Patent Law Practice Center

A conversation about patent valuation and the market

Recently I had the opportunity to interview Efrat Kasznik (pictured left), who is President of Foresight Valuation Group. Kasznik specializes in performing valuations of intangible assets for financial reporting, tax compliance, transfer pricing, litigation damages and business liquidations. She is also starting to work with start-up companies at earlier stages in order to help them develop a strong IP portfolio and to prevent them from making mistakes that later cannot be fixed.

What follows are the highlights of my long form interview, which took place on Tuesday, December 23, 2014, and was published on IPWatchdog.com on January 7, 2015.

I spent some time discussing whether investors should seek patent protection or whether they should freely share their ideas, which is what some VCs actually recommend.

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The Demise of a High-Tech Economy

In a blog post from March 2014, Marian Underweiser, IBM’s Counsel for IP Law Strategy & Policy, wrote:

Computer implemented inventions, particularly in software, form the basis for innovation not only in the technology products we use every day, such as laptops and smartphones, but in everything from cars to surgical techniques to innovations that increase efficiency and production in factories. Strong and effective patent protection for these innovations in the U.S. has fostered a fertile environment for research and development and, as a result, the US is the undisputed leader in the software industry.

But will the U.S. be able to maintain its position as the leader in the software industry under a patent regime that seems openly hostile toward software innovators?

Unfortunately, many simply won’t believe what IBM says because, as one of the most innovative companies in the world, they are also the top patent filer ever year. IBM is a company that spends $6 billion annually, year after year, on research and development, so they have a bias. But the Government Accountability Office does not have a vested interest and, in a 2013 report, they concluded that between 50% and 60% of all patent applications filed seek protection for innovation related to software in one way or another. That means that at least half of all innovations could potentially be lost due to the Supreme Court’s failure to follow the enacted patent statutes and instead act as a super legislature that despises all things patent. The Alice decision will likely be viewed in years to come as a devastating decision for high-tech entrepreneurs and start-ups.

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Alice v. CLS Bank – A Sea Change for Software

Since the United States Supreme Court issued its decision in Alice v. CLS Bank, I have been arguing that the decision would have far reaching implications for software patents. Initially, many were skeptical, and surprisingly many still are, even with the Patent Office issuing Alice rejections like they are candy at Halloween, with the Federal Circuit invalidating software claims in case after case citing Alice, and with the PTAB likewise finding software patent claims of all types invalid. There is no doubt that things are different and a great many issued software patents and pending software applications will be worthless. Sure, moving forward, we have ideas about what needs to be in the disclosure, but you cannot add new matter to an application or issued patent, and software patents are now all about the technical disclosure.

Against this backdrop of disbelief and denial, I spoke with Professor Mark Lemley on August 28, 2014. Lemley shares my view, for the most part. I published our entire interview on IPWatchdog.com, The Ramifications of Alice: A Conversation with Mark Lemley. What follows are some of the highlights of our conversation.

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Software, Open Source and Programmers

On August 12, 2014, I spoke with computer expert Bob Zeidman (pictured left) on the record for an in-depth interview that published on IPWatchdog.com. The interview lasted approximately 1 hour and 15 minutes and was over 11,000 words in length. I think it was an excellent and intriguing discussion about the reality of software, both from a coding and market perspective. We also spoke at length about the Supreme Court’s decisions in Alice v. CLS Bank, Bilski v. Kappos, and Diamond v. Diehr. We also discussed what type of disclosure might be enough to satisfy both the Patent Office and the Supreme Court, which is increasingly becoming the arbiter of all things patent-eligible.

While a lengthy conversation like this would be of interest to those who work in the area, there were a number of intriguing points raised during our interview that I hope all patent practitioners would be interested in. For that reason, I offer here highlights of the interview. For the complete interview, please see A Conversation about Software and Patents.

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The Future Software Patent Application

In the wake of the Supreme Court decision in Alice v. CLS Bank, many in the patent community are starting to realize just how different things will be moving forward. Initially, some convinced themselves that nothing had really changed substantively, which was bolstered by the initial USPTO guidance. But quickly that bubble burst as the Patent Office started issuing supplemental office actions and even withdrawing notices of allowance, all to issue Alice rejections. So what will a software patent application look like that has allowable claims? That is a very good question.

U.S. Patent No. 8,515,829 (“the ‘829 patent”) may provide some answers. It is a patent issued to Google, which is titled Tax-free gifting. See Google Patents Tax-Free Gifting. Generally speaking, the invention relates to a system and related techniques for gifting, and paying for, digital content, including media, such as audio and video. The core of the invention, as suggested by the title, relates to giving someone something tax-free. The invention relates to a method that allows for the giver of the gift to pay for the tax imposed by the jurisdiction where the gift (i.e., gift card) is redeemed.

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