Blame the Behavior—Not the Business Model
Phyllis Turner-Brim began her career in product development at General Electric and Procter & Gamble (P&G), but after years working on the same product, realized that she had “a little bit of technology and product ADD.” Inspired by the patent lawyers with whom she often found herself collaborating closely at P&G, she went to law school. More than 20 years later, that decision has led her into roles ranging from Assistant General Counsel, IP for Wal-Mart Stores, Inc. to IP Counsel and Director of RFID Strategy and Licensing at Intermec Technologies Corporation to her present-day role at Intellectual Ventures, where she is Vice President, Chief IP Counsel, managing a staff of more than 25.
Her position is closely linked with the very activities that have provoked controversy around Intellectual Ventures, which invents and patents some of its own technologies, but also buys, monetizes and licenses patents to others. The company has been referred to by mainstream and technology publications as a “patent troll,” and its practice of buying up large patent portfolios criticized. (Since it was founded in 2000, Intellectual Ventures has acquired more than 70,000 IP assets and has nearly 40,000 of those in active monetization programs).
But Ms. Turner-Brim is not fazed by such characterizations, and points to the company’s many programs that support innovation, such as Global Good and Project Eureka. Such efforts don’t mesh with the agenda of a “troll,” says Ms. Turner-Brim. “How entities are characterized really needs to be determined based on their behavior and not their business model.”
In this Innovator Insights installment, Ms. Turner-Brim, who is also on the IPO Education Foundation Board of Directors, addresses the topic of patent trolls, laments the uncertainty of ever-changing IP systems and shares her views on what IP owners can do to improve respect for IP.
How and why did you become interested in intellectual property?
I’m a lawyer because I wanted to be a patent lawyer. After I had worked in industry for four years—at the time I was working for Procter & Gamble doing product research for therapeutic hair care [i.e. Head & Shoulders shampoo]—it became clear that I could not develop consumer products and do hands on lab stuff for the next 30 years. I had a little bit of technology and product ADD [Attention Deficit Disorder]. I like a lot of variety. I love technology—reading about it, knowing about it—but it became clear that I did not want to do it.
How is your role with Intellectual Ventures different from your early career?
If anyone had told me 22 years ago that I’d be doing what I do now in the arena I’m in, I wouldn’t have seen a path from being a prep and pros patent attorney to being head of legal licensing at a company like Intellectual Ventures. But, in a way, it does mesh a lot with my personality. The thing that’s fascinated me about IP in the last 10 years is the intersection between IP and business. Each patent is an investment. There is an opportunity for a return if the innovation supports getting a return.
Intellectual Ventures gets a lot of media criticism—what’s your response to those who call the company a “patent troll”?
There has been and continues to be no clear definition for the term patent troll. Regardless, Intellectual Ventures, in my view, is clearly not what the general understanding of a patent troll—if there is such a thing—is. Intellectual Ventures is an IP owner, like any other IP owner. Our patents represent an investment. Someone has invested in developing an innovation, crafting that invention in a patent application, filing it with examining authorities and prosecuting it. There’s been a substantial investment in that process, and in my view, there should be a substantial return, provided the innovation is sufficiently valuable.
Now, there are bad actors in every area of law, business and life. So, are there unscrupulous patent owners out there who might be trying to leverage an invention far beyond what it’s worth without any legitimate basis for doing so? There probably are. And are there folks who knowingly pursue claims on patents that are of dubious validity? There probably are, just like there are lawyers who come up with schemes such as “slip and fall” practices, and so on. But you cannot define the entire group of patent owners who are not manufacturers as “trolls” simply because of the behavior of a few. So that moniker as applied to Intellectual Ventures is clearly not earned. I think it’s clear from how we’ve conducted ourselves in licensing negotiations and in litigation that our patents are good and valuable and that we do sufficient diligence. There are alleged infringers who behave badly as well. So how entities are characterized really needs to be determined based on their behavior and not their business model.
Do you think there is a patent troll problem though?
As far as the claim that somehow Non-Practicing Entity (NPE) activity has resulted in increased litigation, there have been a number of academics and other individuals who have unpacked that and determined that there has not been a huge increase in NPE litigation. There are anecdotes about particularly bad behavior—entities that have carpet bombed the universe with very dubious claim letters, for instance—and with the help of the Federal Trade Commission (FTC) and state attorneys general, there has been some activity to alleviate that issue. There probably is a need for more data-driven information, but the statistics are what we should be focused on in my view, rather than anecdotes about one particular company or one particular “mom and pop” shop that received a claim letter.
What is the biggest challenge Intellectual Ventures faces with respect to the U.S. and international IP systems?
There seems to be this desire to keep amending the patent law, and what that creates in the marketplace of course is uncertainty.
There seems to be this desire to keep amending the patent law, and what that creates in the marketplace of course is uncertainty. Uncertainty about patent rights, the strength and applicability of rights, the general availability of monetization regimes and structures—that’s something we face generally, not just in the U.S. but internationally as well. Uncertainty is not good for any business, and it’s certainly not good for ours. The potential shifting sands of IP rights results in a general weakening of the rights of patent holders.
So, governments should leave IP laws alone and let the markets and courts work things out on their own?
You let the market decide between business models – governments should not be in the business of deciding business models. In our general view, all patents should be treated similarly and all patent holders should be treated similarly. The nature of who owns a patent should not affect its value and the ability for a return on investment in the patent to be realized. We had the America Invents Act (AIA), and it was a major change to the patent law just a few years ago. And now again we have people advocating for additional changes, when we haven’t yet let the AIA mature in any real way to know whether long term it will be addressing some of the issues. I think one of the things we see is a reduction in litigation, partly in response to the new AIA procedures [at the USPTO]. We’ve also seen a mushrooming of the number of these proceedings and also the proceedings being used in a way that wasn’t anticipated; for example, financiers threatening IP rights in order to gain advantages in the financial market. That I don’t think is something the AIA intended, and perhaps it’s something that needs to be corrected. But anything that is done should be done on a highly surgical basis. Not on the assumption that parties that engage in one business model are good and those that engage in another are bad.
What more can be done to help counter the criticism Intellectual Ventures faces do you think?
Providing a liquid secondary market in IP actually supports innovation.
One of the things that there should be more emphasis on is the importance of having not only strong patents, but also a strong secondary market. Any market, in order to work effectively, needs liquidity providers, so that folks who get that money can go on and do other things. For example, the consortium Intellectual Ventures coordinated regarding the acquisition of Kodak’s patents some years ago—it was important because it provided Kodak, which was in bankruptcy at the time, a substantial infusion of cash that could be used to build and restructure its business. That was done on the basis of the value of its IP. If there’s substantial diminution in the value of patents on the secondary market, then those types of activities, which are important to the marketplace, won’t happen.
A strong patent system supports innovation because an investor can have a reasonable expectation that their invention won’t be used without their permission unless they’re compensated in a real way. People invent, but then they also reinvest the money a purchaser might provide and go on to invent other things. So providing that liquid secondary market in IP actually supports innovation, contrary to what other folks are saying.
You’re on the Board of the IPO Education Foundation, and Intellectual Ventures is sponsoring the IP Video Contest again this year; what role do programs like the video contest that get young people involved in learning about IP play in furthering respect for IP overall in your opinion?
We’re an innovation society now; we’re technology-based, and we have a unique ability to develop technologies that can be leveraged for monetization and other things. This is part of the future of the world, and the U.S. in particular. So, educating young people about innovation and invention and patents helps them to be better IP citizens, both from the standpoint of obtaining their own IP rights and also helping them to understand why it’s important to respect the IP rights of others.
For the most part, people understand that if I own something and have invested in it and paid to make it, it’s only equitable that I be compensated if you’re using it. I believe that what has happened is we’ve had the Internet crop up in an era when people generally were not educated about those kinds of things, and so they became very used to having things for free. Education is the way forward—and I don’t think some of the more heavy-handed tactics we’ve seen are necessary to communicate those values.
What can IP owners do better to help young people and the public generally to have more respect for IP rights?
The models that make licensing easy facilitate people respecting IP rights.
I think there’s the opportunity for IP owners to talk more demonstratively about how they’re respecting IP rights as a community, because I believe for the most part IP owners do respect IP rights. Companies take licenses from one another, they engage in Freedom to Operate activities—those things are focused on having respect for IP rights. I also think it’s important that we should personalize the problem a lot more. One of the reasons it’s become so easy for people to download that movie on the Internet or not be concerned about whether certain innovations are owned by others is because a lot of times individuals don’t see themselves as benefiting from the fact that someone has an IP right. They don’t see themselves as benefiting from that system as a whole, and they don’t see themselves as innovators. But the reality is that anyone can be an innovator. I think you have to personalize it and say, “If you had written that song, if you had developed that innovation, wouldn’t you want to be compensated for it if other people are using it?”
I think some of the models that make licensing easy facilitate people respecting IP rights. iTunes, for example: we all use it, and that’s because it’s been made easy to do. That’s where the IP owners can come into play. They have to ask, “How do I recognize that this is going to happen—people are going to gain the access—and then how do I make it easy for them to do the right thing?” They have been doing it, and they’ll have to continue to do that as technology continues to evolve. IP owners of all stripes have to evolve in terms of their thinking.
Ms. Turner-Brim is on the IPO Education Foundation’s Board of Directors. Intellectual Ventures has been a sponsor of the IP Video Contest, which encourages students to demonstrate through video why the patent system is important, for the past two years. The IP Video Contest is now open and accepting submissions for 2015 through August 1, 2015. Click here to learn more.