Patent Strategies For Business
by Stephen C. Glazier
(Third Edition, 1997)
Businesspeople are beginning to understand that they must compete on the intellectual-property front as well as with the products and services they market. New developments in intellectual property law, which began to gain momentum with the inception of the Court of Appeals for the Federal Circuit in the early 1980's, continue to accelerate. New fields of technology can now be patented, whether biotechnology under Chakrabarty or methods of doing business under State Street Bank. Harmonization of patent laws combined with increasing globalization of commerce require global intellectual property protection to expand with global commerce. Patent infringement actions proliferate logarithmically. Companies are seeking to patent every aspect of what they market, simply in order to keep up with the competition. Consequently, a vast amount of competitive energy now focuses on furiously "patenting everything," reacting to infringement demand letters, and responding to decision-makers who demand assertion of intellectual-property rights to shore up competitive positions, all often in an unplanned way.
Previous patent strategy, if it existed at all, was often "hit or miss." Patent application drafting was often an exercise in verbal photography. A patent draftsman spoke with the inventor, placed the product on the table, and drafted an application which described the features of the product, usually with some degree of discussion about why the new features were technologically superior. Sometimes the discussion addressed why the technology was superior commercially. The claimed scope more likely than not simply reflected what was technologically new.
Sophisticated practitioners now look at a patent application as a commercial instrument, the claims being commercial creatures drafted to accomplish a business purpose. Not only are the technologists consulted, but also, and perhaps even more importantly, the marketing people and decision-makers who must actualize on the technology so that it makes a difference in people's lives and maximum profit. Claims now reflect commercial ends rather than simply product features when well-drafted.
As another example of hit or miss strategy, patent litigation was considered by many until recently to be a hopelessly complex endeavor best approached by sending a form set of interrogatories and comprehensive document requests, booking airline tickets and living on the road for a while. The lawyers would then pick up the pieces at pretrial order time, determine what the merits look like, and see if the case should settle or be tried. Even now, such litigation sometimes happens when permitted by judges and clients, because of the huge attorney incentives for profitable business and to "put one on the books." Enlightened competitors, however, are beginning to understand that litigation is part of a piece of overall patent strategy which needs to be approached in a planned way and with a clear understanding up front about the economic value and business objectives of the case, the time line, and a budget for which the law firm can be held accountable. Sophisticated customers are demanding excellence in the form not only of legal competence and good results, but also timeliness and adherence to budget.
Despite growing understanding of the need to think ahead and commercially when procuring patent rights and conducting litigation, there remains an overwhelming degree of conventional verbal photography and existential patent litigation of the sort mentioned above. The need for strategic thinkers in this field is unparalleled, and intellectual property lawyers have a huge opportunity to make a difference if they learn to think and act strategically: To visualize the client's overall competitive strategy in a particular product line or field, how the intellectual property protection works to secure and maintain the competitive position, how the picture will change in the ensuing years, and what needs to happen now to address those changes.
Stephen Glazier's book entitled Patent Strategies for Business is a "field manual" for the intellectual-property strategist to start thinking and acting this way. Glazier's book is one of the few sources which makes the effort to approach the patent field as a matter of strategy rather than as a matter of how the patent statute works and how the authorities line up on each particular legal issue. Broadly, the book is organized into several parts, as patent strategy properly should be. These include, among others, the role of patents in current business strategy, the role of patents in financing strategy, patent litigation as a competitive component, patent protection as a commercial function rather than a technical function, global strategies and potential effects of trends in the intellectual-property field.
The first section of the book addresses the nuts and bolts of starting and maintaining an intellectual property protection program. The second chapter treats patent procurement as more truly an engineering exercise where intellectual property protection is being engineered at the same time as the company's technological base protected by those rights. Other chapters address how to design around, how to protect income by protecting intellectual property rights for consumables. and what to think about in a licensing transaction.
The (until recently) frequently neglected issue of patent due diligence forms the subject of another chapter which presents a well-reasoned and well-organized list of items to accomplish (as opposed, for instance, to a mere list of random issues to consider) in conducting a due-diligence effort as part of a commercial transaction.
At the core of the book, chapter 9 addresses how to properly consider and use patent litigation rationally as a business tool, rather than as mindless warfare. Although litigation, like warfare, is inherently wasteful, it need not be deliberately so or wasteful through neglect. Glazier cites a compelling anecdote. He mentions a 2-day patent litigation seminar whose 2,000 pages of written material focus on a wide variety of topics, such as managing legal expenses, preparation of expert witnesses, discovery tactics, uses of demonstrative evidence, jury selection, presentation of evidence, measurement of damages, infringement liability insurance, opinions of counsel, injunctions, the validity of patents and trends in legal fees for litigation. However, these materials include no treatment of settlement strategy and negotiation (even though most patent litigation matters settle without going through trial to judgment), evaluation and management of litigation from the client's point of view, reexamination options, the need to consider designing around to avoid infringement or alter the nature of the litigation, multinational patent litigation, cost-benefit analysis for proper decision-making, preventive measures to avoid litigation, use of second opinions regarding the decision to litigate and conduct of the litigation, steps to minimize personal liability of officers and directors, and other areas which are crucial to rational and strategic conduct of patent litigation but are often given short shrift. Glazier then addresses each of these ignored issues, although sometimes perhaps in too cursory a manner. Essentially, the reader gets a framework for the proper context in which to consider and use patent litigation, with little heavily detailed treatment or guidance.
Other sections of the book consider patent strategy m particular fields, such as software, telecommunications and financial products, as well as medical devices and hospital management. Glazier properly and appropriately identifies trends such as death of the antiquated "methods of doing business" exception to patentability, and how these trends change how patents work in business strategy. Chapters 23-25 are a succinct treatment of how U.S. and non-U.S. patent rights can operate to benefit companies embarked in global competition, and how the GATT amendments change the playing field. Once again, although these chapters provide a useful framework, the leader is often left to develop the details.
Consider this analogy. Glazier's book lets the reader understand, in a brief and manageable way, how things really work in the patent field. In that respect, it is like the "For Dummies" computer program guides, rather than the two-inch thick comprehensive reference guides. While the reference guides are necessary for their own purpose, one always finds it handy and rewarding to refer to the For Dummies guides for perspective and orientation. In the same way, we would be dummies not to consider Glazier's book. The writer wishes Glazier would convert this book into a multi-volume loose-leaf series, for which there is surely a strong need and probably no better potential author or editor.
*Jim Ewing is a partner in the Atlanta office of Kilpatrick Stockton LLP.