Inoculating Against Patent Value Depreciation

Posted on August 20, 2009 by Rajiv Sarathy

In an en banc ruling yesterday in Cardiac Pacemaker v. St. Jude, the Federal Circuit decided that method claims do not have extraterritorial reach under 35 USC 271(f). In earlier cases, courts have ruled that some claim types (e.g., system claims reciting one or more components) have some extraterritorial reach, such as when patented components are separately exported and combined abroad to produce the infringing system or device.

When a patent applicant files a patent application, the minimum government fees cover three independent claims and twenty total claims. Patent attorneys sometimes recommend paying "excess claims fees" to file additional claims. Some clients, however, prefer not to pay the excess claims fees and decide to limit their claim coverage. Cardiac Pacemaker serves as another example that having different claim types can be useful.

The law evolves and it can be difficult to predict which claim types will be valuable (or lose value) in the future. Good patent attorneys draft multiple claim types to inoculate their clients' assets against future depreciation. 

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What Is A Patent Worth?

Posted on June 30, 2009 by Rajiv Sarathy

Entities sometimes need to determine what a patent or a portfolio of patents is worth.  Valuation of a portfolio may be useful when, among other things, an entity desires to:

  • determine whether to pursue a patent application;
  • evaluate a company's value (e.g., for merger, acquisition, or stock price); or
  • estimate damages.

The value of a patent can depend on a multitude of factors including but not limited to: 

  • breadth of a patent claim;
  • scope of the patent claim given up during prosecution;
  • validity of the patent given changes in patent laws;
  • price customers would be willing to pay for a product embodying the claimed invention;
  • license fees paid for similarly important components; and
  • costs to substitute the claimed technology with an alternative.

Often, the value of a patent is not publicly known because parties often settle matters out of court.  Other times, the value of a patent becomes abundantly clear after a blockbuster court case.  For example, a jury yesterday awarded nearly $1.7 billion to Johnson & Johnson, whose patent the jury determined was infringed by Abbott Laboratories' drug, Humira.  Abbott Labs plans to appeal the verdict.

Valuing a patent can thus require the skills of someone who understands both legal as well as business issues, or at least an interdisciplinary approach.

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Burning the Ships

Posted on April 25, 2009 by Rajiv Sarathy

I just finished reading Burning the Ships: Intellectual Property and the Transformation of Microsoft by Marshall Phelps, which is a fascinating account of the transformation of Microsoft's patent power during Marshall Phelp's tenure there.  Under his leadership, Microsoft has become a significant holder of patents covering many important aspects of Microsoft's technology.  The book is well worth the read for anyone who wants to understand Microsoft's patent strategy.

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