Francis Tettey -

MGT 610 Core Topics in Management -

Week 1

Please answer the following questions regarding the " AT&T vs. Microsoft (A): IP Litigation Strategy " 1. The challenge of innovating in complex technologies where the cumulative body of prior work in the field is a fundamental underpinning. What does a firm do when it wishes to build products that utilize a technology for a competitor or other party holds frontier patents? A firm that wishes to build products that utilizes a technology for a competitor or other party that holds frontier patents should get in touch with that competitor and make some monetary payments for that technology or patent. After all, the intention of patent grant is to encourage innovation by giving innovators exclusive periods of benefit in exchange of disclosure so that others can build on that knowledge, either with proper compensation or after a period of time. The firm could also maintain access to its competitors intellectual properties by cross-licenses of patents.

2. How should a firm develop and manage its patent portfolio? The breakneck pace of technology is often not aligned with the slow pace of filing and granting of patents. How should publications and presentations at conferences be handled so as to not jeopardize patent rights? According to Jehangir Choksi, a patent is a right granted by the government of a country providing the patent owner with the exclusive right to commercially exploit an invention within that country. In most countries, to be patentable, an invention must be new and unobvious compared to information which was already publicly available at the time an application for a patent is filed. To obtain a patent for an invention, the inventor or owner of the invention must apply for a patent by submitting an application to the patent office. The patent application consists of a detailed written description of how to build and/or work the invention and a set of claims that define in words what subject matter is sought to be protected. The claims of a patent define the scope of the exclusive right, and, as such, reflect the strength and value of the patent. A patent application (and in particular the claims) is usually prepared by a registered patent agent on the owner or inventor's behalf and a distinct patent license number is given to that patent. The patent holder has to inform an infringer of any infringement and collection of royalties from the use of such patent. Intellectual property is intangible property such as ideas, expressions, formulas, or any other creation of the mind. Intellectual property, like tangible real or personal property, may be bought, sold, or leased. The major types of intellectual property include patents, copyrights, trademarks, and trade secrets. Copyright is a form of protection provided to the authors of "original works of authorship" including literary, dramatic, musical, artistic, and certain other intellectual works, both published and unpublished. The copyright protects the form of expression rather that the subject matter of the expression. Inventors must be aware of certain statutory bars to patenting that are activated by publishing a description of the invention. 35 U.S.C. 102(b) describes bars to patentability. Publication

can occur in a variety of forms: an article, thesis, electronic message, brochure, or PowerPoint presentation at a conference can all constitute publications. Once a publication occurs, U.S. patent protection is barred if a patent application is not filed upon the expiration of one year following publication. For foreign patents, publication may constitute an automatic bar to patentability.

3. How should patent rights be handled in the light of standards bodies? What strategies do firms use? Are there advantages to having patents included in standards? What are a firms right and responsibilities? One school of thoughts wrote, A patent holder whose patent is made public after some relevant technology has been widely adopted can demand not only a royalty that reflects the intrinsic value of that technology but also a royalty that reflects the value of each infringing firm's technology-specific investments. The World Intellectual Property Organization (WIPO) explains that standards are essential for the wide adoption of new technologies in the marketplace. The potential for conflict between patents and standards arises when the implementation of the standard necessitates the use of technology protected by one or more patents. Although the objective of a standard setting body (SSB) as well as of participating companies is to establish standardized technology that can be used as widely as possible, right holders may have a commercial interest in pushing for the adoption of their own patented technology in the framework of the standard, so that they could benefit from royalties. The firm is required to disclose information regarding relevant patents (and, sometimes, also patent applications), in order to include the relevant information into the standard-setting process for recognition and ownership. Broadly stated, measures such as patent policies of SSOs, cross-licensing and patent pools are contractual solutions among involved parties to increase legal certainty for the sake of efficient and effective implementation of standardized technologies. The contractual approach has the advantage of providing flexible solutions agreeable to all involved parties that best meet needs in each specific situation.

4. How should a firm manage its IP so that it is well prepared in the event of litigation? Are there things to be watchful of? Are there strategies for dealing with IP licensing firms? The firm should first of all, register all patents and keep track of these patents. The firm should advocate an aggressive licensing as a way of monetizing their historic investments. Secondly, the firm should also hire patent litigation lawyers or have a legal department who are well vested in patents laws and other legal implications. The industry of Intellectual Property (IP) has become a litigation alley where the applications of patents are challenged in courts for infringements. Some firms litigation departments really generate licensing revenues for them by going after rogue firms who have infringe on their patents.

Surprisingly, some of these litigations are brought by firms who are patent speculators that do not develop, make or distribute any products, but look to the civil litigation system for leverage in the marketplace. The firm should be watchful of these patent speculators and their leverages. The firm should also be watchful of the threat of patent litigation and its vicious cycle.

5. If a firm does get involved in IP litigation, what is the process, and where are there high leverage points? How should a business manager view IP litigation? What is the role for business strategists? First, the plaintiff files a complaint alleging patent infringement of one or more patents. The complaint identifies alleged infringers and the patent or patents alleged to be infringed. The complaint typically includes a brief statement of the alleged infringing acts. The plaintiff then serves the complaint on the defendant, who almost always answers by alleging non-infringement and asserting defenses such as patent invalidity. The defendants also commonly assert counterclaims. The defendants response to each allegation in the complaint is by either admitting or denying the allegations. If the defendant has asserted counterclaims (e.g., asserting that the plaintiffs patent is invalid), the plaintiff must serve a reply, which is the plaintiffs answer to the counterclaims. The plaintiff is required to respond to counterclaims in the same manner as the defendant is required to respond to the plaintiffs claimsthat is, by either denying or admitting the allegations. Fact and expert discovery, which are long, extensive and costly, will then follow with the submission of statements, documents, and taking depositions. The depositions can be used by patent litigation plaintiffs as harassment tools to encourage settlement against defendants. The parties engage in motion practice (such as filing a summary judgment motion of no infringement), pretrial briefing, and then trial. The high leverage points are the elimination of the firms foreign licensing revenues from calculation of damages in jury trials, previous known patent litigation rulings, possible settlements and efforts to improve its overall financial performance. A business manager should view IP litigation with open mind. The manager can consider pre-trial motions as tactical moves to gain some traction and advantages on the basis of some flaws in the other sides case. Otherwise, the manager should prepare for trials, which are always tricky and unpredictable. The manager can also work out a financial deal with the other party to end the litigation. The role for business strategists are to consider all options available, whether to either stick with trial, settle or wait for any opportunity that might arise from the trial.