Indirect Exploitation of Intellectual Property Rights By Corporations and Investors

Competitive pressures and rent-seeking behaviors have motivated companies and investors to develop indirect techniques for beneficially exploiting third-party intellectual property rights (IPRs) that qualitatively depart from the direct exploitation tools honed during the past thirty years of the pro-patent era. Among other things, companies have realized that they do not even need to own IPRs in order to consequently benefit from their exploitation. This phenomenon is labeled here “IP privateering” because of its similarities to an historic method of waging war on the high seas. This Article classifies IP privateering as a species of aggressive non-practicing entities (NPEs). The parameters of this newly identified strategy are probed using a variety of methods. The apparent evolution of this indirect IPR exploitation strategy is also traced among companies. A typology for IP privateering is provided that identifies the key variables associated with this strategy. Examples of privateering, both actual and hypothetical are discussed. The identified privateering scenarios, while small in number, have amounted to well over $3 billion in rent collections and have possibly saved sponsoring companies an order of magnitude more in avoided revenue losses. The infrastructure that supports privateering is discussed as well as how a possible patent oversupply may facilitate this strategy. The social utility of privateering is examined from various points of view including corporate, SME, investor, and inventor. Further questions are posed regarding IP privateering and aggressive NPEs (observing that both actors are likely supported financially by participants operating in the investment capital market), the need for ownership transparency in the innovation system, and whether the legislator should more explicitly design an innovation system that includes boundaries for various IPR strategies.

Practical Considerations In The Indirect Deployment Of Intellectual Property Rights By Corporations And Investors

 

Competitive pressures and rent-seeking behaviors have motivated companies  and investors to develop indirect techniques for beneficially exploiting third-party intellectual property rights (IPRs) that qualitatively depart from the direct exploitation tools honed during the past thirty years of the ongoing pro-patent era. Companies and investors have learned that they do not even need to own IPRs in order to consequently benefit from their exploitation. This phenomenon is labeled here “IP privateering” because of its similarities to an historic method for waging war on the high seas. This Article probes certain practical limitations of this newly identified strategy. Specifically, this Article explores of the range of counterattacks available to the target of a privateering operation and finds that but for certain specific scenarios related to antitrust and market manipulation, the typical target will likely be required to prove that the privateer’s litigation was frivolous before any effective attack can be launched on the sponsor. This Article also explores how the rise of market intermediaries coupled with an oversupply of patents simplifies the sponsor’s task of equipping a privateer operation.

Bitcoin: An Innovative Alternative Digital Currency

Bitcoin is a digital, decentralized, partially anonymous currency, not backed by any government or other legal entity, and not redeemable for gold or other commodity. It relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments. This new currency could also hold the key to allowing organizations such as Wikileaks, hated by governments, to receive donations and conduct business anonymously. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin’s legal status. This Article examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the Federal Securities Acts.

Beyond Confusion – Survey Evidence of Consumer Demand and the Entire Market Value Rule

The doctrine of apportionment serves to limit recovery for patent infringement to the economic value contributed by the infringed patent. However, the entire market value rule allows plaintiffs to base their recovery on the entire value of a product, if an infringing feature of the product is the basis for consumer demand for the product. Large damages awards produced by the application of the entire market value rule have prompted appeals for damages reform. In the recent America Invents Act, the legislature did not address damages reform, noting that the judiciary is currently reinvigorating the doctrine of apportionment. Indeed, the Federal Circuit has recently provided such reform by heightening the evidentiary burden for consumer demand, implying that empirical evidence of consumer demand will be necessary in order to apply the entire market value rule. This Note examines issues related to the admissibility and relevancy of empirical evidence of consumer demand, including how such evidence may be used to apportion damages and effect policy.

Customers, Co-workers and Competition: Employee Covenants in California after Edwards v. Arthur Andersen

California law is well settled that most contractual provisions prohibiting competing with or soliciting customers of a former employer are unenforceable under California Business and Professions Code 16600, unless the activity involves misappropriation of trade secrets or confidential information. Nonetheless, case law appears to hold that a restriction on one type of post-employment activity— hiring away former co-workers—might still be permitted. In 2008, the California Supreme Court once again addressed the scope of section 16600. This Note examines employee nonsolicitation covenants in light of that decision, including whether they remain legally defensible, and whether they retain any value for the employer in today’s social-media-connected society.