Amy Corsa Patent Troll Final

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Patent Trolls Amy Corsa, 12/13/11, Gilead Sciences; Negotiating in Business: MGT 348; Tom Cushing

Fremont Troll, Seattle, WA:

Fremont Troll, Seattle, WA “Trolls lurk underneath structures they didn’t build, get in the way, and make unreasonable demands ” Hartford, Taming the patent troll, FT Magazine, 2011

Outline :

Outline What are patent trolls? History Litigation negotiations The Players Examples

What are Patent Trolls?:

What are Patent Trolls? Patent “Trolls” or “Sharks” AKA “Non-practicing entities” Businesses that buy patents, intellectual property, with no intention of using them Encourage other companies to buy a license to use the patents they own Threaten expensive litigation for infringement

What is a patent? :

What is a patent? A form of Intellectual Property Application to protect an invention Issued by a Sovereign State Owned by a person or a corporation Expires in 20 years Enforced by civil lawsuits

History of Patents:

History of Patents 1790 Patent Act 1952 Last major patent reform Worldwide first to invent basis Include definition of infringement 2011 “America Invents” Act

US Patent Activity: 1790 – 2000:

US Patent Activity: 1790 – 2000 http://www.uspto.gov/web/offices/ac/ido/oeip/taf/h_counts.htm

Elements that enable Trolls:

Elements that enable Trolls Absurd patents Cost of the legal process Business model of buying patents as assets

Father Troll:

Father Troll Nathan Myhrvold, Intellectual Ventures Grant licenses to companies to use their patents or face litigation “Greasing the wheels of innovation” Innovation vs. Protection Market of ideas

Litigation negotiations:

Litigation negotiations Inventors undertake exhaustive analysis of relevant technology Ugly harassment; Tortuous Unpredictable jury Cost of defense vs. outcome certain Returns handsome; fairly predicable

Cost of Litigation:

Cost of Litigation 95% Settled out of court Costs $10'000 to $30'000 to obtain a patent Costs millions of dollars per case in court 1,600 cases tried per 153,000 patents annually Increasing annually Disproportionate number involve NPE’s

Biotech Firms Targeted:

Biotech Firms Targeted Classen Immunotherapies Broad vaccine patent claim Failed in US federal Court Upheld in appeals court Sets “a troubling precedent”

Lodsys vs. iOS :

Lodsys vs. iOS Lodsys is a patent troll Shell company for an inventor Asking for small royalties from developers like iOS iOS Infringing on a “user interaction” patent Coded by Apple….deep pockets! Negotiations ongoing; no litigation….yet…

Fark.com Wins!:

Fark.com Wins! Gooseberry Natural Resources lawsuit Infringement on patent covering methods of inputting news releases into a web Fark.com Doesn’t distribute releases, it “aggregates news” Settlement for $0 seen as a “win” for Fark.com 8 months of negotiations Living a “nightmare”

RPX IPO:

RPX IPO Patent troll that protects tech companies Google Cisco Charges an annual fee for troll protection No lawsuits!

Negotiation Lessons:

Negotiation Lessons Fully analyze competitors Think broadly and strategically Include all parties and competitors Assess your BATNA Think in terms of long term value Be thorough Take time to re-assess the game

Summary :

Summary Patent history and current legislation Patent Trolls and their actions Current examples Negotiation lessons

References:

References Hartford, T. 2011. Taming the patent troll. FT Magazine. Retrieved from: http://www.ft.com/intl/cms/s/2/3246d5b4-c870-11e0-833c-00144feabdc0.html#axzz1ZMzixiUW Outsourcing-law.com. 2011. Retrieved from: http://www.outsourcing-law.com/tag/patent-trolls/ U.S. patent and trademark office. Annual US Patent Activity. Retrieved from: http://www.uspto.gov/web/offices/ac/ido/oeip/taf/h_counts.htm Lemley, M. 2001. Rational ignorance at the patent office. SSRN. Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=261400 Economist. 2009. Trolls Demanding Tolls. DOI: 00130613. 9/12/2009. Vol. 392. Issue 8648 O’Neil. 2005. Carry a Big Stick. Holland and Bonzagni. Retrieved from: http://www.hblaw.org/articles-reader/items/carry-a-big-stick.html

References (cont.):

References (cont.) Savitz and Chien. 2011. Turn the tables on patent trolls. Forbes.com. Retrieved from: Business Source Complete. Tomas. 2005. Patent Stalker - Intellectual Ventures. Forbes. DOI: 00156914. Vol. 176. Issue 10. Sebenius. 2002. Negotiation lessons from the browser wars. MIT Sloan Management Review. Vol. 43. p43 Vardi, N. RPX IPO Helps Slay Patent Trolls. Forbes. Retrieved from Business Source Complete, November 1, 2011. Hayden, E. 2011. “Patent Trolls” target biotechnology firms. Nature Biotechnology. Vol. 477. p. 521

References (cont.):

Kravets. 2011. Obama Signs Patent ‘Reform’ Bill — ‘Crustless Sandwich’ Still Patented. Wired.com. Retreived from: http://www.wired.com/threatlevel/2011/09/obama-signs-patent-reform-bill-crustless-sandwich-still-patented/ Laddas and Perry. 2011. A Brief History of Patent Law. Retrieved from: http://www.ladas.com/Patents/USPatentHistory.html Chapin. 2006. Beware Patent Trolls. Allbusiness.com. Retrieved from: http://www.allbusiness.com/legal/intellectual-property-patent/4075765-1.html#ixzz1fue1l0e2 Techsahdez. 2011. Fark.com settles for zero dollars. Retrieved from: http://techshadez.ishadez.com/tag/settlement-negotiations/ References (cont.)

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