3 Questions For Unified Patents CEO Post-Oil
`States (Part IT)
`
` Intellectual Property 3 Questions For Unified Patents CEO Post-Oil States (Part ID) Unified’s CEO has
`
`graciously agreed to a written interview -- one that’s timely in the immediate aftermath of the Supreme
`Court’s recentrulings on the constitutionality and implementation of IPRs. By Gaston Kroub May8,
`2018 at 10:01 AM
`
`In last week’s column, I presented Part I of my
`interview with the CEO of Unified Patents, Kevin
`Jakel. What follows are Kevin’s answers to my other
`two questions. As usual, I have added somebrief
`commentary to Kevin’s answers below,but have
`otherwise presented his answers as he provided them.
`
`2. How does Unified navigate the interests ofits
`membersin situations where it has to deal with
`companies named as defendants in parallel
`district court proceedings? Is it important that
`Unified act completely independentof them to
`avoid time-barissues?
`
`
`
`KJ: Inter partes review (IPR) proceedings, like
`reexamination and reissue protests, are an affordable
`statutory meansto challenge patents of questionable
`merit. Of course, legal rules concerning estoppel,
`time bars, and real party-in-interest (RPI) are
`important issues considered any time an IPR isfiled. As a NPE-deterrence solution whose 200+
`membersare often targeted by NPEs with demandletters and in district court proceedings, Unified
`Patents is well-aware of these issues, and has carefully structured our solution to comply with all of the
`existing legal requirements to file administrative challenges as the sole RPI. Those requirements have
`been carefully articulated by the Patent Trial and Appeal Board in regulation, precedent, and practice, as
`wasrecently endorsed by the Federal Circuit in Wi-Fi One v. Broadcom on April 20. It has been our
`practice since the beginning to be as forthright as possible about our business model, as cooperative as
`possible, to seek the Board’s guidance, andto err on the side of caution, given the sui generis nature of
`the model. And through almost six years and over 110 challenges, Unified has never lost a real party-in-
`interest challenge. We think that’s in part because we laid downstrict internal guidelines from the get-
`go that (1) Unified alone independently makes all decisions regarding any challenge proceeding (and
`will neither confirm nor deny whether it is may challenge a patent, will not discuss ongoing matters, and
`keeps separation between counsel and the membership), (2) Unified alone bearsall costs of any such
`proceeding, and (3) while Unified’s members pay annual subscription fees in addition to Unified’s other
`revenue, members have no control over when, how, or even if Unified spends its revenue, both that
`received from its members and otherwise. Bystrictly adhering to these self-imposed guidelines, Unified
`alone controls, directs, and fundsits challenges and other efforts, and, therefore, is the only RPI.
`
`This complete independenceis one of the unique advantages Unified uses to deter NPEs from
`monetizing overbroad or questionable patent claims or coming in with settlement demandspriced below
`the cost of any one party’s defense costs. Independence from our members allows Unified’s talented
`
`1/3
`MemoryWebEx. 2011
`Unified Patents v. MemoryWeb — IPR2021-01413
`
`MemoryWeb Ex. 2011
`Unified Patents v. MemoryWeb – IPR2021-01413
`
`

`

`legal team to respond quickly andstrategically to challenge patents of poor quality, to counter the
`tragedy-of-the-commonsproblemsprevalent in joint defense situations, and to reduce abusive NPE
`leverage,litigation, and nuisance settlementcost. It is not easy doing business this way, but the
`guidelines Unified abides by ensure our independence from our members and allow usto deliver true
`across-the-board deterrence against NPElitigation, avoid the tragedy-of-the-commonsproblem, and
`promotereal innovation.
`
`GK: Anyonedoubting the scale and sophistication of Unified’s operation should carefully consider
`Kevin’s response. The PTABhasnot been shy aboutissuing rulings interpreting their mandate broadly,
`while at the same time demanding transparency when it comes to real-party-in-interest issues.
`Accordingly, Unified’s ability to successfully navigate the Scylla & Charybdis of independenceaspart
`of its business model is impressive, regardless of whether you are a United fan or foe.
`
`3. While IP becomes ever more important in a macro sensein terms ofvalue-creationfor companies
`over a host ofindustries, there is no doubt thatpatent values have suffered since the passage of
`the AIA, and that many savvy investors categorize the majority ofissuedpatents as aform of
`distressed asset. How do you approach the whole issue ofpatent valuation, and has Unified ever
`considered expanding into patent valuation?
`
`KJ: The AIA has undoubtedly impacted the way patents are valued today, based in part by old
`valuationsreflecting the high cost of defending against patentlitigation. Attempts to measure that
`impact, however, are difficult and have led some to jump to conclusions that are inaccurate at best and
`deceptive at worst. Before addressing the impact that these proceedings have had on patent value,it is
`worth taking a few moments to consider the raw data.
`
`First, the often-repeated claim that the PTABis a patent “death squad”that invalidates upwardsof 80
`percentof patents 1t reviews is simply incorrect. According to USPTO,almosthalf of petitions settle
`and are terminated,just overhalfofpetitions are instituted (62%), and of those making it to final written
`decision, roughly 68% result in claims being cancelled. That meansthat roughly 40% of claims
`challenged in IPR petitions that do notsettle result in a Final Written Decision holding one or more
`claims unpatentable. (PTABStatistics (Feb. 28, 2018)). This is on a par with (and slightly lower than)
`both inter— and ex parte reexamination statistics, and demonstrates meansthat the PTAB is efficiently
`working to resolve disputes involving patentability at a fraction of the cost and time ofdistrict court
`litigation. It is also importantto note that IPRs are themselves expensivestill, and are selectively filed
`against, in turn, a self-selected group of patents, with petitioners whofile generally possessing priorart
`and unpatentability arguments worthyofthe cost, time, effort, and attendantrisk offiling a challenge.
`While the PTAB does (and should!) depress the value of patents and patent families containing
`unpatentable claims, it has not slowed the rate of settlement, which is far higher in the post-AIA era. It
`has simply balancedthescalesabit, resulting in significantly more patents being licensed without IPRs
`being filed against them and in manycases withoutlitigation ever taking place.
`
`Second, it should be noted that traditional measures of patent value do not account for patentability.
`This is because pre-AIA, any determination of a patent’s validity took on average 2-3 yearsin district
`court — not to mention millions of dollars in legal fees. With the advent of IPRs, patents of dubious
`quality now face downwardpressures on once-illusory valuation due to the lower cost and (at least
`relative) ease of checking patentability through the PTAB. Patents can now receive a determination of a
`patent’s probable patentability from the Patent Office within roughly 6 months(at the institution
`decision) at a fraction of the old transaction cost. As a result, the value of patents with questionable
`patentability now reflects this newreality.
`
`Opponents of the AIA argue that IPRs make it easier to challenge patent claims, thereby reducing the
`
`213
`MemoryWebEx. 2011
`Unified Patents v. MemoryWeb — IPR2021-01413
`
`MemoryWeb Ex. 2011
`Unified Patents v. MemoryWeb – IPR2021-01413
`
`

`

`value of patents and harming innovation. Viewedin isolation, this argument may seem reasonable, but
`only if you accept that unpatentable, improperly issued patents should have had valuein thefirst place.
`But IPRs created no new statutory grounds of challenge; they created procedures to reduce transaction
`costs and delay before deciding those existing grounds. Looking at value broadly, it could just as easily
`be said that IPRs have increased the value ofstrong, valid patents by reducing the volume and value of
`improperly granted “bad”patents.
`
`GK:I appreciate Kevin’s perspective, even if I don’t share his views exactly. Where I wholeheartedly
`agree, however,is that non-IPRed patents do not offer the same valuation certainty as those that have
`survived the process. Further, if you accept that the floor value for the small minority of patents that end
`up licensed orlitigated is a discount of the expectedlitigation cost, then it is no surprise that the cost
`savings of IPR overdistrict court have lowered that floor. At the same time, patents that do survive IPR
`do have a better chance of reaching their expected value ceiling, and as such IPRs can also be
`considered a value-validating — or even value-establishing — mechanism for patents, even as the
`process proves that the value of some patents is zero.
`
`Mythanks to Kevin andhis team for the insights and cooperation, and I know they will continue to play
`an outsized role in the development of IPR jurisprudence going forward. I am always opento
`conducting interviewsofthis type with other IP thought leaders, so feel free to reach out if you have a
`compelling perspective to offer or someone you suggest I interview.
`
`Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter:
`@gkroub. Any topic suggestions or thoughts are most welcome.
`
`
`Gaston Kroub lives in Brooklyn andis a founding partner ofKroub, Silbersher & Kolmykov PLLC,
`
`an intellectualproperty litigation boutique, and MarkmanAdvisorsLLC,a leading consultancy on
`patent issues for the investment community. Gaston’s practice focuses on intellectual property
`litigation andrelated counseling, with a strongfocus on patent matters. You can reach him
`at gkroub@kskiplaw.comorfollow him on Twitter: @gkroub.
`
`Love ATL? Let's makeit official.
`Sign up for our newsletter.
`
`Wewill neversell or share your information without your consent. See ourprivacypolicy.
`
`3/3
`MemoryWebEx. 2011
`Unified Patents v. MemoryWeb — IPR2021-01413
`
`MemoryWeb Ex. 2011
`Unified Patents v. MemoryWeb – IPR2021-01413
`
`