Rethink(IP)

Posted by Bill Meade

By Bill Meade of http://www.basicip.com

LES stands for the "Licensing Executive Society" and this post is a review of the LES winter meeting that took place February 22, 23, and 24 in Pasadena California. This post is an attempt to give RethinkIP readers a sense of what the conference and LES society is like.

Who went?

Approximately 320 people attended the conference and they represent a mix of licensing-related backgrounds including patent litigators, house counsel, attorneys with MBAs working as licensing executives (i.e., Outside their company’s legal department!), geniuses at large (one person had an MD from Russia, a PhD from Israel, and an MBA from the US), and many technical people (Ph.D. biochemistry or physics for example) acting as IP commercialization consultants, and expert witnesses. Add to this mix a dash of retired judge, a genial Cornell PhD in materials science, JDs with Ph.Ds, the Knobe Martin litigator alumni association, and you begin to get a feel for the human chemistry of an LES meeting.

What was surprising?

1. I was very surprised at how easy and enjoyable it was to meet LES people. LES was unlike an academic conference where outsiders are greeted with humorless pomposity. The agenda has networking time built in, so that you quickly become comfortable with sitting down at a table and meeting new people.

2. The partying. The basic approach to an LES networking time is to put people in a room and surround them on all sides with food and booze, and then give them time to talk. My observation: this works!

3. The number of ways that IP is being monetized. It seems like no two entities are licensing the same way. One hospital licensing executive described how licensing is done first and then inventing is done later. I may be reading too much into the situation, but there seemed to be many licensing executives that are newly minted. They look like good general business managers who out of the blue, have been given the responsibility for getting something out of the patent portfolio. So the executives have a product and no market knowledge. On the outside they are confident and smooth. On the inside they feel career vertigo as their toes curl over the abyss of market ignorance.

Having worked in marketing research, I had an interesting vantage point. Equal in number to the newly-mined-IP managers were marketing research consultants. The marketing researchers reminded me of the 1970s Kelly’s Heroes movie and the role of Sgt. Oddball. Sgt. Oddball was a tank commander (played by Donald Sutherland) who was trying to get to a German bank in order to blow it open and take gold bullion. In one scene in the movie, Sutherland is on the radio negotiating with an army corps of engineers person for a 50 foot pontoon bridge with which to drive his tank across a river. Sg.t Oddball says “I can …. find … 50 feet of bridge … er ... almost anywhere.” after which the bridge is provided by the corps of engineers at a nominal cost.

Marketing researchers offer to fill the gap between patents and markets with statistical tools applied in psychology in the 1960s and 1970s, and then re-applied in marketing in the 1970s and 1980s. Like Sgt. Oddball's pontoon bridge, these tools are being dusted off and re-applied in the new century to connect the patents of newly-minted-IP managers to customers who want to buy access to any market so they can show "results."

4. Data. I was almost brought to tears (humor me, I’m an economist) by Michael Elmer’s presentation “GLOBAL PATENT LITIGATION: THE PICTURE WITH COUNTRY WIN RATE DATA” where Elmer has computed the chances that a patent holder will win based on historical data across countries. After compiling and computing the probabilities of winning, Elmer showed how these probabilities can be used to construct decision trees. Decision trees allowing rational management of litigation. Read that sentence again! Little surprises within Elmer’s presentation:

a. Of 3075 district cour patent cases filed in 2004, 3.6% went to trial.
b. US patentees win 49% of the time in bench trials and 67.5% in jury trials.
c. In the US overall patentees win 59% of the time, in the central district of California 72% of the time, in the Eastern District in Texas patentees win 83% of the time.

I’ve emailed Michael Elmer (Michael.elmer@finnegan.com) and asked if he can have his presentation posted to the Finnegan web site so that I can point to it to provide it to the RethinkIP community. I will update this post when I hear back from him. This presentation alone made attending LES worth it for me. The implications of differing success rates across countries have huge implication for foreign filing decisions. For example, Elmer showed that Korea, Japan, and Great Britain, all have about the same success rate for patentees (20%). So, if you are using the UK for European protection in an attempt to avoid translation costs, the low likelihood of success needs to be factored in to your decision.

5. Database balkanization. Balkanization in the sense that the world of patent databases is divided into small mutually hostile units of ardent users. What surprises me about the patent database use in LES is how similar LES user use patterns are to the patterns of academic researchers using omnibus statistical programs like SPSS or SAS. My observation during my brief stint in academia is that the same people who would say “I pride myself on my open mindedness” would be brand loyal to their statistics program to the point of irrational pig headedness. In the patent database world there are more tool choices than in the statistics world, but the use-patterns seem to be the same. My radar at the LES meeting was telling me that the vast majority of licensing folks use one tool and then learn a bit of a 2nd program but, most users are happily unaware of many of the tools. The aristocratically high prices of patent database programs may further aggravate the imbalanced data diets of users. Full disclosure, there were a few people at the meeting who had access to virtually all the tools. But, these people tended not to be strategists. Instead, they seemed to be like reference librarians on a quest to get other people to ask data questions. The librarians were on a quest to tell the question askers which database could answer their question. Not very useful when the tool costs $12,000 a seat and you don’t have it.

The problem with database balkanization is that it prevents licensing people from developing tools that are standard, valid, and cost-effective enough to be widely used. The problem with the lack of valid, widely used tools, is that licensing analytics is currently a mess of immature tools that don’t support the real work of licensing people.

6. Excellent keynote speaker quality. The three keynote speakers on Thursday were Louis Lupin SVP and General Counsel at QUALCOMM, Gerald Weiner who gave an overview of licensing in the music industry (David Letterman is right, record company executives are weasels!), and William Gross who gave a talk on the video gaming industry. Each of these speakers was great! What was surprising was that they each of these speakers left the audience wanting more. LES set the time slots at 30 minutes, so each of these speakers only had time to cover the “candy cane” portion of their talk. For example, Lupin started his talk, got 2 slides in and then took 2 questions and then the 30 minutes was up. Next! Weiner was able to give a longer talk, I think because the audience knew so little about the entertainment industry. Key sound bite for me was that music artists get $.05 of the $.99 per track sold on the iTunes music store because of the way entertainment industry executives interpret contracts. William Gross’s presentation on video gaming was something of a moral “moon walk” dance around how games affect kids playing them. Gross personally draws the line of “bad” at pornography.

Was the conference worth the $775 price plus the $200 LES membership price?

BasicIP, my company plays for the inventors and patent attorneys who want more from them. We help companies figure out what they need from inventors, help them capture inventions, help them develop the infrastructure and business processes to change their corporate cultures towards inventing. In LES terms I think this would be called a "front end" focus. So, from the BasicIP perspective the LES environment looks like more of a "back end" commercialization-centric environment.

But the value for me was not (or not just) about finding sources of business. I came away from the conference with a new understanding of the licensing industry. Before the conference I saw the IP licensing industry as inefficient and ineffective, that is why I’ve avoiding going to an LES meeting before now. Inefficient? Ineffective? Huh?

Think about it, in the US we have MILLIONS of patents and DOZENS of licensing success stories. Millions to dozens means most patentees have no chance of monetizing their IP. Having attended the LES meeting watching, and enjoying, it strikes me that the licensing industry’s key word today, is "maturity." Licensing today is immature, but there is hope. Like the lighting and mainframe computer industries that initially saw market potential only in large-scale applications, today’s licensing industry is ripe for a democratization. Edison’s vision of making electrical lighting so cheap that the average person would not be able to afford candles democratized the lighting industry and the PC democratized the IT industry. There is hope for the industry and LES is to my mind, a catalyst for the democratization of licensing that is the next wave of IP management. So, to my mind, the $1,000 was worth it to see the larger landscape that my company plays in.

Will I go to the next meeting?

I'll be giving a short talk at the LES Silicon Valley Chapter on March 22, but local chapter events are so much cheaper ($175 if you walk in late) I don’t know yet how to optimize going to national vs. local meetings. It was impressive to have 320 people at the meeting, but the practical reality is that you can meet at most 20 people if you worked really hard, so a local chapter meeting would provide enough people to meet. I would, however, recommend that front-end IP people (ex., patent drafters, patent coordinators, invention workshop moderators, etc.) attend one or two meetings a year to see how their outputs are used down stream.

bill meade

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