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Re: Patent policy for a small company

From: Rob Emmons
Subject: Re: Patent policy for a small company
Date: Fri, 26 Nov 2004 12:53:56 -0600
User-agent: Pan/0.13.3 (That cat's something I can't explain)

On Mon, 22 Nov 2004 16:54:43 -0800, Fergus Henderson wrote:

> There seems to be reasonable (though by no means complete) agreement within 
> the
> company that the legal system of software patents is not beneficial to 
> society.
> However, regardless of whether or not we support the current software patent
> system, that system is the current law of the land, and we must decide how our
> company will act within that system.

Yes need a stratagy.  For one, you need to retain legal councel,
specifically maybe two types of attornies -- intellectual property, and
general councel.  They can help you with a stratagey.  There is something
out there too like Intellectual Property insurance -- that can help you
pay legal expensed needed to defend IP against certain things.  Realize
defending an IP case may cost $10 million or so.

> There is a concern within our company that the companies that we deal with
> might take our ideas and use those ideas to develop their own products,
> competing with us rather than cooperating with us. Such companies might be
> able to invest far more resources into developing the ideas than we can,
> and might have far bigger sales and marketing infrastructures, so it might
> be very hard for a small company like ours to compete with them.

To get a large company to work with you, you need a good patent portfolio
as a negotiating tool generally.  Otherwise, be preparied, they will learn
what they can and move on -- whatever is to their benifit.  In any
relationship remember -- don't be surprised if the other party does what
is in their best interests -- regardless of whether it is really truely

An IP portfolio gives you at least the following benifits:  (a) adds $
value to your company - and respect by major companies - because in the
end they will base their purchase and working decisions on it (a key
component to valuation), (b) gives you negotiating chips - with
competitors, other groups that will attack you based on their IP, etc.
(basically a cross liscencing tool).  Patents don't give you the right
to practice -- but they can be a strong tool to allow you to practice
art.  I'm sure there are other reasons too.

The other thing I would raise is the whole issue of "our ideas."  My
personal feeling is that ideas don't belong to anyone -- and in many ways
that's the position of the free software movement.  However, with all of
the patent, copyright, trademark, etc. expansion in the past few decades,
the main stream certainly views ideas as belonging to someone -- and
that's the leaning of the patent system.  If you believe ideas belong to
someone -- then your really indirectly saying you sport the current IP

> Non-disclosure agreements are another legal instrument that is often used
> for this sort of situation.  However, the companies that we deal with are
> often unwilling to sign non-disclosure agreements.  Should we seek to
> obtain patents on our ideas in order to encourage these companies to
> cooperate with us rather than exploiting our ideas?

As for NDAs -- don't trust them and if possible don't sign them yourself. 
You should use NDAs when you need to/can but get your patents done first
before any discussion.
> Note that these questions are all about what the policy of our company
> should be, given the current legal system, not about what the legal
> system should be.

I find this whole area troubling myself.  I don't think going after 
patents as a pragmatic response to the current situation, and one the
other hand, being open about working with the community are necessarily 
inconsistent.  Look at IBM has done some good things for the gnu/linux 
communities -- but is also has a powerful patent portfolio.

The real point in all of this is you need to decide what you want to do
and what your company wants to be from an enthical point of view -- then
get professional legal advice to make this happen.  When you think through
this you may end up being pro-patent, anti-patent, or somewhere in

I am personally anti-patent and anti-confidentialty personally, but I work
for a large company where I work on patents and have to deal with things
confidentially.  Again -- an annoying conflict -- I've not resolved

One of the other posts talked about "disclosure" -- and that's a good tool
too.  I still personally think though that that is not enough.  What will
probably happen in that case is that someone will file and "improvement"
patent that will block you from doing what you want, and then you'll end
up with no tools to cross-liscence.  So if your not going to patent,
disclose, but if your running a company that want's to stay in business
when treatened by another company -- you'll need patents probably. 
Remember - it may take you $10 million to prove that the bogus patents
that someone is threatening you with are really invalid -- and at the end
of all of that -- they may turn out to be valid.  This is why the whole
patent system is corrupt... very easy to abuse.


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