At my previous company, Postini we developed an innovative email solution and successfully built a nice portfolio of patents. We never had to go to court over IP-related issues, but with the various saber-rattling activities that lawyers like to engage in, our patents were quite useful. They were an important asset for us with customers and, ultimately, as part of our acquisition discussions.
When we started Authentic8, we realized that what we’re building is novel and that building an IP portfolio would be beneficial. Last week, our first patent was issued - USPT #8,776,169 B2: "Disposable Browsers and Authentication Techniques For A Secure Online User Environment”.
We don’t have any earth shattering announcements about what this means to us. We’re still focused on establishing the category of a “browser in the cloud” and on making customers happy. But we have other innovations on file, and until the threat of litigation becomes moot, it is prudent for us to try to define our territory. Why spend the time and energy on patents? Because today’s IP landscape suggests that it is very prudent to plan for litigation; and lawyers, money, and patents are three necessary tools to bring to the table.
The number of litigation actions filed has increased at a compound annual growth rate (CAGR) of 7% since 1991. And between 2007 and 2012, the median damages award was $4.9m, according to a study by PriceWatersCooper. Any awards costs are additive to the cost legal counsel and the discovery process, which often outweigh the award. Having patents can be a big part of a defensive or counter-suit strategy.
You don’t necessarily need to build your own arsenal. Companies have built business around “Defensive patent aggregation services”, where a portfolio of patents is collected and subscribing companies benefit from the collective defenses. Companies agree to non-aggression pacts. Last week, a handful of leading tech companies announced one.
And in one high profile instance, patents may be given back for a common good. About a month ago, Captain America… err, Elon Musk, announced on the Tesla Blog that they were following the open source model and releasing their patents. Hoping to avoid an “intellectual property landmine” that would “inhibit others... Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.” Whether altruistic or self-serving, this announcement represents a pretty major signal to the transportation market.
The administrative grounds are shifting as well. Last weekend it was reported that the Obama administration plans to nominate Philip Johnson to head the US Patent and Trademark Office. Johnson heads IP at Johnson & Johnson and has a long history of speaking out and lobbying against patent reform.
While this is a departure from Obama’s previous support for legislation to rein in patent trolls, there have been some wins. Late last year, the House of Representatives passed The Innovation Act, which was billed as the first anti-patent troll bill.
There are a lot of benefits in the bill to companies defending against patent litigation, as seen here. The primary win with HR 3309 is that it will make it easier for prevailing defendants to recover the costs associated with the litigation. This potential liability changes the cost equation that those bringing suit need to consider.
While all this shakes out, we’ll continue building interesting solutions to hard problems and trying to build the IP protections around them.