Alice is market-affecting and could impact your market advantage in a few short years  

POSTED BY Justin Kunz and Jeff Goodwin AT 2:45 P.M. Apr 23, 2015

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The Alice v. CLS Bank Decision – Background:

Alice Decision Questions
Photo via cc by Flickr user Colin_K
The recent decision in the Alice v. CLS Bank case (Alice) has had a profound impact on patent litigation and prosecution, but what impact has it had on IP strategies? Many of our clients are wondering how this legal decision impacts them strategically. ipCapital Group (ipCG) has begun to explore this topic in more detail with our clients and plan on making this article the first of a series of pieces on the topic.

In this first article, we will briefly explore the breadth that Alice has had. We will also discuss a number of questions executives and IP managers alike should consider in light of Alice and how it may affect their IP strategy.

Who Does Alice Affect?

Despite the fact that Alice is still in its infancy, data suggests that it’s having a significant impact across many industries.  We looked at 26 cases related to Alice and categorized the outcomes by industry in Table 1.  Based on these current cases we can start to identify trends and opportunities.  This article explores one possible approach to Alice and some insights in to adjusting an IP strategy to leverage those opportunities.

Alice Related Court Case Decisions

Table 1. Shows the distribution of court case decisions from 26 Alice related cases and further categorizes the decisions by the patent holders’ respective industries.

The net is that almost ¾ of cases are finding patents invalid! Since Alice is having such a large impact on IP space overall, it’s time you take a step back and consider how to modify your IP strategy to maximize your investment in both patents & trade secrets.

For instance, recently Alice impacted litigation involving Symantec and Trend Micro, adding further pressure on any company using its patents to defend itself. See Intellectual Ventures Patents Axed In Symantec, Trend Case http://www.law360.com/articles/646461/intellectual-ventures-patents-axed-in-symantec-trend-case for an example.

What does Alice affect?

Alice affects the very nature of a business trying to achieve higher margins for its innovations. If a company doesn’t have tremendous brand and it has a lot of copy cats in its industry, patents were one of the ways to ensure first to market could be backed up with ownership of the technology. With Alice, there is the risk that the money in R&D will be utterly wasted. In a few business cycles it becomes obvious that relying on R&D to be first to market is inefficient and costly. So those companies that try to innovate their way out of a business cycle no longer can, unless they can leverage what Alice is saying. So Alice is market affecting!

Post-Alice Questions You Should Ask Yourself:

  1. Alice and your business’ IP landscape

    Alice will have varying impact to your business’ IP landscape depending on your industry.  Understanding which areas of your landscape (e.g. business, technology) are impacted by Alice will be essential for identifying new strategies and opportunities. In some cases, Alice may only affect portions of your landscape allowing you to operate without restriction based on Alice. For example, a landscape relevant to a manufacturing company may see a small portion of the landscape affected by Alice whereas the entire landscape for a technology company may be affected. The IP landscape becomes a tool to identifying the areas affected by Alice as well as identifying opportunities to overcome Alice obstacles.

    What is your process to know “where” you should invent and “what” you should invent that will not be impacted by Alice?

  2. Alice and Front End Inventing processes

    After you can answer the questions on “where” you should invent and ”what” you should invent, the next logical question is “how” you should invent. The first problem is that most companies have no formal process for invention extraction. They leave the inventing to inventors.  It is very unlikely that any inventor follows Alice and other case laws, so they may not find out until a lot of work from their patent attorney that Alice impacts obtaining a patent. The second problem is that most attorneys don’t have visibility to the inventor inventory. The combination of these problems creates a very costly problem for companies, as the further this goes on, the less likely good patents can be obtained and Alice becomes market affecting.

    How can you modify your process from overcoming inventing to overcoming Alice?

  3. Alice and your IP Strategy

    After you can answer the questions on “where” you should invent, “what” you should invent, and “how” you should invent, the next question is: “what is the IP strategy of the result of these decisions?”  As Alice continues to impact markets, you may consider other strategies to protect your inventions.   There are many strategies that do not involve patents to protect inventions to consider relying on more heavily. For instance, trade secreting parts of a technologies might be needed. There are dozens of IP strategies that are not well known that can be brought into play to assist this change in the patent system so that Alice is not market changing for your business.

    What are your IP Strategies to deal with Alice’s market changing issues?

Alice has started to show impact in market-makers and is likely to be even more of a force as time goes on.  If you desire to leverage the change, there is a tremendous opportunity to answer these three questions we have highlighted. If not, there is a subtle IP cancer that will grow in your market-making strategy that you may not be able to fix in a few short business cycles. As with cancer, early detection and treatment is always the most prudent option. So let us re-ask;

  1. What is your process to know, “where” you should invent and “what” you should invent that will not be impacted by Alice?
  2. How can you modify your process from overcoming inventing to overcoming Alice?
  3. What are your IP Strategies to deal with Alice’s market changing issues?

Learn more about ipCG's Alice ProofingSM services here.


TAGS: Regulation and Legislation | Strategy | Justin Kunz | Jeff Goodwin