Finjan Holdings Call to Arms on Licensing Best Practices

By Peter Bernstein March 21, 2014

There are very few topics in tech that get the juices flowing as fast as how intellectual property (IP) in the United States needs to be properly licensed and protected. Patent reform is one major part of a complex series of issues involving the proper use of IP. There have been persistent and growing cries that public policies need to encourage innovation, product realization and job creation instead of enable so-called “Patent Trolls” to collect IP and then in the eyes of many, extort fees from others through lawsuits and the threat of litigation rather than develop products themselves. 

As noted, while concerns about trolling are the most highly visible source of industry contention and consternation, there are a lot more sources of pain as well.

Some people are likely to call this a brave step. I am firmly in that camp. Those with other interests are probably going to label this wishful thinking at best or a pr ploy if they choose to get nasty. What they are going to be commenting on is something you need to be aware of, the announcement by cyber security solutions provider Finjan Holdings of the publication and their commitment to benchmark Licensing Best Practices.

Maybe this can be the spark that ignites a movement. The goal as Finjan says is, “Candid, transparent and consistent business practices for intellectual property (IP) licensing.”

So what are the Licensing Best Practices?

They include seven actionable elements:

  1. Ensure focused licensing and enforcement programs pursuing the provider of the patented technology and not its customers, consumers or end users.
  2. Conduct reasonable diligence to determine a patent's enforceability and use with respect to prospective licensees, and make that information available to them.
  3. Respect procedural rights and judicial efficiency in the courts and in the prosecution and protection of IP behind the innovation.
  4. Be transparent with the intent in each discussion, and articulate the cause and effect scenarios which would prompt a shift in communication and an escalation of each discussion.
  5. Provide useful facts to prospective licensees and defendants to foster productive business discussions early and often to aid in informed decision-making.
  6. Offer fair value licenses or settlements based on legitimate factors and considerations.
  7. Commit to keeping lines of communications open between the patent owner and prospective licensee to preserve a path for the parties to find an amicable solution or resolution for their respective businesses.

Finjan uses the term “actionable” and “core values” to describe these. But, you can substitute the words, “common sense” because that is what they are. 

"We understand that defining our core values early in our growth will guide us as a newly public company on how we develop our business relationships, differentiate our brand within the IP licensing industry, and ultimately define our corporate ethos," said Finjan's President, Phil Hartstein. "The Licensing Best Practices are our commitment to lead and influence greater ethical practices, and enable innovation in the IP industry going forward."

They have also gone a best further by articulating the company’s initiatives that will support the adoption of their principles. These are:

  • Mandate a certain code of conduct by its representatives, affiliates and counsel in connection with all external licensing activities.
  • Teach and speak on industry panels that are attended by industry leaders, entrepreneurs and students. 
  • Participate in U.S. Patent and Trademark Office sponsored programs (e.g., Educational Outreach Program, training programs and events).
  • Support and participate in academic programs throughout the U.S.
  • Create an internship program to train and mentor young up-and-coming individuals in the technology and patent fields.
  • Engage with government officials to help them better understand the challenges and opportunities the industry faces, and provide counsel on patent reforms.

This is obviously a subject near and dear to Finjan. Even in its relatively short life the company has developed and impressive trove of patents relating to cyber security which it has successfully monetized. However, it would be totally wrong to view their commitment to improving not just the protection of IP but also the creation of practices that allow those with great ideas to flourish as self-serving. It is the opposite.

As Finjan points out, product realization of IP is how value is created and society advances. They note that In 2010, patents supported 40 million jobs (27.7 percent of all jobs in the U.S.) and IP-intensive industries accounted for $5.06 trillion in value added (34.8 percent of U.S. GDP), according to the Innovation Alliance.

"The IP industry is maturing fast, yet there is still wide a disparity in licensing practices. By promoting the values we stand by and championing these Licensing Best Practices, we encourage collaborative behaviors that will allow the IP industry to better support the broad dissemination of technological advancements, which in turn reward investments in innovation and create jobs," said Finjan's VP of IP Licensing, Ivan Chaperot. "We have formalized how we conduct business in licensing not only at a professional level, but also at a personal one by embodying our core values which include candor and integrity."

There is an old saying that “All boats rise when the tide comes in” that is very applicable. Finjan looks at their announcement as a conversation starter. Let’s hope the conversation gets heated up, and that those recommendations do become actionable. It is clear that the status quo is not an alternative. 

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