Presentation by Stephen Mason from Dickinson Wright on "Monetizing Game User Interface Innovations in Enterprise Applications"

1. How YOU get paid:
Monetizing game user interface innovations
in enterprise applications
PRESENTED BY:
Stephen A. Mason

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Disclaimer: This presentation is not legal advice
Legal advice happens when:
• You tell me about your business strategy and I suggest legal
tactics to facilitate your strategy. You name a destination, and I
give directions.
This presentation is cartography:
• I draw a map. I tell you about what is happening over the hill
and point out some landmarks and paths.

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• IP LANDSCAPE IN VR
− Why VR patents are different from the rest of computing
• PATHWAYS IN IP
− Quick primer on the differences between patents, trademarks, trade secrets
and copyright
• MONETIZATION MODEL
− Is there commercial value to my business?
Roadmap of Presentation

4. The IP
Landscape
in VR

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Why is VR different? Gaming is in front.
• Entertainment (gaming) is leading the technology.
• The three largest patent holders are Sony (Playstation),
MSFT (Xbox), and Samsung.
• HTC and Facebook do not make the top 10.

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Why is VR different? Gaming is in front.
• In most other computing technology innovations, the
enterprise was in front.
• Businesses bought most Apple II-series computers.
• The killer Macintosh application was desktop
publishing.
• The French word for computer is ordinateur.

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Why is VR different? Fragmentation
• Nobody owns a big portfolio.
• Each of the 3 largest players is on the order of 3%.
• Of 11,776 patents in the space, the largest portfolio is
only 366.

8. The
future
in VR

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What happens next? The enterprise awakens.
• Innovations from gaming spread to other technology areas.
• Training and education:
• The obvious example is a flight simulator.
• A surgery simulator is less obvious, and it already
exists.

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What happens next? The enterprise awakens.
• Innovations from gaming spread to other technology areas.
• Remote controls:
• Telesurgery.
• Remote control of vehicles.
• Remote operation of laboratory robots.

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What happens next? Two models of diffusion.
• Gaming has solved the fundamental problems of the
interface.
• Enterprise software will adopt the solutions already
pioneered by gaming.
• The question is: Will enterprise software providers be made
to pay for what they take?

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What happens next? Why they will pay
• This goes back to fragmentation.
• Because nobody has built a well-developed portfolio,
there will be competitive pressure to buy assets on the
open market.
• When the patent arms race develops, as it has in
everything from cell phones to sewing machines, small
entities will cash in as large entities scramble to
supplement their own meager patent development.

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A Quick Map of Intellectual Property:
PATENT/TRADE SECRETS
COPYRIGHT
TRADEMARKEXPRESSION
FUNCTION
IDENTIFICATION
IDEAS

14. Trademark

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What is a Trademark?
• Words, devices, symbols or composite of both
− Also sounds, smells, colors, buildings, package shapes…
• Distinguish your goods or services from others
• No requirement to register trademark to be protectable
− But registration increases protection

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What Rights Does a Trademark Protect?
• Protects most precious assets of an enterprise - its goodwill
• Provides quality assurance to customers
• Protects against unauthorized use of owner’s mark

17. Patent &
Trade Secret

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What Can Be Patented?
• Anything people have invented:
− Machine
− Article of manufacture
− Process
− Composition of matter
− Improvement of any of the above
Note: In addition to utility patents, encompassing one of the categories above, patent protection
is available for:
1) Ornamental design of an article of manufacture or
2) Asexually reproduced plant varieties by design and plant patents.

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Why Would I Want a Patent?
1. To Stop Others
− From making, using, or selling the invention
2. Licensing Revenue
− Monetize innovation, no matter who is selling
3. Marketing to consumers and investors
− The product itself, because we all know that “patented” means
“better”

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• Immediately, unless:
− You want to keep it secret
− You never want a foreign patent
• Within one year (or else) from:
− Any public use of invention
− Any offer to sell invention
− Any publication describing the invention
Failure to apply for a patent within one year from any of these events will bar you from ever
getting a patent on the invention.
When Do I Want to Apply for a Patent:

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• Nature of patent
− A complete disclosure of the invention
− A 20-year monopoly
• Whether this is a good deal, depends on your industry
− Pace of change
− Detectability
− Reverse Engineering
The Patent Tradeoff

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• Innovations critical to the user experience
− Commercially valuable features (e.g., the ability of the software to
help users model or interact with the physical world). Value in the
market drives protection.
− Distinguishing aspects of the user interface that make the software
preferable for customers. Detectability drives protection
• Innovations in infrastructure
− As the scale of VR use increases, engineers are innovating with
respect to the underlying computation methods and systems. Broad
reach drives protection.
Factors Favoring Patentability in VR

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Six months ago, an employee invented a new utility for providing
haptic feedback in a surgical simulator. Last week, he left the
company and started selling a competing product.
Q: How do I stop the competition?
Common Business Application

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• Identify important inventions
− Product discussions – If an idea is innovative and
important, suggest disclosure submission
− Increase awareness– Whenever possible, refer employees
to the patent legal wiki
− –Submit disclosures at …
Three-Phase Patent Process (Identify Assets)

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• Filing and prosecution:
− A patent committee or in-house patent counsel identifies
cases on which to undertake filing and routes them to
outside patent counsel (hopefully by day 90)
− Outside counsel, working with the inventor, files a patent
application (hopefully by day 180).
− The United States Patent and Trademark Office Examines
the application and issues a patent (hopefully in less than
3 years from filing).
Three-Phase Patent Process (Define Protection)

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Three Phase Patent Process
• Identify Potential Licensees
− Keep on the lookout for infringers stealing the company’s
property. If the interface looks too familiar or the new
feature sounds like something we pioneered, inquire.
− Be aware of opportunities to sell company’s innovation to
partners.
• Negotiate Licensing Arrangements

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• Patent Term
− Starts On Issue Date
− Ends 20 Years From Earliest Effective Filing Date
• Right To Exclude Others:
− Making
− Using
− Selling
− Offering To Sell
− Importing
• Protection For Function & Structure
− Prohibits All Use, Not Just Copying
− Independent Creation Is Not A Defense
− Caveat- A Patent Does Not Convey To Patentee The Right To Practice Invention
The Small Print: Patents

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Trade Secrets
• Really must be secret (take steps to suppress theft)
• Last forever (Coca-Cola)
• Does not prevent reverse-engineering
• Must prove the theft itself

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Tips For Protecting Trade Secrets:
• Limit access to technical information on a “need to know” basis.
• Limit physical access to sensitive areas to approved personnel only.
• Institute proper sign out procedures for software, documents, etc.
• Label confidential information as “SECRET AND CONFIDENTIAL.”
• Require confidentiality agreements, non-disclosure agreements and
licenses for parties with access to trade secrets.

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The Small Print: Trade Secrets
• Definition
A device, method, formula or information that gives one an advantage over the
competition and which is kept secret to be of special value
• Examples
− Soft drink formulas
− Customer lists
− Business processes
• Limits
− Must be kept secret
− Independent development permitted
− Reverse engineering may be used to discover a Trade Secret

31. Copyright

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Copyright Examples:
• Literary works
• Motion pictures and other audio visual works
• Musical works (including accompanying words)
• Sound recordings
• Software
• Plans and Designs
• Semiconductor Masks

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Requirements for Copyright
• The work must be original (someone wrote it for the company)
• The work must be fixed in a tangible medium of expression
(floppy disk, paper, hard disk)

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Why Register a Copyright
• Registration enables suit against unauthorized copiers in
Federal Court
• Registration discourages some copiers
• Registration is not necessary to use the ©, but is good
evidence that you were the first to write/compose/draw/code

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The Rights Afforded Under a Copyright
Prevent others from:
• Making copies
• Modifying the copyrighted work
• Distributing the copyrighted work
• Performing the copyrighted work publicly
• Displaying the copyrighted work publicly

36. Monetization
Model

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Which Protection Is Most Appropriate
To My Business?
• Patents
− Pros: Strongest form of protection (protects ideas, not expressions); covers innocent
infringers; term is reasonable (20 years from filing date)
− Cons: Relatively more expensive and time consuming to obtain
• Trade Secrets
− Pros: Inexpensive and term can be forever
− Cons: Only protected for so long as secret; some things are not protectable as a trade
secret (e.g., visible to all in product)
• Copyrights
− Pros: Relatively inexpensive; copyright term is long (life of author + 70 years)
− Cons: Thin form of protection; infringement only when expression copied
• Trademarks
− Pros: Relatively inexpensive; term so long as used in commerce
− Cons: Non-use, non-enforcement can destroy mark.
− (e.g., Escalator, Linoleum, Kerosene, Cellophane, Thermos, Aspirin, Yo Yo and Bikini)

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A Quick Outline on Relative Costs
Copyright registration is cheap and automatic
• on the order of $1000 for a typical group of registrations
Trademark registration is cheap, but it’s not automatic
• on the order of $1000 for a typical application, and an additional $3000-
$5000 in prosecution to achieve registration
Patents are neither cheap nor automatic
• On the order of $15,000-$25,000 for an application, and an additional
$10,000-$25,000 over five years to get the patent to issue

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What We Learn from the Relative Costs…
Copyright and trademark registrations are “no brainer”
business decisions, if they are appropriate.
But we need to think about patents. The costs are high.
Why would I spend that much money?

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You Just Said $3M in Valuation for $30k?
• Maybe. It varies wildly.
There are 7,000,000+ United States patents.
Many are junk. But some aren’t.
• Gambradella et al. (2008) base their results on the large-scale PatVal
European survey, which asks inventors what is the minimum price
for which they would sell the rights to their patent. They find that the
distribution of values is extremely skewed, with the mean patent
value equal to 3.4 million euros (in mid 1990s
euros) and the median equal to a tenth of that.
• Link: http://onlinelibrary.wiley.com/doi/10.1057/emr.2008.10/pdf

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• MSFT has made five times more money from Android than
from Windows Phone 7.
− Microsoft gets $5 for every HTC phone running Android, according to Citi
analyst Walter Pritchard, thanks to a patent settlement with HTC over
intellectual property infringement.
− Link: http://daringfireball.net/linked/2011/05/27/htc-citi
• Of course, MSFT also lost $200M on a patent infringement
case in 2009.
− McKool Smith announced a $200m patent infringement verdict against
Microsoft in favor of i4i Inc. The complete verdict amount also included
awards for lost profits and royalties.
− Link: http://daringfireball.net/linked/2011/05/27/htc-citi
An Example from MSFT – I Don’t Represent Them

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Recent Patent Sales
• AOL to MSFT: $1.1B / 800 patents
• Nortel to Apple/MSFT/RIM: $4.5B / 6000 patents
• Freescale to Apple: ? / 200+ patents

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Firm Information
Founded in 1878, Dickinson Wright PLLC is a rapidly-growing law firm founded in
Detroit. With more than 475 lawyers serving clients from nineteen offices in the
United States and Canada.
Dickinson Wright’s client success is based upon five key drivers:
• High quality legal work
• Delivering superb value for fees
• Investing to build our knowledge and experience in our client’s industries
• Applying business acumen to legal issues
• Treating our clients with an unsurpassed level of client care
Our commitment to excellence and client service is evidenced by our long-term client
relationships.

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About Stephen A. Mason:
Stephen Mason’s practice focuses on patent acquisition in semiconductors, microprocessors and
memory, databases and storage, graphics processing, electronic commerce, network equipment
and software, and mobile computing and sensor systems.
From 2006 to 2007, Stephen served as general counsel of an Internet advertising startup in
Austin, Texas. His practice has previously included IP aspects of merger and acquisition
transactions, software licensing agreements and research contracts.
Mr. Mason is admitted to practice in Texas and before the USPTO. He received his Bachelor of
Science degree in Electrical Engineering from Texas A&M University (1999) and his Juris Doctor
degree from Baylor University (2003).
Stephen has served as president of both the Texas Aggie Bar Association (2008)
and the Capital City A&M Club (2007). Stephen currently serves as chairman of the supervisory
committee of Aggieland Credit Union (GTFCU) and is a member of the board of directors of the
Senior Aggie Leadership Council of Austin.

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Stephen A. Mason ’99
Member, Dickinson Wright, PLLC
303 Colorado, Suite 2050
Austin, Texas 78701
512.870.7645 | smason@dickinsonwright.com
https://www.linkedin.com/in/stephenmason/
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