How do we enhance the selling price of web-related patents? We prepare claim charts for the patents.
A marketing document that analyzes products against patent claims.
A claim chart is a highly detailed document that offers an argument explaining precisely how a certain product of a particular company arguably infringes upon a claim of the patent. This is a document the preparation of which requires relevant market knowledge, technical expertise and an understanding of patent claims (see below).
Below is an image of part of a claim chart from a patent infringement lawsuit against ClamAV:
What you are looking at above are "claim elements" down the left-hand column. Down the right-hand column is an analysis of how ClamAV seems to "read" on those elements.
Preparation of this document tends to significantly accelerate the generation of interest in the patent among multiple potential buyers (see below).
No. They are merely marketing materials that facilitate business discussion.
Claim charts offer a hypothetical simulation of prospective patent litigation. They are not a legal assertion of infringement. Instead, they merely serve to outline some arguments that some lawyers in the future might make to a court, that the court might accept. In that way, they are a simulation or model of a potential future dynamic, prepared solely for the purposes of business discussion and, in particular, valuation.
Of necessity, this is a multi-step process.
Step 1 involves Claim Chart Prospecting. In this step, which typically takes a day or so, we study your patents closely to determine whether viable claim charts can be created for them. This step happens in close consultation with you.
In Step 2, Claim Chart Preparation, we spend anywhere from a couple of days to a week preparing claim charts for your patents. This work demands little of your time and attention until a draft is complete at which time we work with you to bring you up to speed on the arguments of the claim charts.
In Step 3, Selling, the claim charts are used as marketing materials for prospective buyers. The prospective buyers ought to include the companies mentioned in the claim charts, institutional patent buyers, and other interested parties. You can perform this step yourself, use a broker, online exchange or other intermediary, or rely on us. In any of these cases, we remain available to answer questions as they arise in the sales process.
In Step 4, Closing, the sale is finalized. This involves a contract of sale between you and the buyer. Most marketplaces help you with that step. If your marketplace doesn't, we can help you with that. We have experience negotiating deals.
The best marketplace for you will depend upon your circumstances.
First, we are fully capable of handling the complete transaction with regard to the sale of your patent(s). Our Principal, Peter Savich, has deep experience working inside the very sort of large Internet companies who could be potential bidders, including closely working with the in-house lawyers of those companies — the actual buyers.
However, should you choose to use a different marketplace for completing the transaction, we can help you with that too. As of 2009, there are multiple, very different kinds of patent marketplaces. These kinds range from the secret, manual, and specialized marketplaces operated by patent brokers, to the public, automatic, and general-purpose online marketplaces like eBay Patents. Between these two extremes, there are many intermediate kinds of marketplaces that take a middle approach to secrecy, automation, and specialization (e.g. Ocean Tomo Auctions, IP Auctions).
Which kind of marketplace is best for your patent(s)? That will depend upon your patent(s). Basically, the answer comes down to whether there are any ancillary problems with your patent(s). These problems can include such issues as a cloud on the title, a contentious relationship with one or more of the inventors, significant prior art, etc. In the case of such problems, patent brokers like IPotential provide great value as a private marketplace.
However, in the absence of such ancillary problems, the online patent auctions serve the purpose quite well. In this case, we'd recommend choosing a marketplace that manages the bidding process well, charges a low commission, and allows for the closing of the sale in a manner acceptable to patent buyers.
One item not on the above list is: "popularity of the website". That is, it doesn't matter how many eyeballs, or what quality of eyeballs, come to the online marketplace. This is because, as is discussed in the next Q&A, the claim charts identify the key potential buyers. So all we need to do is point these buyers to the web page offering for your patent. We don't have to wait around for strangers to find it.
Bottom line: In the process of digging deeply into your patent(s) in Steps 1 and 2, we will be in a position to recommend a marketplace that suits your circumstances.
How do claim charts enhance selling price? Claim charts create a natural bidding war.
Because claim charts provide a "sneak preview" of future litigation(s) that would realize the true value of your patent.
A patent exists only because the government (the PTO) says it exists. And ultimately, value can be extracted out of the patent only because the government (a court) says so.
So to understand the true value of a patent, it doesn't help to start by looking at how technology, real estate, or stocks are valued. This is because the value of none of those three kinds of assets arises from the court system.
Instead, to understand the true value of a patent — a creature of the court system — we must understand how the courts arrive at a value for patents.
Well, the process for discovering patent value is called "patent infringement litigation". So we need to know a little bit about that.
For the purposes of this discussion, the most important patent case was the Supreme Court's 1996 decision in Markman v. Westview Instruments, Inc. 116 S.Ct. 1384 (1996). I'm not going to bore you with the specific findings of that decision. Just understand that the upshot of that landmark decision is that, since 1996, the standard procedure for patent litigation in the U.S. has both sides preparing claim charts early on in the case.
The preparation of claim charts fleshes out, early in the trial, whether or not this patent litigation is likely baseless due to the absence of infringement. This is because the claim charts purport to demonstrate infringement. If they can't demonstrate that, then the patent has no value in this litigation and the case should end sooner than later.
In this way, claim charts have an enormous say in whether a patent is worthless or not. If rigorous claim charts cannot be created for a patent, then the patent has little if any value. But if they can be created, then the opposite has been shown: the patent has value — a value that is at least in the ballpark of the cost of defending a patent infringement lawsuit.
This is the fundamental reason why we use claim charts for marketing patents.
Sure. If this was 1909, rather than 2009.
The difference that 100 years makes comes down to the speed of technological advances. The accelerating advance of technology today is acute within the domain that is the specialty of Jack Polymath: the web.
Five years on the web represents multiple lifetimes for various web-related technologies. A bet placed on the future of the web (which is what filing a web-related patent is like) will, in most cases, be settled, once and for all, within only a couple of years, if not months.
But the time lag between:
For example, consider the data on this time lag arising from Ocean Tomo's Spring 2009 Live IP Auction. "Lots" 4-12, 33-35, 40-42 of this auction are web-related patents. These 15 lots comprise 19 different web-related patents. For each of these patents, Ocean Tomo provides the "Earliest Filing Date".
As we write this today, it is February 2009. Ocean Tomo's Spring auction will be held next month, in March. For these 19 web-related patents, the average lag between today and the Earliest Filing Date is about 9.1 years; the median lag is about 8.6 years.
Nine years separating a bet that was placed on the future of the web, and where the web is today, is a very long time. Just for reference, note that nine years ago from February 2009 puts us back to start of 2000, when we all learned that Y2K wasn't the end of civilization after all, but before the dot com crash. On the web of today, the start of 2000 might as well have been the Stone Age.
What all of this means is that a good number of web-related patents being offered for sale today are worthless. They represent bets on a future that never came to pass. And for many of these patents, the failure of that bet has been well known for years.
So if today, a web-related patent is being offered for sale, but it does not come with a set of claim charts, we would advise buyers to be very skeptical, and at least wary. Are these claim charts missing because the seller did not know about their necessity? Or are they missing because they cannot reasonably be created, thus rendering the patent worthless?
For example, in a 2007 presentation entitled Best Practices for Buying, Selling, and Licensing Patents, patent industry luminary Ron Laurie listed "Evidence of infringement - Claim charts" as top on his list of answers for "What are the different ways in which the patent opportunity is 'packaged' and presented to the buyer(s)?"
In the same vein, in their Guide to Selling Your Patent FAQ, leading technology exchange Tynax includes the following Q&A:
What are Claims Charts, and Why Should I Care?As a patent is merely a right to enforce, to exclude others practicing the disclosed invention, even defensive buyers are looking for patents that can be asserted against infringers. A claims chart is a simple two-column chart that is used to show evidence of infringement.
You should care about this because evidence of infringement is important to establish the value of the patent-- a patent with claims charts is more marketable and attracts a higher value than one without (emphasis added).
If you prefer video, watch a few minutes of an industry conference in which the panelists discuss the centrality to claim charts to enhancing sales price.
They create a natural bidding environment.
The preceding discussion explained that sound claim charts are the difference between a worthless patent, and a valuable one. But if we are in the latter, happy camp (i.e. claim charts have been created), how do the claim charts enhance value?
The answer comes down to the simple laws of supply and demand, scarcity, and competitive bidding. In the presentation cited earlier, Ron Laurie gets to the heart of the matter in asking the question: "What are typical approaches to the identification and contacting of potential buyers?" The top answer he gives is: "Buyers with potential infringement exposure".
Any guess as to who are the "Buyers with potential infringement exposure" for your patent? They are the targets identified within the claim charts.
In other words, claim charts enhance the value of your patent not just because they tend to show that the patent will hold its own in a future patent litigation (and trust us, defending against a serious patent infringement lawsuit is a major pain in the a$$ for companies). The claim charts also enhance the value of your patent because they identify the very entities most motivated to buy the patent.
And if the pockets of those entities are deep enough, you can be sure that there will be more than one patent assertion firm and patent investment bank interested in your patent too.
All of those parties interested in your patent make for a natural bidding war.
No bidding, much less money.
In the absence of quality claim charts, you can't be sure that the potential buyers who would have the greatest motivation to buy are even aware of your patent or of their own latent motivation.
A flood of patents are being sold today. From the perspective of buyers, patent purchasing is a "needle in the haystack" problem. Without claim charts, your patent remains just another needle in that haystack.
Indeed, the savvier buyers might take the absence of claim charts as a proxy for worthlessness (e.g., Palm, Inc., corporate counsel Doug Luftman said it best: "Show me the claim charts!, [else don't waste my time]" .)
Bottom line: You have a valuable patent to sell? You need to sell it with quality claim charts.
Perhaps. But if that happens, you're the winner.
In MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Supreme Court made it easier for patent infringers to beat the patent holder to the courthouse by filing a declaratory judgment action. In this sort of action, the plaintiff infringer is saying, in effect: "I'm not waiting around for you to sue me for patent infringement. I'm suing you, saying that your patent is worthless."
In MedImmune, the patent owner had sent claim charts to the infringer. That action was taken by the Court to mean, in the words of Bugs Bunny, "Of course, you realize, this means war".
Accordingly, even though the act of sending our claim charts to potential infringers is purely about marketing and business discussion, this act might well open the door for one of those infringers to rush into court, to litigate against your patent.
The question for you, the patent owner is: "Would that be a good thing, or a bad thing?"
Our answer is: That would be a very good thing for you. Our reasoning runs as follows: Let's say that one of your bidders, within the few weeks or months between when the claim charts are sent out, and when your patent is sold, goes to the trouble of rushing into court to file a declaratory judgment action. This will mean that that bidder thinks very highly of your patent. How highly? High enough to exceed the cost of patent litigation. And that amount is orders of magnitude higher than the average price that patent lots sold for at Ocean Tomo's six Spring/Fall auctions between 2006 and 2008.
Above, we noted that the claim charts ought to show that your patent is worth a minimum value in the ballpark of the cost of patent litigation. But if one of the bidders jumps the gun and files a declaratory judgment action, that will be proof that, at least one bidder agrees that your patent is worth that value. We will have moved from potential, theoretical, and future value, to actual, practical, and current value. "Ca-ching" was the sound you just heard.
The only way we can think of that such a declaratory judgment action could hurt the sales prospect of your patent is if your patent is obviously invalid, and that scares away all the potential buyers. But in that case, your patent is worthless, and you shouldn't be trying to sell it using claim charts or anything like it anyway. In that case, smoke and mirrors would be a better marketing approach.
The bottom line is that if your patent is valuable, it will be valuable to more potential buyers than just the party that files a declaratory judgment action. And its value ought to start in the ballpark of the cost of patent litigation.
It's possible, though rather unlikely.
The bottom line with claim charts they serve as a sort of risk multiplier in the sales process. This effect arises from the fact that claim charts take a deep, intimate look at patent claims. This is in contrast with other patent marketing approaches that treat the patent with broad, generalized brush strokes.
It's the difference between flying high above a stretch of land, versus walking on that land. It's the difference between gazing at a person from 100 feet away, versus standing nose-to-nose.
In these latter, intimate circumstances, the strengths and weaknesses of the land or person become more readily apparent. The result can be a far greater attraction and/or a far greater aversion to the land or person.
Quality in a claim chart tends to ameliorate the downside risk of this intimacy. "Quality" in this context means that the claim chart:
The reason that the foregoing metrics of claim chart quality ameliorate downside risk is that they serve as a proxy for the "seriousness" of prospective patent litigation.
But even with this quality, if none or only one of the prospective buyers "buys" this case of "seriousness", sales price could be harmed.
Why choose us? We're experts who run a hyper-efficient operation.
Because this document requires esoteric knowledge.
Claim charts are a particularly challenging document to prepare because doing so effectively demands expertise in three distinct domains: (1) business; (2) law; and (3) technology. A friend of ours, Michael Pierantozzi, calls this the "BLT" requirement.
Jack Polymath is not the only one claiming that BLT expertise is needed in the area of selling patents. Leading private patent brokerage firms make the same claim. IPotential says that "Patents are a complicated asset class that requires a unique combination of legal, technical, and business expertise to determine the value of and market for those patents". Inflexion Point Strategy concurs, explaining that it "provides an integrated approach to monetizing patents and related know-how through expertise in technology, business and intellectual property transactions [legal]."
In our view, broad business ("B") experience is needed for identifying the companies likely to be infringing your patent, and for understanding the centrality of your patent to the business models of those companies.
Next, a solid grounding in patent law ("L"), including prosecution and litigation, is needed for understanding the reasonable meaning and reach of your patent.
Finally, a sound technical ("T") background is needed for understanding the subject matter and technology referenced in your patent. That background is also necessary for studying the products and services of targets, with a technical understanding as to how those products and services function, and providing sound assumptions about "behind the scenes" operation.
Normally, Jack Polymath is dubious of claims that "only experts are welcome here". Usually when we see such a claim, we assume that the claimant is hiding an insecurity (after all, we are Jack polymaths).
But in this domain, even we will argue that draft claim charts ought to at least pass through the review of one or more BLT experts.
So if DIY is your bent, and you're planning on trying this yourself, let it be said that you were warned.
BLT!
All Jack Polymath personnel who prepare claim charts have at least the "LT" expertise (legal and technical). All work must pass the satisfaction of the principal of the firm, Peter Savich.
Mr. Savich is a full-fledged BLT expert.
Our service is not an alternative to other patent services; instead, it's complementary.
For pretty much all of the online patent exchanges, our service serves as the "missing link" between sale and maximum value. That is, as of 2009, these online exchanges seem en masse to have rushed too quickly to embrace web-based automation.
Patents are a unique asset. Today, the skill required to prepare a quality claim chart is not subject to automation. It's probably not even subject to outsourcing to cheaper labor (i.e. India, China, etc.) either. As noted earlier, it's an esoteric exercise, requiring deep and broad human knowledge.
But beyond the preparation of claim charts, most all other activities surrounding the sale of a patent could feasibly be automated. And, as we all know, appropriate automation enhances profit.
So Jack Polymath is a business that seeks to leave to expert humans that esoteric work, while the using the modern tools of web-based automation to optimize everything else — including the operation of our own business.
The bottom line for you is that, armed with your claim charts, you are in a position of strength to sell your patents using any approach, including direct negotiations with buyers, or indirectly, via brokers or online exchanges. Our service is simply one that empowers you to achieve maximum value for your patent(s).
