How Big Business Actually Created the Patent Troll

Patent Trolls Emerged Because of Market Opportunity rather than Market Demand

How to Harness Digital Assets for the Future

Today, many U.S. businesses are in crisis to respond to an emerging threat:  Non Practicing Entities.  While innovation stalwarts like IBM, Microsoft, Google and Apple remain ahead of the innovation curve, far too many other companies have become short sighted in their ability to identify, value and protect their own innovations. How do we know? A new industry emerged in response to a market opportunity – affectionately referred to as Patent Trolls. Companies like Acacia, Intellectual Ventures, RPX, and even Universities have not only emerged in response to a market opportunity, but they are thriving on buying up patents, innovating and patenting and all for one reason:  to extract a license fee from businesses large and small. Most were formed by the existing digital leaders only to find these innovation hubs turned into a real threat to their customers. This new market represented $29 billion in license and settlement fees paid in 2011 by US Companies. Troll related activity in high technology represents 75% of all IP litigation. And, why are so many companies falling prey to these “trolls”? The number one answer is because they don’t have the right bargaining chips. The big digital players settle, swap or ward off the trolls with their portfolio, while the rest of American companies are left with no bargaining chips. If companies are or could be infringing on patents owned by a troll and they don’t have any of their own patents to back up their position, then they are forced into an exorbitantly expensive patent law suit or to settle behind closed doors. The patent trolls know which companies are weak and exposed. They know which companies are, unbeknownst to them, using digital technologies or assets or devices through a vendor or directly that infringes on one of their patents. Trolls know that most companies are moving too fast to consider patenting their digital activity and thus an easy target. Trolls know that innovation and patents pay off in high profit margins. Armed with data, they know exactly the right price point to extract a license fee from a company.  

In the current Digital Age, organizations must step up and take a proactive stance in developing and protecting intellectual property or risk global marketplace competitors stealing and protecting them under their names, or worse, licensing to a troll (also known in this context as privateers). This also means taking measures to drive more innovation like revolutionizing digital content to drive brick-and-mortar traffic, fostering internal collaboration through platforms and processes no matter the geographic location, and utilizing alternate methods of driving content to target audiences.

While IP lawsuits over technology are prevalent among Apple, Samsung, HTC, Google, Microsoft, Orcale, RIM, LG, Nokia, Cisco and other digital and technology leaders (also the largest patent filers), other industries have been left largely without a digital or technology patent portfolio to protect themselves when attacked by a troll. From consumer products to retail and even entertainment industries, they consider themselves “not an IP company” and so they don’t invest in protecting their digital innovations. Consumer products companies focus on packaging, diapers, toothpaste compounds and other patents, but not in digital. All the while, their marketing is shifting from a traditional media age to a digital age, requiring innovation in new digital arenas. Likewise, retailers might have patented certain configurations, packaging or other inventions, but not its digital technology. Contributing to the problem, they often use outside vendors without ensuring that they are not using patentable technologies in rendering their services and are ultimately sued as an end user (sometimes without sufficient indemnification).   Companies are innovating, for sure, that’s how new products and services emerge to meet new market demands. But the trolls have identified a simple market opportunity. Evaluate what companies are doing in a digital age, apply for patents to protect that technology by tracking data of what companies are doing in their digital platforms, and then extract a license fee from them for using that same technology. And, trolls even go a step further, they are investing in real research, development and innovation directly and protect every aspect of it. Unfortunately for consumers, their sole purpose is to extract license fees from companies large and smalls, rather than to innovate and build products and services that help society.  

How Did this Happen?

The bottom line is that business and the U.S. economy have become so focused on short-term street value, from which executive bonuses trickle down, that the value of long-term research and development and building intellectual assets on a global level has been diminished. Meanwhile, we have evolved from an industrial age to an information age and are now emerging in a digital age where the rules are changing faster than most companies can keep up. While companies are innovating, many are not taking the next step to protect those innovations as assets. For many of these companies, digital strategy is still emerging and is largely fragmented across the company rather than centralized.  So, when the company views itself as “not an IP company” then innovation is occurring, but is not captured and evaluated for protection purposes, rather just rolled out.  

Innovation is about investing in new ideas, breaking down silos, allowing employees to take risks with budgets set aside for those risks, tearing apart old assumptions and thinking about the future. And then, it’s about owning those inventions to capture and maintain market dominance.  Either you innovate and own it or someone else will. So, how do we know innovation capture is declining and not growing in the U.S.? Today, the metric by which most invention is measured is patents granted. Patents are largely the result of innovation that can be used as an asset for companies in the long term. In 2010, half of all patents issued in the U.S. were awarded to non U.S. companies and nearly 60 percent of the information technology patents originated outside of the U.S.

This failure of many U.S. organizations to protect their innovations has resulted in the explosion of the the patent troll business. Due to the increasing number of easy targets—companies lacking patents to defend themselves—patent trolls have amassed large portfolios of patents to use against them. And many companies have sold off patent portfolios to these NPEs to boost revenue and short term gains.    

Kodak, case in point, sold its patent portfolio to many NPEs for hundreds of millions of dollars in a fight to survive. Kodak may not have pursued license fees against you if you used one of their patents on your web site, but the trolls will. Like it or not, patent trolls are simply responding to a market opportunity. So to all those CEOs out who don’t take the necessary steps to protect your innovation pipeline, look out. Trolls are on the rise. The average suit is $1.1 million dollars, often resulting in settlement rather than victory. American companies that are willing to take a proactive stance in protecting their digital innovations have a significant opportunity to end the NPE practice while driving product improvements and strengthening their competitive position.

Making an Innovation Change – It Starts at the Top

Leadership must set the tone.  Leadership must understand the value of building an innovation pipeline, capturing those ideas, and then tracking them for protection and use as an intellectual asset. It’s all about data to drive results in a digital age. It must be a strategic short- and long-term investment. It’s important to pay attention to cultural change and provide incentives, both financial and recognition-based, to facilitate a collaborative, knowledge sharing environment that values intellectual assets as the end result.  

Process is essential.  Human beings are creative and innovative creatures. Establishing a methodology and process that facilitates collaboration and captures ideas into a process that can track it into a valuable asset is essential. Risk taking and failures must not just be allowed, but celebrated and budgeted for, when it comes to innovation.

Technology & Knowledge Sharing.  Using the right technology based tools to capture ideas, share data and information across stakeholder groups is essential. All too often within large companies, multiple groups are performing the same tasks, repeating or reworking them using different data sets. These efforts must be centralized and disseminated through a centralized knowledge sharing program that can capture ideas, develop them and ultimately turn them into valuable “innovative” assets.  

Companies must do more with less and produce even greater return on investment faster to compete and survive today. But they can’t sacrifice innovation and asset protection as a result. While Wall Street may value day-to-day performance and executives strive for bonuses as a result, the rest of us rely on companies to invest in our future. While Apple, Microsoft and IBM continue to lead in innovation and building new technologies for our future, many others have simply opted out as “not an IP company.” Those companies are the targets of trolls. Savvy companies will invest in innovation pipelines and utilize technology of today for efficiencies to maximize the impact and return on investment of tomorrow.  

Note: The above research is based on the research acquired in developing and writing Brand Rewired and Domain Names Rewired, two books authored by Jennifer Wolfe.  

 

The Future of Email in the C-Suite

John Podesta’s Email Hack Should be a Lesson for All

The hack of the DNC and Hillary Clinton’s Campaign Chairman, John Podesta, may fade away as the news media turns its attention to the transition of power and next big story, but an important issue for business executives and board members is not the politics of the hack, but how it happened.  It could easily happen to anyone, causing damage and harm to you, your reputation, your company and your colleagues.

So, let’s take a moment to dissect exactly what happened.  Podesta received a phishing email from no-reply@accounts.googlemail.com that appeared to be from Google requesting him to change his password.   Notice in this email the bit.ly link – this is the key. 

He forwarded it to his IT team to confirm that he should reset his password.  His IT team then informed him that he should reset the password and provided a clean link to use to reset the password and recommended a two-factor authentication (meaning you get a code on your phone or multiple sources to reset your password – thus more secure).  Unfortunately, Podesta somehow went back to the phishing email and clicked on the link, thereby allowing the hackers to have access to his gmail account.  Unknowingly, he let the bad guys in.  It’s like leaving your door open and going on vacation and then being surprised you got robbed. 

Most security breaches are a result of someone mistakenly allowing the hackers access.  So what does this mean, what is the lesson to learn?

There’s really two issues here:

1.  How do you prevent these types of hacks?
2. Should we continue to use email for so many sensitive or conversational matters? 

So, let’s start with the first issue.  Hacks can never be fully prevented. I interview and talk with cyber security professionals regularly and the common belief is that as soon as you develop tools to stop the bad guys, they create new tools.  It will never be a fully solvable problem, but there are ways to mitigate the attacks.  For senior executives and board members a first key step is to ensure that your CIO is fully supported, given resources and funding to implement plans, technology and tools to identify, stop and mitigate bad and malicious activity directed at your company.  I write at length about this in Chapter Two of my new book, Digital in the Boardroom.  There should be an annual independent cyber threat audit and the board should have a clear and objective picture of the threats facing the.  This “independent audit” has been place in accounting for years, why should the threat not be treated with the same level of importance? 

Additionally, senior executives and board members need to exercise extreme caution when clicking on a link to ensure it is from a trusted source.  Phishing sites are designed to confuse even savvy and sophisticated executives.  So when it comes to clicking on a link, particularly one to reset a password, be extra cautious.  I write regularly about the new top level domains.  This is one way companies could minimize the “typosite” that looks confusing.  American Express is often duped by a company using an americanexpress.gov, which is not them. See the image below – this is a phishing email.   They could put a dent in this by using their top level domain,  Dot AmEx for all communication with their customers. 

Now, let’s address the other issue.  With the release of thousands of embarrassing emails to President Obama, Hillary Clinton and her staff alongside the not too distant memory of embarrassing emails released about Sony executives and celebrities, will email conversations hush to a quiet? 

While it’s not likely email will die, or go away entirely, senior executives will likely stop using email as a means of conversation and dialogue.  I anticipate we will see a return to actual phone calls and face-to-face meetings for important discussions and relationship building. 

As cyber security experts know all too well, there is only so much that can be done to prevent a cyber attack.  There are certainly best practices and mitigation plans and technology that can help to minimize this exposure, but if someone wants into your system badly enough, they will likely find a way to do it (or the right person to prey upon). 

This realization will change the way many continue to use electronic communication.  While in ligation lawyers often go to painstaking efforts to protect privileged communication from discovery or presentation in a lawsuit, the reality is if someone just wants to embarrass you, nothing will stop them from releasing it to the court of public opinion, who quite frankly doesn’t care if you think it was subject to some sort of legal privilege.  It will be out there and the damage to your reputation, your company, and career will be done, forever.

So many of us have become accustomed to the idea that an email or text is a one-to-one communication, unlike social media which is one to many.  We believe that these conversations are private.  But if you’ve ever accidently replied to all or sent an email to the wrong person when autofill pulls up the wrong email, you’ve felt the horror of someone seeing something they shouldn’t have seen.  Now imagine that same communication out to the entire world.  Savvy executives will simply stop using email for actual conversations, dialogue, opinions or anything other than benign schedule setting or simple messages that you wouldn’t care if the whole world knew you sent. 

We may see a return to the custom of picking up the phone and speaking to someone or scheduling a face-to-face lunch where the real conversation can occur without the risk of that conversation being read by millions possibly months or years later.  And, is that such a bad thing?  It takes a little more work to make a phone call, but don’t you get so much more out of it?  And, face to face meetings might require a little more effort and sometimes travel, but doesn’t it make for a richer and more meaningful discussion and relationship?  These are things we have sacrificed for speed and convenience. 

Interestingly, the millennial generation may not feel the impact like those of us in Gen X, Gen Y or Baby Boomers.  Millennials never built the habit of using email for conversations, however their use of social media could eventually suffer the same fate as they begin to realize the negative impact their one-to-many conversations have as their lives and careers progress.  What is acceptable at 22 is not so much at 32 or 42, but with social media, it’s all just out there to be found and used against you when someone needs to find a reason.   Think of how these emails have been used against senior executives and politicians in just the last few years.  Social media history will ultimately be the same, only rather than because of a hack, these are messages users have intentionally and willingly posted to the masses.  There’s a lot to unpack here between emails and use of social media.  C-Suite Execs and Board members should heed the warning and carefully consider how email is used and best practices to protect yourself and your company.  

How Analytics Will Change and Shape Marketers Overall Marketing Strategies With the New GTLDs

Top Level Domain Analytics and Big Data Impact on Brands Marketing Strategies

Big data is abuzz today when it comes to ongoing market strategy with companies like Facebook, Twitter, Amazon, Google among others offering staple tools by selling ads, analytics, maps, discount strategies and more to big brands. Using data to drive new products, content and track consumers’ behaviors as well as needs and wants before they happen are ever changing in response to new scientific data-driven technologies and methodologies.  

Analytics and the use of big data to inform marketing strategies will continue to remain a driving force with new Dot Brands (brands operating at the top level domain of the internet) potentially dramatically shaping the marketplace. While many continue to discount the impact of the new TLDs, there has never before been such a scaled expansion of the internet. Led by Internet powerhouses like Google, Amazon, Microsoft and half of the world’s top brands, TLDs should not be ignored as a critical driver of analytics. Although traditional web sites are in a state of decline in favor of social media and apps, the introduction of new TLDs and the benefits to consumers will change the way marketers must think about their domain and web site, particularly when architecting how to extract that important big data from the various digital sources available.  

Unlike .com - TLDs Offer Closed Ecosystem to Capture Data

Analytics help us understand consumers activity and purchase path e.g., what they read, what they buy, where they click through which ultimately provide key indicators of how to evolve a brand’s market strategy. Brands with their own TLD will be able to architect and design their anchor,  landing pages, and drive data in a very customized and closed ecosystem. What’s important to distinguish the TLD web site from a traditional sub-domain is that the brand owns the entire ecosystem like .Target or .Walmart and not just the .com or .biz or even .shop version.  And, within that closed domain, brands can create new ways of navigating that’s a bit more intuitive at the browser level and drive behavior through an innovative approach. For example, Target could customize special promotions and landing pages around seasons and holidays, through retail partnerships and even further customized to the individual shopper: memorialdaysale.target, outdoorfurniture.target, neimanmarcusholiday.target and jenwolfe.target.

Google-Amazon Will Offer Enhanced Data Analytics with their gTLD Portfolio

For those companies who did not apply for a TLD, the segmentation of the internet set to occur could provide important guidance in creating new or alternative landing pages. Google, Amazon and other big players will likely offer enhanced data analytics packaged offerings within many of their available new sub domains. These sub domain opportunities and additional big data insights will grow as a unique platform to consumers. For example, would you want to move your domain name, as the anchor to all of your digital strategy, to one of Google’s numerous top level domains? Or, will you partner with Amazon to become an affiliate in one of their TLDs? And, if Google and Amazon, along with retailers, big banks and insurance companies educate consumers that there is more security in their top level domains, this effort will bring value in migrating landing pages so long as the migration is designed with analytics in mind.  

Web Sites Value in the New TLD Landscape

Many analysts indicate that domain names and traditional web sites are becoming irrelevant. Today, consumers rely less on search engines and more on social media drivers and apps - whether it’s a social media ad, a Pinterest recommendation from a friend or a shared review with someone you admire. The use of social media and apps to “get to you” is more critical than ever and an essential piece of marketing data analytics. But once a consumer finds you, what type of activities and behaviors do they exhibit and what devices do they prefer? Despite the expected acceleration of social media and apps as a means of getting to a brand, the web site, if designed strategically, can be an important anchor to all other digital components of your market strategy – a holistic digital strategy. And, as an anchor, it can be used to capture data in conjunction with social and apps that provide real value.  

Time to Centralize Digital

For CMO’s, the expansion of the internet and the rise of social media, apps and new web sites for data analytics means digital needs to become a centralized hub rather than fragmented across brands or specialized areas. A complete holistic strategy that incorporates the many facets that impact extracting data from social media, brand and web apps to web site landing pages to capture the elusive, on-the-go consumer must cohesively fall under one strategy. Analytics will continue to evolve and the scaled expansion of the internet must be considered as an important piece to the puzzle.