Earlier this week word came from the Intellectual Property Exchange International Inc. (IPXI) that the U.S. Department of Justice Antitrust Division issued its Business Review Letter (BRL) upon the culmination of its eight-month review. The DOJ believes that the IP Exchange business model proposed by IPXI is capable of producing market efficiencies in the patent licensing arena and is likely to be pro-innovation. Although no permission is required of the DOJ before IPXI opens its exchange, having this review of the DOJ Antitrust Division complete has to make IPXI and Exchange participants much more at ease as the move closer toward their attempt to revolutionize IP licensing.
But who is IPXI and what are they trying to accomplish?
IPXI is the first financial exchange that facilitates non-exclusive licensing and trading of intellectual property rights with market-based pricing and standardized terms. At its core is what IPXI calls a “Unit License Right” or ULR. According to IPXI, “ULR contracts transform private licensing of technology into consumable and tradable products, allowing for improved market transparency, smooth technology transfers, and increased efficiencies.” Indeed, Marshall Phelps, an IPXI Board Member who is widely known as a pioneer in the field of IP licensing, including implementing groundbreaking initiatives for both Microsoft and IBM, says: “the new model that IPXI offers is a major breakthrough in the way that IP will be licensed on a non-exclusive basis.”
As you may have noticed over the past several days, IPWatchdog.com has a new Super Sponsor — Article One Partners. Long time readers of IPWatchdog are likely familiar with Article One Partners, or AOP as they are sometimes called, because I have written about their endeavors on many occasions in the past. Until now, however, AOP has not been a sponsor. I have written a lot of positive things about them in the past because I think what they are doing is innovative and serves a real need within the industry, regardless of whether you are one looking for prior art to challenge a patent, or you are looking to see if there is prior art you need to know about to sure up patent rights prior to licensing or enforcement activities. We are happy to have them as a sponsor and this article is to introduce the AOP story to those who may not be intimately familiar with the company and its history.
In November of 2008, Article One Partners announced the launch of what they characterized as a new global community to legitimize the validity of patents. Community members, called Advisors, would have the opportunity to send in previously hard to find evidence that challenges the validity of high profile patents. It was believed that by tapping the knowledge of Advisors it would be possible to collect valuable publicly available prior art, particularly non-patent literature. I was initially quite skeptical of the plan, but on the heals of that initial article I was contacted by Cheryl Milone, who is the President and CEO of Article One. She asked if I would be willing to talk about the business model and learn more. I accepted Cheryl’s invitation and over the last nearly 4 years Cheryl has become one of the people in the industry I reach out to on a periodic basis to help me keep my finger on the pulse of everything patents and intellectual property.
The mobile app economy is estimated to have created nearly 466,000 jobs in the United States alone as of the beginning of 2012, up from zero jobs in 2007. See New ‘App Economy’ Creates Nearly 500,000 Jobs. Further, mobile app downloads are expected to hit 76.9 billion in 2014. This growing technology based industry, like so many other similar growing industries, is facing increased threat of patent infringement claims, which are hampering the process of bringing new mobile innovations to market.
In order to attempt to combat the use of dubious patents against mobile app developers, Article One Partners (AOP), the world’s largest patent research community, today announced the formation of a partnership with the Appsterdam Legal Foundation, a global trade organization for mobile software developers.
Typically I am not one to say that patent infringement lawsuits are responsible for stunning the growth of an industry, but with respect to mobile app developers there is something quite different than what we have witnessed in the past. Many mobile app developers are individuals or truly small businesses. When faced with threats of patent litigation or demands to pay licensing fees, many of these mobile app developers leave the market. Still more are simply not entering the marketplace out of fear.
Article One Partners(AOP), the world’s largest patent research community, earlier today announced that the company has achieved a significant milestone — more than $2 million dollars in financial incentives to its global research community. This milestone comes 11 months to the day from when Article One announced that they had reached the $1 million award milestone. The company has been in business since November 2008, which means the company took approximately 27 months to pay out its first million. There is no doubt that the brand of crowdsourcing for prior art patent research pioneered by AOP is gaining in popularity.
Back in November 2008 I was highly critical of the AOP model, writing that I just didn’t think it would work. At that time I wrote, in part: “While there is nothing wrong with paying to collect prior art references there is an extreme lack of incentive in the Article One business plan because the criteria for awarding the bounty are subjective and ambiguous. Furthermore, rather than paying a bounty the far better model is to hire competent researchers…” There will always be a place for hiring trained patent searchers, but the proof is in. I couldn’t have been more wrong about the AOP business model.
As you may have seen, IPWatchdog.com has been named to the ABA Blawg 100, which recognizes the top 100 blogs on the Internet written by lawyers for lawyers. This marks the third year in a row we have been honored by the American Bar Association Journal as a top 100 blog.
Now the voting begins. Last year we were voted the top IP Law blog and greatly appreciate the support we received. Once again this year we are in the same category — IP Law — as is Professor Dennis Crouch’s widely popular PatentlyO blog. If you are inclined to vote for us we would once again greatly appreciate your support.
Over the years IPWatchdog.com has continued to try and add additional perspectives from a wide variety of guest contributors, ranging from well respected practicing attorneys and agents to high profile academics to inventors and pro-patent lobbyists. It is hard to imagine providing such depth of analysis on such an array of topics without having truly wonderful guest authors. So we take this moment to say a very special thank you and to shine the spotlight on them. Each deserve to share in any recognition of IPWatchdog.com. While I am loathe to single any guests out I would be remiss if I didn’t separately thank both Beth Hutchens (10 contributions) and Eric Guttag (9 contributions)!
Without further ado, here are the guest contributors in alphabetical order, along with their contributions for 2011.
In the weeks since Google acquired Motorola Mobility and its 17,000 patents for $12.5 billion, the media has engaged in an orgy of hand-wringing over a supposedly “broken” patent system that diverts resources away from innovation and towards litigation instead.
Ignore the histrionics. What the Google-Motorola deal actually proves is that innovation — and its embodiment in intellectual property — is more valuable and necessary than ever for market success. What’s more, patents are no longer simply akin to mining claims that give one the exclusive right to pan for gold. In many cases, patents are the gold itself.
But first, let’s debunk some myths about our supposedly-“broken” patent system. The truth is that the number of patent infringement suits each year has held steady for seven years, at just under 3,000. Ninety percent of these suits are abandoned or settled, and of the 300 that remain, two thirds never go to trial but are adjudicated on pre-trial motion.
In November of 2008, Article One Partners announced the launch of what they characterized as a new global community to legitimize the validity of patents. Community members, called Advisors, would have the opportunity to send in previously hard to find evidence that challenges the validity of high profile patents. It was believed that by tapping the knowledge of Advisors it would be possible to collect valuable publicly available prior art, particularly non-patent literature. I was initially quite skeptical of the plan, but it is hard to argue with results. On Monday, March 7, 2011, Article One Partners announced that it had surpassed the $1 Million milestone and has now distributed over $1 million in reward money to Advisors.
Former Head of Patents at Microsoft and IBM, Marshall Phelps, Appointed to Article One Partners Board of Directors
New York — February 1, 2010 — Article One Partners, the world’s largest patent validation firm, today announced the appointment of Marshall Phelps to its Board of Directors. The Director position with Article One is Phelps’ first board involvement within the IP industry since he left Microsoft last year.
Mr. Phelps has had an extraordinary career and is a prominent leader in the patent industry. He oversaw Intellectual Property and Licensing at IBM for 28 years. Chairman Bill Gates then recruited Phelps – the legendary “godfather” of intellectual property who had turned IBM’s modest IP Portfolio into a $2 billion per year revenue stream – to work his magic for Microsoft. In his role as Corporate Vice-President of IP Policy and Strategy at Microsoft, Phelps was responsible for setting the global Intellectual Property Strategies and Policies for the firm. Phelps has also served as the Microsoft Deputy General Counsel for Intellectual Property for the Legal & Corporate Affairs group, where he supervised Microsoft’s intellectual property groups and oversaw the company’s IP portfolio management (comprising well over 60,000 patents and patent applications worldwide).