cover

Contents

Cover

Title Page

Copyright

Dedication

Preface

Acknowledgments

Chapter 1: Corporate Strategies, Structures, and Ownership of Intellectual Property Rights

The Importance of Intellectual Property—A Changing Paradigm

Operational Strategies, Structural Aspects, and Ownership Issues

Roles: Legal versus Business

Strategies and Structures for the Management of Intellectual Property Rights

Ownership Issues

Maximizing the Potential

Tax Considerations219

Legal Concerns—Antitrust

Conclusion

Chapter 2: Properly Evaluating a Target with Intellectual Property Rights

Intellectual Property in Mergers and Acquisitions1

Identifying Intellectual Property in a Potential Target

Verification of IP Rights

Evaluating IP in the Target

Looking Ahead

Conclusion

Chapter 3: Growth through Acquisition or Merger

The Merger or Acquisition Target1

Benefits of Mergers and Acquisitions

Logistics of the Acquisition/Merger

Conclusion

Chapter 4: Penetrating New Markets through Extension of Goods or Product Lines or Expansion into Other Territories

Types of New Business in Connection with Patents

Product Development and Market Exploitation in the 20th Century—Era of Closed Innovation

Recent Product Development and Market Exploitation—Era of Open Innovation

Future Product Development and Market Exploitation

Conclusion

Chapter 5: Intellectual Property: From Asset to Asset Class

Introducing IP-Enhanced Indexes

Creating a Market for Intellectual Property

What Exactly Is a Live Multi-Lot IP Auction?

Moving to a Traded Exchange

Benefits of the Unit License Right™ Contract Model

Market Players and Economic Motivations

Conclusion

Chapter 6: Strategic Patent Management after the Boom: Managing the R&D and Patent Pipeline

Patent Strategy

Disruption: The Post 2008 Recession

A New Strategic Approach

Review and Communicate the Implementation of the Strategy

Simplify Executive Communication

Managing the R&D and Patent Pipeline

Managing the Patent Staff

Small Companies and Individual Inventors

Conclusion

Chapter 7: Global Piracy and Financial Valuation of Intellectual Property Revisited: Threats, Challenges, and Responses

Google versus China: A Case Study for Censorship in the Context of Economic Might

Identity Theft, Cyber Gangs, and Alarming National Security Concerns

Are Proceeds from Counterfeited Goods Funding International Terrorism?

Government and Corporate Responses to International Intellectual Property Theft: Nanotechnology to the Rescue?

Conclusion

Chapter 8: When to Litigate: Rise of the Trolls

What Is a Non-Practicing Entity?

Why Do You Believe Your Company May Be at Risk?

What Are Your Defenses?

Take Action or Wait?

License or Litigate?12

Conclusion

Chapter 9: Using Insurance to Manage Intellectual Property Risk

Case Study—Bob's Bike Shop

Case Study—Blaze Telecommunications

Issues Raised by the Case Studies

Why Buy Insurance to Cover Intellectual Property Risk?

That Was Then: Development of Insurance Policies Covering Intellectual Property-Related Risks

This Is Now: Types of Insurance Policies Responsive to Intellectual Property-Related Risks

The Details: Process, Paperwork, Pricing, and Getting Claims Paid

Conclusion: Why IP Insurance Is No Longer Optional

Chapter 10: Exploring Alternative Dispute Resolution

Why ADR Is Relevant

Exploring the Use of ADR Methods

Types of ADR

Benefits of ADR

Disadvantages of ADR

Mediation Is the Best Option for IP Conflicts

The Best Mediator

Process and Tips

International Mediation (Cultural Differences)

The Future of Mediation

Conclusion

Chapter 11: Outsourcing and Offshoring of IP Legal Work

Reality Check

Outsourcing or Offshoring in the IP Context

Conflicts of Interest32

Confidentiality38

Supervision and Competence of Those Being Supervised

Attorney-Client Privilege and the Practice of Law

Billing

Status Quo

Conclusion

Chapter 12: Intellectual Property Legal Process Outsourcing

History

Data Exchange Risks and Protection Issues

Outsourcing Economics

Selecting Projects and Providers: What Is Outsourcable and Who Can Do It?

Case Studies

Conclusion

Chapter 13: Satisfying Ethical Obligations When Outsourcing Legal Work Overseas

Permissibility of Outsourcing

Need for Heightened Investigation and Supervision

Evaluating the Project

Evaluating the Potential Provider

Ensure Absence of Conflicts8

Providing Initial Direction and Ongoing Supervision

Avoiding the Unauthorized Practice of Law

Protecting Confidences

Payment for Outsourced Services

Insurance10

Conclusion

Chapter 14: The Brave New World of Web 2.0 and the 3-D Internet: How to Prepare Your Company to Participate

Background: The Internet

How Do Businesses Participate in Web 2.0 and Beyond?

Risks and Issues to Consider in Web 2.0 and Beyond

How to Address the Risks and Issues of Participation in Web 2.0 and the 3-D Internet

Conclusion

Chapter 15: Managing Green Intellectual Property

Green IP Fast Track

What's a Patent Worth?16

To Patent or Not to Patent

The Old Guard: Feeling the Winds of Change

Conclusion

Chapter 16: Accounting and Tax Policies as They Relate to Intellectual Property

Types of Intellectual Property

Accounting for Intangible Assets

International Financial Reporting Standards

Tax Treatment for Intangible Assets

Overview of Section 197—Amortization of Goodwill and Certain Other Intangibles

Overview of Section 195—Start-Up Expenditures

Overview of Section 248—Organizational Expenditures

Overview of Section 174—Research and Experimental Expenditures

Overview of Section 173—Circulation Expenditures

Overview of Section 167—Depreciation (Purchased Software)

Conclusion

Chapter 17: Intellectual Property Valuation Techniques and Issues for the 21st Century

Economic Valuation of IP Assets

Recent Advances in the Methods of Valuation

Contemporary Business Practices and Market Structures and IP Value

Selected Contemporary Institutional Changes

Conclusion

About the Editors

About the Contributors

Index

Title Page

To my parents, Mort and Rella, and my wife's parents, Josephine and Eugene, who I miss dearly but honor and treasure their memory, love, and wisdom.

Lanning G. Bryer

For Susan and the boys, Matthew and Luke.

Scott J. Lebson

To my loving wife, Aline, and our parents, Sucha, Michael, and Luiza, for setting the examples to which I aspire and supporting my efforts with their love, encouragement, and patience.

Matthew D. Asbell

Preface

Instead of “May you live in interesting times,” if Confucius were alive today, he might say “We live in interesting times!” Much of the world has been deeply affected by recession. Political tensions in many regions of the world are acute including places where there is no ongoing conflict. Currencies and markets are fluctuating in exceedingly unpredictable fashions. Technology is developing more swiftly than ever could have been imagined in previous centuries. The climate change debate is resulting in initiatives being proffered that may change, for better or worse, how companies traditionally operate. Through all this activity, businesses must protect their revenue streams and contain their expenses while continuing to seek new markets and customers for their products and services to remain competitive.

Change in the economic world is occurring faster and more radically than few could predict. As globalization advances, traditional rules of the economic game are being challenged. Businesses must be in a position to adapt quickly to change, as making decisions based upon traditional considerations can be a dangerous premise. Variables that impacted prior quarters and prior years may be different than those that will influence future financial performance. In the past, external conditions were considered a constant, and internal factors were used to predict organizational performance. That is no longer necessarily the case. It is dangerous, if not fatal, to create an economic or worldview rooted in the recent past. How can business executives and managers compensate for past understandings and ways of management and future change? One way is to explore and investigate changes in the economic environment to better understand which variables impact critical business processes.

The property rights that these businesses own, use, license, and sell cannot be separated from the same rigorous review. It is an indisputable fact that these rights are often the lifeblood of a company. These rights can include many components, including tangible property, such as real estate and inventory, as well as intangible rights, such as intellectual property, which includes patents, trademarks, service marks, copyrights, design rights, and trade secrets. The ownership and management of these intellectual property rights for many corporations fittingly occupy a significant investment of time and money. How intellectual property owners have historically chosen to acquire, develop, protect, maintain, leverage, and enforce their limited monopoly rights in intellectual property is a study and a book unto itself. However, the purpose of this particular series is to examine the decision making processes, activities, and changes thereto of significant corporate intellectual property owners in the new century and millennium. In this case, size matters.

Why not explore the decision-making processes and activities of all IP owners? Although similarities obviously exist between all IP owners, IP owners with significant portfolios have unique issues and challenges of scale, investment, oversight, law, and development. Moreover, the lessons to be learned from the processes and activities of large corporations can sometimes be applied with some modification to growing companies. As a result, we propose to explore the corporate ownership and management of IP rights in these books. The first book, IP Strategies for the 21st Century Corporation, focuses on the strategic decision making that occurs in this process. It is meant to be the view from 20,000 feet by senior decision makers, executives, general counsel, and IP counsel. What strategic corporate or tax issues involving corporate IP ownership need to be considered? How does a corporation expand markets or grow its IP portfolio? How does a corporation keep its IP pipeline full without incurring unnecessary expenses? How has the Internet changed business models and activities and what are the related IP issues? These and other topics that we explore in this first book are detailed in the following chart.

Chapter Title Authors Affiliationsa
Corporate Strategies, Structures, and Ownership of Intellectual Property Rights Lanning G. Bryer and Deepica Capoor Warikoo Ladas & Parry LLP
Properly Evaluating a Target with Intellectual Property Rights David Drews IP Metrics LLC
Growth through Acquisition or Merger Diane Meyers PPG Industries, Inc.
Penetrating New Markets through Extension of Goods or Product Lines or Expansion into Other Territories Toshiya Oka Canon, Inc.
Intellectual Property: From Asset to Asset Class James E. Malackowski Ocean Tomo, LLC
Strategic Patent Management after the Boom: Managing the R&D and Patent Pipeline Marc S. Adler Marc Adler LLC
Global Piracy and Financial Valuation of Intellectual Property Revisited: Threats, Challenges, and Responses Robert Lamb and Randie Beth Rosen Stern School of Business, New York University; Formerly an associate at Orrick, Herrington & Sutcliffe
When to Litigate: The Rise of the Trolls Raymond DiPerna and Jack Hobaugh Ladas & Parry LLP; Blank Rome, LLP
Using Insurance to Manage Intellectual Property Risk Kimberly Klein Cauthorn and Leib Dodell Duff & Phelps; ThinkRisk Underwriting Agency, LLC
Exploring Alternative Dispute Resolution Alicia Lloreda Jose Lloreda Camacho & Co.
Outsourcing and Offshoring of IP Legal Work Olga Nedeltscheff Limited Brands, Inc.
Intellectual Property Legal Process Outsourcing Marilyn O. Primiano Pangea3, a division of Thomson Reuters, Legal
Satisfying Ethical Obligations When Outsourcing Legal Work Overseas Michael Downey Hinshaw & Culbertson LLP
The Brave New World of Web 2.0 and the 3-D Internet: How to Prepare Your Company to Participate Steve Mortinger IBM, Inc.
Managing Green Intellectual Property Larry Greenemeier Scientific American (A Division of Nature, Inc.)
Accounting and Tax Policies as They Relate to Intellectual Property Howard Fine and Andrew Ross Gettry Marcus Stern & Lehrer, CPA, P.C.
Intellectual Property Valuation Techniques and Issues for the 21st Century David Blackburn and Bryan Ray NERA Economic Consulting
a. The views of the authors are not necessarily those of their employers or affiliates.

We find the second book is equally important to the management of corporate IP rights. We have titled our forthcoming second book IP Operations and Implementation for the 21st Century Corporation. Having explored and understood better the strategic issues and decisions that companies make, this second book will examine how companies are effectively implementing them. How does a corporation cost-effectively obtain or enforce its IP rights? How do corporations control expanded counterfeiting throughout the world? What technological developments are available today that did not exist in years past to help manage this process? How are IP searches and investigations more cost-effectively conducted? How are corporations using IP rights to drive increased revenues and profits? These and other subjects will be explored as follows.

Chapter Title Authors Affiliationsa
Controlling Counterfeiting Joseph Gioconda and Joseph Forgione Gioconda Law Group PLLC
Retention and Preservation in Intellectual Property Cases Jennifer Martin Symantec Corporation
Controlling Patenting Costs John Richards Ladas & Parry LLP
Trademark Costs: Trimming the Sails in Rough Economic Waters Robert Doerfler and Matthew Asbell SVP Worldwide; Ladas & Parry LLP
Domain Names Dennis Prahl and Elliot Lipins Ladas & Parry LLP
Creating, Perfecting, and Enforcing Security Interests in Intellectual Property Scott J. Lebson Ladas & Parry LLP
Strategic and Legal View of Licensing Patents James Markarian Siemens Corporation
Monetizing IP Rights: Licensing In and Out Kelly Slavitt Consultant, The Francis Company
Working with Government David J. Rikkers Raytheon Corporation
Chapter Title Authors Affiliationsa
Valuation, Monetization, and Disposition in Bankruptcy Fernando Torres IP Metrics LLC
Outsourcing of Branding and Marketing Terry Heckler Heckler & Associates
Trademark Searches Joshua Braunstein CT Corsearch (a Wolters Kluwer Company)
Pretext Investigation Jeremiah Pastrick Continental Enterprises
Model Intellectual Property Internship Programs Barbara Kolsun Stuart Weitzman Holding, LLC
The Future's So Green, I Gotta Wear Shades: Maximizing Green Brand Exposure and Minimizing Perceptions of Greenwashing Maureen Gorman Davis McGrath LLC
Financial Reporting of Intangible Assets James Donohue and Mark Spelker Charles River Associates Inc.; J.H. Cohn
a. The views of the authors are not necessarily those of their employers or affiliates.

Both books will enjoy the perspective of different players in the process. We are fortunate to have the contributions of a number of respected in-house professionals as well as outside practitioners, service providers, consultants, and academics. The intended purpose is to examine many of these issues from different vantage points. For example, on the topic of outsourcing, we have views from corporate counsel, outside IP counsel, and IP service providers. We are confident that looking at this issue with such a wide lens and from different angles provides greater understanding of the topic. Where possible, we have encouraged authors to consider their subjects from other perspectives and to speculate about changes in practice and attitudes that might yet occur in the future. We hope this approach will provide greater clarity and a deeper understanding of the issues that face everyone who has a role to play in the management and ownership of corporate IP rights in the twenty-first century and beyond.

Lanning G. Bryer
Scott J. Lebson
Matthew D. Asbell
New York, New York
2011

Acknowledgments

The editors owe significant debts of gratitude to many people, without whose time and effort this work would not have been possible.

We are deeply appreciative of the many contributors who submitted chapters, and sections of chapters, to make this work what it is. Our gratitude also extends to Dr. Joseph Cook of Pfizer, Inc. for his early participation in the chapter on valuation techniques. In addition to those who contributed to this book, we are also grateful for the significant contributions of the authors who must endure even longer while waiting for their chapters to be published in the forthcoming companion volume. We further recognize the sacrifices of the various employers with which our contributors are affiliated, although the contents of the books do not necessarily reflect their views.

The editors wish to express their sincerest appreciation to the following law students and recent graduates for their tireless efforts in organizing, researching, drafting, critiquing, and handling necessary correspondence regarding this project: Ms. Ilaria Ferrarini, Mr. Ari Abramowitz, Ms. Marie Flandin, Ms. Caroline Camp, Mr. Alex Silverman, Mr. Jason Kreps, Ms. Shefali Sewak, Ms. Rachelle Fernandes, Ms. Olivia Ruiz-Joffre, Ms. Angela Lam, and Mr. John Glowatz. Without their skill, energy, and dedication, this project would not have been possible.

We thank the splendid professional and trade editors of John Wiley & Sons, Susan McDermott and Judy Howarth and their colleagues, for their encouragement and assistance in making this project a reality.

We are indebted to our law partners and colleagues for their understanding and forbearance, and for believing in the value of this project.

Finally, we are grateful to our spouses and children, who patiently endured the lost evenings and weekends during the birth, development, and publication of this work.