Licensing technology from other sources makes sense in several situations, even when the licensee does not practice the technology.
Remember that patents are merely business tools, and they are useful when they give your business an advantage over a competitor. Taking a license, even when your company may not currently infringe, may be appropriate in some cases.
This post is a third of a series of posts describing patent drafting styles. See the others here and here.
When building a patent portfolio with the intent to sell a company, the main audience is not potential infringers, but the acquiring company. Depending on the situation, the acquiring company may have any of several different reasons for the acquisition.
This is a second part of a series on different patent drafting styles. The first post dealt with protecting an existing product. The final post deals with developing a portfolio with intent to sell a company.
Patents that are intended for licensing have a distinctively different feel to them and a different method of drafting. Here, our intent is to protect an idea that may potentially be more valuable at the end of the patent life. In this circumstance, we are unable to predict where the technology may change.
Rather than focusing on a product or opportunity, these types of patents identify a concept and develop as many variations or configurations of the concept as possible.
In response to my previous post about goofing around with MythTV, a comment was left asking if I was concerned about violating someone else’s patent by building a MythTV box. In fact, I am not concerned about violating anyone’s patent, and here is why.
When a company considers protecting a product, be it a software program, mechanical device, or other product, the strategy must make good business sense. It is certainly possible to spend vast sums of money on large downtown patent firms and file many international patents, then spend virtually endless amounts of money litigating with infringers, but there are other alternatives.
The submarine strategy is a valid business strategy that lets the market for an idea develop before a patent is asserted. This is one of the riskiest strategies, but has the corresponding payoff. There are legal risks as well as business risks, and this strategy tends to have the largest costs as well.
In this strategy, the patentee seeks to cover technology that will become commonplace in the future. Rather than asserting the patent right away, the patentee may keep the patent quiet and let the market develop for the technology. The patentee hopes that the technology will become widely used and a ‘standard’ in the industry. At this point, the patentee may begin asserting the patent against one or more infringers.
One or more patents can be developed for a licensing strategy in conjunction with or separate from a company’s main product.
There are some technologies that are so large that one company may not have the resources to bring the technology to market or where the developing company does not have the interest in fully exploiting the technology.
In this strategy, the patent portfolio is developed with an intent to offer a licensing agreement to one or more other companies, presumably for royalty income.
A very common use for patents is to enforce those patents against infringers in the marketplace. This strategy can be much more complex and risky than it seems.
In the simplistic view, this patent strategy involves protecting the products of the business by writing patents that cover the key elements of a company’s business. These patents serve as roadblocks for potential competitors and are designed to make a competitor go a long way to design around a product.
This is the classic patent strategy.
