19 Nov

C Graham Gerst

Global IP Law Group

What do you see as the fundamental requirements to successful dealmaking?

Integrity and attention to detail, in that order. I achieved the most successful transaction of my career to date ($75 million sales price for two patent families) in large part because we were honest and transparent with all parties involved. When we made representations about what was happening in the process, the parties believed what we said, which led directly to that outcome. Of course, we could not have achieved this result without getting the details right, including ensuring that everything in our voluminous sales materials was legally and technically correct. Getting the details wrong loses you credibility – once that is lost you cannot get it back.

What technological trends are having the biggest effect on IP transactions in the United States?

If Moore’s law and hardware dominated the technology industry for the first 60 years of the semiconductor age, the last 10 have seen software move to the forefront. AI will only increase this emphasis.

Software poses challenges for patent-focused companies, not just in the United States with its Section 101 regime. Patents are most valuable when they are enforceable, and they are most enforceable when infringement is observable. But the details of how particular software operates is often opaque.

What do these developments mean for IP transactions? For decades, patents being transacted were often at the vanguard of the most innovative technologies. Today, while there is still a vibrant patent-transactions market, it involves patents from the economy’s most innovative industry — software — much less often than one would expect given that industry’s importance.

What are the major differences between bringing a case at the International Trade Commission (ITC) and in district court?

The ITC’s compressed time frame, unlimited discovery and availability of injunctions (exclusion orders) are the most significant differences from district court litigation. ITC administrative law judges set a trial date, typically nine to 12 months from institution. Those dates rarely move and stays pending inter partes review do not happen, creating huge time pressure for both sides. Unlimited discovery during this period increases that pressure further. And the remedy — blocking imports and sales — makes the stakes high and immediate. Plaintiffs, who can prepare in advance, can use these pressures to their advantage. But plaintiffs also face challenges. They usually need discovery more than the respondent within this limited time and that discovery often must take place outside the United States, which makes getting information harder and more complex. So the ITC is challenging for both sides.

How has your experience at the Department of Justice (DOJ) benefitted your IP practice?

I worked directly for the US DOJ’s deputy attorney general, with responsibility for international IP enforcement, technology-related national security matters, IP legislation and computer forensics in federal law enforcement. It was a fascinating experience that gave me new insight into many things, not all of them IP related. But it probably helped me the most in negotiation strategy and dealmaking. Trying to negotiate with divisions of the federal bureaucracy requires tact and an understanding of the motivations of the different institutions and decision makers. IP practice, whether negotiating in a litigation, or with potential transactional parties, involves many of the same considerations.

If you could make one change to the current patent regime in the United States, what would it be and why?

We need more clarity and certainty in the law. A legal regime with ambiguity like ours on critical issues has two problems. First is the discretion it gives individual judges – this means that the judge that you get has as much to do with the outcome as the underlying facts. I recently wrote an article analysing this problem with the Federal Circuit’s approach to Alice/Section 101. We see the same problem with the law on obviousness and damages. Such a regime undermines confidence in, and legitimacy of, the process. Second, uncertainty increases costs for everyone. Lawsuits are brought that should not be, and they are litigated longer than they should be.

C Graham Gerst

[email protected]

C Graham Gerst specialises in a wide array of IP and technology-related matters. He represents clients in litigation before the US district courts and the US International Trade Commission, as well as working to license their intellectual property without resorting to the courts. Mr Gerst sells patents and trade secrets on clients’ behalf and, based on his success in patent monetisation, advises on an array of financial interests with regard to investments in patent assets and patent enforcement.

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