Category: Patents

Legal strategy: The driver of legal change

Patent reform is back in the news as both the House and Senate have proposed their own versions of legislation in this complex legal area. The aim of patent reform is to further curtail the activities of the so-called patent trolls, which are companies that own patents, do not make any products and use patent law to sue large companies to collect jury verdicts or settlements. 

Since technology and innovation are growing in importance as drivers of wealth creation, it is natural that patent law would rise in importance. Since the economic stakes have increased, so have the stakes in the political and legal arenas. This could all be predicted by anyone who observes how powerful parties try to alter the legal and political system for their own advantage. From an academic standpoint, this was marvelously theorized and explained by the pioneers in the field of non-market strategy, who deduced the importance of engaging the legal, regulatory and legislative system as a form of strategic behavior. 

My recent writings in legal strategy support the view that law can be used to achieve competitive advantage. My most recent work addresses the abusive aspects of this practice and ways that can limit what I call “strategic legal bullying.”

What’s fascinating to me is that legal strategy is indirectly driving some important political wrangling in the current iteration of patent reform. From press accounts I’ve read, a hedge fund manager is using a transformative legal strategy to exploit a process to challenge drug patents while betting against the drug companies’ stock. Now, the drug companies want a legislative carve-out in place that would shield them from these administrative challenges. Their reaction to the hedge fund manager’s legal strategy is to change the law as it applies to their industry. 

What I’m starting to realize is that legal strategy has often been the agent of legal change, for better or worse. Think of Sony, Napster, Aerio, Uber, Tesla and the “patent trolls.” Their business models are closely tied to legal strategy. In some cases they successfully enacted legal change, and in other cases the status quo prevailed. The systems where this strategic behavior takes place is complex, consisting of companies, courts, administrative agencies, the media, and the legislature. Legal strategy lies at the core of the process and helps parties re-write the rules of the game, or at least try to do that. 

by Categories: Patents, Policy, Research, Strategy, UncategorizedTags: 3 Comments

Apple’s Victory is One for Pioneering Designers

As reported by The Wall Street Journal, Apple won its long-anticipated jury trial against Samsung on Thursday and was awarded $1.05 billion in damages by a jury. I think it is highly unlikely that the decision will be overturned on appeal, so the case is likely to establish an important precedent, as I anticipated in an earlier post I wrote in 2011. My prediction then, however, was that Apple would win through a private settlement instead of a jury verdict.

I predicted a private settlement because of the high stakes involved and the risks open to both companies if the issue ultimately was taken to a jury. Apple’s risk was that the jury would invalidate some or all of the patents it had asserted, a defensive maneuver that Samsung adopted during litigation. Samsung’s risk was that it would be found to have infringed Apple’s patents by copying user interfaces and other design aspects of Apple’s products. In the end, and to the surprise of many, both companies rolled the die and Apple came out on top.

The $1.05 billion verdict is a big coup, not just for Apple, but for product designers in general. For a long time, product design was perceived in industry and in legal policy-making circles as an intellectual property and strategic backwater. That has changed, however, due to consumers’ increasing aesthetic sophistication and a crowded global marketplace.

Design is starting to play an essential role in product differentiation and branding. An empirical study I conducted with two marketing scholars in 2009, published in The Journal of Marketing, found a positive association between trademark ownership and financial performance. This link between the two suggests that companies which pay attention to the legal aspects of branding through trademark registration reap greater rewards.

Elsewhere, I have written about the rare capability within firms that generates product shape trademarks. Product shape and packaging trademarks, often referred to as “trade dress,” were among the arrows in Apple’s legal quiver in the Samsung trial. I believe the Apple-Samsung case signals that product design and trademarks will be increasingly applied during new product development and asserted during litigation among companies across industries.

I make a career of teaching legal studies to business students. In my lectures, I invariably cover the subject of intellectual property management and strategy. Had Samsung won at trial against Apple, I would have cynically advocated what I perceived as Samsung’s business and intellectual property strategy. That is, I would have advocated in favor of free-riding from an industry leader to quickly gain a foothold and increase market share. Had Samsung won, this strategy would be effective, since the risks of infringement and damages would have been minimal. Once the fast follower and design imitator establishes their foothold, they can then compete against the innovator based on a cost advantage. From a business perspective, this clearly would have been an effective tactic.

Given Apple’s victory, however, Samsung’s strategy is no longer risk free or optimal. Instead, a better strategy is to be aware of competitor’s intellectual property rights and embrace innovation. This will require investing in design capabilities to distinguish products, which is how Apple secured its leadership position.

A copycat strategy may still be adopted by firms that want to quickly enter a technology market, such as mobile devices. After the Apple-Samsung case, however, that strategy became significantly riskier, much to to the benefit of pioneering innovators everywhere.

by Categories: Design, Intellectual property controversies, Patents, Research, TrademarksTags: , , , , , Leave a comment

Apple’s iPad Design Patent Enforced

This past Tuesday, Apple obtained a preliminary injunction preventing Samsung from selling its Galaxy Tab tablet. A preliminary injunction was granted before the trial was concluded since Apple demonstrated that it would suffer probable success on the merits and irreparable harm. Interestingly, the basis for the injunction was a design patent (D504889) that Apple obtained for its iPad tablet.

USD504889

Design patents only secure ornamental product attributes, so the patent term is somewhat of a misnomer since utility patents, issued for working inventions, are much more prevalent and are typically what comes to mind when the term patent is used.

For some time design patents were seen as offering little protection to their owners. The Cout of Appeals for the Federal Circuit’s decision in the Apple case, however, breathes new life into design patents.

Since design plays a large role in certain consumer product markets, for example, autos, jewelry, fashion, and consumer electronics, it seems like the courts are more willing to extend property rights to aesthetic innovations. In some markets, design is an important if not essential element of the consumer’s purchase criteria, a source of differentiation from competitors, and an important element of branding and goodwill.

Resorting to the legal system to protect designs, however, as anyone within Apple can attest, remains a lengthy, expensive and uncertain process. Apple first requested the injunction on July 2011 and only recently obtained the order to prevent Samsung from free-riding on Apple’s investments in design-based innovations.

Another important design-related intellectual property case that will be decided soon on appeal is the Louboutin red sole trademark case. This case is currently on appeal at a federal appellate court which will review the New York trial court’s decision to revoke Louboutin’s trademark for its famous and distinctive red sole. Trademarks have a dual purpose to protect consumers from confusion and to protect the property attributes of designs that have become sources of differentiation among consumers. If the New York appellate courts follow the logic of the appellate court in the Apple case, they will reverse the trial court judge and affirm Louboutin’s red sole as a validly procured property right.

by Categories: Design, Intellectual property controversies, Litigation, PatentsTags: , , , Leave a comment

Research Spotlight: Administrative Patent Levers

My most recent article, Administrative Patent Levers was accepted for publication in the Penn State Law Review. This article looks at the U.S. Patent and Trademark Office (PTO) and how they implement rules that are technology-specific and policy-oriented. This is a major departure from the PTO’s prior role since they have historically been limited to procedural rule making by the courts. The PTO’s implementation of administrative patent levers signals a potential new era of greater policy making by the PTO.

by Categories: Patents, PolicyTags: , , Leave a comment

Steve Jobs: Creator and Intellectual Property Strategist

Like many others, I owe a lot to Steve Jobs. Some of the designs and intellectual property management strategies he pioneered at Apple were, and remain, the subject of my research and teaching. His work, along with that of the many talented people at Apple, continue to inspire me.

The New York Times has a nice interactive feature that allows you to view the many patents Steve Job helped usher in during his tenure at Apple. It provides a glimpse into the unique role Jobs had within Apple as a pioneering innovator and strategist.

by Categories: Design, Entrepreneurship, PatentsTags: , , , Leave a comment

Research Spotlight: Friends of the court: Using Amicus Briefs to Identify Corporate Advocacy Positions in Supreme Court Patent Litigation

Northwestern University’s Kellogg School of Management profiled my recent publication, co-authored with Kellogg faculty member James Conley. This work examines amicus (friend of the court) briefs submitted during U.S. Supreme Court patent litigation, and published in the University of Illinois Journal of Law, Technology & Policy.

by Categories: Intellectual property controversies, Patents, Policy, ResearchTags: , Leave a comment

Will a Green Patent Exchange Take Root?

Photo taken by Lars Schmidt

Silicon Valley is officially out of the dumps. Leading the way into our brave new world is clean tech. What is clean tech? The term is broad, and includes any type of novel technology that reduces our carbon footprint, by utilizing renewable energy or lessening the harmful impacts of carbon-based energy sources.

I met clean tech empresario Nikhil Jain back when I was at Michigan Tech. He offered to guest lecture my entrepreneurship class, and subsequently was available via skype to speak to the students about his latest venture, an online marketplace for ideas called OnGreen.

I received a call today from Nikhil, and learned of his latest venture: the OnGreen Patent Exchange (OGPX). This online marketplace of ideas aims to connect parties interested in clean tech-related patents. Yes, patents. The OGPX hub aims to stimulate investments and deal making in green technologies currently secured by patents.

The idea is compelling. It also highlights one of the major issues facing buyers of technology. There is so much innovation and information being claimed, it can be daunting to find the right partner or complement in a rapidly rising sea of patented technology. Hopefully, entrepreneurs like Nikhil will make it happen sooner rather than later so we can begin to enjoy the benefits of the next wave of green technologies.

The OnGreen Patent Exchange is located here.

by Categories: Entrepreneurship, PatentsTags: Leave a comment

Several ways to protect a website

How does one protect a website with great functionality and excellent design? The default is to obtain copyright on the expressive elements of the website. However, these other means are also used:

Utility patents can secure innovative functionality as a method/algorithm. For example, Netflix obtained this patent to secure the way its website guides users to create lists and queues for renting items.

Design patents can secure any ornamental or aesthetic design features on a website. For example, Google obtained this design patent on its clean search interface design.

Trademarks can secure any distinctive names, symbols or icons that are displayed on a website. Twitter does this, for example, by trademarking its stylized blue bird, the words “tweet” and “retweet” and its iconic “t” shaped logo. All of these are then used on the website.

by Categories: Design, Patents, TrademarksTags: , , , 2 Comments

Independent Designers: Here’s a Powerful Tool to Combat Knock-Offs

I’m always troubled when I hear stories about independent designers who are ripped off by knock-off artists, large retail chains and unscrupulous exporters who take advantage of low-cost manufacturing costs to catch a free ride from a designer’s work.

Reporter Christina Binkley wrote an interesting article on this very topic in The Wall Street Journal on April 29. The article discusses how the small, independent makers of the popular Shashi bracelet saw their unique fashion accessory imitated and sold for a fraction of the cost by a large corporate retailer shortly after the product gained mass appeal.

Innovators often fall victim to this type of intellectual property theft as free riders imitate a design and exploit a cost-based advantage that erodes the original design’s exclusivity, leading to brand erosion and foregone sales. From numerous articles I have read, it seems that this happens all too often to designers, and that all they can do is throw their arms up and accept this sorry state of affairs. As The Wall Street Journal article reports, most designers believe that the only response is to keep designing and hope their new creations will keep them above water.

I’d like to offer designers another solution based on strategic knowledge of intellectual property. Designers can register and protect their designs as numerous forms of intellectual property (IP), including trademarks, design patents, copyrights and trade dress. The Wall Street Journal article mentions this fact and discusses how these IP assets rarely prevent the flood of copycats.

The Wall Street Journal article, however, does not discuss a little-known procedure that IP owners can initiate that could offer them a powerful shield in their arsenal. The procedure is IP recordation with the U.S. Customs and Border Enforcement Authorities.

The process is actually quite simple. After you have registered your IP as a trademark, design patent, copyright or trade dress, all you need to do is file a short form with Customs and pay a $190 fee. The form is extremely simple and asks the IP owner to provide a registration number, describe the intellectual property, list parties authorized to use the mark, and provide an image of the intellectual property.

To access a screen shot of the actual form, click here.

Once your IP is recorded with Customs, you may then notify the office of any suspected parties that may be importing goods that infringe your IP. Customs may then decide to seize and impound the knock-off goods at any U.S. port while it conducts an infringement assessment. Impoundment creates a difficult scenario for the alleged infringers, including the foreign manufacturer and the domestic importers, which may include distributors and retailers. The procedure creates a cost for all these parties, buys the designer precious time to retain exclusivity for their designs (especially important when the design in question ties into a current fashion trend), and sends a clear signal that the designer means business.

The Wall Street Journal article mentions that designers may send cease-and-desist letters, and this is an important weapon in the independent designer’s arsenal. However, large companies tend not to respect these letters as much as when a big corporation with deep pockets is behind the letter. For an up-and-coming designer, having knock-off goods impounded is a much stronger weapon, especially when many companies that sell imposters have those items manufactured in China or other locations overseas.

Customs provides statistics on what types of goods have been seized under this impoundment procedure. In 2009, it conducted 14,841 separate IP-related seizures with confiscations worth $260.7 million. To view the statistics, click here.

To learn more about the impoundment procedure and how you can take advantage of it to protect your intellectual property, visit the Customs website here.

Designers, please consider using this legal tactic to protect your hard work and creativity under a system of fair trade for everyone.

by Categories: Copyrights, Design, Entrepreneurship, Intellectual property controversies, Legal resources, Patents, Policy, Trademarks, UncategorizedTags: , , , , , , , , Leave a comment

Top 10 Places for Tech Jobs…And Their Patents

U.S. News and World Report lists the Top Ten Places for Tech Jobs. The list includes: Atlanta, Boston, Houston, Huntsville, New Yok, Phoenix, San Diego, San Francisco, Seattle, Washington.  It’s an interesting list, and I thought I would do a patent search for inventors based out of these cities. Here are the results I obtained and a chart that lists the patents for each area. The West Coast is still dominant with the top three and nearly 60% of the total share of patents. The East Coast is not doing too shabby with nearly 20%.  I was surprised by the relatively large share of Houston and Phoenix. It’s nice to see some other areas of the Nation gaining some traction in the high tech sector. My main question is, why didn’t the Research Triangle of the Durham North Carolina area make the list?

patentstats

by Categories: Entrepreneurship, PatentsTags: , , Leave a comment