Source: http://www.google.co.uk/patents/US20070073625
Timestamp: 2015-11-30 17:10:12
Document Index: 300683986

Matched Legal Cases: ['Application No. 20050010515', 'Application No. 20030212572', 'Application No. 20020077835', 'Application No. 20040133433', 'Application No. 20040181427', 'Application No. 20030139988']

Patent US20070073625 - System and method of licensing intellectual property assets - Google PatentsSearch Images Maps Play YouTube News Gmail Drive More »Sign inAdvanced Patent SearchPatentsThis disclosure provides an improved system and method of licensing intellectual property rights. This disclosure relates to intellectual property licensing arrangements involving a plurality of patents or other intellectual property assets that may be licensed by or on behalf of the owner(s) to one...http://www.google.co.uk/patents/US20070073625?utm_source=gb-gplus-sharePatent US20070073625 - System and method of licensing intellectual property assetsAdvanced Patent SearchPublication numberUS20070073625 A1Publication typeApplicationApplication numberUS 11/235,908Publication date29 Mar 2007Filing date27 Sep 2005Priority date27 Sep 2005Publication number11235908, 235908, US 2007/0073625 A1, US 2007/073625 A1, US 20070073625 A1, US 20070073625A1, US 2007073625 A1, US 2007073625A1, US-A1-20070073625, US-A1-2007073625, US2007/0073625A1, US2007/073625A1, US20070073625 A1, US20070073625A1, US2007073625 A1, US2007073625A1InventorsRobert SheltonOriginal AssigneeShelton Robert HExport CitationBiBTeX, EndNote, RefManPatent Citations (64), Referenced by (89), Classifications (4) External Links: USPTO, USPTO Assignment, EspacenetSystem and method of licensing intellectual property assets
US 20070073625 A1Abstract
This disclosure provides an improved system and method of licensing intellectual property rights. This disclosure relates to intellectual property licensing arrangements involving a plurality of patents or other intellectual property assets that may be licensed by or on behalf of the owner(s) to one or more entities, and in which a system and method is provided for assembling a portfolio of assets that are complementary in nature; negotiating royalties with prospective licensees who are users or prospective users of all or some portion of that complementary asset portfolio; and allocating among the owners of the assets comprising such portfolio the royalty revenue thereby earned in consideration of granting certain enumerated rights in, to and under those intellectual property assets, in whole or in part, to such one or more licensees. Images(18) Claims(52)
1. A patent pooling method implemented by a computer-based system, comprising the steps of: forming a patent pool in the computer-based system, including two or more patents; licensing collectively said patents to at least one licensee; and allocating earnings of said patent pool among owners of said patents according to a predetermined formula that includes consideration of forward citation analysis. 2. The method of claim 1, wherein all of the patents included in said patent pool are essential patents. 3. The method of claim 1, wherein none of the patents included in said patent pool is an essential patent. 4. The method of claim 1, wherein the patents in said patent pool consist of both essential and non-essential patents. 5. The method of claim 1, further comprising the step of: providing for regulatory oversight to the patent pool. 6. The method of claim 5, wherein said regulatory oversight concerns compliance with one or more antitrust regulations. 7. The method of claim 6, wherein said providing for regulatory oversight includes permitting access to said computer-based system for monitoring communications of said licensees and/or patent owners. 8. The method of claim 1, wherein said allocating on the basis of forward citation analysis is dynamic. 9. The method of claim 1, further comprising the step of: establishing an appeals process that may be initiated by a member of said patent pool. 10. The method of claim 1, further comprising the step of: communicating to members of said patent pool one or more alternative allocations of earnings of said patent pool. 11. The method of claim 1, further comprising the step of: permitting one or more of said patent owners to vote on the appropriate allocation of earnings of the patent pool. 12. The method of claim 1, further comprising the step of: calculating relevance scores for the patents in the patent pool. 13. The method of claim 12, further comprising the step of: calculating a local score value for at least two of the patents in the patent pool; and refining relevance scores for the patents in the patent pool based on said local score values. 14. The method of claim 1, further comprising the step of: calculating a local score value for at least two of the patents in the patent pool; and refining an allocation of earnings for the patents in the patent pool based on said local score values. 15. The method of claim 1, further comprising the step of: permitting said licensee to designate patents in said patent pool as substitutes. 16. The method of claim 15, further comprising the step of: adjusting an allocation of earnings of said patent pool among the owners of said patents on the basis of the designation of patents in said patent pool as substitutes. 17. The method of claim 1, further comprising the step of: permitting said licensee to cause one or more patents to be selectively removed from the license to said patent pool. 18. The method of claim 17, further comprising the step of: adjusting a royalty paid by said licensee on the basis of patents selectively removed from the license to said patent pool. 19. The method of claim 18, further comprising the step of: adjusting an allocation of earnings paid on the basis of the adjustment of royalties following selective removal of one or more patents from the license to said patent pool. 20. The method of claim 1, further comprising the step of: permitting owners of any patent in said patent pool to designate one or more patents as blocking one or more other patents. 21. The method of claim 20, further comprising the step of: adjusting the allocation of earnings of said patent pool among the owners of said patents on the basis of the designation of patents in said patent pool as blocking. 22. The method of claim 1, wherein said computer-based system includes a computer program comprising computer-executable instructions represented in computer storage. 23. The method of claim 1, wherein said computer-based system includes a server that provides patent licensing-specific information to one or more users of said system. 24. A patent pooling method implemented by a computer-based system, comprising the steps of: forming a patent pool in the computer-based system, including two or more patents; licensing collectively said patents to at least one licensee; and allocating earnings of said patent pool among owners of said patents according to a predetermined formula that includes consideration of backward citation analysis. 25. A patent pooling method implemented by a computer-based system, comprising the steps of: forming a patent pool in the computer-based system, including two or more patents; offering a collective license on said patents to at least one prospective licensee; permitting one or more prospective licensee to designate patents in said patent pool as substitutes; and adjusting a royalty paid by one or more prospective licensee of the basis of patents selectively removed from the license to said patent pool. 26. A patent pooling method implemented by a computer-based system, comprising the steps of: forming a patent pool in the computer-based system, including two or more patents; entering into a license covering some portion or all of said patents with at least one licensee; permitting said patent owners to designate one or more patents in said patent pool that block other patents; and adjusting an allocation of earnings of said pool among the owners of said patents on the basis of said designation. 27. A system for patent pooling, comprising: (a) at least one CPU having a processor configured to execute patent pool management and/or royalty allocation functions; (b) means for communicating with owners of two or more patents concerning formation of a patent pool and collectively licensing rights under said patents to at least one licensee; (c) means for allocating earnings of said patent pool among the owners of said patents on the basis of a formula that takes into account one or more factors including forward citation analysis. 28. The system of claim 27, wherein all of the patents included in said patent pool are essential patents. 29. The system of claim 27, wherein none of the patents included in said patent pool is an essential patent. 30. The system of claim 27, wherein the patents in said patent pool consist of both essential and non-essential patents. 31. The system of claim 27, further comprising: means for providing for regulatory oversight to said patent pool. 32. The system of claim 31, wherein said regulatory oversight concerns compliance with one or more antitrust regulations. 33. The system of claim 32, wherein said means for providing of regulatory oversight includes permitting access to said computer-based system for monitoring communications of said licensees and/or patent owners. 34. The system of claim 27, wherein said means for allocating on the basis of forward citation analysis is dynamic. 35. The system of claim 27, further comprising: means for a member of said patent pool to appeal said allocation of earnings. 36. The system of claim 27, further comprising the step of: means for communicating to members of said patent pool one or more alternative allocations of earnings of said patent pool. 37. The system of claim 27, further comprising: means for one or more of said patent owners to vote on the appropriate allocation of earnings of the patent pool. 38. The system of claim 27, further comprising: means for calculating relevance scores for the patents in the patent pool. 39. The system of claim 38, further comprising: means for calculating a local score value for at least two of the patents in the patent pool; and means for refining relevance scores for the patents in the patent pool based on said local score values. 40. The system of claim 27, further comprising: means for calculating a local score value for at least two of the patents in the patent pool; and means for refining an allocation of earnings for the patents in the patent pool based on said local score values. 41. The system of claim 27, further comprising: means for said at least one licensee to designate patents in said patent pool as substitutes. 42. The system of claim 41, further comprising: means for adjusting an allocation of earnings of said patent pool among the owners of said patents on the basis of the designation of patents in said patent pool as substitutes. 43. The system of claim 27, further comprising: means for said at least one licensee to cause one or more patents to be selectively removed from the license to said patent pool. 44. The system of claim 43, further comprising: means for adjusting a royalty paid by said at least one licensee on the basis of patents selectively removed from the license to said patent pool. 45. The system of claim 44, further comprising: means for adjusting an allocation of earnings paid on the basis of the adjustment of royalties following selective removal of one or more patents from the license to said patent pool. 46. The system of claim 27, further comprising: means for an owner of any patent in said patent pool to designate one or more patents as blocking one or more other patents. 47. The system of claim 46, further comprising: means for adjusting the allocation of earnings of said patent pool among the owners of said patents on the basis of the designation of patents in said patent pool as blocking. 48. A system for patent pooling, comprising: (a) at least one CPU having a processor configured to execute patent pool management and/or royalty allocation functions; (b) means for communicating with owners of two or more patents concerning formation of a patent pool and collectively licensing rights under said patents to at least one licensee; and (c) means for allocating earnings of said patent pool among the owners of said patents on the basis of a formula that takes into account one or more factors including backward citation analysis. 49. A system for patent pooling, comprising: (a) at least one CPU having a processor configured to execute patent pool management and/or royalty allocation functions; (b) means for communicating with owners of two or more patents concerning formation of a patent pool and collectively licensing rights under said patents to at least one licensee; (c) means for permitting one or more licensees to designate patents in said patent pool as substitutes; (d) means for permitting one or more licensees to selectively remove one or more patents from the license to said patent pool; and (e) means for adjusting the royalty paid by said one or more licensees on the basis of any patents selectively removed from said patent pool. 50. The system of claim 49, further comprising: means for adjusting an allocation of earnings of said patent pool among the owners of said patents. 51. A system for patent pooling, comprising: (a) at least one CPU having a processor configured to execute patent pool management and/or royalty allocation functions; (b) means for communicating with owners of two or more patents concerning formation of a patent pool and collectively licensing rights under said patents to at least one licensee; (c) means for permitting said patent owners to designate one or more patents in said patent pool as blocking one or more other patents; and (d) means for adjusting the royalty paid by one or more licensees on the basis of any patents designated as blocking. 52. The system of claim 51, further comprising: means for adjusting an allocation of earnings of said patent pool among the owners of said patents. Description
BACKGROUND [0001] 1. Technical Field [0002] The present disclosure relates to the field of licensing and, in particular, to a system and method of licensing patents and other intellectual property assets. [0003] 2. Brief Background [0004] It is widely accepted that patents and other forms of intellectual property play an important role in our economy in encouraging a well-spring of innovation and private investment in the development of new technologies that improve productivity and quality of life for everyone. However, when one gets beneath such superficial platitudes and begins to discuss various details concerning the present system of patent procurement and enforcement, both proponents as well as detractors speak of inefficiencies, errors, inequities, abusive practices and the clear and present need for improvements. [0005] Consider, for example, in March 2005, in remarks before an American Enterprise Institute for Public Policy Research event entitled “The Patent System and the New Economy,” Bradford L. Smith, Senior Vice President, General Counsel, and Corporate Secretary of Microsoft Corporation, stated: “We have a major interest in ensuring that we and the rest of our industry benefits from good patent protection for our inventions. But we also sit squarely on the other side of the fence as well. We, for the last three years, every week had to deal with 35 to 40 patent lawsuits pending against us. We win some. We settle some, and new suits are filed. We spend roughly $100 million a year defending against patent litigation. [ . . . ] [W]e confront a patent system in the U.S. that is excessively litigious. It's too easy for a litigant to manipulate the U.S. system and look to a patent lawsuit as the ultimate lottery ticket, hoping to confuse jurors with technical jargon that will yield the payment of a lifetime. We need to eliminate the abusive lawsuits and the patent litigation lottery it fosters.”
[0006] One readily finds there are two sides to such an account. As a patent attorney writes in a recent blog responding to an April 2005 Motley Fool article entitled “The Lowdown on Patent Shakedowns” (addressing “patent trolls,” “patent terrorism” and the likes of the abusive litigants about whom Mr. Smith's remarks castigate): “The supposed problems with the patent system are for the most part created by big business itself. It's not the individual inventors and smaller businesses that stretch patent litigation over several years and run up millions of dollars in legal fees. It's not the smaller inventors and businesses that elect ‘to leave no stone unturned’ in their pursuit to avoid a legitimate patent claim. (Despite stories to the contrary, weak patent cases are quickly and routinely tossed out on summary judgment.) And it's not the smaller inventors and businesses that have the deck stacked in their favor. Far from it. Big business is and always has been the primary beneficiary of the patent system. The cries we hear now are not those of innocents ‘victimized’ by an unfair system. Rather, they are the cries of those who don't like finding out they're expected to follow the laws and live under the same system they have mostly created themselves. Some call that unfair. Others call that justice.”
[0007] Costly patent litigation is certainly one aspect of the problem. In fact, according to a 2003 report by the American Intellectual Property Law Association, the average cost of a patent case with over $25 million in damages at stake is about $3.9 million; and cases with damages of between $1 million and $25 million cost about $2 million to litigate. Nevertheless, a realistic assessment reveals that the issues involved are far more complex than simply abusive lawsuits, irrespective of ones' view concerning which party may be responsible for fomenting them or driving up related litigation costs. In this regard, part of the underlying challenge is the unique character of intellectual property compared with other forms of assets such as real and personal property. Several of these differences are exceedingly fundamental, and must be taken into account in appreciating the challenges inherently involved in this field. [0008] For one, intellectual property rights give their owner no right to make, use, sell, or copy the technology or expression that is protected by such rights. For example, inventions are often improvements on earlier basic inventions made by others. If the owner of the intellectual property rights to the basic invention wants to exercise its exclusivity, that owner can stop the owner of the rights to the improvement from making, using, or selling the improved invention. Likewise, the owner of the rights to the improvement can stop the owner of the rights to the basic invention from making, using, or selling the improved invention. As shown in the foregoing example, the intellectual property right each party owns conveys only the right to exclude, not the right to use. Although intellectual property includes patents, trademarks, copyrights, trade secrets and a variety of other legally cognizable intangible rights to innovations and their expression, it is addressed herein in terms of patents. Thus, a patent is by definition only a negative property right—strictly speaking, a right for a limited period of time to forbid others from making or using without permission. [0009] As a stand-alone asset, a patent does not give its owner the right to practice his or her own invention, much less give that owner positive rights to do so that he may in turn convey to a third party such as a licensee. For this reason, most exclusive rights are nothing more than the right to sue an infringer; and a party licensing non-exclusive rights—particularly in a field involving numerous patented as well as unpatented technologies owned by multiple parties—is acquiring little more than avoidance of the threat of litigation and the related liability by only one of what may be numerous prospective plaintiffs. Accordingly, some firms with relatively modest or no intellectual property but substantial other assets, personnel and capital invested in implementation view being exceedingly tough on any one patent holder seeking to assert his, her or its rights as prophylactic against further claims being asserted by others and therefore of greater value than what they view as being little or no “real” value in voluntarily paying for a license. [0010] Second, although it's often said that the language of the patent claims sets forth the “metes and bounds” description of the invention, in fact a metes and bounds survey of real property is far more precise than the words of any issued patent—particularly in the hands of a capable patent litigator. Moreover, until these words have been construed by a Federal District Court judge as a matter of law, neither the patent owner nor prospective licensee has any assurance where the precise boundary between infringing and non-infringing use is located. To make matters even more challenging (as well as contentious, time-consuming and costly), the Court of Appeals for the Federal Circuit (the Federal Circuit) reviews all claims construction decisions de novo on appeal and has an exceptionally high reversal rate (currently reported as approaching 50%/) of all District Court claims construction rulings, meaning that until the matter is litigated and that outcome has been affirmed on appeal by the Federal Circuit, no one knows precisely where the boundaries of the [negative] rights conveyed by an issued patent are situated and therefore whether a license is even required. Without a clear definition of such boundaries, title insurance and other traditional types of financial instruments (that inherently rely upon the ability to clearly define where a party's rights exist and what they are worth) become impractical or prohibitively expensive, if not rendered entirely impossible under the present system. [0011] And third, likely exacerbated to at least some degree by the foregoing issues, placing a fair and reasonable value on the use of an intellectual property right (particularly when removed from other complementary rights) often involves considerable margin for debate—even to the extent both parties agree that there is literal infringement and some level of compensation would be appropriate. As Robert Kohn, Vice-Chairman of the Board of Borland Software Corporation (who coincidentally served as the company's General Counsel during the Lotus v. Borland intellectual property case), explained in February 2002: [T]he point I want to make about the system is this. When you get involved in one of these cases, or you get involved even with a settlement discussion, and let's say you're legitimately infringing somebody else's patent in some small piece of process or something that you use in this ten million lines of software code for your product, potentially hundreds of thousands of patentable ideas in your code, somebody sues you and says, “You're using our process, you're using our this or that, our interface design. We want a ten percent royalty on your sales, we want ten percent of your gross.” I mean, you end up getting into these discussions, “Well, wait a minute, wait a minute. This is only one patent out of a hundred thousand, okay. You can't ask us for ten percent of our product, it's just a minor feature. Yeah, we're infringing it.” “Well, if you don't pay us the money, we're going to sue you, and you know what the damages are in a patent case.” [ . . . ] So, my argument is at the end of the day there needs to be a major overhaul of how damages are determined in these large intellectual property cases so that there's some reasonableness brought to the table so that when there's one little process or procedure in a code you don't get into this huge discussion of what are your profits and what are our lost profits. Some judge should be able to say, “Look, I'm going to set a reasonable royalty here. It should be one-hundredth of one-thousandth of a percent because this is what the value of your particular idea is to the whole piece of software.” [0015] Intellectual property valuation specialists have traditionally employed three main approaches for valuing patents and other intangible intellectual property assets. These are: (1) the cost-basis approach; (2) the market approach; and (3) the income approach. See, for example, Gordon Smith and Russell Parr, Valuation of Intellectual Property and Intangible Assets, 3rd Edition (John Wiley & Sons: 2000) and Intellectual Property: Valuation, Exploitation and Infringement Damages (John Wiley & Sons: 2005). Dr. Richard Razgaitis, in Valuation and Pricing of Technology-Based Intellectual Property (John Wiley & Sons: 2002) (herein the “2002 Razgaitis textbook”), suggests six methods for valuation, including: (1) industry standards; (2) rating/ranking scores; (3) rules of thumb; (4) discounted cash flow; (5) Monte Carlo calculations and (6) auctions. [0016] Several patented methods have also been proposed, including U.S. Pat. No. 6,847,966 to Matthew Sommer, et al., entitled “Method and System for Optimally Searching a Document Database Using a Representative Semantic Space” ('966 patent), which is reportedly employed in preparing the so called Patent Factor™ Index (PF/i) reports (a sample of which may be viewed on line at http://www.iamcafe.com/patent_reports/patentfactor_terms.pdf) and other specialty products offered by PatentCafe�; U.S. Pat. No. 6,556,992 to Barney et al., entitled “Method and System for Rating Patents and Other Intangible Assets” ('992 patent), which discloses a statistical method and system for independently assessing a patent's relative breadth, defensibility and commercial relevance, as reportedly employed in whole or in part by PatentRatings LLC in calculating Intellectual Property Quotient (IPQ) scores and Patent Rating™ reports for patent assets (a sample of which may be viewed online at http://www.patentratings.com/001/rating_report—01.pdf); and U.S. Pat. No. 6,263,314 to Donner, entitled “Method of Performing Intellectual Property (IP) Audit Optionally Over Network Architecture” ('314 patent). [0017] Additionally, the matter is the subject of several currently pending patent applications, including U.S. Patent Application No. 20050010515 by Woltjen et al., entitled “Method of Identifying High Value Patents Within a Patent Portfolio;” U.S. Patent Application Nos. 20020004775, 20020002524 and 20020002523 by Kossovsky et al., entitled “Online Patent and License Exchange” (proposing use of the Black-Scholes option pricing formula in conjunction with a proposed online patent exchange known as pl-x.com); U.S. Patent Application No. 20030212572 by Poltorak, entitled “Method and Apparatus for Patent Valuation;” U.S. Patent Application No. 20020077835 by Hagelin, entitled “Method for Valuing Intellectual Property” (associates the value of intangible assets based on the comparative monetary value of tangible assets associated with such intangible assets); U.S. Patent Application No. 20040133433 by Lee et al., entitled “Method for Analyzing and Providing of Inter-Relations between Patents from the Patent Database;” U.S. Patent Application No. 20040181427 by Stobbs et al., entitled “Computer-Implemented Patent Portfolio Analysis Method and Apparatus” and U.S. Patent Application No. 20030139988 by Clarkson, entitled “Method for Deriving Optimal Income Stream in Intellectual Asset Transactions.” [0018] In March 2001, at the National Bureau of Economic Research's “Innovation Policy and the Economy” conference, Dr. Carl Shapiro, a professor of Business Strategy at University of California, Berkeley, presented a paper entitled “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting,” a copy of which paper (“Navigating the Patent Thicket”) may be reviewed online at http://www.idei.fr/doc/conf/sic/papers2001/shapiro.pdf, and which is incorporated herein by reference. In it, Dr. Shapiro observes: “Our current patent system is causing a potentially dangerous situation in several fields, including biotechnology, semiconductors, computer software, and e-commerce in which a would-be entrepreneur or innovator may face a barrage of infringement actions that it must overcome to bring its product or service to market. In other words, we are in danger of creating significant transactions costs for those seeking to commercialize new technology based on multiple patents, overlapping rights, and hold-up problems.”
[0019] Jordan Greenhall, the Chief Executive Officer of DivX, Inc., a privately-held firm that offers a proprietary video compression technology with over 160 million users worldwide, explained the problem this way during a February 2002 workshop: “I recently took one of my lead developers, a gentleman who's widely considered a leader in his field . . . and asked him to evaluate a particular patent that we've been hearing about in the marketplace. We did a quick search on the [USPTO] website . . . and uncovered no less than 120 patents that claim to be within the general scope of this particular patent, which was widely cited. The poor guy spent the better part of five days examining all these different patents and came back to me saying, ‘I haven't the slightest idea whether or not we infringe on these patents, and frankly, they all seem to infringe on one another.’ The end result being that I have no idea whether my product infringes on upwards of 120 different patents, all of which are held by large companies who could sue me without thinking about it.” A copy of Mr. Grenhall's testimony, along with other top executives from a variety of industries who described their challenges under the existing state of the art, may be reviewed online at http://www.ftc.gov/opp/intellect/020227trans.pdf, and is incorporated herein by reference (“February 2002 workshop”). Mr. Greenhall summarizes this way the risk that he and hundreds of other leading-edge firms confront: “I'm sitting with a nuclear bomb on top of my products that could go off at any point and cause me to simply not have a business anymore.”
[0020] True to his paper's title, Professor Shapiro coins the term “patent thicket” to refer to the overlapping set of patent rights (inherently made more gnarly by the foregoing described unique characteristics of patents) with such firms seeking to commercialize new technologies must contend. Additionally, he posits a second concern, which he refers to as the “hold-up problem,” and remarks that it is worst in industries where hundreds if not thousands of patents, some already issued, others pending, can potentially be read on a given product. About these, he notes: “In these industries, the danger that a manufacturer will ‘step on a land mine’ is all too real. The result will be that some companies avoid the mine field altogether, i.e., refrain from introducing certain products for fear of hold-up. Other companies will lose their corporate legs, i.e., will be forced to pay royalties on patents that they could easily have invented around at an earlier stage, had they merely been aware that such a patent either existed or was pending.”
[0021] Jordan Greenhall candidly described his firm's strategy designed to confront these realities during the February 2002 workshop. “The end result,” he testified, is that “I have now issued a directive that we reallocate roughly 20 to 35 percent of our developer's resources and sign on two separate law firms to increase our patent portfolio to be able to engage in the patent spew conflict. I think the concept here would be called saber rattling. I need to be able to say, ‘Yeah, I've got that patented too, so go away and leave me alone.’” As Dr. Shapiro points out in Navigating the Patent Thicket, DivX is not unique in this approach. There is, he writes, considerable research showing “that companies are increasingly inclined to seek patents, causing an increase in the ‘propensity to patent,’ as well as an increase in the practice of ‘defensive patenting.’”
[0022] Other companies take the approach of ignoring these issues altogether, some say because they don't know any better, some perhaps borne out of frustration with the present state of affairs, and others based on the view that whatever they're compelled to pay to those parties who may successfully enforce their rights following years of contentious litigation and millions of dollars in related legal costs will end up being far less than taking any of these rights seriously from the start. As Eric Raymond, co-founder and president emeritus of the Open Source Initiative (OSI) candidly explains: “And this [e.g., completing just enough of a pro forma review to have on the record that a review was carried out, then basically ignore your risks until and unless you are sued] is exactly the advice patent lawyers will give you. You don't ‘want’ to know what patents you may be infringing in advance—that makes it ‘willful’ and trebles the damages.” “Yes, this is crazy,” Raymond is also quoted as saying in SitePoint's March 2005 column concerning the legal issues of Open Source. “It reflects the fundamental insanity of modern IP law.”
[0023] Microsoft, DivX, Shapiro, Raymond and advocates for patent owners who contend their clients' rights are routinely infringed by companies playing the odds they will not be held accountable are far from alone in expressing grave concerns. In fact, between February and November 2002, the Federal Trade Commission and the Anti-Trust Division of the Department of Justice held 24 days of hearings concerning the problems of commercializing new discoveries and the need for clearing the thicket, ultimately issuing a report in March 2003. Drawing upon input from more than 300 panelists, including business representatives from large and small firms, and the independent inventor community; leading patent and antitrust organizations; leading antitrust and patent practitioners; and leading scholars in economics and antitrust and patent law, in October 2003, the FTC released an extensive report, entitled “To Promote Innovation: A Proper Balance of Competition and Patent Law and Policy,” a copy of which report (“2003 FTC report”) is available online at http://www.ftc.gov/os/2003/10/innovationrpt.pdf, and is incorporated herein by reference. Also, see http://www.ftc.gov/opp/intellect/index.htm for links to all of these hearings. [0024] A number of participants have periodically suggested the prospect for forming patent pools as a way to help address a number of these problems. In fact, on Jan. 19, 2001, the United States Patent and Trademark Office (“PTO”) officially announced that it was releasing a white paper concerning the potential use of patent pools as a way to improve “access to vital patented biotechnology products and processes.” Accompanying the USPTO's public announcement was a report, dated Dec. 5, 2000, entitled “Patent Pools: A Solution to the Problem of Access in Biotechnology Patents?,” which report (“PTO white paper”) may be reviewed online at http://www.uspto.gov/web/offices/pac/dapp/opla/patentpool.pdf, and is incorporated herein by reference. [0025] Similarly, Dr. Shapiro has repeatedly suggested that the patent thicket situation “is precisely the classic ‘complements problem’ originally studied by [French philosopher, mathematician and economist, Augustin] Cournot in 1838,” and suggested that the “basic theory of complements (used in fixed proportions) gives strong support for businesses to adopt, and for competition authorities to welcome, either cross-licensees, package licenses, or patent pools to clear [ ] blocking positions.” He remarks that while a “royalty-free cross license is ideal from the point of view of competition[,] any cross license is superior to a world in which the patents holders fail to cooperate, since neither [party] could proceed with actual production and sale in that world without infringing on the other's patents. Alternatively, if the two patent holders see benefits from enabling many others to make products that utilize their intellectual property rights, a patent pool, under which all the blocking patents are licensed in a coordinated fashion as a package, can be an ideal outcome.”
[0026] He concludes that in order to “solve the complements problem generally, and to cut through the patent thicket specifically, requires coordination among rights holders.” But he notes that “[s]uch coordination itself faces two types of obstacles. First, there are inevitably coordination costs that must be overcome. Second, antitrust sensitivities are invariably heightened when companies in the same or related lines of business combine their assets, jointly set fees of any sort, or even talk directly with one another.”
[0027] In April 2002, Gerrard Beeney, a partner with Sullivan & Cromwell, testified before the joint FTC/DOJ hearings and, alluding to Professor Shapiro's 2001 paper in his written testimony, stated: “[I]ntellectual property pools serve an important pro-competitive goal of clearing the ‘patent thicket.’ [ . . . ] Indeed, Professor Shapiro calls the pool the ‘purest solution’ to the intellectual property bottleneck. [ . . . ] Thus, it is appropriate to begin analysis of intellectual property pools by emphasizing that, in a proper form, pools are good. [ . . . ] Thus, the question that should be addressed is not yes or no to pools, but rather how to balance the measures necessary to licensors and licensees to facilitate formation and use of pools with guidelines intended to minimize any harm to competition or consumer welfare. [ . . . ] The question is not whether to permit or forbid the formation of patent pools, but rather to identify those licensing practices that advance the undeniable pro-competitive aspects of pool licensing without causing unjustifiable or countervailing competitive harm.” A copy of Mr. Beeney's remarks (“2002 Beeney testimony”) may be reviewed online at http://www.ftc.gov/opp/intellect/020417garrardrbeeney.pdf, and is incorporated herein by reference. [0028] As a February 2005 article in IP Law and Business attests, despite some limited success by a few firms such as Denver-based MPEG LA in using patent pools to clear the thicket pertaining to several key digital compression standards, “[b]ranching out beyond the pool-friendly world of compression technology hasn't been easy.” A copy of the IP Law article may be reviewed online at http://www.ipww.com/texts/0205/splash0205.html, and is incorporated herein by reference (“IP Law article”). Denver-based MPEG LA (whom Mr. Beeney coincidentally represented in securing a business review letter from the DOJ with respect to its first such patent pool respecting MPEG-2 video compression tools) has since 1997 formed six pools, all related in one way or another to video. As described in the IP Law article, since 1997, the firm's Vice President for Licensing and Business Development, Lawrence Horn, has been seeking to expand into other fields, including biotechnology—a field in which the USPTO has itself suggested the use of patent pools—as well as digital rights management (DRM). Nonetheless, to date the firm's efforts in biotech have met with little success since, as Horn concedes, “the mind-set is not exactly to pool,” and the firm has similarly experienced difficulty in getting much traction in DRM where although “the big [patent owners] are pushing for standards, they're also pushing their own proprietary solutions,” thereby making a patent pool under the existing state of the art less attractive. Despite Horn's statement that a very narrow DRM-based patent pool “is the first of what we think will be many licensing pools,” and that as new standards emerge, so too will new pools, IP Law for one remains skeptical, with its writer remarking that “breaking in a new DRM pool may prove harder than breaking into the content it protects.”
[0029] Turning to a different field from the foregoing problematical backdrop in the fields of patents, patent licensing, antitrust law and, as shown, even patent pools under the existing state of the art, one finds a considerably brighter outlook. Over the past several years a number of large group collaboration technologies have been successfully employed in the telecommunications, software programming, retail, finance, entertainment, media and advertising industries. The cover story in the Jun. 20, 2005 issue of Business Week, entitled “The Power of Us: Mass Collaboration on the Internet is Shaking Up Business,” provides a discussion of this trend toward “mass collaboration” and describes the trend toward using a variety of Internet-based technologies to enable companies and industries to “tap into the collective intelligence of employees, customers and outsiders.” The Jun. 20, 2005 Business Week article may be reviewed on online at http://www.businessweek.com/go/future_of_tech; and together with its various embedded hypertext links (collectively, “June 2005 articles”), is incorporated herein by this reference. [0030] The June 2005 articles quote one industry insider as commenting that “the Web's ability to serve as a meeting ground and scheduling coordinator” represents nothing less than “The Future of Competition.” As persons of ordinary skill in the art will understand, these capabilities including email, traditional TCP/IP and HTTP-based infrastructure, and an emerging generation of network-based technologies that include file-sharing, blogs, group-edited sites, instant messaging, widgets and a number of social networking services, can be used to connect many people with many others focused on a common interest and that permit persons to weigh in on issues of relevance. Without limitation, these systems of the prior art include U.S. Pat. No. 6,189,029 to Fuerst, entitled “Web Survey Tool Builder and Result Compiler” ('029 patent); U.S. Pat. No. 6,457,045 to Hanson et al, entitled “System and Method for Group Choice Making” ('045 patent); and U.S. Pat. No. 6,801,900 to Lloyd, entitled “System and Method for Online Dispute Resolution” ('900 patent). [0031] In this regard, the '029 patent appears to describe a system comprising a computer, a communications link between the computer and the Internet and the creation of surveys and the automatic collection and tabulation of survey results corresponding to user responses. Such surveys are constructed by a creator entering the text comprising the survey questions. The form of the questions may include at least seven different question types such as, radio (e.g., a multiple choice question with a single answer), multiple choice with multiple answers, input (with a defined input field size and type) short answer text (with a defined field length), scaled response (e.g., answer selected from among five options such as “strongly disagree,” “disagree,” “neutral,” “agree,” and “strongly agree”), Yes/No, or left/right, text areas with various number of columns and rows, and the like. Survey results are collected in a relational database as each user completes the survey; and thereafter, the survey creator can access the results and apply statistical tools or other analytical software applications to data mine the tabulated results. [0032] The '045 patent appears to describe a system that can be used to support making choices among a group of participants connected to a network. Under this system, a participant creates an electronic form specifying the subject matter of a choice topic and a list of network addresses corresponding to other participants. A server receives the form and includes resources for delivering an electronic mail message associated with an electronic medium providing various choices. When the participant opens the message, an electronic medium is produced by the server that includes static and dynamic regions. The participant can input a choice using an interaction region. The dynamic regions are asynchronously updated in the server and indicate the current content of the electronic medium that can be accessed by other participants in the group. [0033] The '900 patent appears to describe a system comprising a computer, a communications link between the computer and the Internet and an active issue database, accessible by the computer, containing a plurality of issue files and corresponding voting forms. The system also includes issue presentation software executing on the computer for retrieving issue files and corresponding voting forms from the active issue database and presenting the issue files and corresponding voting forms to users over the communications link. The system further includes vote processing software executing on the computer for receiving the completed voting forms submitted by users over the communications link, updating the issue files in the active issue database to reflect the completed voting forms, and presenting vote tallies to users over the communications link. [0034] Additionally, those of ordinary skill in the art will recognize that a number of other technologies are used to help enable such services and benefit from information derived from them. These include collaborative filtering techniques to generate personal recommendations based upon explicit ratings, as well as so called “content-based” filtering techniques that extract key concepts from documents and websites and automate the categorization, cross-referencing, hypertext linking and/or presentation of such information. Another technology is referred to as “content mining,” which automatically analyzes text and other unstructured content to make intelligent decisions and recommendations. And yet another technique involves the use of so called “implicit ratings” that are based on specific actions of participants and which are, in turn, used to provide recommendations based on peer group categorization but without resorting to explicit ratings. [0035] Well conceived implementations employing these and other related network-based technologies are understood as increasingly providing a way “of turning self-interest into social benefit—and real economic value [through an] ‘architecture of participation,’ so it's easy for people to do their own thing . . . [but where] those actions can be pooled into something useful to many.” The June 2005 articles describe capabilities like the seller ratings on eBay, song ratings on Yahoo! and millions of customer-generated product reviews on Amazon.com, eOpinions.com and a multitude of similar services—all of which, at their core, “help decide hits and duds”—as being examples of the power of such technologies in action. Yet these sorts of technologies have not heretofore been proposed nor applied to the field of patent licensing and enforcement. [0036] 3. Description of the Related Art [0037] Although the origins of patents for invention are obscure, many scholars trace the tradition to England, where its origins can be traced back to the 15th century when the Crown started making specific grants of privilege to manufacturers and traders. Such grants were signified by Letters Patent, open letters marked with the King's Great Seal. According to the UK Patent Office, the earliest known English patent for invention was granted by King Henry VI to Flemish-born John of Utynam in 1449. The patent gave John a 20-year monopoly for a method of making stained glass, required for the windows of Eton College, which had not been previously known in England. [0038] The first Article of the U.S. Constitution, Section VIII, provides the basis for the U.S. patent system. [U.S. Constitution, Article I, Section 8, clause 8]. In this article, the Founding Fathers granted to Congress the power to form a system “to promote the progress of Science and useful arts by securing for limited terms to authors and inventors the exclusive right to their respective writings and discoveries.” Almost a century later, Abraham Lincoln expressed his support for the patent system when he stated that “the patent system . . . add[s] the fuel of interest to the fire of genius, in the discovery of new and useful things.”
[0039] Clearly, the purpose of the patent system, from its earliest beginnings was to provide inventors and their employers with the incentive to create and fund the development of new and useful technologies. As described above, in order to achieve this objective, the incentive that the government chose to offer was the granting of an exclusive right to prevent others from making, using or selling the invention for a period of years sufficient to enable the recovery of these costs and, if all went well, to return a profit. In exchange for this exclusive grant of monopolistic rights, the inventor provides the public with a full written and graphical disclosure of his or her invention, sufficient to enable a person having ordinary skill in the field of the invention to make and use the invention, which rights in turn become public property upon the expiry of such period. [0040] Thus, a patent may be thought of as a bilateral agreement with the government, an agreement whereby both the inventor and the public benefit if the terms are honored. In fact, this bilateral agreement underscores a system that most people agree has worked extremely well. As the USPTO has itself said: “The American IP system has played a significant role in the history of our nation's economy. Patents and trademarks have long protected American creativity and ingenuity. [ . . . ] The strength and vitality of our technology-driven economy depends directly on the effectiveness of the mechanisms that protect new ideas and investments in innovation and creativity. The continued demand for patents and trademark registrations underscores the ingenuity of U.S. inventors and entrepreneurs.”
[0041] Today's inventors and entrepreneurs join a long and esteemed tradition. According to historical accounts, the first U.S. patent was issued on Jul. 31, 1790 for an improvement “in the making Pot ash and Pearl ash by a new Apparatus and Process.” The patent was signed by President George Washington, Attorney General Edmund Randolph and Secretary of State Thomas Jefferson. Only two other patents were granted that year, one for a new candle-making process and the other for flour-milling machinery. Between 1790 and 1836, when the current patent numbering system began, a total of only 9,957 patents were issued (or approximately 220 patents per year over the 45-year period). [0042] By the 1850's, the pace of innovation had quickened substantially. In fact, during the decade between 1850 and 1860, the U.S. Patent Office issued an average of approximately 2,000 patents annually (e.g., between 1850 and 1860, the USPTO issued U.S. Pat. Nos. 6,981 to 26,642). By that time, two other things changed as well. First, the sheer complexity of inventions was increasing as America moved from having been an essentially agrarian society to an industrial economy; and with this change, the possibility was inevitably increasing that a commercial product would entail a number of distinct innovations conceived and patented by several different inventors. And second, the accelerated speed of invention, aggregate number of patents issued each year and duration in the period of exclusivity each patent conveyed reached the point that the patents owned by multiple parties were almost certain to be implicated in producing a number of the more complex products in the manner that an increasingly sophisticated consumer base demanded. [0043] Within this context, in one cutting-edge industry of the day, it is written that by the late-1850's, “close to 1,000 sewing patents existed, and every machine made infringed on not one or two, but several patents held by somebody some place. Court dockets filled to overflowing. Attorney's specialized in the complicated in and outs of sewing machine patents and raked in hefty and seemingly unending fees.” As the aforementioned USPTO white paper summarizes, in order to overcome these inevitable challenges, reportedly America's first patent pool was created. [0044] Named the Sewing Machine Combination, this patent pool was formed by Isaac Merritt Singer, Elias Howe, Wheeler & Wilson Co., and Grover & Baker Co. According to historical accounts, the rapidly escalating number of patent infringement cases involving various components of the sewing machine prompted Orlando B. Potter, a lawyer and president of Grover & Baker, to recommend an alternative to his firm and the other major manufacturers “suing their profits out of existence.” According to that proposal, implemented in 1856, the four parties combined their patents and sold licenses to manufacturers for a single fee. That fee—according to at least one account, reportedly $15 per machine—was in turn divided among the patent holders until 1877 (or in Elias Howe's case through 1867), when the last patent expired. [0045] The USPTO white paper provides a brief summary concerning the history of patent pools, various benefits that can derive from their use, a number of the concerns that have historically been voiced about them, and provides a broad overview of the legal guidelines for forming and operating such intellectual property pooling arrangements. As the USPTO states, “patent pools have played an important role in shaping both the industry and the law in the United States.” Over the past 150 years, the public and legal perceptions concerning the practice of pooling intellectual property rights have waxed and waned, ranging from patent pooling being legally proscribed due to various abuses and related antitrust concerns, to viewing such pooling arrangements as being highly desirable (if not essential), such as when the combination of patents held by the Wright Company and the Curtiss Company was desperately needed to enable the country's production of airplanes prior to World War I. [0046] The statistical measures concerning patent activity (and the likelihood that with more issued patents, there will be more overlapping rights) are themselves revealing about why the USPTO and others have again suggested taking a hard look at patent pools. Currently, the U.S. Patent Office is approaching 170,000 new patent issuances annually (e.g., between 1999 and 2004, the USPTO issued U.S. Pat. Nos. 5,855,021 to 6,671,884). At such rates of issuance, approximately two million patents—each with its respective claims designed to exclude unlicensed parties from practicing one or more disclosed inventions—have yet to pass into the public domain. Whereas upon expiry, all of these rights will become public property free for anyone's use, until that time, under 35 U.S.C. � 284, all of these patent holders are legally entitled to obtain at least a reasonable royalty from anyone who makes, uses, sells, offers to sell, or imports into the United States the invention (or substantially the invention) as claimed therein. [0047] Moreover, in addition to the sheer number of patents that must be considered as giving rise to liability, the products, processes and services that these patents cover have become far more complex as the subject matter has evolved from early sewing machines being considered as “cutting-edge” in the late-1850's to today's technologies involving microchips that are produced in billion dollar factories, diagnostics and drug development efforts costing literally hundreds of millions, personal computers and consumer electronics which are increasingly converging and whose product life cycle is often measured in just months rather than years or decades, and specialized financial and communications networks of global reach, just to name a few. [0048] Over the past approximately 25 years, key legal authorities (including the relevant regulatory agencies both in the United States and elsewhere around the world) have increasingly held the view that patent pools can promote efficiency in production and distribution, as well as facilitate risk-sharing. As a result, these groups have tended toward increasingly favoring a case-specific evaluation of such arrangements. By way of example, in the United States, the current enforcement approach is embodied in the 1995 Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) Antitrust Guidelines for the Licensing of Intellectual Property (“Guidelines”). The Guidelines document may be reviewed online at http://www.usdoj.gov/atr/public/guidelines/ipguide.htm, and is incorporated herein by this reference. [0049] Three basic principles underlie the Guidelines. First, for the purpose of antitrust analysis, the Guidelines indicate that intellectual property should be viewed in essentially the same way as any other forms of tangible or intangible property. As such, the Guidelines expressly acknowledge that “an intellectual property owner's rights to exclude are similar to the rights enjoyed by owners of other forms of private property.”
[0050] Second, the Guidelines indicate that although an “intellectual property right confers the power to exclude with respect to the specific product, process or work in question, there will often be sufficient actual or potential close substitutes . . . to prevent the exercise of market power” (referring to the ability profitably to maintain prices above, or output below, competitive levels for a significant period of time). Accordingly, the Guidelines do not assume that a patent creates market power in the antitrust context. [0051] And third, the Guidelines recognize that intellectual property “typically is one component among many in a production process and derives value from its combination with complementary factors, [ . . . including] other items of intellectual property.” As such, the Guidelines recognize that an owner of such rights may find it most efficient to contract with others for these factors; and that licensing which allows firms to combine complementary factors of production can lead to more efficient exploitation and be pro-competitive by virtue of helping to speed innovations to market and encouraging further innovation. Additionally, the Guidelines acknowledge that “[s]ometimes the use of one item of intellectual property requires access to another. An item of intellectual property ‘blocks’ another when the second cannot be practiced without using the first. For example, an improvement on a patented machine can be blocked by the patent on the machine. Licensing may promote the coordinated development of technologies that are in a blocking relationship.”
[0052] According to the Guidelines, the vast majority of licensing restrictions (all except naked price fixing, coordinated output restraints, market division agreements among horizontal competitors, as well as certain group boycotts and resale price maintenance that have no plausible efficiency rationales) are evaluated under the “antitrust rule of reason.” Under the rule of reason, enforcers ask first whether the licensing restraint is likely to have an adverse effect on competition; and if so, whether the restraint is reasonably necessary to achieve pro-competitive benefits or efficiencies that outweigh those adverse effects. [0053] The Guidelines document also expressly discusses “[c]ross-licensing and pooling arrangements,” which it indicates “may provide pro-competitive benefits by integrating complementary technologies, reducing transaction costs, clearing blocking positions, and avoiding costly infringement litigation.” On this basis, the document concludes that by promoting the dissemination of technology, such arrangements are often pro-competitive. Additionally, the Guidelines document acknowledges that “[s]ettlements involving the cross-licensing of intellectual property rights can be an efficient means to avoid litigation;” and note that “in general, courts favor such settlements.”
[0054] At the same time, the Guidelines also recognize that patent pooling can have anti-competitive effects in certain circumstances. For instance, the document states that when such cross-licensing involves horizontal competitors, “the Agencies will consider whether the effect of the settlement is to diminish competition among entities that would have been actual or likely potential competitors in a relevant market in the absence of the cross-license [and, as a result, in] the absence of offsetting efficiencies, such settlements may be challenged as unlawful restraints of trade.”
[0055] The Guidelines document also indicates a “possible anti-competitive effect of pooling arrangements may occur if the arrangement deters or discourages participants from engaging in research and development, thus retarding innovation. For example, a pooling arrangement that requires members to grant licenses to each other for current and future technology at minimal cost may reduce the incentives of its members to engage in research and development because members of the pool have to share their successful research and development and each of the members can free ride on the accomplishments of other pool members.” Simultaneously, the document notes: “However, such an arrangement can have pro-competitive benefits, for example, by exploiting economies of scale and integrating complementary capabilities of the pool members, (including the clearing of blocking positions), and is likely to cause competitive problems only when the arrangement includes a large fraction of the potential research and development in an innovation market.”
[0056] The Justice Department has applied the Guidelines in considering and approving three patent pools. The results of its first review are presented in a Jun. 26, 1997, review letter (“1997 Review Letter”) affirming the pooling of video system patents by a group of [initially] nine firms including Fujitsu, Lucent Technologies, Matsushita Electric, Mitsubishi Electric, Philips Electronics and Sony Corporation. The 1997 Review Letter may be reviewed online at http://www.usdoj.gov/atr/public/busreview/1170.pdf, and is incorporated herein by reference. [0057] The 1997 Review Letter sets forth five additional guidelines for assessing a patent pooling arrangement, including: (1) the patents in the pool must be valid and not expired; (2) although the aggregation of competitive technologies and setting a single price for them “would raise serious competitive concerns[,] [o]n the other hand, a combination of complementary intellectual property rights, especially ones that block the application for which they are jointly licensed, can be an efficient and pro-competitive method of disseminating those rights to would-be users;” (3) “limitation of the Portfolio to technically essential patents, as opposed to merely advantageous ones, helps ensure that the Portfolio patents are not competitive with each other and that the Portfolio license does not, by bundling in non-essential patents, foreclose competitive implementation options” and as a corollary thereof, the continuing role of an independent expert “to assess the essentiality of patents is an especially effective guarantor that the Portfolio patents are complements, not substitutes;” (4) the pool agreement must not disadvantage competitors in downstream product markets; and (5) the pool participants must not collude on prices outside the scope of the pool, e.g., on downstream products. [0058] The 1997 Review Letter provides the foundation for MPEG LA (an acronym for “MPEG Licensing Agent”) to offer a package license on behalf of the intellectual property owners of a group of patents that are assessed by an independent expert as being “essential” to compliance with the MPEG-2 compression technology standard, and to distribute royalty income among such patent owners “pursuant to a pro-rata allocation based on each Licensor's proportionate share of the total number of Portfolio patents in the countries in which a particular royalty-bearing product is made or sold.” According to the 1997 Review Letter and subsequent industry publications, the approximately nine-year old MPEG-2 patent pool commenced with less than 30 patents owned by nine licensors, which were selected by the independent expert from over 8,000 submittals from more than 100 firms, and has grown to now include about 650 MPEG-2 essential patents owned by 24 licensors in 56 countries. According to trade publications, this substantial patent pool has attracted more than 800 licensees accounting for most MPEG-2 products in the current world market. [0059] On the basis of the MPEG-2 precedent, and the aforementioned 1997 Ruling Letter, MPEG LA has organized and/or operates approximately half a dozen other pooling arrangements involving the owners of patents deemed to be “essential” to compliance with various technical standards. These include patent pools for the MPEG-4 visual standard and MPEG-4 systems standards; the IEEE 1394 high speed transfer digital interface; the DVB-T digital television broadcast standard employed in Europe, parts of Asia, Australia and New Zealand; and the AVC.264 audio-visual coding standard. In accordance with these same principles, MPEG LA is currently attempting to organize at least four additional patent pools comprising owners of “essential patents” for other key technology standards. These include proposed patent pools for the application of DRM (digital rights management) standards to electronic media distribution systems on computers, mobile and consumer electronics platforms; the SMPTE VC-1 video compression standard for television; the ATSC digital television standard; and the DVB-H digital handheld terminals broadcast standard. [0060] MPEG LA also notes in multiple press releases issued during 2004 and 2005 that, “[i]n addition, MPEG LA actively seeks to adopt its alternative patent licensing model in other industries including biotech and pharmaceutical.” According to MPEG LA's site on the World Wide Web, which may be reviewed online at http://www.mpegla.com, “MPEG LA is the world leader in one-stop technology platform patent licenses, enabling users to acquire patent rights necessary for a particular technology standard or platform from multiple patent holders in a single transaction.” Thus, MPEG LA asserts that “[w]here-ever an independently administered one-stop patent license would provide a convenient marketplace alternative to assist users with implementation of their technology choices, the licensing model pioneered and employed by MPEG LA may provide a solution.”
[0061] Shortly after the 1997 Ruling Letter effectively laid the foundation for the patent pool approach taken by MPEG LA, in 1998, Sony, Philips and Pioneer disclosed having an interest in forming a patent pool to “assemble and offer a package license under the patents of Philips, Sony and Pioneer . . . that are ‘essential,’ . . . to manufacturing Digital Versatile Discs (DVDs) and players in compliance with the DVD-ROM and DVD-Video formats, and [to] distribute royalty income among [these firms].” Accordingly, they also sought and obtained a business review letter from the DOJ on their proposed patent pool arrangement (“1998 Ruling Letter”). The 1998 Ruling Letter, issued on Dec. 16, 1998, may be reviewed online at http://www.usdoj.gov/atr/public/busreview/2121.htm, and is incorporated herein by reference. [0062] Approximately six months later, on Jun. 10, 1999, the DOJ issued a third opinion letter (“1999 Ruling Letter) in response to a request for business review of yet another patent pool proposed by Toshiba Corporation, Hitatchi, Matsushita, Mitsubishi, Time Warner and Victor Company of Japan for products manufactured in compliance with the DVD-ROM and DVD-Video formats. The 1999 Ruling Letter also may be reviewed online at http://www.usdoj.gov/atr/public/busreview/2485.htm, and is incorporated herein by reference. [0063] As stated in the USPTO white paper, the 1998 and 1999 Ruling Letters tend to effectively “collapse” the guidelines enumerated within the 1997 Review Letter into “two overarching questions,” namely: (1) “whether the proposed licensing program is likely to integrate complementary patent rights,” and (2) “if so, whether the resulting competitive benefits are likely to be outweighed by competitive harm posed by other aspects of the program.”
[0064] In addition to MPEG LA and these specialized industry consortiums, several other firms either serve or propose to serve as intermediaries respecting patent pools addressing various technology standards. For example, according to the aforementioned IP Law article, “Via Licensing Corporation, a spin-off from Dolby Laboratories, Inc., has already issued patent calls for nine different pools . . . . Like MPEG LA, Via Licensing has focused largely on technology standards related to compression.” According to the Via Licensing site on the World Wide Web, which may be reviewed online at http://www.vialicensing.com, it too focuses exclusively on “standards based” patent pooling arrangements that incorporate “essential” patents to implementing such standard. [0065] As the foregoing examples aptly illustrate, according to limitations of the present state of the art, in order to avoid concerns that the pool might restrain competition, patent pooling arrangements tend to impose a structural requirement that all of the patents in such pool be limited exclusively to “essential” patents. As those skilled in the art understand, the term “essential” in this context generally refers to valid patents that are technically essential—i.e., inevitably infringed by compliance with a mandated and/or de facto industry standard or specification—and those for which existing alternatives are economically unfeasible. [0066] A variety of experts have urged key regulatory agencies—in the United States, the FTC and DOJ—to liberalize this restriction, thereby opening pooling to patents which are something less than essential in character. Given the limitations of the present state of the art, such recommendations inherently call into question the balance between competition, patent law and public policy, which examination persons of ordinary skill in the art will understand is the principal focus of the aforementioned 2003 FTC report and the testimony from the more than 300 panelists that it summarizes. [0067] Shortly thereafter, in April 2004, the National Academies of Science (“NAS”) released a report, entitled “A Patent System for the 21st Century” (“2004 NAS study”), calling for significant changes in the U.S. patent system. A summary of the 2004 NAS study is available online at http://thefdp.org/STEP_Patent_Rpt.pdf; and the full report is available at http://books.nap.edu/catalog/10976.html, both of which are incorporated herein by reference. [0068] An excellent summary of the 2003 FTC report and 2004 NAS study is provided in a 2004 paper authored by Dr. Carl Shapiro, the aforementioned author of Navigating the Patent Thicket. A copy of this analysis (“2004 Shapiro paper”) may be reviewed online at http://faculty.haas.berkeley.edu/shapiro/patentreform.pdf, and is incorporated herein by reference. In it, Dr. Shapiro characterizes the 2003 FTC report and 2004 NAS study as being very helpful in assembling evidence to support a call for patent reforms, but notes that “the problems with the patent system so many industry participants perceive do not primarily fit the picture often painted: absurd or obviously invalid patents being brandished by non-inventors who are exploiting the patent system to extract royalties from upstanding companies who are the true innovators.” Instead, the 2004 Shapiro paper suggests “there appears to be a much more subtle and deeper complex of problems, consisting of [nine] basic elements.”
[0069] Four of these nine elements focus principally on a number of proposed changes to USPTO examination resources, policies and procedures, and/or statutory changes respecting the threshold of obviousness and the appropriate burden for overcoming the presumption of patent validity. These and similar reform recommendations are still being debated in the Congress, by the affected agencies themselves, by the courts and by numerous interested parties. [0070] This disclosure relates, among other things, to the other five elements cited by Dr. Shapiro in the 2004 Shapiro paper as being problems arising out of limitations in the present state of the art. These include: (1) “the [ ] presence of a very large number of patents that are likely to be invalid if actually tested in court;” (2) “the fear that many patents could be asserted against a given product, perhaps by a single entity holding a large portfolio of patents;” (3) “the danger that a company developing, designing, and even manufacturing a new product will be unaware of many patents which can then be asserted opportunistically against its products after it has made significant investments;” (4) “the danger that such an assertion can lead to an injunction, damages, and even treble damages in the case of willful infringement;” and (5) the “very expensive and time consuming litigation process involving unpredictable juries.”
[0071] There is also a need to find a way to overcome problems associated with attracting greater interest and participation in patent pools and to assure that such pools operate in a consistently pro-competitive manner. Quite clearly, there is a need even in patent pools involving only “essential” patents for an improved method of assuring that such pools are more pro-competitive and broadly inclusive. This is particularly true in fields which either don't lend themselves to industry standards or that aren't accustomed to such practices, and/or where gross disparities in market power may exist between the owners of essential patents (e.g., a small start-up company or independent inventor with little or no market share but an early priority date on a patented invention in a field that is dominated by major companies). [0072] Additionally, there is a potentially even more significant need for accomplishing the foregoing described pro-competitive objectives in a manner that could supplant (or at a minimum render moot) the present requirement that such patent pool must include only essential patents in order to strike the proper balance under the antitrust rule of reason, as summarized above. [0073] As Dr. Shapiro has warned, while patent pools may afford a pro-competitive solution, “antitrust law can potentially play [ ] a counterproductive role, especially since antitrust jurisprudence starts with a hostility towards cooperation among horizontal rivals. [ . . . ] Unfortunately, antitrust enforcement and antitrust law have a deep-rooted suspicion of cooperative activities involving direct competitors. But such cooperation, in one form or another, may be precisely what is needed to navigate the patent thicket. As a result, unless antitrust law and enforcement are quite sensitive to the problems posed by the patent thicket, they can have the perverse effect of slowing down the commercialization of new discoveries and ultimately retarding innovation, precisely the opposite of the intent of both the patent laws and the antitrust laws.”
BRIEF SUMMARY OF THE INVENTION(S) [0074] This invention relates to intellectual property licensing arrangements involving a plurality of patents or other intellectual property assets that may be licensed by or on behalf of the owner(s) to one or more entities, and in which a system and method is provided for assembling a portfolio of assets that are complementary in nature; negotiating royalties with prospective licensees who are users or prospective users of all or some portion of that complementary asset portfolio; and allocating among the owners of the assets comprising such portfolio the royalty revenue thereby earned in consideration of granting certain enumerated rights in, to and under those intellectual property assets, in whole or in part, to such one or more licensees. [0075] It is contemplated that such licenses could, depending on the interests of each such licensee, (1) cover the development, offer, sale and/or use of licensee's existing products, systems and activities that in the absence of such license could infringe some or all of such rights; and/or (2) provide the licensee with the added flexibility to modify, enhance, revise, substitute or develop new products, systems and activities without infringement concerns, without need for and expense of devising workarounds to avoid infringing some or all of such rights, and without need to disclose trade secret and proprietary information, processes and systems. [0076] In one embodiment of the present invention, among others, the system and method includes an algorithm that can be used to allocate such royalty earnings in a fair and unbiased manner among the owners of all of the patents having relevance to such licensee(s). In a preferred embodiment of the present invention, such algorithm also takes into consideration whether and the extent to which the application of such rights by each such licensee is highly material to their existing products, systems and activities or entirely peripheral in nature such as simply providing the licensee the flexibility to in the future modify, enhance, revise, substitute or develop new products, systems and activities without infringement concerns. Additionally, a preferred embodiment includes an optional system for resolution of disagreements, if any, as and when these occur among members of the patent pool concerning the proposed allocation of royalty revenue. In accordance with the principles and objectives of the invention, in one preferred embodiment of the invention, the foregoing algorithms go beyond simply analyzing the words of the patent; and take into account one or more other factors including analysis of the number, nature and timing of citations subsequently received by a patent (herein “forward citation analysis”), analysis of the number, nature and timing of prior art references cited during prosecution of the patent (herein “backward citation analysis”), explicit ratings by other patent owners within the same field, and optionally implicit ratings based upon the interaction of system users, in order to provide a fair and appropriate formula for allocating the royalties paid for such rights among the parties contributing to the collective portfolio of intellectual property rights in the patent pool. [0077] Additionally, a preferred embodiment of the invention applies a variety of known network-based group collaboration technologies tailored to the specific requirements of patent licensing and management of intell