Business Intellectual Property, also known as “BIP,” is the intellectual property (IP) that correlates with business development. BIP dynamically evolves with the emerging features of IP marketing and enforcement.
Contents
- New IP forms and features GIP AIP and HIP
- Patent litigation is the dominant form of BIP litigation
- Parties in patent litigation
- New features of BIP litigations by NPE in the United States
- General process and outcomes for BIP litigation
- Top companies targeted by NPEs
- Top BIP litigation filer
- Legislative Acts in the United States
- References
BIP not only covers IP used for products and technologies, but also covers IP used for transactions, litigations and other commercial activities. People may not be able to distinguish one from the other. Historically, BIP referred to IP that was used for product and technology commercialization by the IP owner or the licensee, and the practice that develops or uses IP exclusively for making profits on lawsuits was relatively rare. At that time, IP litigations were mainly instituted by practicing entities with the primary purpose of protecting technology and securing monopoly in the market.
Non-practicing entity (NPE) refers to an entity that owns IP rights and exclusively enforces them by filing or threatening to file infringement lawsuits against targeted infringers in exchange for potential winnings. In the past decade or so, patent litigations, especially those initiated by NPEs, grew dramatically. The application of IP has evolved so much that a new category of IP, i.e., BIP, has emerged. Currently, the new and actual meaning of BIP, which is redefined to mirror the trend of IP activities, refers to a specific category of IP that is not enforced via manufacturing/providing products/services either by the IP owners or any licensees, but is exclusively used by its owner to file infringement litigation and to make profits by claiming awards or settlements.
New IP forms and features: GIP, AIP, and HIP
In addition to the concept of BIP above, there are also other IP forms coexisting and/or overlapping with one another. All these emerging forms effectively reflect the features of IP activities all over the world.
China is the second largest economy in the world by nominal GDP. According to 2012 World Intellectual Property Indicators (WIPO), State Intellectual Property Office (SIPO) (China) became the busiest patent office receiving the highest amount of utility patent applications in the world. In 2014, SIPO received 928,177 utility patent applications, which is much more than those in USPTO (578,802). The quantity-oriented policies of Chinese central or local government ‘catalyzed’ the rapid growth of patent application. For example, Chinese government will reimburse the filing fee or provide other awards for filing utility patent applications. The quality of Chinese patent applications and the granted patents is strongly debated. As described in one recent publication, “Government Induced Patent (GIP)” is used to define IP that is closely related to the policy-driven IP application and grant. “Apparently Invalid Patent (AIP)” is created to define patents that are invalid or unenforceable.
“Honorary Intellectual Property (HIP)” is to describe IP that is exclusively created for ‘honor’ without any potential/intention for commercialization. The problems have been identified and the potential influence on the innovation has also been studied. As cited in the book, “quantity-oriented policies did influence the creativity to a limited extent”, and “China may need a long time, probably one or several generations, to achieve the ultimate goal of ‘Innovation in China’.” The authors of the book also suggested that “China may emphasize the absorption and transformation of leading technologies abroad and may promote ‘Improvement Intellectual Property (IIP)’ in a short period.”
Patent litigation is the dominant form of BIP litigation
BIP can exist as patents, copyrights, industrial design rights, trademarks and trade secrets. Patent litigation by NPEs is the dominant form.
Parties in patent litigation
The parties involved in IP litigations can be categorized into non-practicing entity (NPE) and practicing entity. As described above, the current patent litigations are mainly filed in an offensive manner. The initiators of such patent litigations are also termed as “patent troll” or “patent privateer.”
New features of BIP litigations by NPE in the United States
According to a patent litigation study performed by PwC, in comparison with litigation initiated by practicing entities, BIP litigations filed by NPE feature that (1) NPEs win a higher median average damage award; (2) NPEs may win the case with a success rate that is ~10% lower than practicing entities; (3) Both practicing entities and NPEs enjoy a higher success rate with juries; and (4) Cases with NPEs were concentrated in a few districts. Top 5 out of total 94 districts (Texas Easton, Illinois Northern, New York Southern, California Northern and Delaware) accounted for 42% of all identified decisions.
General process and outcomes for BIP litigation
IP law is to protect the inventor’s exclusive rights and encourage innovation. These exclusive rights, however, also provide NPEs with a powerful weapon against practicing companies, especially those with more available cash or those with low defending capabilities. When a practicing party commercializes the product, the practicing party or its business partners may suddenly receive a demanding letter claiming that its product has infringed NPEs’ IP rights and asking for a toll. Due to the uncertainty of the jury trial or the high defending cost, the defending parties may choose to pay an early settlement. Alternatively, the parties may end up in extensive litigations until a final jury decision comes up.
Top companies targeted by NPEs
According to Unified Patents, almost 90% of NPE litigations are related to High-Tech sector in the first half year of 2015. Also, the top 5 most frequently targeted companies by NPEs are Apple, Inc., Actavis, Inc., Amazon.com, Inc., Hewlett-Packard Company and Mylan Pharmaceuticals, Inc. in the first half year of 2015. Apple Inc. was sued 25 times by NPEs.
Top BIP litigation filer
Unified Patents report indicates that the top 6 NPE filers include eDekka LLC, Data Carriers LLC, Wetro LanLLC, Eclipse IP LLC, Loramax LLC and Oberalis LLC. Among them, eDekka LLC has filed more than 100 patent litigations in the first half year of 2015.
Legislative Acts in the United States
When small and mid-size companies are targeted, the defendant may have a huge burden on the routine management even if they know that they can win the case from the very beginning. Generally, such cases may last for more than 2 years and need at least 1 million dollars for a full defense. Therefore, some of the small and mid-size businesses may have to enter into a settlement rather than get engaged in expensive lawsuits.
Such litigations do harm to the economy, especially to those entities without full capability to defend. Some preventive acts are being legislated or have been legislated. The Protecting American Talent and Entrepreneurship Act of 2015 (The Patent Act) was reported to Senate on September 8, 2015, and is currently pending with Federal Senate.