Patent Integrity

“Integrity” Road Sign with dramatic clouds and sky.CIP Forum 2009, currently held in Goteborg, Sweden, covers lot of IP management issues from valuation, open innovation and the relationship with IP, and of course contributions where the Patent Troll prominently appears as the bad guys. No IP forum these days can go bye without at least at some occasion hit on the trolls. Patent trolls or NPEs (Non Practicing Entities[1]) are bad, as they do not innovate, is what we learn. True or not, it misses the point. We like to compare NPEs with Real Estate management companies (“Agents”). Property developers are creating new (real  estate) property, the Agents are not. True again, but, so what? They both make money with an asset class, the property developers, construction companies build what becomes unique properties, appealable to renters and buyers. Agents do not build anything, make money to monetize those properties and play their role in property economics. The one cannot do without the other.

Same for IP. Companies, R&D companies and universities, create IP. NPEs firms make money from property that others “build”. Many perceive the fact that NPEs do not innovate as such is what make NPEs “deplicable” (sort of mix of being deplorable and despicable alike).  Attack the “good guys” so in the public eye becoming the bad guys as they cannot be countersued. Dan McCurdy, originator of Patent Freedom, spoke on NPEs in this way giving nice graphs on how many companies are negatively implicated by NPEs (See his list of companies most affected since 2004 by NPEs. Dan Mc Curdy to be a wonderful  IP professional, it is not up to us to criticize his observations. However we have defended the position that NPE are not at all so bad as we are made believe. NPEs are not “eroding innovation”, nor are patents “creating” innovation. Both statements do miss the point. As Agents who charge overpriced rents for Property Estates are destroying the Property market, nor do NPEs block or erode innovation. As we tried to bring to the table in one of earlier blogs, is the idea that NPE’s who spent quite a bit of money and time to identify valuable patents (as in potential license income or produce “litigation value”) not helpful repairing the causes of the growing NPE practices. NPEs show value in patents where obviously other failed to do so. If they put their money were their mouth is and in a way have been brave to do where others failed, well,  it’s something operating companies could have done themselves (and, as a result of those same NPEs, create defensive buying models to forgo dealings with NPEs).

Both parties being opponents in a complex IP market, try to find new ways to get what they want. CIP Forum speaker Dan McCurdy announced a New Project initiative, something like “Project Integrity”. The gist? Not sure but thought the idea is to allow companies to participate in a program to identify finance companies and other players who on the one hand facilitate deals with operating companies in IP transactions and proliferating NPEs practices on the other hand. Are we going to have a witch hunt against law firms, IP professionals who deal with, support or even create NPEs and also advise operating companies?

Not a good idea. Its reminds us to the Pavlov reaction by the music industry fighting against illegal copying music portfolios(legal actions against the copiers, then to find out that this does not resolve the problem, creating  new business models that provide support for the industry and at the same time align with market wishes and realities, does.

[1] Interesting reading is Colleen Chien‘s article “Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents”, North Carolina Law Review, Vol. 87, 2009. Santa Clara Univ. Legal Studies Research Paper No. 09-13.

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