POWER AND VALUE OF INTELLECTUAL PROPERTY
U.S. government granted 20-year patent monopolies (the right to exclude others from making, using or selling the patented inventions without practicing these inventions) allow the patent holders, regardless of their business size or financial status, to tacitly attract and control the respective industries.
The patent holder’s (a private party or U.S. government) control of product (incorporating the patented invention) manufacturers is empowered and protected by the U.S. judicial system including courts, International Trade Commission and the U.S. Customs and Border Protection/ Homeland Security Department destroying/ barring illegal/counterfeit products’ entry into the U.S.A. Businesses can be shut down by injunctions and severe financial penalties for unauthorized exploitation of the patented inventions, i.e. patent infringement. IP monopolies are also protected by international safeguards, such as The World Trade Organization ("WTO") enforcing the Trade-Related Aspects of Intellectual Property Rights ("TRIPS") agreement (providing for increased tariffs or other trade sanctions on a nation inadequately protecting IP rights), as per the U.S. Trade Representative's annual report (under The Trade Act of 1974, Section 301), and taking actions against the nations violating IP laws to the detriment of American companies.
The IP national and global power overwhelms all domestic and foreign, small and gigantic companies like Google, Amazon.com, Monsanto, Samsung, Pfizer, Johnson & Johnson, or Apple, whose products or technologies may infringe on design and utility patents of their competitors or non-practicing entities (universities, research laboratories or private patent holders, “trolls”). In many cases, the most valuable assets left behind by a demised company or dropped product line are the company’s patent portfolio, R&D results and know-how.
The patents’ court-determined value is derived from analyzing a variety of legal, technical, and economic factors. The courts may determine the value of patents by damage awards to lawsuit winners, but only after the lengthy and costly litigation. Illustrations of courts’ patent infringement judgments reflecting the value of patents:
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$1.17 billion (which could be tripled if the jury finds that infringement was willful) to be paid by Marvell Technology Group, a chip manufacturer, for infringing a single (1) claim in each of two Carnegie Mellon University’s (a non-practicing entity, which never licensed these patents) patents (the second is a continuation of the first one) describing a method which cannot practically be built in silicon.*
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$1.05 billion (reduced by judge to $599 million) to Apple for Samsung’s infringing of Apple’s three (3) design and three (3) utility patents.**
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$1 billion awarded to Monsanto Co. in a patent- infringement trial against DuPont Co. over seeds for growing herbicide-tolerant soybeans (the award was set aside pursuant to a settlement agreement).***
Examples of patents’ market value established by the industry’s buy/ sell market, i.e. through patents’ purchase prices:
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Google paid $12.5 billion for Motorola Mobility’s 24,500 patents and patent applications, i.e. $510,200 per patent.****
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Novell sold its 882 patents for $450 million, i.e. $510,200 per patent.*****
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A six IT firms’ group (Microsoft, RIM, Apple, etc.) paid $4.5 billion for 6,000 patents of Nortel (a bankrupt Canadian manufacturer), i.e. $750,000 per patent.******
The U.S. government R&D labs, and public and private companies, spent billions of dollars on development of inventions and discoveries, some of which were materialized in patents but never reached markets. Consequently, thousands of patents and research results covering abandoned or unused technologies could be materialized in innovation-based products and creation of attendant U.S. jobs.
Tekapult assists the patent owners to valuate and materialize these non-core revolutionary inventions and idling patents, trade secrets and know-how in tangible properties and financial benefits.
*Carnegie Mellon University v. Marvell Technology Group Ltd et al; 09-00290 (W.D. Pa., 2013).
** Apple, Inc. v. Samsung Elecs. Co., Ltd.; 11-1846 LHK (PSG), 2012 WL 1067548 (N.D. Cal., 2012).
*** Monsanto Co. v. E.I. Dupont De Nemours & Co.; 4:09-CV-00686 ERW (E.D. Mo., 2011).
**** Savitz, Eric (2012). Google Completes $12.5 Billion Motorola Mobility Acquisition. Forbes.com.
***** (2011) Valuing patents: Doing the maths. The Economist. http://www.economist.com/blogs/babbage/2011/08/valuing-patents
****** Elmer-DeWitt, Phillip (2011). Consortium led by Apple buys Nortel's patents for $4.5 billion. CNN Money.
http://tech.fortune.cnn.com/2011/07/01/consortium-led-by-apple-buys-nortels-patents-for-4-5-billion/