Proactive and Pragmatic Strategies Against NPEs

By Michael D. Kaminski and Vid S. Mohan-Ram, Foley & Lardner LLP

This article is part of our Spring 2010 edition of Legal News: China Quarterly Newsletter, Eye on China.

Non-practicing entities (NPEs) — entities that do not practice the technology in their patents but aggressively assert their patent rights against others — can create disruptions to companies that seek to utilize inventions to enhance competitive advantage for their goods and services. By forcing a company to come to a negotiation table or to courts, NPEs can not only accelerate depreciation of the value of the company’s IP assets, but they also can squeeze profits out of the company’s businesses.

The following are several options for monitoring the IP landscape and determining which risks are distant, which are more immediate, and what technologies are being heavily litigated and by whom.

Search Strategies

1. Create Alerts: A proactive way to stay abreast of developments by NPEs is to create keyword-specific Internet searches that run automatically at a defined time and that deliver reports to your e-mail inbox when the keyword appears in a news item. One such (free) service is Google Alerts (http://www.google.com//alerts). To use this service, simply input any search term such as an NPE’s name or a technological keyword, select a database, and specify how often you would like to run the search (e.g., daily, weekly, or as-it-happens). A separate and independent Google Patent Search service also is available at http://www.google.com/advanced_patent_search, but it is not a database that Google uses for its alert service, which currently includes searches of news and Web sites, blogs, videos, and Google Groups.
2. Search the USPTO Generally: You can monitor issued patents and published patent applications within a relevant technology area, and compare them to the company’s current products and those in development. The USPTO permits manual keyword searches of patents and published applications via its Web site, http://patft.uspto.gov/. The “Quick Search” function contains a dropdown menu that allows you to search for patent owners, inventors, or words that appear in the patent claims. When searching for granted patents, however, keep in mind that an asserted patent is sometimes an older one directed to an invention that has since become ubiquitous or was monetized or purchased as part of a patent portfolio sale.
3. Search the USPTO Specifically: The USPTO’s “PAIR” Web site allows you to access the entire file history of a patent or a published patent application. The Web site also identifies, under the “Continuity Data” tab, what other applications or patents exist, if any, that are related to the one searched. See http://portal.uspto.gov/external/portal/pair.
4. Search Patent Assignments: Search for NPEs to see if they are named as patent owners or assignees through the USPTO’s “Patent Assignment Query Menu” available at http://assignments.uspto.gov/assignments/q?db=pat.
5. Search Patent Auctions: Consider monitoring patent auctions for patents that could be a problem if purchased by an NPE. Several IP auction houses provide searchable databases to identify patents up for sale, including Patent Auction at http://www.patentauction.com/ and Ocean Tomo at http://www.oceantomo.com/auctions.html.

Patent Owner Trackin

1. Track NPE Activities: Various efforts are ongoing to track activities by known NPEs. One online effort is Patent Freedom at https://www.patentfreedom.com/. The organizers of Patent Freedom have identified what they call the “Most Litigious NPEs.” For your own monitoring of NPE activities, this is not to suggest starting a trolltracker blog — someone was sued already for doing so — but having an internal list of NPEs that is helpful in monitoring NPE activities.
2. Defense Groups: Consider joining a patent defense group such as RPX Corporation, whose business plan apparently is to buy patents but not to use them to sue anyone. RPX’s activities are discussed, for example, at http://bits.blogs.nytimes.com/2009/03/30/trolling-for-patents-to-fight-patent-trolls/.
3. Public Company Searches: Performing an SEC EDGAR search for public companies through http://www.secinfo.com is sometimes helpful in situations where a public company sells patent assets to an NPE that could be recorded on its 8-K and 10-K filings.

Court Docket Diligence

1. Review Federal Dockets: Consider reviewing U.S. federal court dockets for NPE-initiated suits in the last five years in a particular industry. This information may be used to prepare a spreadsheet listing the cases, the jurisdictions, and the patents involved.
2. Monitor Infringement Suits: Monitor patent infringement case filings, paying particular attention to asserted patents close to your company’s business.

Defensive IP Actions

1. File Your Own Patent Application: File provisional applications as early as possible on new product ideas to create evidence of prior use.
2. Reexamination: Proactively organize grounds for challenging a patent’s validity by preparing reexamination requests against NPE patent assets that pose an infringement risk. Additionally, when inter partes reexamination is used, the same invalidity arguments that are used during the reexamination can also be used in International Trade Commission (ITC) investigations — in effect, giving you opportunities to make the same argument.
3. Generate Conflicts: In the Eastern District of Texas, where many NPEs like to bring infringement actions, engage as many of the most active NPE law firms as possible to conflict them out of future litigations.
4. Engage in Freedom to Operate and Design Around Activities: Routinely conduct searches of issued patent claims to proactively identify high-risk infringement issues, and be flexible in designing or redesigning aspects of the commercial product.

Collaborative Initiatives

1. Form Consortiums: Rather than taking on an NPE on your own, one can use an industry-wide approach. For example, you can form a consortium to solicit contributions from interested companies. This approach can be used to spread the cost of reexaminations across the companies that are impacted by an NPE.
2. Licensing: A company always can offer to license the patent(s) for a nominal royalty-rate, which the patent owner might be eager to do, instead of fighting against the patent(s). In this way, the license fees can be thought of as a “cost of doing business,” a cost that might be passed along in whole or in part to the customer. The company is essentially given a discount for its cooperation in resolving the dispute expediently.

The examples above are just a few proactive measures a company director or manager can take from the comfort of his or her office.

This article is part of our Summer 2010 edition of Legal News: China Quarterly Newsletter, Eye on China.