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Commercializing Expired Patents

Posted by: In: Uncategorized 14 Aug 2013 Comments: 0

The more patents become a hot button issue – particularly with the increasing amount of tech startups being hit with infringement suits – the idea of IP risk mitigation becomes even that much more of a priority.  Whether your organization licenses a subset of Intellectual Ventures’ 40,000+ drove of patents, aligns with the Allied Security Trust’s patent pool (granted you meet their criteria), or seeks protection through Unified Patents’ anti-troll efforts, many new business models exist to help mitigate the threat of patent litigation.

And these models make perfect sense to a large extent for SMBs and large corporations alike.  By having this intermediate layer of protection, these organizations can have increased certainty that their commercialization efforts will not get interrupted down the road from an unanticipated patent infringement lawsuit.  This also makes sense since most SMBs and still, many Fortune 500 companies don’t have robust, internal patent groups and the requisite resources to make well informed freedom-to-operate decisions themselves.  They would rather off-load at least some of this burden to an organization that does this type of work full-time, thereby freeing them to stick to their product development roadmap.

But to the greater point here, it could be extremely beneficial for companies to understand which patents are no longer active (based on the patent term expiring or the inventor not paying the requisite maintenance fees).

And since, it’s generally accepted that less than 20% of patents are actually commercialized, I’m willing to bet the entirety of the remaining 80% aren’t worthless.  Just because an inventor or company failed to commercialize (e.g. lack of funding, premature market, inexperienced management team, failed execution) doesn’t render those inventive concepts worthless.  Let’s take two scenarios here that would embody this concept.

Scenario 1 – Your company wants to build out its mobile device division and wishes to identify what power management technologies (for mobile devices) could be implemented free and clear.  In searching our engine about this concept, the first few records that appeared in the result set were:

Search Results 1

It could very well make sense for your chief engineer to review these results in order to avoid reinventing the wheel .  This information transfer may not only save money and time, but should reduce the risk of future of patent infringement.

Scenario 2 – You want to start a company, at least partly based on under-the-radar technology in interactive television technology space.  What is out there as far as expired patents go?  Who are the inventors?  And, perhaps your company hires those 2 engineers listed on the patent (and not the management team that failed to execute the idea).   Taking a look at some of the most related patents in a search, I came across:

Search Results 2

So using this information, both as a freedom-to-operate guide as well as a competitive/market research study, could be incredibly useful.  Personally, I never heard of 4 of the 5 entities on that above list.  Are these other entities still operating in this space?  What other patents have they filed since then (that are still in force)?  The answers to these questions will help you better understand the market landscape to help form your commercialization strategy, and will help you better answer due diligence questions during fundraising efforts.

Ultimately, I believe the prevailing attitude is that commercializing patent-pending technologies represents a substantially more attractive proposition because of 1) they are new, and 2) there’s the assumption that it will be granted with exclusivity for the 20 years after filing period.  Yet, despite not having exclusivity, the idea of commercializing expired patents is still very attractive as 1) you still may have the first mover advantage with a dormant or non-commercialized technology concept, 2) you may be more certain that you have the freedom-to-operate the idea.  The idea of making a concerted effort in combining the acquisition of patents rights (through prosecution, licensing, or brokerage efforts) and the integration of sound technological concepts outlined in expired patents seems logical, IMO.

– Brian Bochicco

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