This column usually focuses on the latest patents in a specific technology as a way to look into the future and see what new products are on the horizon. And we will return to that format in future installments, but today we focus on getting the greatest return on a corporation’s intellectual assets—patents—as well as trademarks and service marks, copyrights, and trade secrets.
First, however, a history lesson. Most people are surprised to learn that the U.S. Patent System was not created by Congress, but was actually created by the Founding Fathers and is included in the original U.S. Constitution that was ratified in 1788. Article I Section 8 gives Congress the power “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Known as the “patent clause,” this section of the Constitution is the basis for U.S. patents and copyrights.
Because the concept for copyrights and patents was included in the original U.S. Constitution, it is an American legal principle that actually predates such stalwart American liberties as freedom of speech, freedom of the press, habeas corpus and due process. These were not in the original Constitution, but were included in the Bill of Rights that was ratified in Amendments to the Constitution until 1791.
The first U.S. patent was issued July 31, 1790 to one Samuel Hopkins of Vermont, and it covered a process for making potash, a key ingredient used in fertilizer. The patent examiner was none other than U.S. Secretary of State Thomas Jefferson and the patent was signed by President George Washington himself!
U.S. Patents are assigned a number as they are issued, and we are currently in the high nine millions. It is likely that in 2018 or 2019, the 10 millionth U.S. Patent will be granted!
The concept behind a patent is simple: The federal government grants an inventor a limited monopoly for his or her invention in exchange for the inventor publishing the invention, as a reward for the inventor’s ingenuity and creativity, and as an incentive for businesses to invest in the technology covered by a patent. It is the U.S. Patent System that is in large part responsible for making the U.S. the global technology leader that it is! Over time, other countries adopted patent systems, and the PCT (Patent Cooperation Treaty) that was recently ratified back in 1970 by over 150 nations enables inventors to receive worldwide protection for their inventions.
While patents are designed to protect inventions and incentivize businesses to invest in those inventions, patents have many of uses not originally conceived of by the founding fathers. Patents have considerable marketing, public relations and competitive value to any business, and especially for electric utilities.
The reality is that the only asset a company can have that is absolutely, positively, and totally exclusively theirs is a patent (or a trademark, service mark or copyright). Once a patent is issued by the U.S. Patent and Trademark Office, that patent is totally unique. That uniqueness gives the owner (“assignee” is the patentland term) a distinct competitive advantage that no company can match! Each and every patent is totally unique. It cannot be duplicated or copied.
Patents are acquired two ways: You either apply for a patent, your application is reviewed by the Patent Office, and your patent application is either rejected or you are granted a patent. Or you buy a patent from an inventor or another business. Regardless of how you acquired it, a patent is an asset that you exclusively own and that no competitor can beg, borrow or steal. A competitor can infringe the patent, but you have legal recourse in that event.
Virtually every electric utility has a portfolio of patents, but most of them keep that treasure under a bushel. Here is a punch list of suggestions for how your business can optimize the value of its patents:
§ Announce New Patent Grants: When the Patent Office grants your business a patent, put out a news release and announce the grant at your website. This is a positive event, and a business that receives a patent is perceived of as an innovator—a company that consumers and businesses what to do business with.
§ Announce Patent Acquisitions: Should your company acquire a patent or patent portfolio, issue a news release and announce the acquisition at your website. This is also a positive event since a business that acquires patented technology is an enterprise on the cutting-edge and one that businesses and consumers want to do business with.
§ List All Your Patents at Your Website: Under the About Us section of your website, add an Innovation section and list all patents and other IP assigned to your company. No competitor can list these assets! Take advantage of that exclusivity to enhance the image of your business by highlighting the technology your company has developed and owns.
§ Celebrate Key Patents: If you have a company history section at your website, include key patents—even if they expired years ago—that were issued to your business or one of your predecessors businesses.
§ Make Note of Patent Use: When your company introduces a new product or service, and it is protected by one or more patents, include that in the announcement of the new product and service, and in all information—from sales material to operating instructions—related to that product or service so customers and prospects understand and appreciate the innovation that went into that new product or service!
§ Turn Patent Litigation to Your Favor: There are some industries—smart phones come to mind immediately—in which there is considerable patent litigation. And while there is not significant utility-to-utility or utility-to-other industry patent infringement lawsuits, if you have a patent that is infringed, and you file a patent infringement lawsuit, issue regular news releases and cover the litigation at your website. The plaintiff in a patent infringement lawsuit is always perceived of as the “good guy” (just ask the folks at Apple and Samsung), so having to defend a patent in court is a positive event for the patent assignee as it positions the patent owner as the innovator and the alleged infringer as the thief.
§ Include Your IP Portfolio in Your Annual Report and SEC Filings: While you are not required to do so under “generally accepted accounting procedures” or by any federal laws, detail for investors exactly what the “Intangible Assets” line in your Balance Sheet really is. List all of your patents as well as any other intellectual assets in your Annual Report and all public filings. This can only reflect positively on your business in the minds of investors and potential stockholders.
Patents are incredibly valuable assets, especially if their value is optimized.
Next time: Data security – keeping data out of the hands of those who should not have it, and protection from hackers and other trouble-makers – is a growing concern, and several new patents address various solutions.
About the author: Alec Schibanoff is vice president of IPOfferings LLC, a leading patent broker and IP consulting services firm. He can be reached at alec@IPOfferings.com.