Posts Tagged ‘licensing agreement’

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By: Mark R. Malek

Sorry for the lack of articles on TacticalIP regarding basic IP rights, but duty called.  I’m going to get back to the series of articles directed to some of the nuances of patent law.  You may recall in my previous article on this situation I indicated that one option might be to enter into a mutually beneficial licensing agreement, or even a cross licensing agreement.

A licensing agreement (I am going to focus on patent licensing agreements for the sake of this article, but you should understand that it is possible to license any intellectual property) is one in where the patent holder grants the licensee (he/she who is the beneficiary of the licensing agreement) the right to make, use, sell, or offer to sell the invention covered by the claims of the patent.  I’ll get into details of licensing agreements in another article but, in short, there is normally some sort of fee for the right to use the patent.  These can be paid up licenses, i.e., the entire fee for the right to sue the patent is paid up front and the license is granted for a certain period of time.  License fees can be paid per use, or as a percentage of sales, or any number of combinations.

Another option is cross licensing.  This is when you and the patent holder license each other the rights to use one another’s patents.  Why would you want to do this?  Perhaps this is your best option.  The reason why the patent holder is interested in your patent is because it is likely an improvement of the original.  We all know that continued success in business does not come with one product.  Sure, there are some one product wonders, but what happens to those companies that do not do anything else, or try to update their products?  They are here today, gone tomorrow.  A couple of examples off the top of my head – beanie babies and silly bands.  Being a father of young children, I have seen these come and go…quickly.

In the case of cross licensing, the original patent holder sees value in what you are doing and is hoping to improve their product line by being able to offer a product that is improved.  You may not want to be creating competition, but sometimes it may be your only option.  There are ways to work such agreements so that everyone wins.  For example, you can insert terms that you agree to a minimum retail price of the product (which prevents one party from drastically undercutting the price of the other party).  You can also set up territories, or include a number of different terms to make sure that the cross-licensing agreement works more like a partnership.

My next series of articles will deal with some mischaracterizations of patent protection, and a discussion about how patents are NOT monopolies!

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By: Mark R. Malek

One of the things that I have encountered over the years is an inventor that comes up with an incredible invention, but that does not know what to do with the invention in order to make money with it.  During my consultations, I generally break down the very complicated business side of inventing to the three most common ways that I believe the inventor can make profit from an invention.  Of course, this article assumes that the invention is patentable, will eventually be granted a patent, and does not infringe on someone else’s patent (many assumptions, but I will discuss those in a future post.)

The first way that I know how to make money on your invention is to manufacture it and sell it yourself.  Why do you need a patent to do that?  To tell you the truth, you don’t.  There is no requirement for you to patent your invention in order to sell it. If, however, you start selling your invention, or otherwise disclose it, and one year passes, you can kiss any hope of getting a patent goodbye.  Suppose that obtaining a patent is not that important to you.  That’s fine, but I guarantee that it becomes important to you once your invention starts getting knocked off and there is no reasonable remedy to stop the knock offs.  Also, one thing that I have notices about trying to launch your own product, i.e., trying to manufacture the product and get the product into a distribution chain, is that the patent is usually the cheap part.  Depending on the invention, just getting manufacturing set up can be extraordinarily expensive.

The second and third ways that I suggest profiting from an  invention does require a patent, or some other protectable right.  Way number two to make profit from an invention is to license a patent covering the invention.  This is usually the case when an inventor can come to terms with an entity or person that desires to make, use or sell an invention that is covered by the inventor’s patent.  In such a case, the two parties can enter into a licensing agreement.  A licensing agreement is an agreement that allows the inventor to maintain ownership of the patent, and grant rights to another to use the patent for some sort of compensation (or other consideration) and for a fixed amount of time.  Licensing agreements are not something that are scratched on the back of a Denny’s napkin in crayon.  They are very complicated, and require a great amount of detail.  If you find yourself in a position where you are shaking hands in a bar and thinking that you have just saved money on your licensing negotiation by not using an attorney, chances are you will be using an attorney in the not to distant future – in a much more expensive lawsuit.

The third way to profit from an invention is an outright sale of your rights to the invention.  This, almost always, involves the sale of a patent.  I have had many conversations with inventors that want to skip the patent process and just go right to the big company (say Johnson & Johnson, for example) and sell their invention for millions.  Really?  What would Johnson & Johnson be purchasing?  The inventor’s thoughts?  It doesn’t really work that way.  An invention inside of one’s head does not result in a protectable right.  Johnson & Johnson does not have any reason to pay for the invention because there is no protectable right in that invention until a patent is granted on it.  Put another way, there are no lawsuits for idea infringement, but there can be a lawsuits for patent infringement.  The above simplistic outline does not discuss other legal remedies, such as theft of trade secret, for example, but that is not really applicable to this situation.

There are several other ways, some more complicated, to profit from an invention.  I will continue to write on this topic, as well as provide some additional details of the above in future posts.  This is just a short intro to satisfy some of the common questions that inventors sometimes have.

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By: Mark R. Malek

Ameranth Wireless has filed a patent infringement lawsuit against several large pizza chains claiming that the online and mobile ordering infringes two patents (source). The patents in questions are U.S. Patent Nos.  6,384,850 and 6,871,325.

I have not read the complaint, but I can only imagine that many of these large pizza chains use similar software for their online ordering and/or mobile ordering system.  You wouldn’t think that online ordering software for pizza is that complicated.  Do you want a specialty pizza?  No?  Then what size pizza do you want, and what do you want on it?  Seems as thought it must be a bit more complicated than that in order for these systems to read on the above referenced patents.

I took a look at Claim 1 of the ‘850 patent.  This claim is directed to a system that generates and transmits menus.  The system includes a first menu that has menu categories, a modifier menu, a sub-modifier menu, and software for generating a second menu from the first menu and transmitting the second menu to a webpage.  I guess that means that the first menu, the modifier menu and the sub-modifier menu are things that the pizza chain employee manipulate to generate a second menu that is visible on the website. Claim1 of the ‘325 patent is extraordinarily similar to Claim 1 of the ‘850 patent, but has a few extra limitations.

I’ve never personally ordered pizza on-line.  I do it the old fashion way.  Call the pizza delivery guy on my way home so that the pizza is delivered right as I’m walking in the door.  My suspicion is that if all of these pizza chains are named in the same suit for infringing the claims of the same two patents, then they all use similar software.  I would suspect that the software licensing agreement that is in place includes an indemnification clause that indemnifies the end user from an infringement claim.  That does not mean that the end user is not technically liable for infringement.  It only (usually) means that, in this case, the software company that wrote the software will defend the company using the software, and will be liable for any damages that might arise as a result of an infringement claim.

I could be completely wrong here.  Each of these pizza chains may have written their own software.  Maybe the only way to display a pizza menu on a website or a mobile device is to manipulate a series of menus to generate another menu.   All I know is that I like to eat pizza.  I suspect that this case will either settle quickly, or that a software company will be dragged into the case.


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By Scott Nyman

So what is the price of love these days? If you ask Intel, the price is $1.5 billion ($1,500,000,000.00 for those of you who like zeros) for the affection of NVIDIA. Microprocessor makers Intel and NVIDA recently came to a cross-licensing agreement, granting the two chipmakers access to a large number of patents in portfolios of each respective company. This agreement marks the end of a long running patent dispute over the infringement of patents owned by each company. Under this new deal, Intel will share a large number of its patents with NVIDIA , in addition to the $1.5B sum spread across the next six years. In return, NVIDIA will open up its patent portfolio to Intel for the same duration.

This is 4% of the sum to be paid by Intel

Despite having to pay the substantial royalties, Intel benefits from the deal by receiving access to NVIDIA technologies, especially related to graphics processing. This includes some of NVIDIA technologies already incorporated into Intel’s newly released “Sandy Bridge” x86 microprocessors. Additionally, with access to the NVIDIA patents, Intel will undoubtedly continue to integrate increasingly powerful graphic processing capabilities into their upcoming processor models.

It’s not difficult to see that NVIDIA benefits from this deal, considering just the royalties received. NVIDIA also receives access to use some of Intel’s patents relating to microprocessors and chipsets. NVIDIA has been looking to expand their microprocessor offerings, as demonstrated with the continued development of its Tegra SoC (system on a chip) series. However, Intel is not sharing its patents relating to proprietary x86 processor designs and flash memory technologies. This likely suits NVIDIA just as well, seeing how the chipmaker has continually stated no interest in entering the crowded x86 market.

The new direction for NVIDIA?

Actually, NVIDIA has been placing an increasingly large focus in the development of ARM based processors. President and Co-Founder Jen-Hsun Huang has been reported saying, “At the moment, energy around ARM is absolutely enormous, and if you, as a software developer, are not working with ARM, you have your head in the sand.” (source) Huang further evidences that Intel’s exclusion of x86 technologies is inconsequential to NVIDA, stating, “we have no intentions of building x86 processors.” Huang continues, “Our intention is to capitalize on the growing popularity of ARM processors… We’ve always felt that building yet another x86 processor when the world is a-flood with them is a pointless exercise.” (source)

I’m definitely curious to see what technologies come out of this cross-licensing agreement.




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