Wednesday, June 24, 2009

Netflix Intellectual Vertigo Part 2

Intellectual vertigo returns. Just when my brain had recovered from reading the 87 claims of the most recent Netflix patent 7,456,252, I read an article in the Wall Street Journal that talks about how Netflix is getting ready for the next big thing - having more movies available on line because the DVD is doomed.

WSJ notes, "But Netflix's chief executive officer, Reed Hastings, thinks his core business is doomed. As soon as four years from now, he predicts, the business that generates most of Netflix's revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. So Mr. Hastings, who co-founded the company, is quickly trying to shift Netflix's business -- seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets."

Interesting. Probably true. I must confess I recently caught up on some back episodes streamed on my laptop using the wireless not the DVD.

This raises the interesting question about the value of the Netflix patent. How does one monetize intellectual property when your business model will change long before your patent expires? What do you do with this piece of intellectual property that will protect a declining part of the business when you need to focus on building the next big thing? How does the market function with a patent system where it takes six years to get the patent and four years later it may not be a critical component of your business strategy being eclipsed by your newest business model? (We'll save the obvious discussion on how the length of the patent process impacts innovation for another post.)


Do you embark on an enforcement campaign to unearth potential infringers and get them to take a license? Is this a distraction from our core business? Do you know where to look for potential infringers? How much will it cost?

Is it time to bring in the trolls?

The Non-Practicing Entity (NPE), companies that buy and sell patents and other IP but don't actually manufacture the items disclosed in the patent, create an interesting, all be it disruptive, economic element to the market for intellectual property. Do you sell your asset to an NPE and take your own perpetual license and leave it to someone else to enforce and maintain your patent.

In the case of rapidly changing business models, the NPE may provide the accelerated revenue to allow businesses to create new products and services, to transform to the next big thing while having some other focused organization maximize the return on the IP asset. From a purely economic perspective the NPE model can be attractive if you have assets you can't monetize.

Collaborate with Your Competitors?

Another alternative is to adopt the intellectual property approach adopted by Microsoft, yes Microsoft, eloquently described in "Burning the Ships - Intellectual Property and the Transformation of Microsoft", written by Microsoft's former IP counsel Marshall Phelps and his collaborator David Kline. (A good read even if it was a bit of a marketing moment sometimes.) Under this model IP holders make their technology available to their competitors using reasonable licensing approaches. Collaborate, repurpose, enlist. See what other good stuff can come of your invention and guarantee you'll get a piece of the action. A variation on the Win-Win model.

The intellectual vertigo sets in when you consider the lack of decision making tools to support understanding and evaluating options. This is further complicated by the cult of secrecy associated with all matters IP. Finding the list of actual IP assets owned or licensed by a firm takes herculean effort if you aren't a skilled user of the USPTO website, a subscriber to expensive search tools or don't have a staff of analysts. I started keeping track of how many IP articles I read actually contain either the patent number or the actual owner of the patents. So far, none.

So we toil away enhancing the information about who owns what and why you should care to make the process of making IP decisions easier and more transparent. This will be the cure for intellectual property intellectual vertigo.

Wednesday, June 17, 2009

Where Are the Patent Numbers?

Intellectual property is growing, global marketplace. Depending on who you listen to up to 80% current valuations of US companies is based on their intellectual property, trade secrets, and innovations. There is increased interest in valuation of IP assets, and the creation of a global market place for buying, selling, and leasing (licensing) IP assets.

Why is there no INFORMATION?

A June 17th Wall Street Journal article discussing what up until now has been an eight year old patent litigation between Star Scientific (STSI) snd R.J. Reynolds stated,
"A federal jury ruled Tuesday R.J. Reynolds Tobacco Co. did not infringe Star Scientific Inc.'s patents claiming a new method of curing tobacco in a way that reduces certain cancer-causing toxins." News that the court rejected their claims against RJ Reynolds drove the STSI stock price down 86%.

Is there a reason why every major business publication and even quite a few dedicated to intellectual property matters don't include the patent numbers in their reporting? What is the reason for the almost uniform obfuscation of important details about the patent assets? Who owns the patent? When was it awarded; when will it expire? Who licenses it? How about a little information on when the patent was issued, and when it will expire. The announcement appears to have triggered a precipitous decline in STSI's stock price. Why the precipitous decline?

The article says STSI was seeking "several hundred million dollars" but says little about the inventions deemed to be invalid. Turns out there are two - 6,202,649 (the '649 patent) and 6,425,401 (the '401 patent.) They both disclose techniques for lowering the carcinogens in tobacco.

Turns out that the stock price at STSI moved from $5.00 at the close on June 1st to $.83 at the close on June 17th. A stock that had a volume hovering around 1M shares with occasional spikes here an there had its trading volumes jump to over 65M shares on June 17th. Who owned the stock? Were the investors looking for a payout on the patent suit or did they believe in the STSI technology. Did the investors walk because of fear that the IP assets were no longer valuable.

The fine print in the announcement discusses the "strategic relationship between the STSI and Brown & Williamson Tobacco Corporation. Apparently, as far back as 2001, B&W entered into an agreement to purchase at least 15M pounds of Star Scientific StarCured brand of carcinogen-reduced tobacco for each of the next three years. The fine print raises issues concerning risk associated with the fact that in 2003 RJ Reynolds and Brown & Williamson combined their US businesses. Did STSI have a chance when going up against the $10 billion combined company, Reynold's America? Did this impact the outcome of the case?

And then there's the issue of who owns the actual patent. USPTO assignment data shows the patent is owned by Regent Court Technologies in Missouri. Looks like an exclusive use license exists between Regent Court and STSI. The inventor is an officer of both companies. Then there's another company called Rock Creek Pharmaceuticals that is a subsidiary of STSI which develops pharmaceutical products for the treatment of addition and neurological disorders. Apparently Rock Creek announced the results of their latest advances in smoke cessation in a January 6th, 2009 announcement.

If you dig around on the Internet to find information on the case that includes the patent numbers you will be disappointed. There also isn't much in the way of documents over the history of the case. I guess you have to pay for them somewhere, Pacer perhaps? Here's one of the documents.

The increasing interest in companies IP holdings, non-correlated assets, and new IP strategies like those employed by non-practicing entities and licensing firms should result in better, more intelligible coverage of the issues surrounding a case like this. The current economic focus on innovation as the path to growth and job creation would seem to result in a push to make things more transparent. It just shouldn't be this hard to find information. What we need is intellectual property reporting for the masses. For now it appears that on the intellectual property front we are stuck with text rich but content free (read worthless) announcements and press coverage.

Sunday, June 14, 2009

27,000 Patents and Counting

Today's interesting IP article -- "Bellevue's lab is an inventor's real dream"

The latest news of the inventions and intellectual property holdings of Intellectual Ventures in Bellevue, Washington from the Seattle Times Newspaper.

Friday, June 12, 2009

Netflix New Patent, & Intellectual Vertigo

On Tuesday we learned about the latest patent from Netflix courtesy of Aaron Feigelson's blog 12:01 Tuesday. 12:01 Tuesday is the time each week that the Patent and Trademark Office issues the electronic gazette that publishes all of the newly granted patents.

Mr. Feigelson post provided insight into the origin of Netflix -- it's founder Reed Hastings started Netflix after paying a $40 late fee to Blockbuster eleven years ago. It's only five years? That's what Mr. Feigleson thought too. He then provided an insightful analysis of the new patent Netflix -- "Approach for managing rental items across a plurality of distribution locations", patent number 7,546,252.

The comments we found most interesting were:

"What do we make of the Examiner’s statement in the Notice of Allowability:

“Applicant’s voluminous IDS received August 28, 2008 has been given a cursory review.”

"Should an accused infringer need to present clear & convincing evidence to show invalidity in this situation where the Examiner essentially admits he did not read the references?"

A cursory review?? They had this thing for six years even if the IDS only came in in 2008. Ah, but it's bad to jump to conclusions with our doing a little work of your own. So, we did.

Since we specialize in all manner of technology for searching and researching intellectual property matters, we decided to see for ourselves. It was a nice Friday afternoon so we decided to spend a little time on it.

We read the claims. Eighty seven total claims, 6 independent claims, 81 dependent leading to intellectual vertigo. So many permutations we couldn't keep them straight.

This lead us to ask our own interesting question: How hard would it be to find all these references if you had to start from scratch; would it have been so hard for the examiner to read the references. So we spent a few minutes seeing what we were up against.

We started with the 58 patent prior art references including my personal favorite 6,334,127,
System, method and article of manufacture for making serendipity-weighted recommendations to a user. How can you not like something dealing with serendipitous recommendations? This one has 67 claims and its own voluminous set of patent and non-patent prior art citations. A cacophony of art across a broad spectrum of subject matter.

The application portfolio from inventor John N. Gross was interesting. Since these were PGPubs we couldn't figure out if he was an independent inventor or worked with another firm. We didn't look that hard though.

First we downloaded the File Wrapper -- it's huge. Too much to deal with for a casual Friday exercise. We'll extract it and figure out what's in there next week. None of the non-patent prior art was there though.

Then we started tooling around and tried to get to some of the prior art references gathered from the internet. This should be somewhat fruitful we thought. Not so. The very first one produced the following dead end as did many others revealing variations on the Not Found message.

Then there was a link that led to a one page reference to a library circulation system that cites how books are selected by computer based on the reader's grade. The link worked this time. It produced a silly reference but one that, if it wasn't their, might prove troublesome if someone tried to claim that Netflix' approach was like the process of stocking a book mobile.

There are two references from publications that are almost impossible to find:

Anonymous, Untitled, Press Release, Business Wire, Apr. 27, 1999, 1 page. cited by other .
Anonymous, Untitled, Press Release, The Washington Post, Apr. 24, 1999, 1 page. cited by other.

We look forward to reading the entire issue of the April 24th Washington Post looking to find the Anonymous Untitled Press Release that has something to do with inventory management, renting movies, taking books out of the library with the aid of a computer. This ought to cost a bundle if anyone tried to challenge the patent unless they are prepared to wonder to Alexandria to read the file itself.

Imagine if this application was submitted under the new proposed rules on claims. The enhanced information disclosure would be encyclopedic. Or maybe it would have been a deterent. Hard to tell at this point.

After this exercise, I started to feel bad for the examiner. I wonder it the examiner was overtaken by the urge to heave the whole file out the window? I wonder if the examiner figured, let these guys duke it out in the marketplace. USPTO has had this thing for years and if I don't get it off my docket I'm never going to hear the end of it. Maybe the use of the word approach was enough for the examiner to say, maybe Bilski will take care of this eventually. Maybe it was a nice Friday and the examiner decided enough, I'm done for the day.

Either way, the whole exercise was intellectual property, intellectual vertigo.

Thursday, June 11, 2009

Chocolate Bunnys

Today's IP article comes from the Wall Street Journal on the trademark case on the Lindt golden bunny - foil wrapped chocolate bunnies. It reads,

"If you are not going to protect your trademarks, they are worth nothing," says Reinhart Lange, an intellectual-property lawyer at WilmerHale in Frankfurt.

"Mr. Lange is the Elmer Fudd of chocolate rabbit look-alikes. He has represented Lindt for some two decades. He learned the trade from a senior partner who brought intellectual-property cases for Lindt back in the early 1980s."

Little critters multiplied to get to it's current sales of $44M. The case is a legal rabbit hole with hopping mad founders family. Lots of rabbit metaphor. Nice.

Chocolate rabbits, intellectual property lawyers, Elmer Fudd. Some guys have all the fun.

Here are a couple of great golden bunny videos:

Information Retrieval Serendipity

Serendipitous information retrieval is the art of finding things you didn't know you were looking for until you find them. It's the joy of finding stuff, serendipity, good fortune, an auspicious search moment and you are happy. A search "ah ha" moment and they are fun. Serendipitous information retrieval is search nirvana.

I had my own serendipitious search moment late one Sunday night. Doing a little channel surfing to attempt to cure insomnia, I found an HD concert channel. Paying no real attention while multitasking on the laptop the HD concert was just background noise until Dave Matthews Band came on. It was musical nirvana. Something new but kinda old as Dave put himself during the concert. Aside from the commentary about being late to the party, for me it was an amazing find. Four concerts and 102 songs later, I still consider that channel surfing to have been a serendipitous event.

Serendipitous search is a creative investigative process. It's about thinking and navigating through information, and data, and web sites, and images, and enjoying the trip. It's the opposite of search paralysis where you just can't seem to find what you are looking for and keep giving up and starting over until you call it quits. Amazon and Netflix and the smart phone app stores all have a variation on these types of searches to help their customers navigate and make new discoveries by leading them down the path of searchers that came before them, it's a kind of simulated curiosity encouraging you to keep looking.

We learned about serendipitous search when we were working on our diagnostic imaging project. Doctors and clinicians talk about having a hunch and seeing if their hunch is right or more importantly when researching a problem, seeing where their hunches take them. When you ask them what they don't like about the current state of the art in search they'll tell you it's just too hard to follow their hunches, the tools just aren't there.

Richard Feynman's book "The Pleasure of Finding Things Out" shows how the art of finding things out and the process of doing it has it's own pleasure. Like when you're a kid and you have to tell everyone "look what I found." Or when you have one of those white light enlightenment moments when you learn something new.

David Pescovitz wrote an interesting post on serendipitous search in the real world, how people search in malls, at flea markets, in the real world.

So that's what we're trying to do, to try to create serendipitous search experiences. To make the search experience one where you don't want to heave the laptop out the window.


The phrase serendipity came from a 1754 fairy tale by Horace Walpole retelling the story of a 1557 Italian story, retelling a 1302 Persian fairy tale retelling a tale based on life of a Persian king who lived around 402. The English version is called "The Three Princes of Serendip" in which "the heroes were always making discoveries by accidents and sagacity of things they were in quest of."

If Serendipitous search isn't your thing, you can always go to Serendipity in NYC founded in 1954, 200 years afer Walpole's translation. They have great ice cream!!

Silent Discos

In honor of Bonnaroo, the amazing four day Music & Arts Festival taking place in Manchester, Tennessee, we bring you information on the technology that supports their innovative event - the Silent Disco.

The Silent Disco was made possible by the emergence of wireless technology and the IPod generation, the silent disco solves the age old problem of "turn down that music". No need to turn down the music here. The club goers wear wireless headsets and the DJ spins for non-stop jamming without disturbing the peace or violating the noise ordinances.

In the world of information hide and seek, here are we provide you with what wireless headphones are called devices in patent lingo:
And you thought all you had to do was slip them on and bust a move...

Here's how Sony describes one of its inventions:

A pair of wireless headphones receives radio frequency transmissions from a sound system to provide music and other audio programming to a user who is free to move anywhere within the range of the transmissions. A telephone base unit also broadcasts notification of incoming phone calls to the wireless headphones. The headphones may provide an audio signal over or instead of the audio programming to notify the user of the incoming call. The headphones may also incorporate a microphone so that the user can receive the phone call with the headphones.

Wednesday, June 10, 2009

Folding Mobile Phones

Lately we have been digging around in the mobile telephone space. There's a lot of action there. Between new IPhones and Blackberries, the new Palm Pre, and the latest features from Nokia including their app store Ova, there are lots of interesting developments to watch evolve.

Under the heading of deja vu all over again, we wanted to see how far back you had to go to find a folding phone. We saw the early Motorola folding phone back in the 1990s, owned folding phones for the car including the Razr, and a host of other cell phones with different versions of the "fold" so we were curious.

Consider the 1905 patent that described a vibrator for a sound-telegraph apparatus' "specially constructed for use in the army or in other service where the apparatus must be portable or occupy but small space." It features a collapsing design with a fold out flap for the microphone. An elegant piece of work considering it was over 100 years ago. The inventor was Arvid Andersson Lind of Stockholm, Sweden, yet another testiment to Swedish design.