Friday, February 23, 2007

Patent management for fun and profit

The big news of the day is Anna Nicole Smith's final resting place, of course, but yesterday's $1.52 billion judgement against Microsoft, a record-setting award for a patent infringement case, is also of some note. Alcatel-Lucent picked up this tidy piece of change for two patents that were filed when Bell Labs was developing MP3, the now ubiquitous digital music format, almost 20 years ago.

Microsoft thought it had licensed all the rights it needed to use the format from Bell's partner in the original MP3 research consortium, Germany's Fraunhofer Institute. Unhappily for them, it turns out that Bell had a couple of earlier, related patents stashed in its back pocket and somebody who was really on the ball figured out that Alcatel-Lucent now owned them. Now, everyone else who is making MP3 players -- surprise, Apple -- may also have to pay homage.

One person this story won't surprise is M. Henry Heines, whose new book with its oddly arresting cover art, Patents for Business, was just published by Praeger. Heines, a partner in the San Francisco law firm Townsend, Townsend, and Crew, wrote the primer specifically for managers because:

Regardless of the nature of one's business, a strong patent portfolio gives a business entity a value that far exceeds the entity's net book worth. A strong patent portfolio also provides leverage and a strong bargaining position in negotiating joint ventures and strategic alliances, generating licensing revenue, and attracting investors. These transactions and the decisions that control and direct them are made by management, not patent attorneys.

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