innography webinar freedom to operate (fto)

©2015 INNOGRAPHY, INC. : : CONFIDENTIAL 1 ©2015 INNOGRAPHY, INC. :: CONFIDENTIAL SEPTEMBER 15, 2015

Freedom-to-Operate Misnomer: Methods of Providing an

Opportunity Analysis

https://www.innography.com/

©2015 INNOGRAPHY, INC. : : CONFIDENTIAL 2

Host and Participants

• Sr. Data Expert atInnography

• Host of today’swebinar

Maneesha Joshi (MJ)

• Partner of Cesari &Reed, LLP

Michael Reed (MR)

To watch the full webinar, click here.


https://go.innography.com/2015.07.28FreedomtoOperate_Webinar_OnDemand.html


Introduction

We will discuss: •  The “Freedom-to-Operate” misnomer and alternative

ways for data and research collection to gain an upfront advantage

•  What “Opportunity Analysis” is. •  A practical example of how to perform this type of

analysis efficiently.



The Largest Issue with Freedom-to-Operate



“In our view the preparaCon of a Freedom-‐to-‐Operate study begins with an understanding of what the client is doing, what the product details are and so forth and do you have to use that informaCon to search through the prior art and figure out where the land mines might live, and part of the problem with that is a lot of imperfecCons. Those imperfecCons exist not only in the lexicon of the patents but also in our understanding of the product at the Cme when the request for Freedom-‐to-‐Operate is made. A lot of Cmes the company is in the middle of a research and development Cmeline and the product details are sCll in flux. So, at the end of this research and analysis there is a product that is based on an imperfect understanding of a product, an imperfect picture of the prior art, and it’s dependent on so many things…We are limited in our searching parCcularly when it’s a new technology area. It’s not always clear, if it’s new to us or if it’s new in general, if it’s truly a new invenCon it’s going to be hard to figure out what’s out there, but if it’s something that’s new to us as well we’re starCng from a learning curve to try to get up to speed to figure out where to start.”

Mike Reed:



“There’s also incomplete access to data sources. SomeCmes you can find a Ctle or an abstract but unless you have full access to the IEEE Journal ArCcles whatever it is you’re searching you may or may not be able to evaluate the relevance of the enCre document. There’s also the limited understanding or snap shot of the product or business strategy…The risk in the analysis and all of that can hinge a liTle bit on what the five year goal is or ten year goal. The other limit is the caveats and disclaimers that would go at the beginning of any such freedom-‐to-‐operate study…by the Cme you get done with all these caveats it’s not worth the paper it was wriTen on. At the end of the day, our view is that the freedom-‐to-‐operate is a misnomer; it has very limited applicability.”

Mike Reed, continued:



Alternative Practice: Opportunity Analysis

MR: “The way that we typically handle the opportunity analysis is not that different from how you would start with the freedom-‐to-‐operate, is that you would start with an iniCal search that’s based on the informaCon you have about the product or idea. What we typically do is accommodaCon of key word searches, semanCc searches and so on to create a set of documents that we’re going to start with, and then we do some text clustering on the contents, abstract Ctle, and someCmes claims depending on how we want to work this.”



MR: “From the text cluster you can see some keywords that can not only provide some ideas but can also point you to some of these potenCal land mines that you would be concerned about. AddiConally then from that text cluster and from the data set that was used to make the text cluster we will do some Cme slicing and different types of slices and by that I just mean that we take a look at filing dates or publicaCon dates for those parCcular applicaCons and kind of get a sense for Cmeline trends; which companies are doing what, at what Cme, and how liCgious those companies are, and then we look for some gaps, not only when things were being filed but in terms of the content in parCcular spaces.”

Alternative Practice: Opportunity Analysis, continued



Example: Pet Toy Industry



“Pet Toys” as the Keyword Search for IP

MJ: We looked at the market, the expenditure and the breakdown of the expenditure, the IP from a keyword search, the number of acCve patents, expired patents, priority date, trends, top companies, the players in this market, the revenue, liCgaCon, the IP landscape comparison, and then the patent landscape itself using text clusters, and PatentScape in Innography to figure out Cme trends and then drill down into the text clusters to hopefully find white space potenCal. We also looked at liCgaCon; plainCffs, defendants, Cmelines of liCgaCon, patent transfers, the buyers and sellers of patents in this space, and finally trademarks.



So let’s start with some market data. And what I pulled here was pet industry market report from APPA which is I believe, “American Pet Products AssociaCon”, and what we see here are U.S. pet industry expenditures, this is what people spend on pet products. This is in billions of

dollars and in the last twelve years it’s doubled from about thirty billion to sixty billion.



When you look at the breakdown of expenditures, this is again U.S. dollars in billions for 2014 you have food followed by pet care, then I guess supplies and toys fall into that bracket there. That’s up to almost fi]een billion for last year. So what we next did was did a search for IP using the simple keyword “pet toys” you can do this on the internet you know using Google patents. What ends up happening is you receive thousands of results and making sense of this can

MJ:

be quite a challenge and it’s very handy to have tools and so]ware that can aggregate this data and give you insights into the data right away.



MR There are two things I want to point out here. One is that doing the pet toy search -‐-‐ on Google patents they do more of a social voCng sorCng rouCne that’s based on what other people have selected and what other people have found to be relevant, that’s what comes up on the surface in the order you see it so those may or may not be relevant to what you’re looking at. The second thing is -‐-‐ it’s my understanding that Google actually minds their data and they are also one of the largest patent fillers if you go and look. So that last thing I would want to do if I was going to invent in this space is Cp them off in terms of the details of what I was invenCng. From a pracCcal perspecCve when we’re doing the search we do some limited searching in Google just to see what surfaces because someCmes that provides useful seed data for other search tools, but we typically don’t search really detailed stuff using their tool because we don’t want to Cp them off.



Priority Year Trend (1996-2014)

MR: What’s interesCng to note here is that this informaCon may also reflect or at least the down trend in U.S. may reflect the elecCon not to publish, because in the U.S. if you’re not planning to file foreign applicaCons if you choose non publicaCon it remains secret and therefore wouldn’t show up. Worst thing, a lot of smaller clients who have no intenCon of filing overseas doing that is an opCon for strategic advantage and so it’s possible that may be reflected here.



Priority Year Trend (1996-2014), continued

MJ: So we have U.S. Grants and U.S. ApplicaCon that seem to show a kind of steady trend but it’s probably declining in the last two to three years. The other jurisdicCons definitely show a downward trend. However the Chinese applicaCons and Chinese grants have seen a preTy sharp increase of patents in this space. I was wondering what was happening with the Chinese patents and there has been a rapid rise in patent applicaCons filed in China. Twenty six percent over one year, this was in 2013 I think, this is because the Chinese government has provided financial incenCves to support patent filings by Chinese enCCes and that has probably resulted in a sharp spike. All these patents -‐-‐ most of these patents are filed in China. One other thing that I didn’t menCon was in my iniCal search, most of the patents that came back in the search were expired. I think it was two thirds to one third split of expired to acCve patents.



Top 20 companies Keyword (pet or dog or cat) and toy – active patents

0

10

20

30

40

50

60

70

80



Alternative: Bubble Market Map Top 20 Companies – Market Map

Keyword (pet or dog or cat) and toy – Active Patents



MJ: What I have next here is what we call a bubble market map generated in Innography. It takes all the top companies and puts them into four quadrants, what we have are proxies for vision of the company versus resources of the company. If you have a company in the top right quadrant it’s a company with a lot of resources as well as vision. What we have here is Doskocil in the boTom right where it is a visionary in this area in spite of not as many resources as the other companies in this list here.

Alternative: Bubble Market Map, continued



MJ: So another technique available to us in Innography is text clustering, it takes the patents and finds the most frequently occurring text clusters and groups them. You can drill down into these clusters and what I have here is just to illustrate what can be done, it takes a bit of Cme and analysis to actually drill down and find what you are looking for. But one technique to use to get at your white space is to go down into the smaller clusters and hopefully find something in an area where there are very few patents and that might give you clues as to your white space. MR: Animal toys -‐-‐ pet toys are preTy straight forward and simple but if you look into these text clusters you start seeing interacCve toys, toy vehicles and inside of those when I drilled down through these clusters I was seeing piezo-‐electric elements and all kinds of sensor technologies, small control circuits and all kinds of other things were somewhat unexpected in the dog toy market.

Alternative: Text Clustering



Pet Toys: Text Clustering

Refine using keyword filters and operators or semanCc searching

General keyword search



MJ: “One other way of visualizing this text clustering is by a PatentScape and this again gives you the most frequently found keywords in your patents and the larger the text and the bigger the area there are more patents under that…Another technique you can use is to over lay on this Cme slices so you look at patents filed only within certain years or year ranges. I didn’t pick up too much informaCon but perhaps there are other areas where you can actually disCnctly see technology trends moving away from a certain group to another group… what we can also do is overlay on this PatentScape the top five companies with patents in each of these areas. So again we see Doskocil Manufacturing Company. The takeaway from this I guess is it helps you get a feel for which company is focused on which sub area so to say.”

Alternative: PatentScapes



PatentScape Visusalization (using basic search)



PatentScape Visusalization (Top companies using basic search)



PatentScape drill down (small clusters for new/sparse areas – 2000 to 2014)



PatentScape Time Slices (evolving technology keywords – 2000 to 2014)



MR: “Everybody always thinks about IBM and so on, but individual inventors account for a larger percentage than any one of those. So a lot of what we were just showing is examples of the data that are found when you’re looking for starCng with a starCng point of “here’s a product we’re thinking about making” and we go and do a prior art search and we look at what we find, not only what’s in there but what pieces of the technology are already in the prior art. Two, who are the companies and the players, what kind of liCgaCon history do they have, and so on and we start looking at all of those pieces. So all of this is part of an analysis that begins with, ‘Hey, we’re going to try to make this product... If I were actually invenCng in this space and I was looking at this art I might also be looking at what didn’t work or what would not work in a parCcular invenCon and seeing if I can solve it because the soluCon to those problems may be separately patentable.’”



Risk Mitigation – Litigation Trends – Plaintiffs

(@patentClaims (pet or dog or cat) and toy - 38 cases)

23%

13%

10%

8% 5%

5%

5%

3%

3%

3%

3%

3%

3%

3%

3%

3% 3%

3% 3% 3%

Our PET'S Company Think Tek, Inc., Nevada

OpCgen LLC The Kong Company, LLC

Mann Design Ltd. Swag Company Inc

JW Holding GmbH Ethical Products Inc

Louis W. Randall Christopher Weiberg PA

Alan-‐Lee Distributors, Inc. Central Garden & Pet Company

CB Worldwide Inc California Truseal Technologies, Inc.

Jefferson Rubber Works, Inc. Margherita Arvanites

Clip Ventures LLC VIP Products LLC

Petsport USA, Inc. The Kroger Co.



Litigation Trends – Defendents (@patentClaims (pet or dog or cat) and toy)

16%

14%

8%

5%

3% 3% 3% 3%

3% 3%

3%

3%

3%

3%

3%

3%

3%

3%

3%

3%

3% 3%

3% 3% 3%

% Cases per Defendant (Top 25) PETCO Animal Supplies Inc The Kong Company, LLC Sowell & Co., Inc. Vo-‐Toys, Inc. Ethical Products Inc Alan-‐Lee Distributors, Inc. ASA PET SUPPLIES INC. Mistral Equity Partners LLC Advanced Decoy Research, Inc. Megatech InternaConal, Inc. Triple Crown Media, Inc. Van Sorrel Enterprises Co. Ltd. Our PET'S Company Pet Zone Products, Ltd. Central Garden & Pet Company Phydeaux Enterprises, Inc. GGK DistribuCon LLC PetEdge Inc MulCpet InternaConal, Inc Petstages, Inc. Animal GeneCcs, Inc. VIP Products LLC CenCnela Feed, Inc. Radio Systems Corp GeneCc Veterinary Sciences, Inc.



Litigation in the Pet Toy Industry, continued MR: A large number of successful companies don’t necessarily have patents in this space, but the quesCon I would then have a]er I find these is have any of these guys been sued, because most likely they haven’t. They probably either aren’t on the radar screen of a larger company yet or they aren’t doing something that infringes. MJ: These are the companies involved as plainCffs in these cases we have Our Pets Company and I think we saw this in our top twenty companies with patents in this area. There’s Think Tek, OpCgen, The Kong Company when I generated this Mike came back to me and said “This doesn’t paint the whole picture because o]en people counter sue” so we went ahead and did another analysis on the defendants on this case and sure enough there are the same parCes found in the plainCffs are in the defendants. I don’t have a visual for that but in Innography when you go to a case you can quickly figure out the plainCffs and defendants and then you have a counter defendant there. MR: …In terms of risk that was one of the bigger indicators. If it’s an industry where there are a lot of players and they’re constantly suing each other, there’s a high risk industry you have to spend a lot more Cme worrying about what your compeCtors are doing, what their art might be. In an industry like this it’s a liTle less concerCng unless you’re right on top of somebody.



MJ: There’s one other data slice, as I’d like to say that you can look at and that’s patent transacCons. So I picked this data up from patent market tracker that Innography delivers every month and what we do is we look at patent transacCons between company to company. We remove patents assignments, securiCzaCon, and only look at intercompany transacCons, and I examined the last five years of data for pet, and toy, and the Ctle and came back with five intercompany transacCons. And we have our Doskocil Manufacturing Company here again.

Assignor Assignee Patents Year Title

TUFF ENUFF PET PRODCTS, INC.

SJ ASSETS, LLC US8186309, US795032

2011 Pet Toy

MUNCHKIN, INC.

DOSKOCIL MANUFACTURING COMPANY, INC.

USD550460

2011 Pet chew toy brush

THE DUBLIN DOG COMPANY

REMINGTOM ARMS COMPANY, LLC

USD6139313, USD614365

2012 Pet toy

BERGAN, LLC COASTAL PET PRODUCTS, INC.

USD662675

2015 Pet toy with capCve chase ball

MR: This actually goes back for our firm when we are doing this sort of opportunity analysis, if it’s for a small company that’s wanCng to be acquired this is something we look at to also assist them in having kind of managing their own expectaCons. If this isn’t an industry where there are a lot of acquisiCons of assets they at least need to know that. Then they want to know who is doing the acquiring and what sort of thing are they acquiring because that may influence design decisions or patent decisions.



MR: One thing about the trademark search, and we do this a lot of Cmes too, to idenCfy potenCal not only acquisiCon targets but acquirers because who is making toys and the goods and services as a pet toy because you know that gives us a more targeted search to see you know “what are they doing, what does their art look like?” So when we’re doing those sorts of searches on the back end, we’ll do this upfront to make sure that we have a full collecCon of patent literature.

MJ: So one other search I did in Innography was a trademark search because o]en Cmes I have come across companies that have no patents but do have trademarks. So I did a search on the trademark Ctles for pet, and toy and again here you see there’s a bunch of individual inventors, looks like because the owners are just inventor names, a few companies thrown in there again.

Trademark Search



Freedom-to-Operate Misnomer: Methods of Providing an

Opportunity Analysis Watch the complete

webinar here.


https://go.innography.com/2015.07.28FreedomtoOperate_Webinar_OnDemand.html

innography webinar freedom to operate (fto)

Data & Analytics