IP Marketplace Still Sizzles

From: The Recorder, January 5, 2009

Big tech companies haven’t stopped patenting their inventions, but more than ever they’re also buying others’ patents as a weapon in intellectual property litigation. In-house counsel know that the best defense against a high-stakes IP suit can be the ability to threaten the other side with suits based on your own portfolio. But with more patents on the market than ever, companies are on a shopping spree that a recessionary economy is only likely to fuel.

There are three reasons why companies buy patents, says Joe Chernesky, president of IP investment bank IPotential, and they have more to do with defense than innovation. The first is to assert back against a patent infringement threat. The second is to take patents that are perceived as threats off the street. And the distant third is to go into a new line of business.

“Patents covering your own technology are not very useful,” said Craig Opperman, an IP lawyer at Reed Smith. “You want patents on the other guys’ technology — you want patents that you can stick ’em with.”

Juniper Networks Inc. first started buying patents when it got hit with an infringement suit by Toshiba five years ago, said Scott Coonan, director of IP litigation and licensing. Juniper bought patents that covered Toshiba technology, made counterclaims, and was able to come to a “reasonable resolution,” he said.

Now the company continues to buy to fill in what Coonan calls “gaps” in its patent portfolio — but filling those gaps doesn’t mean buying shields against lawsuits, but swords to use against hostile opponents.

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