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les Nouvelles - June 2009


Standards—An Important Patent Portfolio Licensing Opportunity

Robert A. Myers

Fairfield Resources International, Inc., Senior Vice President, Darien, CT USA

In the 1980s, Texas Instruments and, somewhat later, IBM showed that it is possible for a company with a strong patent portfolio to reap large added rents for their sunk R&D costs through patent assertion and licensing. Seeing this opportunity, enterprises and universities throughout the world have tried to emulate those trailblazers and somehow monetize their patent portfolios profitably. In spite of reports of astonishing settlements and awards for patent infringement, however, the great majority of patentees have been disappointed. So-called “patent trolls”—accumulators of large numbers of third party patents—have arisen to attempt to remedy this problem with the business model of monetizing by sale, licensing or litigation patents obtained by others while extracting hopefully substantial transaction fees in the process. An important if less well appreciated licensing opportunity can be found in patents that may read on standards. Following a discussion of where such patents fit into patent portfolio management, we will then review the challenges facing patentees looking for standards based licensing revenue.

Reasons for Patenting

Historically, the United States patent system was established, as stated in the U.S. Constitution, [Article 1, Section 8] “to promote the progress of Science and useful Arts by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and discoveries.” This was primarily a reaction to the mercantile practices of their former British colonial masters, to whom keeping innovation secret—at the time, in areas such as spinning and weaving—was a key source of private wealth. The founding fathers believed, and two hundred years of experience have confirmed, that society benefits tremendously when inventors are well rewarded bya system in which inventions are publicized through the exclusionary right awarded by a patent.

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