- ♠ Technology
- ♠ Damages
- February 5, 2020 Damages Expert, Damages Report, Expert Witness, Intellectual Property, Inventions, Litigation, USPTOMusic Choice vs Stingray Settlement arrives right before trial. This case has been analyzed as a case by our experts from two angles:
- December 19, 2019 Cloud, cloud to cable, Intellectual Property, IPTV, Media Projects, Music for Cable TV, Patents, USPTO
What does Cloud to Cable Patent Covers?
Cloud to Cable is a patented solution for music streaming providers to distribute content to MVPDs. Amplify your ooffering from online streaming to Cable TV & IPTV systems with linear channels and SVOD subscriptions. Create visually appealing streams with great sound, bundled with a mobile experience
through the MEVIA app.
Patents: US 10,123,074, and 10,524,002 with European Patent filed/PCT.
Music and Video are ready in all broadcasting platforms for easy monetization from your affiliates in MVPD, IPTV, Smart TVs & Mobile systems.
Cloud to Cable are high-performance servers ready for your customer’s CABSAT headend, with a fault-tolerance design for quick integration. The
content is available in mobile applications and Cable TV Broadcasts as SVOD or linear channels, all at once
Cloud to Cable TV patent Issued
10,524,002 Patent Now Available
Cloud to Cable Patent Portfolio
As of December 11th, 2019, the USPTO officially issued US Patent 10,524,002 covering aspects of Cloud to Cable TV that were not covered in the initial patent. I received a notification today of my 12th issued US Patent and hopefully more to come in the coming years.
This patent includes several claims that include: Generation of a parallelized set of MPEG TV / DVB Broadcasted to Cable TV systems or IPTV; MPEG TV bi-directional communication from the Set Top Box to the Cable TV system’ Virtualized versions of the broadcasting embodiment or the Cloud and other important inventions covered..
Edge Computing for TV Broadcasting
Both, Cloud to Cable Patents, 10,123,074 and 10,524,002 cover a device or computing system that can be embodied into an edge server located at the Cable TV premises, IPTV System, or even at newly defined 4G LTE and 5G broadcasting platforms.
Cloud to Cable TV brings virtualization to media broadcasting and distribution.
For licensing proposals, partnerships, don’t hesitate to reach me.
Cloud to Cable TV Patent
The family of patents includes now 10,123,074 and 10,524,002, both patents entail
As shown herein, those claims include for example:
Two way control messages from Claim 24, Claim 24 itself,
Injection of MPEG Metadata or MPEG Frames into the stream.
Fault-tolerance system and multicasting server for MPEG encoded video and audio,
HTTP Live Streaming, RTSP, or HTTP Playlist
Linear and Video on Demand (VOD) Support.
Software Platform and Reference Implementation
The reference implementation and production device is implemented under our “MediaPlug” or “Mevia” Appliance. In general, any server with 8-16GB of RAM, i7 Intel Processor or AMD, 2TB drive (RAID), ethernet or fiber interfaces is more than sufficient to load all docker images and be provisioned for media delivery.
Additional Software Requirements
Xen Server 7.2 or higher, or Ubuntu Linux 14.04 or higher with Docker Images.
Sources implemented with PHP, Python, C/C++, BASH, and other modules.
Mux and Cable Headend Requirements
The Cable Headend should consist of a Motorola-based Cherry or any other DVB/MPEG mux. All Set Top Boxes can support multicast streams directly for IPTV systems with fiber, or Coaxial with DOCSIS 2.0-3.0. MPEG messages and encoding depends on provider.
Formatted for Audio-only, HTML-based Standard Definition (SD), High Definition (HD), 4K, and/or Dolby-digital Sound.
- IPR Consultants We assist our clients and law firms crafting strong arguments for a Patent Owner or a Petitioner in IPRs. We consider infringement, estoppel issues, and provide a strategic technical value to your IPR process. ...
This analysis only works when Panduit testfails for a computation of loss profits and only works for a reasonable royalty damagers model.
I personally submitted a damages report in a the case: Mobility Workx, LLC vs Cellco Partnership aka Verizon Wireless in the E.D. Texas, and Judge Mazzant ordered me to present it to a jury which means a Daubert challenge was made and survived..
The model I created for damages can be used for many technology disputes where “Key Performance Indicators” are measured to map a business performance, and how and what intellectual property maps to the revenues generated by a business and its performance.
My report mapped, KPIs from ETSI Specification “TS 32.451 Version 8.0.0 Release 8” describing the following subcategories:
Judge Mazzant accepted my report due to my experience at Motorola and all my overall resume working with startups, licensing deals, and being part of multiple patent and technology licensing agreements that involved companies like Qualcomm, Google, and many others.
For example, TS 32.451 contain several KPIs for LTE Systems or E-UTRAN and you can map an Intellectual Property piece to one or several subcategories, and then from that category you can then establish the proper proportion of what an intellectual property maps to, which means that clearly a percentage of the revenues that a company generates can be mapped to a certain technology.
Key performance Indicators are part of not only 4G LTE systems but are found in most technological systems. The process is presented in the following slides:
KPI - Damages Reports
In summary, one can say that many KPIs have a mapping to revenues, and that’s how companies can value performance to value.
Once these mappings are determined, which all KPIs may offer the same proportion of value to the generated revenues of a corporation, then one can map the features of a patent portfolio to one or many KPIs and create a weighed average of contribution to the KPIs and hence to the revenues.
In the following charts, I represent that maybe a single patent or IP maps to a KPI which equates to a percentage of the revenues, let’s say it is 20%. Assume for a second that the KPI category contains 20 parameters, that for simplicity will be equally weighted. As such, the technology where damages are being calculated corresponds to 2 parameters let’s say, hence a 10% of the KPI is then affected or benefited by the patents or technologies.
Setting up a royalty rate, of let’s say 3% to 5% seems reasonable and affects only the percentage of the revenues a KPI is affected by the patents. Hence, there is no dispute on how much effect a patent or an IP affects a business model.
KPIs are usually defined by the defendant or an industry-defined, like in LTE, and each are granular enough that a mapping between a patent portfolio and /or an intellectual property can be mapped to.
As such a simply royalty yield of 5% can be used to compute an overall royalty that only affects the revenues generated by let’s say LTE Revenues for example, or any other technology with KPIs.
if you have any questions you can contact me or hire me to calculate your damages report.ts_132451v080000p
- September 5, 2019 Cloud, cloud to cable, Intellectual Property, Inventions, Media Projects, Mevia, Music for Cable TV, USPTO
Cloud to Cable Second Patent Allowed
Besides US Patent 10,123,074 a new patent is allowed within the same family. A second set of claims were allowed on September 3rd, 2019 and that means that several claims that cover MPEG TV and Music broadcasting, MPEG 2-way communications, HTTP Live Streaming broadcasting, and fault-tolerance for carriers.
The patent covers a system to deliver multiple video and audio broadcasts that combine web pages with multimedia to be delivered to cable operators.
The following summary of inventions and claims for the following inventions:
✪ MPEG Broadcasting – DVB (Digital Video Broadcasting)
✪ MPEG 2-way broadcasting (On Demand)
✪ HTTP Live Streaming (Applications, OTT TV, Over-the-Top)(
✪ Fault-Tolerance and broadcasting
The claims allowed are essential for modern broadcasting systems for video, music, and web-pages
The Cloud to Cable TV patents are a bridge between cloud systems and TV & Audio broadcasting platforms where the convergence of HTML and Virtualization make possible, what is called today Edge Computing.
In 4G & 5G systems, Edge Computing is classified as:
Edge computing provides compute and storage resources with adequate connectivity (networking) close to the devices generating traffic. The benefit is the ability to provide new services with high requirements on e.g. latency or on local break-out possibilities to save bandwidth in the network – data should not have to travel far in the network to reach the server. Regulatory compliance and network scalability are also important edge computing drivers. Source (Ericsson)
In a way, Cloud to Cable brings compute and storage resources for TV broadcasting systems, either DVB, Content Delivery Networks, or other similar systems.
You can review a summary of what’s been published by the USPTO.
US Patent 10,123,074Today, the US Pat 10,123,074 issued for Cloud to Cable, after a provisional was filed December 2014. This patent covers the currently commercialized Cloud to Cable TV system. The process was not that long, considering that the initial firm, NOVAK DRUCE was disbanded and I had to transfer the case to Greg Nelson and Fox & Rothschild, LLP in West Palm Beach, FL.The patent issued is titled: Method, system, and apparatus for multimedia content delivery to cable TV and satellite operators A patent continuation was filed in October to cover other aspects of the invention, as shown in the picture the patent generates video with an MPEG Transport Stream that is compatible with a Cable TV system.
What is Cloud to Cable?The main aspects and novelty of the invention include but are not limited to the following items:
- Integration of web-elements, web pages, or HTML5-related content with rendering of this content on OTT, IPTV, and most importantly, Cable TV systems.
- Virtualization and use of containers in the distribution of music and TV content to cable operators, by provision at virtual machine or docker container with the web page plus content for rendering purposes.
- Essentially, the patent covers music and TV distribution to cable operators and systems for broadcasting.
- Audio and music channels can be integrated and created by just connecting to the web-based content provider.
- Fault-tolerance and high-reliability is presented in the disclosure.
Cloud to Cable VideoA video can be found at EGLA’s Youtube Channel:
- cloud to cable TV patents.The final written decisions are available herein:
” The case split the PTAB panel, with each of the three judges filing opinions. The majority ruling by Judge Mitchell Weatherly held that eight of the patent’s 20 claims are invalid because Stingray showed that a person skilled in the art would be motivated to combine the earlier inventions to arrive at Music Choice’s invention, which includes both a playlist and on-demand playback. Source: https://www.law360.com/media/articles/1091845/ptab-partly-axes-music-choice-patent-in-row-with-rival “This goes in accordance to the prediction made by myself back when this issue was discussed initially, specially in the article where I analyzed the acquisition of Music Choice by Stingray digital.
Infringement and Damages ModelAs expected Music Choice should be more interested not so much on the “Video on Demand” revenues which is what these two patents cover, but more so in the patent covering the method and system for broadcasting to Cable TV which is the main source of revenues for both companies. The patent in dispute will be resolved this Friday October 19th, 2018, and the patent 8,769,062 as well as the original applications from 2001-08-28 which is claimed as priority date. It is my opinion that a similar outcome may result from the PTAB panel.Hence, what would the damages be for Music Choice? Well, I don’t have access to any information but what is found online, and in a letter from 2014, Music Choice was claimed to have 56M homes, or 57M listeners per month. Source: https://www.justice.gov/sites/default/files/atr/legacy/2014/08/18/307851.pdf ‘In this document, Music Choice indicates that their Multi-Video Programming Distributors (MVPD) constitutes a main source of income for the company. Additionally, in a marketing material VOD distribution is said to have 72M subscribers as of Music Choice’s 2016 PDF :http://corporate.musicchoice.com/files/2214/6228/4671/2016_Music_Choice_Media_Kit.pdfIn a similar filing, Music Choice makes a case with a rebuttal testimony by Gregory S. Crawford, PhD https://www.crb.gov/rate/16-CRB-0001-SR-PSSR-SDARSIII/rebuttals/2-21-17-music-choice.pdf Hence, assuming a price point of let’s say 0.05c to 0.25c/subscriber and recalling what Mr. Boyko said in a prior-conference call, Music Choice should have revenues could be:
- 0.05c per subscriber @ 50M subs = $30M/year
- 0.25c per subscriber @ 50M subs = $150M/year
” … or the quarter, Canadian revenues decreased 2.6% to $13.6 million (41.3% of total revenues) due to decrease in non-recurring revenues related to digital signage, United States revenues increased 102.2% to $7.8 million (23.5% of total revenues), whereas revenues in Other Countries increased by 34.4% to $11.6 million (35.2% of total revenues). (CNBC source: https://www.cnbc.com/2018/06/07/globe-newswire-stingray-reports-fourth-quarter-2018-results.html) “What this means is that somehow per year $32M/year o revenues were eroded from Music Choice’s pie, or since 2014 when the lawsuit was said to have had some issues with Stingray, then the total loss could be $32×4=$120M on damages. Which, it seems to have been the offering made by Stingray digital to Music Choice for a full acquisition.The question is, what would be the forward revenues would be for a Georgia-Pacific model that a damages expert would have done for pricing moving forward and how Stingray Digital would have to pay for any future earnings to Music Choice. The information collected indices a 35% tax by Stingray on royalties and potentially another 20-30% which in turn would make operations in the United States at no profit or even at a loss.
ConclusionIt is very hard to compute a damages calculation, assuming that infringement takes place in the surviving claims of the patents in dispute. Hence, if damages were to be computed should be in the range of 8-9 digits with upside to the future, not including potential treble damages which could account for more money to be paid.Alternatively, Cloud to Cable TV is the best technological platform for monetization with Cable TV and works using the most recent advancements in Cloud computing, Web technologies, and in combination with standard DVB Systems. A unified patented technology for Cable TV distribution!
What is Cloud to Cable TV?
Use Case : Music for Cable | Amplify your Reach®
First Patent is Allowed and will be granted
The patent filed for an important component of the “CloudtoCableTV” architecture has received a “Notice of Allowance” meaning that a patent will be granted as soon as fees are paid by me. I will also file for continuations and other divisional, including the European Patent Office action that is also pending as part of a PCT Filing. This is the first patent created and issued at the “EGLAVATOR”
Creating any “TV/Cable Network” is difficult. The complexity of content distribution to cable/mobile operators (“affiliates”) is enormous and requires time, effort, lots of capital, and the use of multiple complex technologies. As one example, satellite time required to distribute TV/music content cost thousands if not millions of dollars per year. In the case of music distribution, this is more complex, as revenues may need to be split among multiple brokers and intermediate agents.
Additionally, current cable TV subscribers want to consume their TV and music content ontheir mobile devices and tablets. Users want to enjoy their cable TV subscriptions at home, school and office, — any time, any where.
Over-the-Top Platforms (OTT) are widely used today to sell individual subscriptions but not that many systems can reach out to millions of viewers without Cable TV’s help. Hence, Cable TV distribution provides a volume monetization outlet by tapping into millions of subscribers worldwide. Cable TV is the best monetization outlet for new networks including music channels, TV, and video Video on Demand (VOD) content.
In this white paper, we introduce MEVIA as a novel platform solution for content distribution to mobile, web, and Cable/Satellite TV systems. MEVIA effectively reduces cost and maximizes returns.
MEVIA is a unifiedmultimedia platform that enables quick and easy distribution of TV, video, and music package content to cable and mobile operators. MEVIA connects the worlds of web/mobile with Communications Service Provider (CSP) or Multi-System Operator (MSO) content distribution headends.
Our “Cloud to Cable” technology is a patented system that distributes and delivers TV, music, and video channels to satellite and cable TV operators as well as to mobile/web, providing a unified user experience. MEVIA is true to our “Amplify your reach®”slogan.
When a content owner decides to distribute their content with MEVIA, the first step is to load TV feeds, music assets, and/or video content into MEVIA storage or ingest servers. The content is then made available securely in all the affiliate systems on Cable TV and mobile/web distribution via our mobile application. Finally, a content ownermay define special playlists and grid programming.Different pricing structures can be enables such as on aper subscriber-basis,per download, or a flat rate.
What Type of TV, Music, and Video Offers are Available?
The range of multimedia services that can be offered are:
- VOD or Video On Demand
- Linear Television Networks
A media owner could offer, for example, a Cable TV and Mobile package that includes:
- Thousands of VOD files
- 50+ Music channels with customizable screens
- 5+ Linear concert channels
What Type of Formats?
MEVIA uses all commonly available encoders and transcoders for audio and video, hence any file from any format can be ingested, processed and broadcasted. The most popular formats are MPEG, MP4, with encoding in H.264,. H.265, AAC, AC-3, and MP3.
How does MEVIA Work?
In essence, MEVIA connects to any web-based platform, rendering its contents and preparing multiple broadcast-ready streams for operators, mobile, and web.
These streams can deliver:
- Music with enhanced metadata
- TV/Video with real-time enriched web-based information, such as twitter feeds
- Music-only content
In summary, Cloud to Cable and MEVIA provides three main delivery mechanisms:
- Applications – Mobile and Web
- Linear streams – Cable Systems and Satellite Operators
- Over-the-Top Applications for Apple TV, Chromecast, Smart TVs,and private systems
We will present howthe business model works, some case studies. and our mobile application.
The business model used by MEVIA issubscriber-based and perfectly aligns with the proven “Multichannel Video Provider Distributor” (MVPD)business model. In this model, operators purchase packages from companies such as Time Warner, SONY, ESPN, Disney, CNN, and many others at prices that range from cents to several dollars paid per subscriber. The MVPD generates revenue through adding targeted distribution capability. In this case, an MVPD will use MEVIA to purchase TV, Music, and Video content, pay the content owner and resell that content rights to all their subscribers as part a “Digital” or “Premium” package, or as any format that the operator chooses to use. For Example a Cable TV Operator may purchase ESPN package for $3.95/subscriber and sell a premium package with ESPN For $29.99/subscriber, it is likely that other similar network would cost the operator between cents per subscriber to a few dollars. Package pricing depends on volume and in some cases, years of negotiations and agreements.
MEVIA will provide as many channels as are included in an agreement with a specific provider,and will deliverthat contentto the operator in the format that their system supports– Linear TV, VOD, or Interactive.
Case Study: CABLEVISION MEXICO
As an example, CABLEVISION MEXICO needed 50+ music channels branded under their name “CABLEVISION”in market. They provided a set of backgrounds that were used for customizable screensbroadcasted to their users on channels 800-850. The broadcast should include their logo and artist/song metadata, as shown here:
MEVIA created all the music channels simultaneously and broadcasted a lineup ready for more than 1 Million subscribers in Mexico City. Similar screens were made for AXTEL TV, a smaller operator in Mexico City.
Sample Set Top Boxes for DMX and CABLEVISION Music
Case Study: MOOD MEDIA
MOOD MEDIA ingested thousands of song files into MEVIA’s storage platform via secured FTP (SFTP). The files were stored in 256Kbps format in some cases where stored in MP3 in others AC-3.\
The multimedia content might be hosted within MEVIA’s storage platform and content management. In this case study, a product was created for DMX Music/MOOD Media in 2013-2015 timeframe where all the assets were hosted by MEVIA. MEVIA applications and platform was used to synchronize up to 10+ Cable Operators broadcasting multiple packages with 50+ music channels,some with audio-only some others with video and metadata. MOOD MEDIA had over 20M subscribers in operators that included TIGO, CLARO, and many others.
In this case, a customized HTML web application and native applications were used together for mobile/web and OTT that complemented the Cable Operator offering.
Demonstration: Case Study Using Spotify (Internal Test)
Assume a CSPhas decided to make a deal with “Spotify” and would like to broadcast music to 2M subscribers with a package composed of 50 music channels from Spotify and a few music video channels from a different provider,VEVO.
Without our Cloud to Cable technology, this would be a daunting task, besides the associated cost for satellite fees, and additional complications. In this figure, MEVIA facilitates distribution of a web application to be part of the Cable TV channel line-up.
MEVIA Cloud will connect to the web-provider and retrieve all required webassets that are currently in use by Spotify. The authentication and authorization can also be linked in connection with the Cable Operator and MEVIA provides a method for single sign-on.
MEVIA can accommodate 50-100 music channels broadcasting in SD, HD, or even 4K depending on the bandwidth that the operator may have available for this service.
Now, an Operator will be able to offer a particular set of Spotify playlists to its subscribers and increase Spotify® music viewership by 2M subscribers.
Similarly, VEVO has no cable TV product offering, MEVIA can enable both VOD and Linear Programming streaming from the same appliance using our caching and distribution network that has been put in place for Spotify®
Case Study: SKY Brasil and SKY TUNES Application
SKY BRASIL® created SKY TUNES,a product that was powered by MEVIA from 2013-2015. MEVIA provided all OTT streams for thousands of customers in that part of the world. SKY TUNES mobile applications were downloaded by millions of subscribers in IOS and Android. MEVIA provided to SKYTUNES APIs, streams, and playlists for the application, as well as analytics.
Ingest of media can be done to our cloud storage in our platform, by simply adding and dropping all the required music files in MP3, AAC, or AC-3 Formats.
Movies can also be uploaded and ingested by accessing the storage and uploading all the required MP4, MPEG-2, or any other format encoded in any known video encoder, suchas H.264, H.265, MPEG2 Video, and many others.
Mobile Apps for MEVIA
MEVIA provides two middleware components, one for music content that was branded initially as “Mediamplify Music” and MEVIA Apps. The fist app is music-centric only, and is capable of handling thousands of music channels in linear format, including“keyword” seed stationscapability. MEVIA is more video and music centric, in other words playback of video and music for IOS and Android. The sample implementations and can be customizedwith any additional branding or screens as the operator requires.
Patents and Trademarks
Amplify your Reach ® is a registered trademark of EGLA COMMUNICATIONS
US15/538,911 and PCT/US2015/067464 METHOD, SYSTEM, AND APPARATUS FOR MULTIMEDIA CONTENT DELIVERY TO CABLE TV AND SATELLITE OPERATORS
US PATENT 7339493MULTIMEDIA CONTROLLER
For a PDF version of this document: What is Cloud to Cable
American Innovation Cycle : Challenges and Phases / IPR Era
An Inventor’s Perspective
The new American Innovation Cycle has changed how Innovation is produced and will be created in America. It takes brains, sweat, and tears to innovate, specially technology when you count with limited resources and advanced technological innovations. Inventions do not come easy as many would think and the amount of work and sacrifice to create an new idea is only achieved by a combination of persistence, talent, and creativity. After all this effort, the United States Patent Office (USPTO) may grant that inventor exclusive rights to that intellectual capital in the forms of a patent. Moreover, in this new era of IPRs/PTAB, the innovation cycle is more challenging and what the inventor thought it was of his exclusive right, could be taken away by a group of individuals without a jury.
It’s clear that besides intelligence or necessity, the innovation process requires a great amount of research, many hours of testing, and solving problems that may have never been solved before. and then as a result, the creation of a clever solution or a technological breakthrough that may leads to a brand new product, gadget, or drug.
∴ “The cure for Apple is not cost-cutting. The cure for Apple is to innovate its way out of its current predicament.”” — Steve Jobs
Technological Innovations are things that has never been done or invented before, and there is where the challenge relies, fighting with the unknown. Some innovators work alone, while some others work as a team and it all depends on the field of the invention. Notwithstanding, the thought process, experimentation, and brain capacity required to change the world is significant. As a consequence, innovators put their own reputation on the line when thoughts, ideas, or breakthroughs challenge current trends or ways of doing things.
In my personal experience and many others, their discoveries were a product of a PhD dissertation, after academic research or a Post-Doc position. Clearly, graduate school involves a ton of effort and your peers generally offer a great amount of scrutiny to your findings, creating the perfect environment for innovation, patents, and the creation of intellectual property (IP) wealth.
∴ “The National Science Foundation keeps the US on the cutting edge of discovery. This government agency funds science and engineering research and education programs. ” — NSF Website
One of the organizations financing research is the NSF (National Science Foundation), in some other cases private grants fund and help graduate school research.
However, when you are a private inventor or a small business, this innovation process is even more challenging. Small businesses enter mercy waters as risk intensifies when the inventor’s own savings are on the line.
An inventor, thru his small business, or an entrepreneur with limited resources may account with an income of 100–200K/year. I would bet the average inventor would allocate an R&D budget of 10–20% of that capital, so his/her idea can materialize. In other words, 10-30k may be required for a private inventor or entrepreneur to conceive an idea to practice. Obviously, these amounts are far less smaller than many R&D budgets of mid-size enterprises, and may be insignificant for a corporation such as Apple or Google.
∴ “Google’s R&D spending will rise 16% in 2016 to $14.3 billion, BMO Capital Markets estimates” — BMO Capital Report.
I am an inventor and have personally been involved for the past 20+ years in software and electrical engineering projects and have been awarded with 10 issued patents. For the last 7 years, I have also been immersed into the world of intellectual property as an Expert Witness. Additionally, I have been to the courtroom fighting my own patent battles, licensing my inventions to corporations, and working as an expert witness helping big and small corporations, and other innovators in IP litigation cases.
Moreover, I have been part of an incubator/accelerator, and just recently formed my own technology incubator “EGLAVATOR,”. Hence, I perfectly understand and have personally witnessed passionate inventors and entrepreneurs succeed and fail. Besides that, I have been advising startups and entrepreneurs with their intellectual property strategies from implementation of software to patents.
The Phases of the American Innovation Cycle
I can summarize in the following chart the Innovation Cycle in America, as of 2017, identifying 4 phases:
- The Prototype : First inventors create an exciting new idea, or prototype, this is first of the “Innovation cycle”,
- Am I Rich Phase : Teams are formed, early-stage capita, and people believe in the “American Dream” as Edison, Musk, Larry Page, and others have preceded them,
- Try Again Phase: Promoting that patent or technological product was full of hurdles, and problems, and,
- Fighting Phase: Many times, you may give up as your innovation could have been taken by major corporations. It is tiime to fight back
Phase I: Your Prototype
Congratulations, you have completed that prototype and have successfully closed an R&D cycle. All your findings are promising and are able to get some cash to file for a patent. As an inventor, you may be excited to have that prototype built and working with your innovation in your garage, your small office, or even under your 3D-printer. A new functional product may require additional effort to perfect, but the core of your minimally viable product has been completed.
Now it is time to get your investment back and hopefully some additional return to your time, ingenuity, and investment made.
In Phase 1 or the initial stage, can be identified when the inventor is excited to find out that after a couple of years of work and waiting for the patent office response, his invention has been granted with a patent. All inventors feel happy, safer, and more confident then to share with others their final product or intellectual property creation.
The inventor may even find some additional dollars for a continuation patent or a divisional that your friendly patent attorney has offered for another set of payments. Then and within this excitement, the inventor believes that his valuable creation can help company A or company B, and Inventors can forecast good faith sales, royalties, or a revenue shared agreements with those companies. In this phase, the inventor may draft or someone may help him draft a business plan. This is a very common process in academic and research institutions, where their intellectual property is being commercialized and often needs a business plan attached to it.
As an example, the University of Florida Research Foundation receives an assignment to the patents created by students or professors while at the university, and many spinoff companies are created from many inventions and intellectual property created in Gainesville.
As time progresses, the inventor is almost sure that relinquishing 60% to 80% of the value of his IP, in exchange for business help has certain value, obviously when you multiply $yM by 60%, is still a much larger number than a 100K+ salary.
In this initial stage of his invention, the now nascent entrepreneur has a “startup” venture. However, an inventor should be aware that 1 out of 200 startups may succeed, and no PhD will suffice or exclude you from the probability.
Phase 2: Am I rich Phase?
During a second phase, that we call Phase 2, inventors believe that their invention is worth millions and why not billions, and in order to get paid, the world needs to know about it and licensing deals need to take place.
In this phase, a process of idea exchange is initiated with the world. In some cases, inventors may start this phase even without a patent issued, but with a patent filed or “patent pending” status. As this stage, Inventors believe that they are protected by their patent or multiple patents, some even may use an NDA to cover their IP a bit more. Inventors and entrepreneurs start sharing “decks” with their IP with others.
Some companies may proceed with more due diligence steps, after an initial presentation, which may take a few weeks that may include the disclosure of your finances, a term sheet prepared to license, partner, or sell the IP with a major player, your new customer. As such, term sheets may include 5%, 0.5%, or even 0.05% may represent 10x to 1000x what the inventor invested or what a 401K would contain after 30 years of savings.
At this stage, some inventors may think about Kearns and Ford’s case with the windshield wiper, or more recently Home Depot vs Powell patent win, or in some cases a multimillion dollar settlement between Carnegie Mellon and Marvell, Inc.
Personally, I have met many engineers at trade shows, conferences, meetings, and in general when I worked for corporate America, many engineers and directors would say phrases like “We can do that ourselves, why do we need them?,” or “We did that already, isn’t that we had in a prototype before?”. That mentality is not conducive to licensing deals, in fact, many engineers would think they are not infringing that idea or may indeed have done a similar thing without filing for a patent.
Obviously. the AIA (American Innovation Act) is not at play here, it is a fair game and inventors in good faith exchange the ins and outs of their technology, and probably more than they actually have protected with their patent and their claims. AIA changes the rules to who filed first, and that may benefit the inventor, but not for long.
At this stage, you cannot guarantee any NDA or outcome from sharing your invention, prototype, and trade secrets to third parties. Your potential payout has maybe, inadvertently zeroed, as you have shared details to a corporation that had no desire to pay a penny to begin with.
Obviously, if you were convincing enough or had a 1 a billion invention, you might hit the jackpot, at 1/10th of the value or even at 1/100th of the value perceived by you. Good for you!!! You don’t have to go thru Phase 3 and 4.
Phase 3: Try Again
After weeks or months of “marketing” and sales, there are no more responses to that presentation, and the excitement is gone, and you try it again with another party. In some cases, a corporation may say “Send your claim chart,” “if you think I am infringing your invention, say that clearly.” In many cases, these are tactics designed to defuse your value, and get that idea or innovation for free without paying.
The inventor and his parties are now part of the “Try Again” phase, and very few corporations will actually pay or offer to pay a fair deal to the inventor or the entrepreneur. May corporations understand that a fair deal is 0% royalty for them or a rev share that will make them billions and thousands to the inventor, they think they may even try to hire the inventor to work for them. Obviously, not that many inventors had a father like Donald Trump with a $1M dollar loan, in many cases inventors are using their time and own capital to fund their dream, many even quit their jobs, and are sacrificing their families so they can move out of their garages or co-working spaces.
This is where when the nightmare starts, as you have disclosed to Corporation A, Corporation B, and C your deepest secrets. You assume that your NDA (that could be just downloaded form a free site) will cover you, and the answers is no. Sounds like bad news? Maybe you are better of working under the radar or move to the “Try Again” phase.
Instead, don’t feel discourage and be prepared to gain some market share from Corporate A, B, and C and get leverage, gain momentum for your product, get customers and generate revenue. In many cases, this may not be even possible and if that is not an option, this is the perfect time to think about selling or auctioning your IP.
It is also possible that as you contact more companies, maybe no phone calls are returned and you might get emails stating things like “We moved in a different direction….” Or “We will get back to you in the future,” or “If you think we are infringing say so.” In other words, the “little guy” just wasted months of his/her time waiting and sharing all their knowledge, training for free several groups of engineers.
” It could be also a communication problem, hire a good sales person. Inventors might confuse and use too much jargon, confusing a potential buyer”
Maybe if you are in this situation, and you are planning to file a lawsuit, stop right here and think. If nobody wants to pay for your invention or innovation, or offers little to pay for your invention, there are two reasons:
- Your invention is not valuable as you think it is, or
- Your invention is very valuable and they think you cannot fight back
Get some validation from the marketplace and offer some licenses at reasonable prices, get paid small amounts. Assuming, you can reach two or three licensing agreements, you may use some of the funds to move into Phase 4.
‘Good artists copy; great artists steal’ – Steve Jobs
Phase 4: Give up or Fighting Back Phase
At this point , you have decided to continue the fight and that’s what I will call the “Fighting back” phase, in this phase you have :
- Legal or Litigation
- Compete in the marketplace, go on offense
We wil address the first option as the second option is more than obvious. if you choose to fight back legally, it is going to cost money and a ton of effort.
In my experience, corporations are banking on a simple fact:
“you are poor and cannot afford to fight back.”
An inventor will run out of money and will not be able to afford a firm like “Foley and Lardner,” or “Fish & Richardson,” Instead, most inventors, hire a John Smith, P.A,, a guy at the co-working space that will settle a licensing deal for a 25K offer because he can make easy ½ of that without inventing a thing.
Many other inventors won’t give up that easy, and after the past 2-3 years of efforts and, after dumping 300k – 1M of their own capital that will not make your 401k anymore decide to act on a different strategy, sell the asset. Maybe at this point the cost of opportunity is not that high, and the inventor has not given up entirely for all these stories to become part of another “Thanksgiving dinner chatter” story.
It is advisable that inventors find an intellectual property investor and sell their assets to them, after all that hard work, maybe someone can make some money. Many of these patent acquisition firms are called as “Patent Trolls” and will likely review your case and take a risk by enforcing your intellectual property.
The last group of inventors and entrepreneurs, the lucky set in Phase 4. have most likely no family to worry about, or have a wife with a 7-digit salary, and in general have a cushion of cash that has kept them afloat.
Even these few inventors have to face retainers from boutique firms requiring $300k for an IPR defense. IPR stands for Inter-partiers Review which is a technique/trial coined as part of the AIA and used by the PTAB or “Patent Trial and Appeal Board.” to determine grounds of unpatentability or obviousness of a patent. This process and all other litigation require thousands of dollars to retain experts at $300-$700/hr in the fields of damages, telecom, electronics, and computer engineering. Some may say that a patent lawsuit needs a budget of $1M to $3M to be safe.
Once you are at this stage, you may have to have a wealthy business partner, where your business plan is your intellectual property, and your strategy is to take them to court as you have no other option left.
At this stage, the inventor has no choice but to create a corporation that carries out one function and one only purpose, litigate your patents with some leverage to fight back, the same leverage your infringers will have. The inventor is unfortunately now facing another cut in his IP value, 30-50% perhaps plus the attorney’s fees.
Corporations like Unified Patents and others are in the business of invalidating patents, they claim that they are looking after “startups” when we know that “Trolls” or patent investors don’t waste their time with startups that can barely make payroll. Unified Patents is in the business of protecting the big donors and their big corporate members, as an example I wrote an article in my blog https://edwinhernandez.com/2016/03/05/unified-patents-ipr-for-8886308-patent/
At this stage, the fight is not easy and after meeting maybe 20 to 100 law firms, you may find a match, and have an investor to cover your patent and IPR litigation costs, and there you go, your first litigation.
Be were that IPRs are very hard to win, and the PTAB is invalidating patents using the “broadest interpretation of the claims” which I still don’t know what broad means, and what aspects of innovation are hence decided by a board of people that will obviously make mistakes. It is much easier to kill a patent than say why it is valid. In fact, 90% of the patents will be invalidated in an IPR.
Obviously, if your IP is invalid and non-enforceable, you have no need to worry, don’t try to play a patent stunt. If you have not invested time and money with reputable attorneys, you will fail, you cannot fool the system, you need a strong patent with good “claims.” Hire a good Patent Attorney to handle this for you.
On the other hand, the US Government must create an environment and laws, or extend the current laws to protect the many inventors that are facing gigantic multi-billion dollar corporations that are not interested in fostering innovation and paying their fair share to private inventors but instead are greedy and rather make their attorneys richer.
Current invalidation processes and all the litigation roadblocks that are placed to protect corporations from “Patent Trolls” are simply unjust and unfair. The invention is not the victimizer, it is the victim. The current process incites and motivates large companies to simply steal and take the inventors to the cleaners via an IPR or just take IP with the agreement “see you in court.” Corporations are abusing the system and avoiding fair payment to small and independent inventors, this simply hinders innovation and halts private research made by small corporations, which brings to add as one of the “American Innovation Cycle” phases described in this articled.
In my opinion, corporations should be penalized and award the total amount of fees paid to their attorneys plus what is paid to the inventor’s attorneys, if in fact and in bad faith an invention was taken. Specially, after fishing valuable information from the inventor. A recent case lost by Huawei shows how major corporation would not allow even a picture taken of one of their assets (T-Mobile vs Huawei – $4.8M Award) Maybe, this will discourage illegal use of Intellectual Property (IP).
An inventor has to remember that most corporations will pay millions to law firms and will offer thousands to the inventor, even if that invention is valuable. Hence, my recommendation is:
- Create a business model and substantiate your invention, be prepared with enough cash to protect your IP wisely and very well,
- Don’t save in attorney’s fees and look for attorneys that their patents have not been invalidated,
- Keep your options open and file a continuation, even if you have your patent issued.
- Be ready to fight back, send a letter to your congressman,
- Talk to other inventors, inventors are often shy and hermits, speak up
- If one of your inventions was stolen, well you are a creative kind, learn and create a new one!!!
Obviously, inventors are move vulnerable at trade show as many do not understand or don’t know what the consequences of an email badly written, or whey they act emotionally sending a threatening letter or triggering a “Docket” action, meaning a lawsuit filed against them. Be careful and think before you act!
What worries me is that innovation is getting monopolized by big corporations that can afford a litigation system. Any major corporation, specially those that you contacted and signed NDAs with yo, would rather hire a law-firm than pay you a dime. A major corporation with deep pockets will not be hesitant to allocate and pay to any law-firm $3M to $6M to defend their business form you. The corporation will try to find a a way to invalidate your patents, and fight the inventor that is perceived as the “little guy,” after all, you are just an annoying thing going on in their radar. The sad part is that. a corporation and its management team will not even offer the inventor a low-ball 7 to 8-digit licensing deal even when you presented your invention or technology in good faith and in a non-threatening way.
My company EGLA has its own intellectual property and we manage a technology incubator (“EGLA INCUBATOR”). At my company, we represent innovative ideas and we want to meet corporations with interest in helping themselves and help innovators with our patents and software.
Part of our IP can be found here:
Disclaimer: Nothing here represents a legal advice, I am not an attorney and if you need one contact, your yellow pages or a friend may be your best referral. I bet there is a good IP/Patent attorney nearby. Hence, you have to make your own decisions about any intellectual property matters.