Posts Tagged: "Ashley Keller"

Enforcement of patents through litigation occurs when licensing has failed to result in an arms length negotiated resolution. In other words, patent owners resort to litigation when there is a market failure… When Keller says that the value of a patent is inextricably tied to the value obtainable through litigation that is just an economic truism. If the patent has no value when enforced in litigation, whether because the subject matter of the innovation has become patent ineligible, or because of a bias that tends toward finding practically everything obvious, the patent has no enforcement value. These litigation realities spill over into the business dealings because a patent that has no enforcement value will have necessarily have no licensing value.

Asking whether the industry has gone too far to eradicate weak patents misses the point entirely, and to some extent will allow those who want the patent system to continue its march off the cliff to inappropriately claim the moral high ground. Regardless of how you prefer to characterize problem patents, whether it be as weak, bad, low quality, or invalid, no one wants those problematic patents to issue or be used to harass individuals or businesses as they sometimes have been used by bad actors. But that begs the real question. In an attempt to eradicate the system from those problematic patents have things gotten out of control and, thereby caused collateral damage in an indiscriminate way to all patents, including high quality, strong patents? To that question the answer must be a resounding yes!

Patents and the innovators who own them do not “cost” the U.S. economy tens of billions of dollars each year. This claim has been repeatedly and thoroughly debunked… But for a moment let’s buy into the fraud. If you actually do the math, which the Internet Association and infringer lobby obviously has never done, you will be amazed as how inconsequential even their grossly inflated estimates of cost are in terms of the scale of the overall U.S. tech economy… If the problems with patents are so awful because they create such a windfall for patent owners doesn’t that just admit that these companies are misleading their own shareholders and perhaps even not maximizing value?

Ashley Keller: “However, when you do infringe a patent, even if it was efficient for you to do so, the upshot should be you have to pay. You have to pay a reasonable royalty associated with that infringement so that the innovator who came up with the innovation can also be compensated for the research and development that they did to generate that innovation in the first place. So efficient infringement existence, in and of itself, is not the concern for me. The concern is it is now legally possible, I think in many circumstances, for someone to not only be an efficient infringer but also to get away with infringing and never paying and that is problematic from a societal perspective because it will dramatically reduce the returns to R&D and society will lose out on the advancement of technology that R&D inevitably produces.”

At exactly 11:42am on September 16, 2011, President Barak Obama signed the America Invents Act into law. As President Obama put his pen down he said: “All right guys, congratulations, the bill is signed.” It was at this precise moment that U.S. patent laws dramatically changed forever. With this in mind, over the next two weeks we will be examining the AIA in great detail in a special AIA 5th Anniversary series. I’ve invited a number of guests to comment, discuss and/or editorialize about the AIA. Below is a sneak peak of some of the contributions already received. As articles are published this preview article will be updated with links to the entire series.

Lenders and investors like Gerchen Keller and Fortress, among others, have provided capital to or are partnering with private and public NPEs. These business are well suited to assessing market conditions, especially value, and calculating risk for given rights in a specific industry. That they are still willing to fund activities and co-invest in this climate is a testament to the durability of good patents. Also, there is some expectation that we are at or near bottom, and that there are more opportunities now.

This year our panel has a diverse variety of wishes. We see the usual wishes relating to patent eligibility and the abstract idea exception, with a reference to a Moody Blue’s song to make the point. We also see wishes relating to inter partes review (IPR) and the biotech industry, and a wish for uniformity at the Federal Circuit. There is a wish for federal trade secret legislation to finally pass, and a reminder that elections matter, even for us in the intellectual property space, a topic that we will return to quite a lot during 2016 here at IPWatchdog.com. We also see several exasperated wishes, hoping for solutions to the real problems facing the industry rather than the same old tired cries for “reform” that would benefit only a handful of large entities while harming practically everyone else.

If patent owners do not have the financial resources to pursue infringers the patent becomes nothing more than a wall decoration – a very expensive wall decoration. And getting funding is more difficult than ever. According to Ashley Keller, Managing Director of Gerchen Keller Capital, speaking on the last panel of the day on Monday at the IP Dealmakers Forum in New York City, they are funding 1 out of ever 100 cases they review these days.

Ashley Keller: ”I am mildly bullish, because we’re coming from such a low point that it is likely to improve from here. We just talked about the Supreme Court and the willfulness case. I also think that Europe’s unitary patent system is going to be an eye-opener, because it has the potential to be better than our system’s status quo. Competition is a healthy force, and the new system will drive innovation over there. People are going to pay attention to that, and as a consequence, it may improve things over here.”

Ashley Keller: ”I think the market is challenging right now. I wouldn’t say it’s deteriorating—it’s more stable than it’s been—but I think it’s a challenging market. There has been a fair amount of court activity, with a lot of it potentially negative for patent monetization and patentees. In terms of things on the horizon, Congress seems to perhaps have decided not to pursue patent reform this year, but that is always something that’s looming large in the background. And some of the reform proposals had some decent ideas in them, but they were sandwiched between some ideas that were potentially going to weaken patent rights even further. So until that risk is decidedly off the table, I think the patentees have to be cognizant of it. All of that leads to a difficult environment for monetizing IP rights for the moment.”

Of course, if the debt provider is doing their job properly the valuation of the assets is to provide a safety net in the event of default. The fact that certain patents are currently under assault has to weigh into the valuation proposition, but the debt provider is not in the business of providing money to acquire patents. The debt provider would rather never have the assets revert to them. They want regular payments to service the debt. Thus, who you work with matters on at least one level. “The story matters a lot, and management is super important,” Zur explained. “One should look at the management because it is extremely important how the company itself, not the assets, are going to succeed.” If management is bad that increases the risk and debt providers have to act accordingly.