Conversant is pleased to be one of a group of leaders in intellectual property and open data that have contributed to the newly launched ORoPO (www.oropo.net), the world’s first Open Register of Patent Ownership. ORoPO aims to provide an open data register of patents, accessible to all at no cost. Voluntary, non-profit-making, and freely accessible online, ORoPO offers a simple solution to significant problems with the accuracy of current patent ownership records. Today, information as to who owns the world’s patents is recorded at 180 patent offices worldwide. But a combination of data entry and translation errors, a lack of corporate naming harmonization, delays by certain patent offices to register assignments and the absence of regulation mandating that changes in ownership be recorded means that an estimated 25% of this information is inaccurate, incomplete or out of date. This situation has created unclear lines of sight to ownership of patent assets, which many in the patent profession would argue retards evolution and efficient operation of the patent asset marketplace. For example, if a patent owner and a potential patent licensee want to enter into negotiations regarding the patent owner’s patent, certainly a prerequisite for the prospective patent licensee to agree to enter into any serious, in detail discussions should be that he can satisfy himself that the patent owner does indeed own that patent.
The economic benefit of clearing of the lines of sight to ownership of patent assets has been studied in a survey and a report commissioned by ORoPO: “Who Owns the World’s Patents?”
When ORoPO’s patent database comes on line soon it will include details of patents owned by Conversant and ORoPO’s other founder members – IBM, Microsoft, ARM, BAE Systems, Shazam, Patent Properties, and Finjan. As more companies join ORoPO its registry of patent ownership will become an even more invaluable resource.
Transparency of patent ownership is a fundamental basis of responsible patent licensing, as stated in the first of Conversant’s Patent Licensing Principles. We are pleased to be a part of ORoPO and we believe it will unquestionably benefit those companies which support and encourage ethical patent licensing.
This recent article, in which former U.S. Court of Appeals for the Federal Circuit Chief Judge Paul Michel calls licensing best practices “just not very realistic”, caught our eye. Conversant was the first company to publish a set of Patent Licensing Principles back in November 2013. We have received a lot of support for our initiative, and we have been especially pleased to see the Licensing Executives Society’s program to establish industry-wide patent licensing standards.
But to Judge Michel’s point: Are patent licensing principles unrealistic? The issue comes down to what we call Principle 9:
“Litigation should only be resorted to by a licensor when good-faith license negotiations prove unsuccessful or a potential licensee demonstrates an unwillingness to negotiate in good faith for a license.”
In other words, patentees should try to negotiate a patent license before filing a lawsuit. At Conversant, we remain committed to our belief that good-faith negotiations are the best way to resolve any business issue, and we have tried to follow that principle throughout our forty-year history. But more and more we see other companies taking advantage of this principle to avoid concluding a license agreement. As Judge Michel points out, trying to negotiate with a potential licensee that does not follow best practices becomes a “handicap” and in such situations, following best practices can “end up hurting good people, while the bad people who refuse to follow them go the other way”.
These are what IAM calls the patent ogres: “big companies – especially in the tech sector – that are all too happy to use their deep pockets to drive patentees that are short of resources into unfavourable deals, into walking away from disputes or even into bankruptcy”. As IAM explains, patent ogres are not interested in good-faith negotiations; they only negotiate to delay litigation and paying fair value for a patent license. At Conversant, we have experienced this behavior first hand when after over two years of negotiations a potential licensee refused to make any counter-offer for a patent license. We were told that if we wanted anything more than a nominal amount for our portfolio that we would have to sue them. So, we did. Those patent cases now are a small part of the total 2014 filings that some people decry as excessive. And, while we would have preferred a negotiated resolution, the reality is that we stayed true to our principles, because that “potential licensee demonstrate[d] an unwillingness to negotiate in good faith for a license”.
Is Conversant being unrealistic in sticking to its principles? No, but neither are we naïve. We simply have to recognize the realities of the current patent licensing market described by Judge Michel, where many potential licensees are not interested in a negotiated license and where, in the absence of real progress towards good-faith negotiations, patentees must decide whether to stop negotiating and resort to litigation to protect their interests. No company should expect license negotiations to simply drag on indefinitely. We still look forward to talking with companies who want to reach a license agreement through good-faith negotiations. But, for the other companies, whatever label IAM or others may give them, we have run out of patience with your delaying tactics.