Bush Administration’s Annual IP Report: Intellectual Property Related Prosecutions Up, Focus on Health and Safety Redoubled

U.S. Coordinator for International Intellectual Property Enforcement Chris Israel released the administration’s Annual Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection today. The Annual Report conveys the yearly accomplishments and establishes priorities for the upcoming year for the federal agencies responsible for protecting and enforcing American intellectual property (IP) rights, both domestically and abroad.

“Creativity and innovation are the lifeblood of the American economy, and intellectual property protection is vital to ensure our economic health now and for the future,” said Commerce Secretary Carlos M. Gutierrez. “The Bush Administration recognizes the importance of IP rights and is dealing with counterfeiting and piracy through strong enforcement here at home and increased engagement abroad. We realize there’s more work to be done and will work to meet the goals outlined in the report.”

“The record increases in intellectual property enforcement carried out by U.S. law enforcement and other NIPLECC agencies during the past year prove the importance and effectiveness of our coordinated efforts," said Assistant Attorney General Alice S. Fisher. "The Department of Justice is committed to enhancing our already substantial efforts toaddress this growing problem.”

Highlights cited in the Annual Report include:
* Record increases in IP-related investigations and prosecutions. The Department of Justice reports substantial increases in federal investigations and prosecutions of IP violations. The Department filed 217 IP cases in FY2007, representing a 7% increase over cases reported in FY2006 (204), and a 33% increase over cases reported in FY2005 (169).
Also in FY2007, 287 defendants were sentenced for IP crimes, representing a 35% increase over FY2006 (213) and a 92% increase over FY2005 (149);
* Enhanced border enforcement. The Department of Homeland Security reports the estimated value of the goods seized by border agents continues to rise, this year, by approximately 27%, up to approximately $200 million;* Increased emphasis on the annual Special 301 Review, the USTR-led analysis of intellectual property protection within each country worldwide;
* Expanded engagement within the World Trade Organization (WTO) in an attempt to resolve IP-related trade disputes;
* The launch of a major multilateral anti-counterfeiting initiative, the Anti-Counterfeiting Trade Agreement;
* Deepened bilateral and multilateral relationships, such as the U.S.-EU Summit, G8, and Asia Pacific Economic Cooperation (APEC); and
* Redoubled focus by all agencies on the public health and safety implications of counterfeit goods.

“As this year's report underscores, the administration has a achieved a great deal with respect to protecting U.S. intellectual property--valued at more than $5 trillion," said Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO Margaret J.A. Peterlin. "This year, the USPTO completed our Global Intellectual Property Academy, which allowed us to train more than 700 foreign officials on how to strengthen their IP rights and enforcement, which will benefit American IP rights holders around the world.”

“This year’s report demonstrates the continued commitment of the Administration to protect intellectual property rights with a coordinated, results-driven approach,” said Israel. “The Administration has made IP enforcement a high priority through senior-level leadership and smarter coordination. While widespread counterfeiting and piracy remains a serious problem, we are improving the global marketplace for American rights holders.”

The Annual Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection is published by the Office of the U.S. Coordinator for International Intellectual Property Enforcement, which heads the National Intellectual Property Law Enforcement Coordination Council (NIPLECC). NIPLECC is composed of the five federal agencies involved in intellectual property enforcement, including the Departments of Commerce, Homeland Security, and Justice; the State Department; and the Office of the U.S. Trade Representative. The Annual Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection can be found online at www.stopfakes.gov

Patent Audits And Internal Invention Surveys: 7 Strategies, 33 Tactical Steps, And 2 Benchmarks

Both the corporate management and investment communities increasingly recognize that building and exploiting a strong corporate patent portfolio increases shareholder value. Recent empirical studies have shown for the first time that for both large cap S&P 500 index companies and new tech start-ups, strong patent portfolios and good patent strategies are essential to building revenues, operating margins, and shareholder value.

A first step in building a strong patent portfolio from internally developed concepts is to identify internally developed products and ideas for patenting. This requires an ongoing internal survey for patentable concepts, which is often called a "patent audit," or "patentability inventory," or "invention audit," or "invention data mining."

Following is a discussion of 7 strategies, 33 tactical steps, and 2 benchmarks that may be executed in a patent audit. A patent program may be developed with all these steps, or selected steps that are most applicable to a specific company. Analogous steps may be taken for other types of intellectual property, such as trademarks, copyrights, and domain name registration.

Strategy 1. Industrial Intelligence and Response
A patent audit may be used for legitimate industrial intelligence to determine what your major competitors are doing and to respond to the same before severe problems are generated for you by your competitors. The following steps may be followed:
Step 1: Identify your major competitors.
Step 2: Inventory the current U.S. and foreign patents issued to your major competitors. Also, search the published foreign patent applications of your competitors that have not yet resulted in patents in the United States.
Step 3: Group the resulting inventory of competitor patents by product line and industry.
Step 4: Characterize market niches and directions of the patent portfolios developing with your competitors.
Step 5: Determine if "invent-around" opportunities exist for you for any particular patent grouping of your competitors. (Rules for inventing-around competitor patents are discussed in Chapters 2 and 3 of Patent Strategies for Business, third edition.)1
Step 6: Determine whether you can use a leap frog and tollgate strategy for any group of competitor patents. (The leap frog strategy and tollgate strategy are discussed in Chapters 2 and 3 of Patent Strategies for Business, third edition.)
Step 7: Determine if any group of competitor patents blocks any of your planned products or lines of business. If so, develop an invent-around strategy for each of your blocked future products.
Step 8: Plot the number of patents issued per year for each competitor and product grouping. From this determine the rate of growth of competitor patents in your industry. Use this percentage growth as a benchmark for your development of a patent portfolio for your own company. Consult any available current data on patent strategy metrics and competitive benchmarks in your industry.
Step 9: Develop a list of key terms and key fields for patent developments in your industry.
Step 10: From the list in Step 9, find the key patents in your industry, and determine who owns these key patents. Determine invent-around strategy possibilities for such patents.

Strategy 2. Market Driven Intellectual Property Survey for Existing Products and Services
A market driven intellectual property survey process for existing lines of business may have the following steps.
Step 1: Inventory all the intellectual property in your company at this time. This includes patents, trademarks, copyrights, and trade secrets. The inventory should also include license agreements, joint development agreements, partnership agreements and other contractual arrangements that may impact intellectual property. This may include bringing intellectual property into your company, transferring out intellectual property from your company, and the development and ownership of intellectual property in the future.
Step 2: Inventory the major existing product or service lines of business of your company.
Step 3: Correlate each intellectual property with the products and services that are protected by the intellectual property. From the opposite point of view, also correlate each line of business with the intellectual property protecting each line of business from avoidable competition.
Step 4: Determine if any of your products or services are unprotected from avoidable competition by intellectual property. If so, develop an intellectual property strategy to protect each unprotected line of business. Be sure to apply this process to new lines of business that are not yet for sale but planned and under development. For each intellectual property that is protecting no line of business, consider selling off that property.

Benchmark 1
Each product should have at least one intellectual property protecting that product from competition. Utility patents, where they can be obtained, may be the best form of protection available.
Step 5: Plot the growth of your intellectual property portfolio, especially your patents, over time. As a benchmark, determine whether your rate of intellectual property portfolio growth is keeping up with that of your competitors.
Step 6: Determine the major lines of business of your competitors.
Step 7: Determine what intellectual property, if any, is protecting each of your competitors' lines of business.
Step 8: Develop a strategy to defeat any intellectual property protecting each of your competitors' lines of business from your competition. In the case of competitor patents, determine if they can be invented-around.

Strategy 3. Market Driven Intellectual Property Survey for New Products and Services
Step 1: Identify all your new lines of business (goods or services) currently under development.
Step 2: Itemize your intellectual property strategy for protecting each of these new lines of business from competition. Develop intellectual property for each new line.
Step 3: Determine the risk for each new line of business of suppression by competitors asserting infringement of the competitors' intellectual property. Where the risks are serious, determine a strategy to legitimately circumvent the competitor's intellectual property.

Strategy 4. Technology Driven Intellectual Property Survey
Step 1: Inventory each research and development effort at your company.
Step 2: Specify the intellectual property for each project under development, both offensive (to protect from copycat competition by competitors) and defensive (to avoid infringement attacks by your competitors enforcing their intellectual property).
Step 3: For unprotected R&D projects, develop an adequate intellectual property strategy (offensive and defensive), or consider terminating the project. (Sell what you can patent; patent what you can sell.)

Benchmark 2 (For Manufacturing)
A rule of thumb in some manufacturing industries is to develop one patent for each $1 million of research and development funds expended.

Strategy 5. Licensing
Step 1: From your intellectual property inventory, determine which intellectual properties do not cover a current or planned line of business. Determine for each of these intellectual properties if you may sell or license that intellectual property to a non-competitor to generate cash flow.
Step 2: Regarding each intellectual property that covers a current or planned good or service, determine if that intellectual property may be licensed on a non-exclusive basis for cash to use in a non-competitive way.

Strategy 6. Patent Cluster Analysis
Step 1: Identify your current patents.
Step 2: Check the appropriate databases to determine which of your patents are referred to as named prior art references in other patents. Develop a "lineage" chart of patent cross-references to prior art.
Step 3: Determine the owners of the various patents in the cross-reference lineage chart.
Step 4: Determine if any of your patents are developing a cluster of patents around them from a particular competitor referring to your individual patent. This may indicate that a competitor is attempting a "picket fence" strategy to contain the utility of one of your key patents. (The "picket fence" strategy is discussed in Chapter 3 of Patent Strategies for Business, third edition.)
Step 5: If any of your key patents are being "picket fenced," determine if the competitor's picket fence patents can be "leap frogged."
Step 6: Determine if you can "picket fence" any of your competitors patents in your industry.

Strategy 7. Special Tips for Software, Telecom Services and Financial Services
All industries now have patentable proprietary software, including the software, telecom services, and financial services industries.
Step 1: Patent your new software and services. Also, review your RFP's for software acquisitions, for possible patent opportunities. Software, telecom services and financial services are relatively new to patents and present unique opportunities for patent competition. Note in particular that in these three fields, new services and new infrastructures for providing old services are now candidates for patent protection. These new developments may also infringe the prior patents of others.