Setting patents free.
Patent licensing can be an effective and efficient way to maximize the profit potential of a patent. A patent license agreement grants a third-party user of the invention (an infringer) permission to use the technology, or patented invention, in exchange for a license fee. Through patent licensing, Acacia may generate a financial return for patent owners.
At Acacia, there are four fundamental steps in our patent licensing process. First, we engage with a patent owner to review a potentially valuable patent or group of patents. Second, we work with experts to evaluate the use of the patented invention in the marketplace. Third, Acacia assesses the patent’s expected economic value. Finally, for unauthorized users of the patented invention, we enter into license negotiations and, if necessary, litigation to monetize the patent based on its assessed value.
There are several key factors to consider when determining a patent’s value: infringement, validity and enforceability.
To determine infringement, our team identifies those companies producing products covered by the patent without the patent owner’s permission. A key tool in determining patent infringement is a claim chart. A claim chart illustrates how a product or method matches the claims of an invention.
Three major components of patent invalidity are anticipation, obviousness, and non-patentable subject matter. Anticipation occurs when the claims of the patent are entirely revealed within a single piece of prior art (a technical term that generally means an invention that existed before the patent was granted). If the claims of the patent are not entirely revealed within a single piece of prior art, the patent may still be invalid if determined to be “obvious” under the law. Obvious means the differences between prior art and the patented invention are so slight that they would have been obvious to an industry expert at the time of invention. Even if the patent lacks anticipation and obviousness, it may still be invalid if its subject matter is un-patentable by law. Un-patentable subject matter includes naturally occurring things, abstract concepts, or algorithms that perform an ordinary function. However, in recent years it is commonly found in the form of a “business method.”
A myriad of factors are analyzed to determine whether or not a patent is enforceable, including whether or not there has been patent misuse, or whether or not there are antitrust violations associated with the patent. Because patent law is inherently complex, and because a patent is a federal grant, only a federal district court can ultimately decide on patent infringement, validity and enforceability. Acacia uses its broad legal and technological expertise to optimally assess the patent licensing opportunity, including the patent’s economic value.
Acacia works to monetize a patent or group of patents by negotiating a license agreement with patent infringers on the patent owner’s behalf. The value of the license agreement is determined by the expected value of past, present and future revenue streams from the infringing product. Acacia strongly prefers to secure a license agreement in a non-litigious manner, but many infringers refuse to negotiate even when confronted with substantial and persuasive evidence of infringement, validity, enforceability and significant economic value. As a result, Acacia may resort to litigation to demonstrate and prove infringement, and ultimately induce infringers to take a license. The final step, in the absence of a reasonable settlement, is presenting our case at trial.
Patent license negotiations and litigation initiated by Acacia often lead to serious and thoughtful discussions with the unauthorized users of the patented inventions. The result can be quite favorable with the user being granted permission to practice the patented invention in exchange for a financial settlement. This settlement is shared between Acacia and the patent holder.