Being a technical person by training I am frequently asked by founders how much they should invest in a patent strategy at the early stages of a company. I personally am a big fan of doing this, not likely for the reason you would expect.
Patents will no deter a big company from doing what you are doing – period. Even if they do it, it will take years of litigation before an outcome can occur. I was peripherally involved in one of the largest US patent settlements of all time between Microsoft and Intertrust (InterTrust had actually acquired some patent materials from one of the companies I founded, Ahpah Software).
The case was settled in 2004 for $440 million dollars.
But here is the truth in advertising. — some of the key patents that were involved were originally filed in 1986. Yes, that’s right 1986. Almost 20 years before the settlement.
As an aside, many of the people involved in winning that lawsuit are key people/founders of an interesting patent company called RPX. You can learn more about RPX here. John Amster, Eric Olsen, and Mike Mackay are all great guys I worked with at InterTrust back in the day. They like Zynga and Aggregate Knowledge were backed by Kleiner Perkins.
So why I do advise companies to file patents if the value in litigation is sometimes 20 years later? The answer is simple: increasing enterprise value. When a company has filed patents early on a space that is going to be important, the value of the company can be significantly improved in both a good and a bad outcome.
A case in point is what happened to the remnants of Tribe back in the day. Mark Pincus, Val Syme, Chris Law, and I formed Tribe at the end of 2002. Being one of the first social networks, we filed very important patents early. Without the patent portfolio, I am not sure that Cisco would acquired the technology of the company.
It turns out it was a smart move. Over the past 6 months many of those patents have issued. These are major assets now held by Cisco with priority filing dates going back before a single user ever logged onto Facebook, LinkedIn, or MySpace.
There was a great brain trust that wrote these patents: Mark Pincus, Elliot Loh, Brian Lawler, Chris Vale, and Kris Wehner. A quick manifest and links to them are below.
- 7,856,449: Methods and apparatus for determining social relevance in near constant time
- 7,844,671: Communication systems and methods with social network filtering
- 7,831,684: Social network filtering of search results methods and apparatus
- 7,818,394: Social network augmentation of search results methods and apparatus
- 7,818,392: Hierarchical posting systems and methods with social network filtering
- 7,797,345: Restricting hierarchical posts with social network metrics methods and apparatus
One of the other amazing things about the patent office is that actions happen in bunches and can be unrelated to the filing date. Two of my patents at Aggregate Knowledge issued in between these Tribe ones but they we filled 3-4 years later. Here they are as well.
- 7,853,630: System and method for the dynamic generation of correlation scores between arbitrary objects
- 7,788,358: Using cross-site relationships to generate recommendations