Owners of intellectual property are often rightfully curious as to the value of their IP. Anyone who has tried to assign a value to patents outside of a litigation context and in the absence of robust licensing market for similar patents knows very well how challenging it is. Figuring out the value of trade secrets, on the other hand, is not (always) as hard. This is because what most trade secrets “are” on an ontological level are more readily ascertainable that patents. What is in the bills of materials; who are on the customer list; the process for connecting the machinery; the history and results of failed experiments; and last year’s profit margins are all knowable by a company in a way that the scope of a patent is not. Because of this fact, it is much easier for a company to correlate a particular trade secret to the value-add that the trade secret brings to the company’s business. Moreover, whether a trade secret is in fact a protectable right is much more in the hands of the rights-owner that a patent. Patents, globally, have a high invalidation rate from third party prior art, whereas whether trade secrets are generally invalidated only when the owner did adequately protect the trade secret as a secret.
What is a trade secret audit and why get one? At first blush an audit sounds expensive, distracting and unnecessary. Let’s face it, we live in the age of the long tail. Over the past few years, things people would have given a remote chance of coming to pass seem to be happening on a regular basis. What’s more, the pace of change and disruption in business and in the personal world is so great, it is almost impossible to keep up. It seems that whatever you are doing today will have to be radically altered very soon. With all this change most of us are running just to stay in place – so any distraction from the daily chores of simply keeping up needs a powerful justification. I would argue however, that the frenetic pace of business life is precisely why audits are so important. Just as mindfulness is rightly understood as being key to a centered life, trade secret audits are essential to continued success as a business.
A trade secret is anything that has economic value (e.g., gives you a competitive advantage in the marketplace) because it is kept secret. Understood that way, it should be evident that regular stock-taking of a company’s competitive advantages comprises a necessary component of good business practices. Thoughtful companies will utilize these corporate self-assessments – of which trade secret (and more broadly IP) audits are a necessary component – to understand their true growth drivers, both current and anticipated. With the assessments in hand companies can take any actions necessary to better protect and cultivate those growth drivers. The assessments allow companies to proactively course-correct their trajectory in a way that maximize how they utilize their identified competitive advantages.
Not everyone can have full-time legal staff. While there are many advantages to internal lawyers, hiring in-house counsel may not always be possible. Moreover, hiring traditional outside counsel is often expensive and inefficient and can sometime ineffective. Outsourced, in-house counsel can be an elegant solution.
Below are some of situations when outsourced, in-house counsel can help. They include when a company:
Previously I discussed the business case for engaging outsourced in-house counsel when a company is facing legal challenges related to standard essential patent (SEP) assertions, in the context of trade secret services, and when engaging outside litigation counsel. In this article I discuss a slightly counter-intuitive use for outsourced in-house counsel: intellectual property (IP) department creation.
Previously I discussed the business case for engaging outsourced in-house counsel when a company is facing legal challenges related to standard essential patent (SEP) assertions and in the context of trade secret services. In this article I discuss how outsourced in-house counsel can provide significant value-add when engaging outside litigation counsel. Where a company does not have in-house counsel, or where in-house counsel is not familiar with a specialized area like Intellectual Property (IP) litigation, outsourced, in-house counsel can both help the company engage the best outside counsel and manage them more effectively. Read more
- Doing nothing is an option, but a risky one.
Pro: Some patent owners are not committed to actually filing lawsuits. They cast a wide net with lots of demand letters, knowing some recipients will pay nominal amounts to make it go away. If you ignore it, there’s a chance there will be no serious follow-up.
Con: Ignoring a patent demand letter may lead the patent owner to file a lawsuit to get your attention. Read more
I first met Eric Stasik some 5 years ago when I was at Vringo. When we first met, it took no more than 10 minutes to appreciate how lucky I was to have him on my team. Eric has an uncanny ability to, very quickly, see through can’t and cut to the core issues at hand. More importantly, he finds solutions. Eric gets stuff done quickly, effectively, and cost efficiently. Having seen him at work in the years since, my appreciation of Eric and what he brings to the table has only deepened.
Eric currently provides assistance and guidance to firms engaged in commercial patent license negotiations through his consultancy, Avvika AB. I am honored he agreed to this interview.
Intellectual Asset Management Magazine (IAM) today published a short excerpt of my and Doug Clark’s forthcoming, longer piece on China’s anti-monopoly law (AML) and how it has been applied to standard essential patents (SEPs). The published excerpt concerns China’s National Development and Reform Commission’s (NDRC) investigation of Vringo undertaken at the behest of ZTE. The piece focuses on two hair-raising meetings I had with NDRC officials in Beijing where all manner of explicit and implicit threats to my life, liberty, and property were made. Read more
Over the course of my 20+ years practicing law, I have had the honor of working with many individuals at the cutting edge of all aspects of intellectual property. I consider myself very lucky that most of these folks, in addition to being luminaries in the industry, are good people and have welcomed me into their professional world with open arms. To celebrate these individuals, I am inaugurating a series of interviews. Read more
This article is the next piece of my series discussing patent demand letters. Part one, reviewed the initial considerations and steps one should make upon receiving a patent demand letter. Part two explored the subject or content of the letter — i.e., what is the sender asking for? Part three addresses evaluating the merits.
At this stage it might not be worthwhile to perform a full analysis of the letter’s claims, but it is definitely worth performing at least a high-level review. Read more