What Should a CEO Know About Patents?

Last week I gave an interview to Mark McCarty at Medical Device Daily, which published on Monday, August 17, 2009.  We had a good conversation for almost two hours about all kinds of patent topics.  Sometimes when you talk to reporters you never really know whether they are following what you are saying, whether they will wait for that one pithy quote that you wish you could dial back as soon as it leaves your mouth, or whether you are going to spend a ton of time talking to them only to get little or no mention at all in the article.  I have had my share of ups and downs with reporters, and recently even spent multiple days helping a reporter who was doing a series of hard-hitting investigative articles on the state of the patent system, only to never get mentioned in any of the articles.  So you never know what will happen, but I always try and play it straight and make myself available whenever possible.  Being a writer myself, I know the importance of a deadline, so I am always willing to comply.  In any event, during my conversations with McCarty he asked me a question that no one had ever asked me before, but one that I have given a lot of thought about over the years.  He asked the simple question: “What should a CEO know about patents and patent law?”  I almost had to pinch myself.

The interview ranged from the claims and continuations rules, David Kappos being appointed Director of the PTO, Supreme Court patent jurisprudence and what I thought Congress should do in terms of no-brainer patent legislation.  Much of the interview was focused on how patents and patent law impacts business decisions, and then the bomb dropped.  No one has ever asked me what a CEO should know about patents, but it is such a simple, straight forward and yet insightful question.  Executives that have decision making capacity within an organization almost universally have little or no familiarity with patent practice, patent law and the maze of decisions, pitfalls and opportunities that permeate the sometimes bizarro world that patent attorneys operate in.  Having at least some knowledge, even just enough knowledge to ask the right questions, would pay enormous dividends.

My answer to McCarty was:

The best thing a CEO could do is take a five-day intensive course on patent law and patent prosecution and learn what goes on.  This would allow CEOs to ask the right questions.”

McCarty then asked a couple questions that didn’t get printed, regarding where would someone find such a course.  My answer, of course, was that I teach just such a course for aspiring patent attorneys who need to take the patent bar exam, and the course could be modified in order to focus on business aspects, litigation management and strategic portfolio development, instead of focusing on how to pass the 100 question multiple choice patent bar exam. McCarty then asked how much such a course would cost, and I explained that it would likely be in the vicinity of $2,000 to $3,000, and at that price “I guarantee that every CEO would get that money back in the first month, maybe the first week.”

Ever since I was working on my LL.M. thesis regarding patent litigation and the use of alternative dispute resolution, back in 1997-1998 while at Franklin Pierce Law Center, I have marveled at how little most decision makers know about patent law.  If decision makers knew basic patent law concepts, understood how a patent application proceeds through the Patent Office, why you are 100% guaranteed to get all claims rejected on the first action on the merits, why old claim strategies do not force the patent examiners to provide any useful information prior to a Final Rejection, and why one would want to get at least one quick patent on a commercially relevant invention and then circle back for more later, they would be able to make strategic decisions better, and know when their managers, inventors and attorneys are not giving them the straight scoop.  The truth is the CEOs, CFOs, CTOs and General Counsel are typically very good at making decisions when they have the relevant facts, but how often do they have the relevant facts when making decisions regarding patents and innovation?  Probably never.

Patent attorneys tend to be extraordinarily good at telling clients and inventors whether they can get a patent, but then simply cannot talk about business and what to do with a patent.  This is not a slight at patent attorneys.  I really cannot say I know any bad patent attorneys, nor do I know any patent attorneys who are not highly intelligent.  For the most part business is not something that is in their wheelhouse, and that is fine.  Anyone who knows me knows chemistry is not something in my wheelhouse, having screwed up the formula for water during one patent bar presentation years ago.  It was so memorable I have worked it into my presentation every time since, making Markush groups exceptionally memorable I think. But I digress.  The point is if you are a decision maker and you want the best patent attorney working for you then you better be ready to make the business decisions.  You wouldn’t want an eye doctor doing brain surgery, and you wouldn’t want a brain surgeon going laser eye surgery.  Everyone has a role, and the business and strategy role has to be in the hands of the business people.

I have talked with many clients and prospective clients over the years, and some of my best work and best clients have come to me after leaving other patent attorneys.  This is not necessarily because I am better, more knowledgeable or more talented.  I suspect it is because I have spent the last 12+ years teaching highly motivated, highly intelligent law students, engineers and scientists in a variety of law schools, and for the PLI patent bar review course.  I actually read my reviews, I talk with others about what works and what doesn’t work, and I constantly look for ways to explain complicated concepts to educated, intelligent people in a way that they can understand, but also in a way that doesn’t talk down to them.  I am not perfect, but if practice makes perfect my goal is to eventually be perfect and that requires me to constantly search out new ways to convey large amounts of dense information in small segments.  I think for the most part I succeed at that very well, even if I say so myself.

Just yesterday a friend of mine from law school was e-mailing me, and said that he gave my name to a law student so she could get a different perspective on things.  He also acknowledged that I followed a “non-traditional path.”  Boy was he being generous!  Talk about the road less traveled?!?  I have been a law professor,  a VP and General Counsel of a Record Label, serial entrepreneur, day-trader (not for long though), author (yes I get paid) and a patent attorney.  Before I was a patent attorney I did general litigation for about 4 years, making me the only patent attorney I know who was a PI attorney for a time before falling back on patent law and my electrical and computer engineering degree now 11 years ago.  This road less traveled has made all the difference for me, and it has shown me the importance of knowing what I know, knowing what I don’t know and focusing on what I do know and getting help with what I don’t know.

In any event, thanks to Mark McCarty for his wonderful interview, and for this question.  And, if there are any CEOs out there that want to learn patent law basics with an eye toward gaining a competitive advantage and making better decisions, give me a call!

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6 comments so far.

  • [Avatar for Gene Quinn]
    Gene Quinn
    August 25, 2009 12:05 pm

    Katie-

    I agree that CEOs should take our patent bar review course, but how does one convince them that they should? They would easily get their investment back and make better decisions.

    -Gene

  • [Avatar for Katie]
    Katie
    August 25, 2009 10:44 am

    A patent bar review course would be helpful for CEOs to learn the basics and to know when they should have patent counsel involved.

  • [Avatar for Gene Quinn]
    Gene Quinn
    August 19, 2009 06:44 pm

    Paul-

    Amen! One of the real gems from my thesis research was along this topic. There is no great surprise why small and mid-size corporations engage in high stakes patent litigation death matches and why corporations in mature industries as a rule use patent litigation as a way of creating leverage. I think it is about time that I write more about this.

    -Gene

  • [Avatar for Paul F. Morgan]
    Paul F. Morgan
    August 19, 2009 05:16 pm

    The most surprising thing that CEO’s do not seem to know about patents is really just a matter of common sense. Few would consider costly major surgery without getting a second opinion from a medical expert in that field, not just the doctor who is going to get paid for the surgery. [Their insurance companies would probably not even allow that.] Yet CEO’s all to often approve proceeding with patent litigation solely on the advice of the trial attorneys who are positioned to make millions in legal fees therefrom, win or lose, or their own in-house attorneys. For several thousand dollars they could get an independent second opinion on the proposed patent litigation from a competent patent litigation firm that is told in advance that it will not be trial counsel.

  • [Avatar for Gene Quinn]
    Gene Quinn
    August 19, 2009 12:29 pm

    Ron-

    Thanks.

    By the way, I remembered the formula, I just had it with 2 Os and 1 H. Now that would be an invention!

    -Gene

  • [Avatar for Ron Reardon]
    Ron Reardon
    August 19, 2009 11:49 am

    Gene,

    This article should be required reading by all CEO’s! Send it in to all the magazines that they read.

    Also, go the blackboard and write 1,000 times: The formula for water is H2O. 🙂

    Ron