Companies in technology sectors, especially social media companies, have seen some incredible investment through recent initial public offerings (IPOs) of corporate stock. Multi-billion dollar valuations for companies like Facebook, Twitter and more gave investors some excitement, but questions about sustainability, revenue generation and user growth has caused stock prices to dip in recent months.
Many of these companies have valuations that seem to fly in the face of their business models, which harkens back to the days of “irrational exuberance” of the “dot com” era. Still, social media companies can enjoy billions of users, but many of them use their services for free and generate negligible ad revenue for the company providing the platform. Will social media evolve into a money-making proposition or will these companies falter? Time will tell, as it tells with all things.
Against this backdrop and with the full knowledge that higher levels of investment almost universally require significant intellectual property holdings, we thought we’d take some time to look at the current state of the social media industry, including revenue and innovations. To accomplish this task we will also take a closer look at some recent inventions patented by major companies in this field.
As the dust settles after the storm caused by the conversion of the United States patent system from a first-to-invent system to a “modified” first-to-file system through implementation of the America Invents Act (AIA) on March 16, 2013, it is essential that companies and inventors avoid inadvertent disclosures of the company’s or inventor’s inventions on social media networks and the company’s website.
Social media websites such as Facebook, LinkedIn and Twitter, have changed the manner that businesses communicate and market their products and innovations. Although these tools may be beneficial by creating market “buzz” for new products through rapid information sharing, they may also be detrimental to a company’s patenting practices for the same reason. If disclosures of up and coming products are made on social media websites without the company first filing for patent protection, and the disclosures are then copied by a second party who then files an application based on the company’s social media disclosures, before the company does, then the first-to-file law could bar the company from patenting the invention, whereas the second party could then obtain patent rights to the invention disclosed on the social media site.
Lexington Technology Group (LTG), an intellectual property management firm, announced on Monday that its wholly owned subsidiary, Bascom Research, filed a patent infringement lawsuit against Salesforce.com in the Northern District of California.
Bascom Research is a software development company focused on building solutions for the management of complex and distributed data in healthcare and other fields. The company owns patents that relate to social networking and aspects of enterprise networking. In 2012, Bascom Research brought claims for patent infringement against five defendants. To date, Bascom Research has entered into a settlement agreements with two of the five original defendants in the litigation for effective royalty rates of 4% and 5% of infringing use. In addition to the newly-filed case against Salesforce.com, Bascom remains in litigation with Facebook, Inc., LinkedIn Corp, and Novell Corp in the Northern District of California. A Markman hearing for the cases against Facebook, Inc., LinkedIn Corp, and Novell Corp is scheduled to be heard on October 2nd, 2013.
The patents Bascom alleges that Salesforce.com infringes are: (1) U.S. Patent No. 7,111,232 (“the ‘232 Patent”), entitled Method and system for making document objects available to users of a network; (2) U.S. Patent No. 7,139,974 (“the ‘974 Patent”), entitled Framework For Managing Document Objects Stored On A Network; and (3) U.S. Patent No. 7,158,971 (“the ‘971 Patent”), entitled Method For Searching Document Objects On A Network.
The month of January started off quite busy, which in all likelihood was as the result of deals and announcements either held over or that simply couldn’t get done in the run up to closing out the year. There was a noticeable lull in news and announcements with respect to patent deals, settlements and litigation announcements, and then things picked up a bit toward the end of the month.
This month some of the highlights included (1) an exclusive option to license drugs targeting Parkinson’s disease; (2) potential patent problems on the horizon for Facebook; (3) additional settlements in the Forest Laboratory’s BYSTOLIC® patent litigation; (4) the inevitable news from Acacia Research; plus more.
Single Touch Systems Inc., a technology based mobile media solutions provider that enables businesses, advertisers and brands to connect with customers, by and through its wholly owned subsidiary, Single Touch Interactive R&D IP, Inc., issued a “Letter of Notification” to Facebook, Inc. (NASDAQ: FB). The purpose of the letter was to inform Facebook of several Single Touch’s issued U.S. patents directed to streaming and routing media. The patents include U.S. Patent Nos. 7,054,949, 7,191,244, 7,689,706 and 8,015,307, but also mention U.S. Patent Publication 2004/0025186.
The letter was sent on behalf of Single Touch by attorneys Polsinelli Shughart, P.C. The letter seems to obviously be a first salvo in what could become another patent problem for Facebook. While some may want to speculate that this is nothing more than an attempt at licensing, I find that difficult to believe. Why would Single Touch issue a press release if they were simply seeking to open the line of communication over the acquisition of the patents or the granting of a license?
Although rather muted in tone, the letter is easily recognized by those in the industry as either an attempt to open licensing negotiations, or a subtle warning that patent infringement litigation is right around the corner.
Whether you are just getting your feet wet in the wild world of inventions and patents, or you already have your business up and running, social media can help expand your business. Everywhere you look, there are Facebook “Like” buttons, LinkedIn “Share” buttons and Twitter “Tweet” buttons. Even Google has entered the social sharing game with Google+ allowing you to “+1” content. Social media can help catapult your business into overdrive – if you know how to use it effectively.
Here are some tips to using social media to expand business.
1. Choose which social platforms you want to use
There are many social networks out there – Facebook, Twitter, LinkedIn, Google+, Pinterest, the list seems to be constantly growing. You want to channel your hard work into a select amount of platforms, and make sure that they are the right ones for your business. But with so many choices, how can you be sure which is right for you? Well that depends on what your goal is. Twitter is very up-to-the-minute, a place that provides short blurbs about news, insights and just about anything else. Facebook will allow you to post pictures, talk about events and what’s new with your business. LinkedIn caters to the professional crowd and will allow you to highlight your business credentials, but there is a social side to it that is beneficial for businesses.
Mark Zuckerberg, founder and CEO of Facebook, circa 2005.
One week ago Mark Zuckerberg, the famed founder of Facebook.com, received U.S. Patent No. 8,225,376titled “Dynamically generating a privacy summary.” The patent relates to a system and method that automatically generates a privacy summary. In the method according to one particular implementation of the invention, a profile for a user is generated, one or more privacy setting selections are received from the user, and the profile associated with the user is updated to incorporate the privacy setting selections. A privacy summary is then generated for the profile based on the privacy setting selections.
Although this is not the first patent awarded to Zuckerberg, who now has 10 issued U.S. patents, this patent is noteworthy because it relates to the the first patent application filed by Zuckerberg, which was filed almost six years ago, on July 25, 2006. According to the Issue Notification, the patent is entitled to Patent Term Adjustment of 1258 days.
Many were still enjoying a long summer weekend last Friday thanks to the 4th of July coming smack in the middle of the week. Yahoo! (NASDAQ:YHOO) and Facebook (NASDAQ:FB), on the other hand, were closing a deal to form a strategic alliance that would end their patent battle. Indeed, Yahoo and Facebook announced that they entered into definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements, and settle all pending patent claims between the companies.
Under the agreements, which include a patent portfolio cross-license, the parties will work together to bring consumers and advertisers premium media experiences promoted and distributed across both Yahoo! and Facebook. Yahoo! and Facebook will also work together to bring Yahoo!’s large media event coverage to Facebook users by collaborating on social integrations on the Yahoo! site.
While I don’t know the specifics of the deal reached or the terms of the patent cross-licenses, I can still say that this represents a brilliant deal for both companies. It also likely signals that the Internet space is starting to leave its adolescence behind and is entering the beginnings of a mature marketplace.
Creativity and invention are highly valued within the United States as reflected by patent laws dating back to 1790, with mention of intellectual property even included in the U.S. Constitution. Protecting these ideals was seen as key to promoting an innovative spirit within American society and encouraging the creation of new products. Ultimately, a steady influx of new products and services translates into a healthy economic market as consumers reap the benefits of innovation.
With the advent and rise of the Internet, digital property rights have become an increasingly hot-topic in the Board rooms and Executive Offices of major companies, particularly those in the hi-tech industry. Much like the information protected under intellectual property rights, digital products provide their creators with certain protections under the law. The problems and legal challenges facing major companies like Yahoo and Facebook will help better define the laws surrounding digital property rights, and likely present opportunities as well as a whole host of new legal questions.
In my first article, I posed the question whether the “Smart Phone Patent Wars” were giving IP rights – and more specifically, patents – a bad rap? My conclusion was an unfortunate “yes,” with the villains being a handful of companies that willingly contributed patented technologies to various standard setting organizations (SSOs), encouraged their use in a host of consumer electronics, and years later charge the very producers they encouraged to implement these standards with patent infringement. In my second article, I examined the so-called “Fair, Reasonable and Non-Discriminatory” (FRAND) licensing terms that SSOs require of their participants and concluded the phrase has no clear, widely-accepted definition or standards for determining compliance. In my thirdarticle, I examined the patent policies of four major SSOs and concluded that none offered any clear guidance on what constitutes a FRAND license leading to unnecessary and counterproductive litigation. In this article – the fourth in a six-part series – I now make a few observations among the flurry of activity as to the market effects of these patent wars.
First, I recently read a blog entry by Mark Cuban – published on the Web’s currently top-ranked blog, the Huffington Post – where he states:
I hate patent laws. I think 99 percent of the time they are anti-competitive, corruptive, impede creativity and innovation … I think the ratio of patent law doing a good job protecting company IP vs it being used purely to negatively impact competitors or to troll for un-earned revenue is probably 1000 to 1, or worse.
Commenting on the Yahoo! Inc. patent infringement lawsuit filed against Facebook in March of 2012, Mr. Cuban concludes his post by stating: “I hope Yahoo[!] is awarded $50 billion dollars. It is the only way that consumers will realize what is at stake with patent law as is. Then maybe we can get it right and further innovation and competition in this country.” These statements are from a very influential technology entrepreneur, investor and generally-recognized American business guru. Thus, it would seem that the continuous negative headlines from the smart phone patent wars are definitely giving patents a bad rap!