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.

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