Robert Litan is an extraordinarily accomplished lawyer, economist and author. Indeed, through his research and writings he has become a nationally recognized expert in the field of economics. Along with co-author Hal Singer, Litan recently published a study that concluded that modestly increasing the number of patents under license could generate social benefits ranging between $100 and $200 billion per year. See $200 Billion Could Be Added to Economic Output Annually by Unlocking Patents. I caught up with Litan for an interview on December 1, 2014, and published part 1 of our conversation yesterday.
What follows is the final segment of my conversation with Litan, in which we discuss the importance unlocking the patents that are not being monetized. We specifically discuss Jay Walker’s brainchild — dubbed the Patent Utility — and what it could mean for the U.S. economy and innovation more generally.
QUINN: I think that what you said there is definitely a fair point. As you were saying it I recall an interview I did with Manny Schechter, who is Chief Patent Counsel at IBM. I asked him at one point in time about how they constantly stay in front of everybody else with respect to a true commitment to research and development? I asked him if they ever look at what others do and wonder why they haven’t figured it out? And his answer to me was basically — why we would look at what anybody else does, we’re confident in what we’re doing, our management is in tune with our overall IP strategy and objectives, and we just do our own thing, do our research and development on our own. So IBM doesn’t spend time considering the competition.
The passage of the America Invents Act (AIA) in 2011 was touted as an important moment for modernizing patent laws and making it easier for innovators to innovate. Of course, nothing could have been further from the truth. The AIA further weakened patent rights, which is exactly what the large tech companies wanted. Far more is prior art under the AIA than under the previous regime, the grace period that remains is so infinitesimally narrow that it would be malpractice to suggest the AIA ushered in anything other than an absolute novelty system, there are a trio of new post grant procedures aimed at making it easier to strip patent rights away from owners, and several categories of invention were explicitly made unpatentable. The AIA was hardly the panacea that it was sold to be.
But legislative changes to the patent system are not the most significant blows suffered by the innovators who require strong patents in order to obtain financing and have any kind of chance against the large corporations that would love nothing more than to take their inventions without remuneration. The Courts are where the most dramatic changes to patent law have come, starting back at least as early as 2005 when the Supreme Court rendered its decision in eBay v. MercExchange. That ill-considered decision turned a patent, which had been an exclusive right, into some kind of a ghostly remnant of its former self. Thanks the eBay it has been extremely difficult, if not impossible, to obtain an injunction even after proving infringement and withstanding all invalidity challenges. The irony is that strong patents that have been infringed are really no longer capable of supporting exclusive rights. See The Impact of eBay v. MercExchange. What good is a patent without an injunction against an infringer?
WALKER: Let me give you an example, Gene, that would be simple. I would like to be the nonexclusive agent for your blog in South America. All right? I think I can get people in South America to pay to read your blog. Because how it works in South America they pay to read blogs. I don’t know how much I’m gonna generate for you, Gene, but you can revoke it at any time. I won’t license to any of the major television networks, publishers, et cetera, I’ll only license to small people. And 85% of any money I collect in South America for the blog licenses that I generate for you I’m going to give you. Would you be willing to list your blog with me to try to generate revenue for you in South America?
QUINN: Yeah, I mean that’s a no brainer.
WALKER: There you go. It’s no different. Exactly the same. It’s a no brainer. Listing with us is a no brainer. The only reason you wouldn’t list with us if you didn’t want to have a nonexclusive agent. If you only wanted to license on an exclusive basis.
On Monday, May 12, 2014, Patent Properties, Inc. (OTCQB: PPRO), the brainchild of Priceline.com founder Jay Walker, announced the appointment of Robert Stoll, former Commissioner for Patents at the United States Patent and Trademark Office, to Chair the Patent Properties Advisory Board. Joining Stoll on the Board will be Mona Sutphen, former White House Deputy Chief of Staff for Policy for President Obama; Vinit Nijhawan, Managing Director, Office of Technology Development and Lecturer in the Entrepreneurship Programs Office at Boston University; Louis Foreman, CEO & Founder of Edison Nation; and Stephen Merrill, former Executive Director of the National Academies’ Program on Science, Technology, and Economic Policy.
The purpose of the Board is to advise Patent Properties’ senior leadership on business, policy, regulatory, and legal issues related to the development, launch, and growth. Board members will serve in an advisory capacity without operational or decision-making responsibilities.
Earlier this month GlobalOptions Group, Inc. (“GlobalOptions”) (OTCBB:GLOI) and Walker Digital Holdings, LLC, a wholly-owned subsidiary of Walker Digital, LLC (“Walker Digital”), announced that they completed the previously announced merger of the two companies. The newly formed entity consists of the patent portfolio created by Walker Digital, the research and development lab led by renowned inventor, entrepreneur and Priceline (NASDAQ:PCLN) founder Jay Walker. Walker, who is named on more than 450 issued and pending U.S. and international patents, is one of the most prolific individual living inventors.
The merged company will seek a corporate name change to Patent Properties, Inc. as expeditiously as possible. All of the patents owned by Patent Properties, Inc. were developed internally by Walker Digital, with Jay Walker as a named inventor on all issued patents and the lead inventor on most of the patents in the portfolio. Currently the Company’s patent portfolio includes 377 granted patents and 94 pending patent applications.
Prior to the merger, GlobalOptions Group provided risk mitigation and management services, including forensic DNA analysis, proprietary DNA collection products, and related research services to law enforcement agencies, federal and state governments, crime laboratories and disaster management organizations. Thus, this merger seems in some ways to be a backdoor way for Walker Digital to obtain a ticker symbol for trading purposes.