8 April 2001
IP.com is first of a kind and one of a kind. It is the brainchild of chief executive officer Tom Colson and it provides a service which should have existed before. Even in its infancy, it has started to attract some of the world's top companies as its clients.
IP.com started life as the intellectual asset management division of Manning & Napier. In May 2000, the division broke from the company to enter into a joint venture with Venture Info Capital.
The new company specialises in defensive publication of intellectual property (IP). Colson says: "It aims to provide a vehicle for clients to get their innovation into the public domain and by doing so, to stop others from getting patents on their original ideas."
Patents and the protection of ideas, concepts and developments is now big business. In 1999 more than 300,000 patents were filed in the US alone, three times as many as in 1995, with companies such as IBM earning as much as $1bn (£703m) every year.
But filing patents can be an expensive business - most cost between $12,000 (£8,440) and $17,000 (£11,950) per application and most patents are filed in multiple jurisdictions to maximise profits.
To file, defend and update a single patent could cost as much as $200,000 (£140,600) in its lifetime of just 7 to 20 years, and as the majority of companies have hundreds of ideas every year it is uneconomic to patent them all.
This is where Colson and IP.com come in, as a defensive publication site they can be used for the relatively minuscule fee of $109 (£77) per publication to put these ideas in the public sphere and so prevent others from claiming a monopoly on them. Of course, this also means that the company with the idea also cannot claim a patent in the future.
But Colson believes that in the long run it benefits the company to publish. He says: "It is a double-edged sword - by publishing you are also burning your own patent rights, but you have to have an IP strategy, as soon as you decide not to file an application the clock starts to click. There is a real danger that someone else might come up with the idea themselves and patent it, or find out about yours, leaving you to pay for your own concept."
Although the company has no in-house capacity, more than 20 per cent of employees are former lawyers, including Colson, who worked as a criminal prosecutor in the New York State district attorney's office. Colson believes that their training is useful. "Lawyers make the most powerful salesmen," he says. "And we deal quite a bit with firms. At the moment we are in partnership with hundreds of firms, allowing clients to publish through the firm site directly to IP.com. This means that they can load and search documents without leaving the original site and their client stays with them."
Choosing and using firms is officially the job of chief financial officer John McCabe, although unofficially he and Colson make decisions together.
Colson says that it is a delicate balancing act of ability and size. "We need to find firms which are big enough to hand out work but small enough to ensure that we are an important client and not the fodder for a first-year associate, as we could be in some of the biggest firms."
IP.com uses Simpson Simpson & Snyder, McDermott Will & Emery and Hodgson Russ to work on its own patenting and publication writing. Hodgson Russ also handles its contract work together with Brown & Kelly.
But having a wealth of internal legal experience also means that IP.com is canny in its dealings with its firms. Colson says: "We normally put the work in before we approach a firm and then go to them with a working draft document. This means that we get greater efficiency and the law firms only do high-value work for us."
But its selection of firms is by no means the final solution to its legal needs. As a very young company, IP.com is still in the process of finding out who works best for it. Colson says: "We have a stable of firms, each has certain strengths but we are still at the developmental stage for law firms. We have not reached maturity and have yet to focus in on the perfect firm for us - we are still trying to find the best fit."
But it has achieved quite a lot in the past nine months: its their system launched properly only two months ago, and has already had publications from companies such as Abbott Laboratories, Eastman Kodak, Motorolla and Otis Elevators. Defensive publications have risen this month and the database now contains between 6,000 and 7,000 documents.
Its recent agreement with the European Patent Office (EPO) is sure to lead to a dramatic increase in this number. The agreement, handled by Hodgson Russ, provides the EPO with the data from the IP.com site for its own patent search system and should ensure that any defensive publications on the system are unlikely to be patented by someone else in the European Union.
But although IP.com is interested in fostering such relationships, Colson says: "Such agreements are not necessary. The European Patents Office put our data onto its own search engine to help keep as much consistency as possible. Unless an organisation wants data in-house there is no need to enter into an agreement. The site can be searched by any computer as long as they are aware that the facility exists."
The difficulty for most patent examiners is that they have very little time to investigate the validity of a patent and to decide whether to issue a monopoly or not. IP.com has been designed as a tool for these examiners to help ensure that patents are not granted to the wrong people.
Colson says: "If in their search they find publication of a product which predates claims of the inventor then they have the power to reject an application. But although many ideas are published anyway they are simply not in a place where the patent examiners can find them. And with just an hour or two to do a full search there is little hope that an examiner can look at more than two or three sites.
"What we want to do is help people take their ideas and put them directly in front of a patents officer so he cannot help but know that this idea has been in the public domain prior to the application for a patent."
But even if a patent is mistakenly granted, IP.com could have a role to play. When the site was set up, Colson and his team hired McDermott Will & Emery to come in and make sure that if a document was needed at trial then everything was in place to make their system acceptable to the court. Colson says: "If a document is needed at trial downstream we have a bulletproof system so that we can prove effectively the date of publication." Such elements as tracking, fingerprinting and digital watermarking are used to provide a defensible publication date in court.
The system works in real time, and it takes no more than a few minutes to put a document up on the site. Colson hopes that the simplicity of the system will help it reach critical mass within 12 months, publishing between 3,000 and 4,000 documents a month.
And with as many as 90 per cent of inventions not even going beyond the review committee stage, and patent litigation costs rising dramatically, it is not beyond the realms of possibility that they could reach this target. Companies are seeking to protect their research and development investment in a more cost-effective way.
Colson wants IP.com to be "the world's publication office". He says: "We want to be the publication that can defeat patents all over the world. That by publishing with IP.com, although there are many authorities around the world, you can burn other people's patent rights on your ideas all over the world."
It is a grand scheme. And although this is admittedly a good idea, it involves the good will of all sides. The patent authorities around the world must be willing to use the system and the site will have to convince companies and individuals worldwide that forking out $109 (£77) per idea is good business and that it will work for them.
It is a little like the chicken and the egg syndrome - without a huge database to search the examiners are unlikely to use the tool, while on the other hand if the examiners are not using the site then clients are unlikely to pay the money to have their concepts published on it. But IP.com has made an impressive start and if it continues to attract other Fortune 500 companies then some success, however limited, has to be guaranteed.
Chief executive officer
|Head of legal||Chief financial officer John McCabe|
|Reporting to||Chief executive officer Tom Colson|
|Main location for lawyers||Rochester, New York|
|Main law firms||Brown & Kelly, Hodgson Russ, McDermott Will & Emery, Ropes & Grey, Simpson Simpson & Snyder|