By Russell Binns
When I speak at conferences, I am often asked by companies of all shapes and sizes how they should approach protecting their intellectual property. I am always pleased to get this question because I believe that safeguarding IP is critical to companies whose success is closely tied to their ability to develop and deliver innovative technology. My answer always depends on the type of company asking the question, but one of the consistent themes I like to emphasize is that regardless of the company, when designing an IP strategy, is to push the boundaries, something Google Inc. refers to as crashing the plane.
Since I don’t have my pilot’s license, what do I mean by crashing the plane, and why do I think it’s a great analogy for devising a successful IP strategy?
Google long ago recognized that innovation comes through exploration and an appetite for risk, which is in part why Google’s ability to innovate has become legendary. In fact, the company's lab group, Google X, is a think tank for innovation where employees were invited to pursue their ideas – to come and “build their airplane” – but only if they adhere to the credo that they have to crash the plane at least three times. In other words, Google believes that you had to push boundaries in order to understand the full scope and limits of an idea. It’s a mentality that has permeated throughout the organization. If you don’t crash the plane, you won’t know how far it can go and how much can be accomplished.
There’s a lesson here for the world that I live in every day – as CEO of a not-for-profit consortium for some of the world’s leading tech companies. In my job, I see first-hand how companies try to navigate the IP landscape, particularly with respect to the secondary patent market which poses a number of challenges to operating companies.
For example, NPEs often offer to buy patents before they are for sale, preventing operating companies access to patents they may want or need. There is also a mountain of junk patents clouding the market, making it incredibly difficult for operating companies from the small to even the most well resourced to comb through the junk to find and evaluate patents worth buying.
The cause of the malady is rather easy to diagnose – many companies are too focused on filing many patents regardless of quality, rather than on spending more on filing fewer patents that are drafted with more clarity and a better defined scope. These are often the source of the bulk of frivolous litigation, and they make it harder to determine the scope of the patents and their validity, which makes them difficult to value, license, and transact.
In addition, the all too frequent strategy of some NPEs is to assert many assets against a company regardless of the likelihood of success using a see-what-sticks strategy that can often burden the resources of an operating company. All told, all of these trends create a backlog of frivolous patent litigation and assertions that clog the courts and prevent the patent marketplace from working efficiently.
For many of the same reasons, sellers are also negatively affected by this unnecessary litigation. Sellers often end up losing out on returns from their assets through contingency arrangements, unnecessary litigation, wasted enforcement efforts, and the lost time associated with waiting for a return or while their patents are sitting on a shelf, adding doubts – particularly among smaller patent owners – that the patent marketplace can still operate fairly and effectively for everyone.
There are many solutions out there to help make the patent markets operate more efficiently and that help companies manage and protect their IP because their IP needs are complex and diverse – but one solution won’t solve everyone’s problems. The unfortunate fact is that despite these different solutions, patent risk will always be present and the patent marketplace will always remain imperfect.
So how can we design better IP solutions that give companies effective solutions that protect their IP and lead to a more efficient marketplace? The answer is that we need to adopt a “crashing the plane” mentality to innovate new solutions that may work better.
Here too, Google has led by example. In May 2015, Google launched its Patent Purchase Program. This was an experimental program whereby Google sought to remove the friction associated with patent transactions by shortening the response time to sellers; creating a simplified, streamlined purchase process and eliminating the used car-salesman like haggling often associated with patent sales. The program was an overwhelming success. It resulted in a 4x submission response rate over the expected rate; a simplified decision-making process led to an overall high quality of patents submitted and purchased.
Just this past May, AST took its own shot at crashing the plane to see if we could innovate our way to a new and better approach to patent transactions. On May 25 we launched the Industry Patent Purchase Program, IP3. Inspired by Google’s program, IP3 was created to attract the submission of high quality patents from patent owners across a wide array of industries during a limited time period. Only this time, we took on the complexity of combining the resources of 21 companies looking to purchase patents, including some of the world’s largest companies such as Google, Facebook, IBM, Microsoft, Adobe, SAP, Ford, Honda, Verizon, Cisco, Arris, and many other multinational companies.
As I write this, we’re still analyzing the results of IP3, but I can say that the interest we saw from patent sellers was consistent and encouraging, and I hope to have more to report about the program in the coming weeks. But in the bigger scheme I believe that the significance of programs like IP3 and Google’s Patent Purchase Program goes far beyond the data, as they are emblematic of the kind of innovative thinking that I believe will be critical to helping our patent markets operate more effectively for operating companies and patent sellers alike. By coming together to find new ways to crash the plane, we can innovate our way to more effective patent solutions for the industry.
--Russell Binns is the CEO and general counsel of Allied Security Trust, a defensive patent aggregator based in Princeton, N.J. He can be reached at firstname.lastname@example.org