751 Park of Commerce Dr. #128, Boca Raton, FL, 33487
I will start quoting, MultiChannel article that describes the genesis of this dispute..
Stingray and Music Choice have a long history. In 2015, Music Choice sued Stingray for patent infringement after AT&T U-verse dropped Music Choice in favor of the Canadian company. Music Choice had claimed that Stingray’s service included digital audio music and video-on-demand features that infringed on its patents, features that Stingray enhanced after getting access to confidential information during talks about possibly buying Music Choice in 2015. Stingray counter-sued, asserting “claims of unfair competition, defamation, trade libel, tortious interference with existing and prospective contractual relationships, and unfair competition.” (Source: Multichannel)
It was very interesting that in 2017, Stingray made a $120M offer to Music Choice, that was, rejected, not publicly, simply ignored. The offer was sweet basically no strings attached, and likely this case in dispute completely dismissed.
“Canadian digital and music video company Stingray Digital Group said it has made an unsolicited offer to purchase pay TV stalwart Music Choice for $120 million. (Id) “
As consequence of this lawsuit, multiple other litigation steps have followed this case: IPR, Counter Claims, Daubert challenges, and much more. I have been tracking this case I have a portfolio in the same are as “Music Choice” & “Stingray Digital”
Now all my observations resulted accurate, and in other words, the analysis of this cases that I made in 2017 is now a reality.
In summary, I concluded, and you can confirm at [1]. [2]. [3]. and at edwinhernandez.com that:
Now this case is scheduled for trial Dec 9th, 2019 in Marshall, TX. 
Several rulings have gone unfavorable to Stingray Digital, which includes adoption of the Magistrate judge opinions followed by an order denying the Daubert challenge made to Dr. Keith Ugone. What this means is that Mr. Ugone’s damages report is safe and sound, in other words the damages expert, Dr. Ugon representing Music Choice, will be able to tell the jury his story about this case.
Clearly, this was a big reverse to Stingray ,specially when Dr. Ugone has testified that a “non-infringing alternative” presented by Stingray was not suitable and hence, the damages model was at least $23M from the numbers released in a court ruling.
Dr. Ugone’s testified that in absence of a non-infringement alternative, loss profits need to be used to compute damages, instead of a reasonable royalty. Assuming $23M in loss profits, that means revenues could have been $75M. If, an expert applies a royalty of 10% that’s $7M and 1%, 700k in reasonable royalties. Potentially saving $23M in loss profits, or even higher at $75M for treble damages, if the judge considers necessary to punish Stingray.
As you know, already, I completely disagree as my patents when in use in Cable TV systems are a non-infringing alternative to Music Choice’s.
For that reason and the other reasons stated within the Order, the Court agrees with the conclusion reached within the Order. The Magistrate Judge’s Recommendation is therefore ADOPTED.
On second adverse ruling, Judge Payne has provided to Judge Gilstrap its report and recommendations regarding the Alice challenge that Stingray has made against Music Choice, Inc patents. The adverse ruling indicates that as a matter of law, Alice Step One, fails and there is no need to conduct any further steps,
The Court concludes that each of the remaining asserted claims are not directed to an abstract idea at Alice Step One. Because the Court resolves the Alice inquiry at Step One, the Court need not proceed to Alice Step Two. Thus, the Court recommends that Music Choice’s cross-motion be GRANTED and that Stingray’s motion for judgment on the pleadings be DENIED.
As jury selection is due December 9th, 2019, clearly Stingray has a low chance of surviving a trial, and in my opinion, Stingray has increase its chances to be found guilty of infringement and pay a hefty amount, likely a multi-million dollar judgment and a potential injunction relief favorable to stingray.
Stingray digital has to find a way to now settle this case or, maybe even better, Stingay can discuss a way to present a license to my patents and technology. My patents and technologiss are clearly as a non-infringing alternative to Music Choice, and my patents are new, and will last for a longer time as a protection.
Either way, this is not good to be in this position for Stingray.
Stingray could take a license to my portfolio and present it to Music Choice and the court, and avoid all infringement claims.
Besides that, Stingray Digital made an offer for $120M to purchase Music Choice, and Music Choice rejected the offer, risked a trial and now their position has been getting more solid day after day. I would assume that it will have to make an offer around that to settle? That means that Stingray’s revenues in the US, which totals $9M per Quarter or $36M/year are now at risk.
The current damages report shows a $23M loss profits made by Music Choice as of this date, however a full report is only REDACTED and unavailable to the public.
“Revenues in the United States increased 12.2% to $9.4 million (12.9% of total revenues) and in Other Countries, revenues increased by 31.3% to $16.1 million (22.1% of total revenues)” (Source: Globenewswire).
Greenberg and Trauig is defending Stingray and Dechert Law, LLP is Music Choice’s plaintiff.
There are several ways to find out about my portfolio of patents and software implementation, you can contact me via email to sales@eglacorp.com or call me. My innovations are covered by US Patents 10,123,074 and 10,524,002 and other continuation patents, including European Patent filings, plus the technology and software platform:
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:
• Accessibility
• Retainability
• Integrity
• Availability
• Mobility
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
Late September and early October total of two judgments have been filed thus far by the Patent Trial and Appeal Board (PTAB) in the case against Music Choice’s patent. As indicated in the rulings for IPR2017-00888 and IPR2017-01191, partial axing fo the patents have been granted to Stingray or against Music Choice’s interest. Interesting findings that enforce the value of our cloud to cable TV patents.The final written decisions are available herein:As Law360 points out:” 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.
” … 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.
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.
MEVIA also includes customizable mobile applications and specialized equipment for Satellite and Cable TV broadcasting.
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.
The range of multimedia services that can be offered are:
A media owner could offer, for example, a Cable TV and Mobile package that includes:
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.
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:
In summary, Cloud to Cable and MEVIA provides three main delivery mechanisms:
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.
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
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.
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®
[spiderpowa-pdf src=”http://edwinhernandez.com/wp-content/uploads/2018/06/MEVIA-box-appliance.pdf”]MEVIA-box-appliance
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.
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.
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
vs. 
Music Choice vs Stingray is a case taking place in the E.D. of Texas. We will discuss in the article, the judge’s order (Judge Roy Payne) and memorandum regarding all the claims terms and its construction. As expected, the judge went for:
“[C]laims ‘must be read in view of the specification, of which they are a part.’” Id. (quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc)). “[T]he specification ‘is always highly relevant to the claim construction analysis.
As in many cases, this was also the case as well, here the order/memorandum available online:
[spiderpowa-pdf src=”http://edwinhernandez.com/wp-content/uploads/2017/07/Music_Choice_v_Stingray_Digital_Group_Inc__txedce-16-00586__0145.0.pdf”]Music_Choice_v_Stingray_Digital_Group_Inc__txedce-16-00586__0145.0
As shown, in all cases where Music Choice made a simple term definition, Judge Payne went for the simplest and more appropriate meaning to the words. Music Choice won pretty much all terms in their favor and in all “indefinite” arguments did not move an inch in favor of Stingray. Hence the judge also sided with Music Choice’s arguments and claim construction. For instance:
All the evidence is sealed and there is no way to see exactly how these terms match the device in dispute, however, Music Choice’s attorneys should be prepared and if those terms were favorable to them, now one can asume that their evidence to match these terms is solid.
We will keep track on this case and how this develops, on a different note, Music Choice also got hit by Stingray with several IPRs:
Music Choice then has to defend the following IPR cases filed by Stingray Digital regarding this particular case:
For example we found: http://ptolitigationcenter.com/2017/05/pto-litigation-report-may-19-2017/
Disclosure: EGLA, which I own, provided a platform for DMX for digital music distribution. Stingray acquired DMX Music but not our technology and kept its own music delivery system, the infringing system now. However, EGLA owns a patented technology that is called “CLOUD to CABLE TV“ that enables delivery of linear music channels to Cable TV subscribers in a more clever, fault-tolerant, and efficient way than these patents disputed here. Source: http://edwinhernandez.com/2016/08/01/platform-nternet-tv-music/
https://www.slideshare.net/edwinhm/egla-communications-cloud-to-cable-tv-licensing-proposal?qid=9a8ef586-78a7-45a5-b02f-fc6ad1e0a95a&v=&b=&from_search=1
and,
EGLA CORP has a patented technology, superior to all the patented technologies out there, that brings the Cloud -based systems and generated images for music and TV channels that can be overlapped. The Cloud to Cable TV system provides:
The device is called MediaPlug and also contains other Management APIs, as well as a good implementation tested with:
Advantages over all other systems
There is no dependency into any Set Top Box or DOCSIS 2.0, DOCSIS 3.0, or other MPEG frames or dependencies in changes to STB.
All the systems, are fault-tolerant and enable great reliability and remote management system for all distribution devices
Uses standard DSL/Cable Modem technologies with the system to deliver 50, 100, 200 music channels, and 10-20 HD/SD/4K TV Channels.
Many more advantages that are benefit DRM security, provisioning, and tracking for media playback.
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.
I can summarize in the following chart the Innovation Cycle in America, as of 2017, identifying 4 phases:
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.
MobileCAD Parts – Prototype GSM
Now it is time to get your investment back and hopefully some additional return to your time, ingenuity, and investment made.
US 7231330 Patent
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.
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.
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:
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
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 :
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:
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:
https://www.slideshare.net/edwinhm/eglas-patent-and-intellectual-property-portfoilio-licensing
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.
Stingray could take a license to my portfolio and present it to Music Choice and the court, and avoid all infringement claims.