IPWatchdog Innography Webinar: Supreme Court Impact on Patent Portfolio Management

©2015 INNOGRAPHY, INC. :: CONFIDENTIAL 1©2015 INNOGRAPHY, INC. :: CONFIDENTIAL JULY 30, 2015
Supreme Court Impact on
Patent Portfolio Management

©2015 INNOGRAPHY, INC. :: CONFIDENTIAL 2
Host and Participants
•  President
at

IPWatchdog

•  Host
of
today’s

webinar

Gene Quinn
•  CEO
at

MedicinusIP

•  Former
veteran

of
Acacia

•  Current
Partner

at
Crowell
&

Moring

•  Former
Deputy

Director
of
US

PTO

Bob Rauker Terry Rea

Introduction
We will discuss:
•  What
the
recent
Supreme
Court
cases
have
meant
for

patents,
patent
porHolios,
and
valuaIons

•  The
recent
case
of
CLS
Bank
v.
Alice
CorporaIon
and
the

ramiﬁcaIons
to
the
industry

•  Other
§101
issues
and
important
quesIons

©2015 INNOGRAPHY, INC. :: CONFIDENTIAL 4©2015 INNOGRAPHY, INC. :: CONFIDENTIAL JULY 30, 2015
Q&A

What has Alice done to the licensing industry?
Bob Rauker:
“Alice
has
had
a
huge
impact
on
the
licensing
industry…
With
the
high
rate

of
patent
cases
now
being
basically
killed,
it’s
had
a
devastaIng
eﬀect…
It’s

becoming
very,
very
diﬃcult
to
understand
and
evaluate
patents
for

licensing,
because
you
just
don’t
know
the
value.”

Terry Rea:

“I
was
surprised
at
the
extreme
impact
that
CLS
Bank
vs.
Alice
had
on
the

soZware
and
business
method
sector.
The
fact
that
they
almost
needed
a

technological
component
to
be
part
of
their
claim
and
you
couldn’t
just

merely
recite
computer
anymore.
I
didn’t
expect
that
in
the
higher
tech

world
to
have
the
impact
that
it
did.”

How do you approach valuing patents or a
portfolio you may be trying to acquire?
Bob:
Positive effects: “It’s
had
the
posiIve
eﬀect
of
cleaning
up
what
we
would

say
‘garbage
patents’
and
maybe
what
I
would
call
the
true
troll
business
of

junk
patents
being
asserted,
the
cost
of
liIgaIon.”

Negative effects: “You
literally
have
to
put
a
much
lower
value
like

anything
else
unIl
there’s
more
certainty,
which
is
unfortunate,
because

there
are
a
number
of
people
who
have
some
nice
patents,
but
the
industry

has
to
respond
and
say,
‘Listen,
there’s
just
huge
uncertainty.’”

Terry:

“So
what
I
do
with
my
clients,
when
I’m
claim
draZing,
I
try
and
be
as

creaIve
as
possible.
I
look
start
to
finish
when
you
find
and
idenIfy
that

component
in
nature
that
will
be
modified.
I
try
and
draZ
claims
that
will

cover
it
each
segment
of
the
way
unIl
it’s
sold
and
used
by
a
paIent
or
a

pracIIoner.

…the
examiners
are
going
through
the
very
same
learning
curve
that
we

are.
We’re
all
in
it
together
and
we
should
think
about
teaming
with
the

examiner
to
arrive
at
patentable
subject
ma]er.”

What are you telling clients?

Terry:

“I’m
sort
of
opImisIc
that
the
future
will
give
us
the
drugs
and
the
diagnosIcs

that
we
need
so
we
can
all
live
purportedly
to
be
over
a
hundred.
I
think
that
if
I

owned
a
company
right
now,
frankly
I
would
conInue
filing
patent
applicaIons.

Maybe
I
wouldn’t
file
on
as
many
or
as
robustly
as
I
did
in
the
past,
but
I
think
that

you’ve
got
to
protect
your
R&D
efforts
and
your
spend
as
much
as
possible.”

“If
you
already
have
something
commercial
and
your
patent
is
listed
in
the

package
insert
or
on
the
product,
I
would
be
inclined
to
pay
that
maintenance
fee,

because
I
do
think
that
it
does
provide
some
type
of
barrier
from
prevenIng
third

parIes
to
copy
what
you’re
doing.
But
it’s
all
a
balance.”

What should a start up company in the bio-tech sector do? Should
they still be filing patent applications? What should an established
company do when it comes time to decide whether or not to pay
maintenance fee?

Bob:
“These
recent
rulings
have
had
a
signiﬁcant
impact
on
the
industry.

And
so
the
key
there
is
people
need
to
be
cognizant
of
what
these

rulings
are.

I
would
sIll
conInue
ﬁling
the
claims.
I
would
try
to
push
as
much

as
possible
toward
diagnosIc
kits
or
other
apparatus
claims
if
we

can
do
it.
That’s
the
general
advice
on
that
that
we’re
following.”

What do you think about the future in diagnostic
methods? Where are you placing your focus?

Bob:
“We’re
basically
keeping
everything
alive.
Yes,
it
is
more
expensive
and
I

think
the
typical
thing
is
to
do
that,
but
we’re
really
trying
to
go
down
the

various
paths
and
focus
on
that
and
that
requires
creaIng
specificaIons

that
are
more
detailed
perhaps
and
maybe
take
a
li]le
bit
longer,
or
filing

mulIple
different
specificaIons.
One
may
be
directed
more
towards

methods,
one
more
directed
toward
apparatus.
It’s
the
idea
that
you
have

to
keep
stuff
alive
because
you’re
going
to
have
to
respond
to
these

changes.

It’s
tough,
the
cost,
we
understand
that,
but
it
could
be
a
very
significant

cost
if
you
don’t
keep
it
alive.

How do you determine what to focus on, what to
keep alive, and what is worth having?

Terry:
“I
think
that
you
do
have
to
draZ
patent
applicaIon
smarter
than
ever

before
in
some
areas
of
technology
they
might
be
longer,
in
other
areas,

maybe
not.
You
have
to
be
smarter;
you
have
to
be
more
creaIve
in
your

claim
draZing.

Reissue
is
a
bit
expensive,
it
takes
a
while,
but
for
those
crown
jewels,
where

you
think
your
future
is
riding,
I’d
recommend
it
in
those
circumstances.
It’s

true
the
record
tends
to
get
a
li]le
bit
more
convoluted,
but
if
you
already

have,
in
the
back
of
your
mind,
liIgaIon
issues
and
you’re
already
working

with
liIgaIon
counsel
while
you’re
going
through
a
reissue
or
reexam,
I
do

think
the
product
that
comes
out
could
be
ve]ed
and
could
come
out
a

stronger
patent
than
before,
because
every
issue
was
already
addressed
by

the
PTO.”

Is re-issue a solution?

Gene:
“I’m
sIll
in
favor
of
patents,
and
fundamentally
I
think
things
are
going
to
change
sooner

rather
than
later,
because
if
you
look
at
the
last
30
years,
as
far
as
I
can
tell,
and
I’ve
looked

through
it,
we
haven’t
given
the
same
advice
to
soZware
applicants
for
any
more
than
a
two

to
two
and
a
half
year
period
of
Ime.
It’s
just
constantly
evolving
and
changing.”

Bob:
“Even
if
there
is
this
quesIon
of
validity
when
we’re
looking
at
invesIng,
there’s
always
a

slightly
be]er
comfort
level
that
there
is
a
patent.
It
may
eventually
be
declared
invalid,
but
I

think
just
from
a
pure
funding
standpoint,
the
valuaIon
of
the
company,
it’s
be]er
to
have

patents
than
not…
That’s
why
you
have
to
keep
stuﬀ
alive
and
try
to
put
as
much
in
there
that

goes
to
the
core
of
what
you’re
trying
to
achieve…
There’s
a
lot
more
priority
now
and
we

have
to
be
cognizant
of
that.
But
I
would
sIll
ﬁle
them.
I
think
you
just
have
to
be
recognizing

that
it’s
going
to
be
narrower,
there
are
going
to
be
changes
in
the
law,
but
I
sIll
think
it’s

be]er
to
have
them
at
the
very
least
from
a
valuaIon
and
funding
source.”

What would your advice be to a start-up company whose core
technology is web-based software? Should they be seeking patent
protection today or not? If not, what approach should they take to
try and protect what they have?

Is it time to build again?
Terry:
“That
would
be
my
basic
recommendaIon.
I’m
hoping
that
the
Supreme
Court
is

going
to
get
more
sophisIcated
and
more
finely
tuned
with
their
decisions
as
their

comfort
level
with
these
patent
cases
and
their
understanding
of
how
they
affect

business
and
the
economy
evolve.
And
it
sIll
amazes
me,
9
to
0;
that’s
a
whole
lot

of
very
intelligent
people,
who
don’t
oZenImes
act
in
sync
on
a
wide
variety
of

other
issues,
and
yet
in
the
patent
world,
they’re
pre]y
much
lockstep.”

Bob:
“I’ve
always
been
of
the
feeling
that
you
design
and
develop
and
then
have
the

patents
follow…
I
think,
in
fact,
the
development
drives
be]er
patents
because
you

work
through
all
the
issues
and
then
you
file
on
those
issues.
That’s
what
we’re

working
with
and
trying
to
get
people
to
see.
Develop
your
product.
Sell
your

product.
The
patent
applicaIons
will
follow.
Just
be
smart
about
it.”

Terry:
“I
do
think
that
there
will
conInue
to
be
strong
licensing
from

outside
the
United
States
because,
believe
it
or
not,
they
sIll
have

conﬁdence,
perhaps
more
than
many
of
us
who
are
in
the
middle
of

it,
that
they’re
more
objecIve
perhaps
than
us
and
they
think
that

we
will
ﬁnd
our
way
out
of
this
apparent
inconsistency
a
li]le
bit

sooner
than
we
think.

Teva
vs.
Sandoz
has
not
changed,
I
don’t
think,
the
liIgaIon

plaHorm
as
much
as
we
thought.”

What is the effect on licensing US Patents
internationally in light of all these cases? And
what about enforcement as well?

Bob:
“I’m
somewhat
pessimisIc
that
there’ll
ever
be
harmonizaIon.
I
just
think
that
there
are
too

many
naIonal
interests
in
industries
within
the
various
countries.
I
don’t
think
you’ll
ever
see

a
global
patent
or
anything
of
that
nature
where
stuff
is
consistent.

To
Terry’s
point,
they
sIll
have
great
hope
and
promise
in
our
patent
system.
As
she
said,
I

think
they
do
have
a
li]le
bit
stronger
belief
in
our
system,
but
they’re
also
obviously
buying
it

to
bring
in
their
own
industries.”

Terry:
“I
think
a
lot
of
countries
are
talking
about
[harmonizaIon]
now
just
because
business

requires
efficiencies
and
they
don’t
like
that
mulItude
of
different
laws
in
different
countries,

and
also
patent
offices
are
collaboraIng
more
so
now
than
ever
before
in
areas
such
as
work-‐
sharing.
I
think
that
the
more
we
can
inch
there,
the
more
efficient
it
can
be
for
business,
and

therefore
it’ll
give
us,
hopefully,
a
“best
pracIces”
and
it
would
only
be
the
best
aspects
that

were
harmonized
across
the
globe.”

What do you think about §101 issues or the equivalent issue overseas?
Are we going to harmonize these issues with the way that Europe looks
at them and the way that we look at them? Should we in the US just be
writing applications and looking for applications that would satisfy
the European standard?

Terry:
“Absolutely.
It’s
easier
to
do
it
than
ever
before.
The
examiners
are

encouraged
to
parIcipate
in
interviews.
The
examiners
are

encouraged
to
iniIate
interviews.
The
examiners
are
ﬂexible
no

ma]er
what
your
Ime
zone
is
to
work
with
you.
So,
yes.
Historically,

that’s
what
I’ve
found
to
work
best
and
I
think
the
staIsIcs
also
show

the
quality
of
the
claims
and
the
applicaIon
is
higher
when
that

applicaIon
has
an
interview.”

In light of all that’s going on, do you recommend
trying to do more interviews with examiners?

Bob:
“I
don’t
think
so.
Let’s
face
it.
Companies
are
in
the
business
to
make

products
and
commercialize
stuﬀ.

People
will
conInue
to
invent.

People
will
conInue
to
innovate.
The
problem
is
more
on
the
smaller

level.
Is
it
going
to
impact
smaller
companies?
Probably.
Are
they

going
to
be
able
to
protect
their
intellectual
property?
That
may
be

more
diﬃcult.
I
don’t
think
R&D
is
going
to
go
away,
but
a
lot
of

these
decisions
will
have
an
impact
on
these
smaller
companies.”
Do you think that all of these recent decisions
are going to wind up having a long-term
adverse effect on R&D in the US?

Terry:
“I’m
big
about
ﬁling
in
the
EPO
and,
as
I
indicated
before,
I
think
quite
a

few
commentators,
and
myself
included,
think
that
the
actual
subject

ma]er
eligibility
101,
it’s
broader
in
Europe
right
now
than
it
is
here
in

the
US…
Right
now
the
EPO
has
been
surprisingly
posiIve
for
me
and
my

clients.”

Bob:
“I
agree
with
her.
I
would
just
add
in
I
am
very
comfortable
with
Canada,

at
least
on
the
medical
device
side.
Japan
has
been
always
ﬁne
with
me…

You
just
have
to
look
on
an
individual
basis.”

Are there places around the world that you can
get better protection right now than you can get
in the US?

With the growing use of the patent
prosecution highway, do you suppose it may
be a strategic advantage, that in these
jurisdictions where you might be able to get
better, more meaningful, strong protection,
you try and start there and then enter the PPH
and the US based on what you get there,
maybe under the belief that the courts might
think that it’s a stronger patent because it’s
been looked at in multiple different countries?

Terry:
Yes,
absolutely.
I
know
quite
a
few
people
who
use
that
as
a
strategy.
They
make
a

strategic
decision
where
to
file
their
first
applicaIon
or
where
to
request

examinaIon
or
where
the
first
examinaIon
will
likely
occur.
I
actually
haven’t
seen

it
completely
play
out
quite
yet,
but
they
do
seem
to
get
a
broader
scope
to
their

claims
once
they
come
back
to
the
US.

Bob:
The
other
thing
I’d
say
is,
especially
in
the
bio-‐tech
and
med
device,
with
your

products
being
commercialized
typically
sooner
in
Europe,
it’s
that
much
be]er
to

do
it.
You
get
that
advantage
of
geing
your
patent
issued.

To watch the full
webinar, click here.

IPWatchdog Innography Webinar: Supreme Court Impact on Patent Portfolio Management

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