just flew out.

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I had my claims allowed on the initially didn't have

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to fight for it. And they're so happy. I have to bring the news

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that this is actually not very positive.

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So these are the things where again,

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it's okay to fight back with the examiner. And interviews are great.

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I think everybody who practices interviews usually have better

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results than people who don't. So there's no reason not to

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do that. And you can get a lot of good business

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intelligence. And sometimes, you know, they're human

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being. It's not that they don't want you to have the

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pattern for your client. If you convince them that this word is

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better than that word or is the same as the same scope

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as far as they're concerned. But for you, you know, strategically that it's

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going to keep some options of some options open. It's okay

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to fight for that, because it's going to make a big difference. And again,

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the deliverable that you give the client should not be.

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I just got your patent issue because for me, it's meaningless.

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It's like I've got your painting frame. But is the painting

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any good you really have

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to think about? Is this an enforceable patent that they

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will be able to rely on and a certain and

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maintain validity thereof when they need it, whether it's

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two years or 15 years from now or if they want to

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sell it, will they get anything out of it? Because, you know, it's commercial

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grade, as opposed to something that's so narrow that it only really

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covers a clone of their

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product. And that's maybe the last thing I'd like to say. And adding,

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including on my end, is a lot of patents are

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really drafted to cover the invention, which is really not

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what you should be doing. You should be really thinking

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of the design around. And then invent around that design around and file

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some claims to cover that because nobody's gonna clone your I mean, except for

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to Chinese knockoff. Nobody's gonna clone perfectly what

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your client is doing. In all cases that I've seen,

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frankly, the initial infringement is innocent.

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You don't have anyone who knew about your

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clients patent when they designed their feature. They just designed something that came

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to them naturally within the software world. And then

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it just so happens it might read on your clients patent. So if your patent

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was really narrow, narrow to cover their invention, there's a very good

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chance it will not be enough to secure

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any kind of infringement story on that, because there

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will be too many limitations. So again, think about playing

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the bad guys. What will your competitors do? And the clients love that

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when you explain to them it's kind of role playing right now pretend you're the

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bad guy and try to break that patent or try to

59:22.760 --> 59:26.260
go around. What would you do? How would you do it? Okay. What are

59:26.270 --> 59:29.620
the pros and cons? And let's file some plans around that and enrich

59:29.630 --> 59:33.580
the patent. So it can be more of a kind of a war game simulation

59:33.610 --> 59:36.700
than just drafting something and say, look at this and tell me if

59:36.710 --> 59:40.180
you agree. So again, you want to have something that's going

59:40.190 --> 59:43.510
to be meaningful down the road. You just don't know when you're going

59:43.520 --> 59:46.480
to need it, but it's not a reason not to do a job about it.

59:46.490 --> 59:50.170
So that when it happens, if and when it happens, you've got

59:50.180 --> 59:53.960
something that is ready for bat certainly

59:53.970 --> 59:56.300
makes patent a lot more fun when it's war games.

1:00:01.600 --> 1:00:05.670
Okay. That's all I have to say. Awesome. We really

1:00:05.680 --> 1:00:09.090
appreciate you. Thank you so much for historical perspective. And then also

1:00:09.390 --> 1:00:13.230
some practical tips, because I think the whole spirit

1:00:13.240 --> 1:00:16.260
of this group is to up our game per se.

1:00:16.270 --> 1:00:19.470
And so I think I know there's some tidbits I've been taking down

1:00:19.480 --> 1:00:23.260
the side, too about just different ways to think about

1:00:23.270 --> 1:00:26.050
things. And so I hope everybody else has in Tibbits, or if you have any

1:00:26.060 --> 1:00:29.200
additional questions, there's a few more minutes to throw them out there.

1:00:29.600 --> 1:00:32.670
Yeah. No, thank you. Give us a lot to think about.

1:00:32.820 --> 1:00:35.670
Yeah. Thanks, Kate. Thank you very much.

1:00:35.680 --> 1:00:39.570
Was a pleasure interacting with you guys. Best of luck. And again, I lost

1:00:39.580 --> 1:00:43.380
Pat lawyers. It's just that I'm trying to help them get a better work product

1:00:43.390 --> 1:00:46.470
at the end. Perfect.

1:00:47.670 --> 1:00:48.870
Okay. Bye bye, everyone.

1:00:50.800 --> 1:00:54.130
All right. That's all for today folks. Thanks for listening and remember

1:00:54.140 --> 1:00:57.940
to check us out at Aurora. Patents. Com for more great podcasts, blogs and

1:00:57.950 --> 1:01:01.630
videos covering all things patent strategy. And if you're an agent or attorney

1:01:01.640 --> 1:01:04.360
and would like to be part of the discussion or an inventor with a topic

1:01:04.370 --> 1:01:08.120
you'd like to hear discussed, email us at podcast at war. Patents.

1:01:08.240 --> 1:01:11.690
Com. Do remember that this podcast did not constitute legal advice,

1:01:11.700 --> 1:01:14.030
and until next time, keep calm and patent on.

Intro
Strategy tidbits: AFCP 2.0 follow-up
Louis introduction
Market forces and historical context
Who's buying and selling?
Proposed legislation: Pride in Patent Ownership Act
Proposed legislation: Unleashing American Innovators Act
What you can control about the market for your patent
Patent sales vs. technology transfer
What buyers want: attributes of a marketable patent
Prosecution strategies for future proofing against case law changes
Time vs. exhaustive balance when searching
The problem with examiner prior art searches
The patent industry conflict of interest problem
Other requirements for selling
Enforceable claims
Cascading CIPs
Unnecessary restrictions: giving in to examiners too soon
Increased leverage with foreign patents
Working with examiners
Meaningful, commercial grade patents
Drafting beyond the invention
Outro