3 Observations From The Managing IP Patent Forum

Companies and IP lawyers today require a level of flexibility and adaptability if they hope to succeed.

Earlier this month, I had the opportunity to attend three patent-focused conferences in the span of a week. The first was held in Midtown Manhattan, and was organized by the well-known publication Managing IP. Geared towards in-house counsel, the conference featured discussion on a wide range of both perennial and hot-button topics in the patent space. For the purposes of this column, I want to focus on three points of discussion that I found particularly informative. Over the next few weeks, I hope to do similar columns on the other two conferences I attended. When concluded, I hope this series of columns will provide readers a sense of what is being discussed in the patent world right now, and how different perspectives on important issues are being communicated to different audiences.

From a macro sense, it is worthwhile to consider that across all three conferences, the consensus feeling regarding patent values was that they have been adversely impacted by IPRs, and in certain industries, Alice. Whether a particular speaker or audience member agreed that this was a positive change is immaterial for our purposes. What is important is that everyone agreed that this is a challenging time for patent owners, and conversely a favorable time for erstwhile infringers — especially if they have the resources to mount a strong defense to any lawsuits brought against them. Nothing shocking here, but further confirmation of what should already be widely understood. With that in mind, here are some thoughts about what I heard at the Patent Forum.

First, the discussion regarding IP due diligence was an interesting one from a number of angles. On the one hand there was an admission that IP due diligence in the context of a corporate transaction hasn’t changed much from a patent perspective, even though patent values have surely changed. Yes, there may be a cursory analysis done to see if an entire portfolio is infected with the Alice virus throughout its bloodstream.  But otherwise, it’s business as usual, and doing deep dives to determine IPR susceptibility of key patents within a certain portfolio remains a rarity in the context of standard IP due diligence. Instead, the usual due diligence sticking points such as determining ownership and clear title continue to command attention, particularly when inventions originated in universities or via collaborative efforts between a plurality of entities.

On the other hand, it was interesting to hear that in an environment of lower assumed patent values, some companies are choosing to re-dedicate their attention to shoring up other aspects of their IP portfolios. In particular, one panelist from a major multi-national company indicated that their company has a renewed focus on seeking copyright protection where appropriate. It makes sense that when patents are worth less, there is more mindspace (and potentially room in the in-house legal budget) available for considering how to buttress their copyright and trademark protection.

Second, there was a valuable consensus regarding early settlement presented by panelists from both larger and smaller technology companies. Particularly in terms of dealing with licensing requests or lawsuits initiated by competitors or non-practicing entities. For companies in the software space, regardless of size, the message was clearly expressed that due to the existence of IPRs and the chance for an early dismissal on Alice grounds, that cost of litigation was no longer a justifiable basis for early settlement. Even nuisance value settlements were talked of disparagingly, as leading to potential future costs if it becomes clear that a company is an easy mark for early settlement of an infringement claim. Since I remember the days when six-figure settlements were the norm in software cases — for patents of dubious provenance and value — based solely on avoiding litigation cost, to hear how much things have changed communicated this starkly was compelling. In short, a patent owner targeting technology companies must run a difficult early gauntlet if it hopes to secure an early settlement. Otherwise, it must be prepared to hunker down for a protracted battle, regardless of the size of the target. Here again, what was discussed clearly matches what everyone is seeing in the marketplace. At the same time, hearing the death of cost of litigation settlements pronounced so forcefully had an impact.

Third, it was interesting to see that patent conferences are not immune from serious discussion relevant to the ongoing broader drug price debate. In particular, the role of IPRs as a potential tool for challenging questionable drug patents continues to receive attention. Considering how important patent-related maneuvers are to branded pharmaceutical companies hoping to continue enjoying monopoly pricing, it is not surprising that patent-related countermeasures are being discussed. What is surprising, however, is that a consensus among generic pharmaceutical companies as to how best to employ IPRs has apparently not yet emerged — primarily due to a misalignment of incentives under the existing Hatch-Waxman regime.

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It may be a radical thought that was discussed, but there was some suggestion that the way to encourage more IPR filings by generic companies would be to modify the Hatch-Waxman exclusivity rules for generic challengers. While that action could depress generic manufacturer profits (on top of the branded pharma profits that would surely suffer from successful IPR challenges), the benefits to purchasers could be immense. I am sure the various lobbyists are well-prepared to shut down ideas of this type as ridiculous and dangerous. Which is precisely why they should be explored.

Ultimately, attending the Patent Forum was time well-spent, and confirmed that robust discussion continues with respect to the role of patent rights in this country at this moment in time. As with any changing environment, the clear message was that companies — and for that matter, IP lawyers — today require a level of flexibility and adaptability if they hope to succeed. It may seem obvious, but when times are uncertain, nothing really is.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.


Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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