Technicolor, the French company that invented the process for color movies, currently holds an estimated 40,000 valuable patents in digital audio and video. Their innovations go back almost a century and have been involved in licensing deals for said innovations for almost sixty years. The longevity of the impact of Technicolor’s visual, audio, and optic patents has somewhat caused them to be taken for granted. Not many can remember a time without Technicolor, but the company is now taking proactive steps to remind us of what it has done, and more importantly, what patents remain active in their arsenal.
As smartphones, tablets, and other electronic devices are igniting international patent litigation over what company is infringing on another company’s technology patent, Technicolor is literally breaking these devices apart. The company has devised a team of 220 employees whose purpose is to take apart every popular electronic device to find possible patent infringements. (more…)
Barney J. Cassidy, General Counsel and Executive VP of Tessera, Inc. as well as PLI faculty member, recently had an op-ed article published on Politico.com. The article, entitled, “Shooting a patent straw man,” challenges the notion that patent trolls and their readiness to litigate is at the root behind the recent surge of patent portfolio growth among the major tech companies.
The patent wars are all the rage amongst tech companies these days. Not too long ago, Microsoft Corp. made news when announcing it purchased approximately 925 patents from AOL, Inc. for an estimated $1.1 billion dollars. The commentary regarding that purchase was equally focused on the impressive sale price for the amount of patents purchased as it was on the fact that tech companies are looking twice at their patent portfolios as litigation and licensing tools.
The latest development is that Facebook, who is currently in a patent infringement battle with Yahoo, recently purchased 650 of the AOL patents from Microsoft for an estimated $550 million dollars. This recent acquisition comes just one month after Facebook purchased 750 patents from IBM. (more…)
Tech companies’ battles over patent portfolios have become the new norm in patent litigation. Yahoo sued Facebook over the alleged infringement of 10 patents, Oracle and Google are battling over operating system patents, Apple and Samsung have patent litigation in 10 countries simultaneously, and Microsoft just purchased 800 patents from AOL for over $1.1 billion dollars. We have previously reported on the growing use of patents as more than just defensive tools. But last week, Twitter announced it would not participate in such litigation.
Twitter’s Innovator’s Patent Agreement proposes that if a patent is assigned to Twitter, Twitter promises it won’t use that patent to sue anyone, except for defensive purposes or unless the engineers grant permission to the company to do so. According to Twitter’s announcement,
The IPA is a new way to do patent assignment that keeps control in the hands of engineers and designers. It is a commitment from Twitter to our employees that patents can only be used for defensive purposes. We will not use the patents from employees’ inventions in offensive litigation without their permission. What’s more, this control flows with the patents, so if we sold them to others, they could only use them as the inventor intended.
This is a significant departure from the current state of affairs in the industry. Typically, engineers and designers sign an agreement with their company that irrevocably gives that company any patents filed related to the employee’s work. The company then has control over the patents and can use them however they want, which may include selling them to others who can also use them however they want. With the IPA, employees can be assured that their patents will be used only as a shield rather than as a weapon.
Twitter’s proposed patent litigation model has received support as well as criticism. Supporters applaud Twitter for actively promoting creativity and innovation via its promise to not actively pursue legal recourse. Such a business model also reduces the amount of money spent by the company for litigation. Critics, including frequent PLI speaker Mark Radcliffe, on the other hand, question whether Twitter made a wise decision considering they could end up needing to pursue patent infringement litigation in the future. By granting technology engineers with the right to veto a legal action, Twitter would essentially be granting the power to make legal decisions to non-lawyers. Meanwhile Twitter’s plan gets implemented, the patent wars will rage on in courts all over the world. Time will tell what impact Twitter’s stance will have on patent litigation.
Licensing transactions are becoming more complex than ever. At PLI’s Advanced Licensing Agreements 2012 seminar last week, Joseph Yang, Founding Partner of PatentEsque Law Group, LLP and Co-chair of the seminar, lead the panel entitled, “Patent & Technology Licensing”. He discussed the most common mistakes that occur when licensing patents, and shared personal tips on how to avoid making the mistakes that could gravely cost you later.
Technology vs. Intellectual Property
Patent licensing and technology licensing are very different. A patent is a legal right to stop someone from utilizing technology covered by the patent. Often, when someone takes a patent license, they don’t even need your technology. So the motivation for taking a patent license is for the licensee to be able to utilize its own (infringing) technology without being sued. In contrast, when someone wants a technology license, it usually doesn’t have its own technology, and needs access to yours. Typically, the technology licensee doesn’t even care if you have a patent. Understanding these differences is key to structuring a license to cover what you mean to gives (but not more). When patents and technology are co-mingled in a contract without the intention to give away both, it could cause big problems. Tips: Be careful to define “Technology” and “Patents” separately in a contract, rather than commingling them.