Patent due diligence is hard.
It doesn’t have to be.
New software and services are needed to support patent due diligence, including software that identifies GeoOutliers: inventors who live in locations strongly suggesting they did not have authorization to execute their assignments of record. While at one time due diligence could move at a slower pace allowing tolerance of less optimized software and manual support processes, today’s clients often request clearance in as little as 24 hours. Most law firms have not yet adapted to this reality, but have now realized that in order to meet their client needs they will have to use a far more highly automated system designed specifically for due diligence.
We have designed such a system, DueDiligence, which can save critical hours and even days on a given transaction. Moreover, this system does not only save time, it also provides qualitatively better due diligence information than previously possible.
Start fast. Finish fast.
The first way we save you time with our software system is that it is designed to begin work with an absolute minimum of information. No more waiting for that first list of patents from the seller; just give us the names of the parties to the transaction and we can get to work immediately. We will automatically check all of the sellers patents for good chain of title, cross check the inventors on these patents against the inventors listed in the assignments, and check for all terminal disclaimers that require patents to be co-assigned.
Unlike most vendors and firm internal resources, we can start as many projects as necessary without any delays using cloud computing which is several orders of magnitude faster than manual processes that most of the market still relies upon.
So we start faster and finish faster saving you precious time, even on small jobs.
The claim is the thing.
We also save you time by executing your searches designed to get a handle on the scope of the seller’s portfolio along with the portfolios of other industry players on an independent patent claims database rather than a patent database. That reduces the number of hits by 80-90% right away by removing dependent claims irrelevant to your project. After all, dependent claims only narrow the scope of the patents of interest, and when your interest is their full scope, you don’t want to bother with dependent claims the way other patent search tools force you to do.
We further reduce the number of hits you need to consider by 2-3 fold by allowing you to: (1) prioritize product claims over method claims or vice versa; (2) prioritize open preamble claims over closed preamble claims; (3) apply your subject matter search on each individual claim rather than on all of the claims as a whole. Using these standard filters as well as custom techniques specific to a project, we’ve reduced databases of 50,000 potentially relevant patent claims to just 500 claims that needed to be reviewed. That converted a document review that would have taken a team of attorneys weeks into a two day project for us.
Better due diligence though better technology.
We didn’t just limit ourselves to simply speeding up the due diligence processes that many leading firms are currently struggling to have paralegals complete manually in 48 hours. We also have used our automation to improve the quality of information as well.
In particular, due diligence products sometimes fail to uncover patents that should have been a part of a transaction but were not. For example, when Microsoft recently bought Skype they thought they had bought all of Skype’s technology—only to have Skype’s founders reveal (after the sale) that they had retained possession of certain key patents, which they asked Microsoft to license. This is not unusual. Founders of startups often retain key intellectual property, and these errant ownership rights should be brought to light and addressed before any transaction closes. Moreover, even well-established companies routinely conceal their ownership of patents to insure competitors are ignorant of their patent pipelines, because there is essentially no downside to doing so. So searching on assignees of record to define a companies patent portfolio will never adequately guard against another Skype or similar situation where key patents fail to get included in the transaction. And while subject matter searching will turn up patents of interest, with no assignee of record, you have no way to tell whether or not those patents should reasonably be part of your transaction.
To solve this problem, you need to search on all of the inventors of the seller company, because only such a search will turn up both key, unassigned patents as well as stealth patents owned by the company but not publically acknowledged as such. No company or founder can afford to leave the correct inventors off patents to play the types of games that are played with assignment records; false inventorship renders the patent invalid. And while no human being would ever want to perform the many hundreds of searches this type of process requires—or reconcile all of the results of those hundreds of searches—this is handled nearly instantly by our software. We take every patent that is known to be in the possession of the seller—through public records, through disclosure during the transaction, through any sources you can share with us (all the current and past employee names of the seller for example)—and build an exhaustive inventor database. We then search for all patents by those individuals. The result is much better information about the sellers portfolio as well as the portfolios of other key players than an assignee-only search can ever provide.
Find GeoOutliers. Now.
Another key area of due diligence failure is failing to uncover patents that have defective title because the patent assignment paper work, while in good order on the surface, is either of no effect or violates another agreement between the seller and another company. For example, in one litigation I was involved in, we came very close to bringing suit on behalf of a U.S. company on a patent naming three U.S. and a single Japanese inventor. While all the inventors had assigned their rights to the U.S. company in a perfectly adequate document on file, when I eventually inquired of a Japanese attorney whether the Japanese employee/inventor had any right to assign to the U.S. company, his answer was clear: absolutely not. His Japanese employer owned all of his inventorship rights the moment the invention was made. So while the Japanese inventor signed the normal paper work, he had no right to assign; his share of the patent was owned in part by a Japanese company and he had nothing to assign to the U.S. company we represented. Needless to say, we discovered this later than we would have preferred. With FPP’s DueDiligence, this is one of the first things we check for so that you can stay away from the patent ownership laws of foreign countries as much as possible, or at least know to focus on particular countries as having particular relevance to the portfolio.
We’ve also used our technology to take this approach to detect clusters of inventors in illogical places in the United States, which is a good indication that another company could have a claim to that part of the portfolio. While we are all more mobile than ever before, inventor/employees need frequent access to labs and highly skilled personnel, so where they live tells us a lot about where they work and, therefore, who they work for. And if you find a significant number of inventors in your sellers portfolio live nowhere near where the sellers research centers are—there’s a good chance what you’ve detected is a cluster of inventors who were employees of another company, not the seller, and the IP is thus likely subject to a joint venture or collaboration agreement which will need to be considered to insure the seller has good title.
Off we go.
We’re ready to go as soon as you are on your next transaction. Call us at 1-855 FPP 2 WIN (1-855-377-2946) with the key facts—there’s no obligation to get us primed for the transaction—and we’ll be ready to move instantly when you are. The cost is just $100 per patent (minimum of $1000), with a deliverable of a series of databases encompassing all of the work we’ve described above, as well as full text searchable images of the associated patents, and the underlying assignment records of any patents that turn up as having chain of title problems. Custom deliverables and customization of our technologies to the specific needs of your project are billed at flat fee derived from the amount of developer time anticipated at $100/hr, and usually such customizations can be completed within one business day. Bulk discounts for projects involving 100 or more patents are available. Supplements to an existing deal to address ever-changing portfolios are billed on a per-new-patent basis.
We appreciate your consideration and look forward to working with you soon.By Geoffrey Mason