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PATENTS & LICENSES -- Covering Their Assets

October 2002

The concept of patent awarding and infringement sounds like a straightforward proposition, but the very act of trying to be unambiguous itself leads to confusion. It results in such complex descriptions written in legalese and with so many qualifying statements that they become all but undecipherable. The exercise is like trying to nail Jell-O to the wall. The harder you work to pin it down, the more that oozes out around the edges.

Try Nailing This Down

Take the example of the aforementioned ImageX patent on automated prepress. In part, its abstract reads: "An online, automated printing system quickly produces consistent printed materials. The system includes front-end customer setup and product setup modules available on a Web server. A print-ready file is produced embodying the product to be printed. The print-ready file is compiled and all operations on the file can be completed via reference to the information contained therein. A state flag is associated with each element of the file; the flag having states such as preview, print, both or none. The file is stored on an asset management file server..."

The confusion patents can cause was reflected in a thread posted earlier this spring in a PrintPlant.com forum (which has since been renamed "Application Integration—eProduction") in response to ImageX announcing its receipt of "Notices of Allowance" for some of its patent applications. Posters speculated on whether or not an earlier patent, or prior art, might invalidate the applications. With a quick read of that patent's abstract below, it's easy to see why there might be some confusion about what all it covers:

Patent #4,839,829 issued to Henry B. Freedman—"Automated Printing Control System. A system for automated control of the printing of a work comprises a first terminal adapted for use by a printing requester for receiving from the requester information concerning parameters for the printing of the work. A second terminal is adapted for use by a printing facility for receiving from the printing facility pricing and administrative information concerning the printing of a work. A programmed computer having a memory and input/output means is provided in communication with the first and second terminals..."

Pittsburgh-based Printcafe Software is one of the companies to have negotiated a licensing agreement with Freedman in the past. At that time, President Marc Olin commented, "In licensing this patent, we acknowledge the work of Henry Freedman before us in addressing the broad scope of e-production and e-commerce within the printing industry."

When asked to clarify what his patent covers and his intentions for its enforcement, Freedman replied that, "Since I have ongoing work in this area, I do not have any public comments (to make)."

Given the complexity of the issues, and perhaps seeming remoteness, the temptation is there to take the same approach to patents as many do to OSHA or EPA inspections, licensing of fonts, etc. Don't worry about it until that proverbial knock on the door comes.

There's really no way to know what impact the current spate of patent activity will have on the industry. Much of the patent process occurs behind closed doors, and companies are very guarded about what they say for competitive and legal reasons. Even after a patent is awarded, details of licensing agreements and court cases are routinely kept private. To keep surprises to a minimum, though, it pays to stay as informed as possible.

ImageX's Begert points out that patents may not be as broad as they seem. "We don't feel there are a lot of people violating our automated prepress solution (patent) because it is a unique application we are bringing to the market," he notes.

In the case of workflow solutions from equipment vendors, for example, the company president says it would be harder to prove a system is in clear violation if there is a device-dependent component to it. "Our approach is all basically software driven," Begert adds.

Still, Begert doesn't see the firm's patent-related moves being restricted to any particular category of company, such as Web-based solution providers like printChannel or iPrint. "We are going to defend our patents vigorously," he says. "That could include system vendors or even individual printers that develop their own solutions, if what they are doing is in fact in violation of the patents."

ImageX is open to exploring a potential business relationship with any company, Begert says, so its intent isn't to use the patents as an anti-competition weapon. "I've found that people in the printing industry may be a little naive around the issue of patents. In the software industry, a lot of business relationships are negotiated as a result of patent infringement issues. There's a need for education on this subject."

An interesting side note, Oliver Pflug, CEO of printChannel, actually was among those expressing some skepticism about ImageX's patents in the earlier forum posting. Pflug says the comments he made at that time were based on a cursory review of the applications, and his company's subsequent decision to negotiate a license really came down to expediency.

"With patents in general, your options are to ignore them, fight them or negotiate a license," Pflug points out. "It comes down to an elementary business analysis of the costs involved.

"Since ImageX had a backlog of 50-plus patents that it had applied for, we simply made a business decision that it was in the best interest of the company, its shareholders and customers to proceed with a licensing agreement rather than trying to fight one or more of those patents," he continues. "The fact that you license a patent is not necessarily a comment on the validity or value of the patent."

Patent Potential

That's not to say Pflug is down on patents in general. "We are actively reviewing our intellectual property strategy, and we believe there are elements of our technology that are potentially patentable.

"Philosophically, I would say patents are a good thing because they provide incentive for companies like ours to invent new things that have commercial value," he continues. "On the other hand, I'm not completely convinced the patent office (U.S. Patent and Trademark Office) is in a position, particularly with regard to the printing industry, to tell what's truly innovative and what is not. What we all want is to encourage research and development, but we don't want to get into a situation where very generic, common processes in some way or another get patent approval."
 

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