Moving from a Stick to “Sticky” Licensing

Dipanjan Nag, President and CEO, Prediqtus

Markets are driven by greed and fear. If you have been reading my other articles then you know where I am coming from. Fear works well, if you listen to any news channel, you will see most of the news is negative. That is because we retain the negative news and forget the positive news. The world of licensing is no different. People are driven by fear, rather than being moved by ground breaking, novel, and disruptive technologies. In the world of licensing there are two types of licensing:: stick and carrot licensing. Lately, the concept of “sticky” licenses is becoming more common. A “sticky” license is when a patent is licensed with the use of a claims chart/evidence of use, but the owner (licensor) does not intend to assert that patent.

You might have noticed by now, that large corporations are not moved by your brilliant technologies. In fact, most of the time you will not even get a response back when you are marketing a technology to them. On the other hand, IBM, MSFT, QCOM and other successful licensing operations are making billions by pure patent licensing. Is it just because they have better technologies? Well, maybe, but there is another common factor for the successful practices in licensing, who are perhaps eating your lunch!

In every instance, and every single licensing deal, IBM has created a claims chart with evidence of use. At a recent LES event, I posed a question to a top brass from IBM licensing:: “how many times do you use a claims chart when you are licensing?” His response was “almost every time.”. I was frankly not very surprised by his response. We have adopted that approach since the very start, of course, after I left the university technology transfer world.

So, you ask, what is a “claims chart”? Many people will name it differently based on their background. If you speak with a patent attorney, that name has a very specific connotation. If you ask a business person, to her it would probably mean an “evidence of use.”. In very simple terms, you have to show a potential licensee that they are using your patent in some component or service of their product offering, a specific claim(s) of your patent.

Here is an example of a claims chart in Apple v. Samsung case:

Here is an analysis of the feature and product based analysis:

The more obvious the use of the patent in that product is, the higher your chances are of licensing your patent to the potential licensee. You might be saying by now, “but then how are you different than a patent troll?” It is very different than a patent troll. For those of you, who don’t know what a patent troll is, they are entities which buy patents from others and assert those patents against product manufacturing companies. The pejorative term of troll is applied to bad actors who file frivolous lawsuits against a large number of companies. There are examples when a patent troll would sue mom and pop stores who are probably infringing the patent for use of the “internet!”!

I am making a few assumptions, when I am saying you are different than a patent troll:

  • You own the patent and your organization inventor created that invention
  • You are probably a company that practices the inventions embodied in your patents
  • You are probably a university
  • Most importantly, you did not acquire this patent with the sole intention of asserting this patent against others

Another interesting fact that a lot of people do not recognize, is that a patent is really a negative right; it does not actually give you the right to make money. On the contrary, it gives you the right to exclude others.

But, there is something you could learn from the NPEs of the world, they are way savvier than most operating companies in licensing patents. That is their sole business! If you knew what kinds of analytics existed in evaluating patents, you would be shocked. The world of licensing is very similar to others, knowledge is a key factor for success. If you are throwing stuff in a one page marketing summary and sending out to 100, or even better 1,000s of companies, good luck licensing those technologies.

Two other points were also mentioned by the IBM licensing team at the LES meeting, the technology (patent) has to be:

  • Relevant
  • High quality

There is no getting around the fact that a technology is only as valuable as the patent which protects it. You might have the best technology in the world, but if you chose a poor patent prosecution attorney to save a few dollars, your technology is now worth absolutely nothing! And, I am not even a patent attorney. So, please do yourself a favor, at the inception of the technology, write a very detailed invention disclosure and go to a good patent prosecution attorney who can help you protect that invention. The signs of a good patent attorney are:

  • One who does not say “yes” to everything you say,
  • Who charges more than others (clearly the successful attorneys command a higher rate)
  • Provides you with very broad claims, in fact the claims are much broader than your conceived invention
  • Provides you with some advice on commercialization fields, essentially broadening the field of use for your invention

For example, your patent prosecution attorney should start with a picture claim covering your product specifically. From this picture claim, the specification and ultimately the claims, should attempt to cover any use or product component alternative, even if not originally contemplated by the inventor. The goal of your patent prosecution attorney should be to make the defensive fence created by your patent as broad as possible, in light of the patent landscape within your product field.

Claims charts and evidence of use have been used very successfully by the NPEs in asserting patents, which is their business. This strategy could also be used very successfully in true technology transfer (transferring a technology from the owner to the licensee for a successful product launch in the market). Making the technology (patent) relevant to the licensee is especially important today to separate yourself from others in the licensing world.