The Best Protection Against Litigation
While PatentBooks offer a number of advantages to product manufacturers (Subscribers) and patent owners (“Publishers”), perhaps the greatest “bottom line” advantage, particularly for companies that are both potential Subscribers and Publishers, comes from the significant protection against patent infringement litigation. Such companies substantially reduce the costs, risks, and distractions of defensive patent infringement litigation by using a PatentBook as a critical element of a comprehensive product strategy.
The costs of patent litigation, particularly in the US, have been rising steadily; this increase shows no signs of slowing. The American Intellectual Property Law Association 2009 Economic Survey showed that a single defendant in a case involving a single patent had legal costs of US$1.8 million through the discovery phase alone. The total cost for such a case (including outside counsel, travel, analytics and expert witnesses) averaged $3.1 million – an increase of 20% over 2007 costs. The respondents in the survey also noted that these “hard” litigation costs are far less than the opportunity costs related to the time spent and the distraction from the company’s core business.
Even where no litigation is involved, the costs of a bilateral licensing transaction, in a single agreement covering from 1-‐20 patents, average between US$100-‐150,000 per patent, and the negotiations lasting some 18-‐36 months involve face-to-face negotiations in several locations around the world.
PatentBooks protect Subscribers from infringement lawsuits and offer far lower patent licensing costs. Subscribers:
- License all PatentBook patents only when a production unit actually ships.
- Enjoy freedom from litigation for their shipped products from all published patents.
- Enjoy “amnesty” from all Publishers for all prior use of PatentBook™ patents for as long as they remain Subscribers in good standing.
- Demonstrate a good-‐faith effort to license the necessary patents and meet their obligations to pay for the intellectual property they use, which should substantially reduce damages in the event of litigation brought by non-‐Publishers.
- PatentBook patent evaluation criteria are open to the public. The market value of a patent not published to the PatentBook can be determined by evaluating the patent to determine its PatentBook Tier and relative compensation. This information, available to the public for the first time, will allow courts to establish a market value for a patent royalty based on the quality of the patent itself. Confronted with this information, non-‐Publishers are unlikely to obtain excess damages.
- Appreciate the precipitous decline in the number of lawsuits from non-‐Publishers. The existence of a PatentBook offers a patent owner the choice between pursuing time-‐consuming, costly, and risky litigation, or simply publishing their patents risk-‐ free to the PatentBook. Even if a patent is exceptional, by paying a modest fee to have its evaluation validated for placement into a higher value tier, its compensation will be similar to that which it might have received via litigation, without the time, expense and risk.
- May purchase an optional insurance policy (Lloyds of London) to cover exposure to litigation from all non-‐PatentBook patents. This insurance completes a Subscriber’s freedom to operate. The insurance company will have the responsibility for handling any covered litigation.
Publisher advantages include:
- Listing patents in a PatentBook is free, unlike other patent aggregation programs. The only potential expense is optional, and occurs only if a Publisher requests a validation of his self-‐evaluation of a valuable patent. The validation could result in the patent’s reclassification from the default Tier 3 into either Tier 2 or Tier 1, resulting in a distribution increase of 15 or 140 times greater per patent, respectively.
- By making its patents easily available to a wide audience of manufacturers, Publishers receive revenues from a much larger group of licensees than with a traditional bilateral licensing strategy, thereby reducing the population of unlicensed manufacturers and the number of targets for potential lawsuits.
- PatentBooks further reduce Publisher costs by eliminating the costs of searching for unlicensed manufacturers. PatentBooks, Inc., the administrator of PatentBooks, provides to all Publishers lists of both Subscribers and non-‐Subscribers.
- By listing patents in PatentBooks, Publishers remove one of the major arguments of unlicensed manufacturers – the cost and difficulty of licensing all of the patents necessary to manufacture their products from the hundreds or thousands of patent owners. PatentBooks makes licensing and/or litigation more precise and efficient.
Independent observers around the world see PatentBooks as a rational, cost-‐effective solution to the current patent licensing and litigation practices.
These observers will recognize and applaud the decision of companies that become the initial Publishers and Subscribers, generating considerable visibility and good will to those “first movers” for their role in being pioneers in this effort to rationalize and improve the current patent marketplace for patent owners, manufacturers and retailers.