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Mutually Assured Drag on Profits – Reduce Litigation and Return to Your Core

by: David Nickelson, Director of Research

The Cold-War gave us the term 'Mutually Assured Destruction' where the United States and Soviet Union raced to build a bigger stockpile of nuclear weapons than their counterpart. The result was untold billions of dollars spent and an ever-present worry that those weapons could actually be used. Fortunately for all of us, the two sides eventually called a truce and decided their money and energy were better spent elsewhere.

In the patent field we sometimes see situations that I term a 'Mutually Assured Drag on Profits.' These are fields of older and established technology that still see a tremendous number of patent applications filed and patents being granted. Despite this heightened activity the advances we see in the art are marginal with the patents appearing to be more about differentiation than innovation. Also, our research tools enable us to see that these fields are a source of significant litigation with various players engaged in an almost continual legal battle.

This constant legal fight results in millions of dollars being diverted away from the core business of these companies both in direct litigation costs and the time and energy their attorneys, engineers and designers spend trying not to get sued or trying to figure out how to sue their competitors.

The obvious answer to this is cross-licensing amongst parties. Such agreements allow companies to focus on their core business, increase profits and avoid uncertainty. Resistance to cross-licensing often comes from an ingrained antagonistic view of competitors built up over years of litigation, but when one views the field of art as a whole, something we at Techson are in a unique position to do as we perform our research, the optimal solution is often setting aside differences and agreeing to the truce..."Mr. Gorbachev, tear down this wall!"

Whether cross-licensing makes sense in your field is an individual question, but if it's an established field where advancements in the art are becoming incremental if not merely differential, consider whether you and your competitors are enforcing true advancement in the field through litigation, or merely decreasing each others profits through that litigation.

At Techson we can help you make this determination and work with you and your competitors to help you get back to what your company does best.