 |
As of this month, GIS’ founder and president, Pierrette Breton, is celebrating 20 years in the patent licensing and reverse engineering industry. To celebrate this milestone event we sat down with Pierrette to reminisce on how she got into the industry, what it was like back then, and how things have changed over time. We hope you enjoy this interview with one of the pioneers of infringement patent licensing. |
Q: What was it that attracted you to this business in the first place?
I was always interested in technology and semiconductors in particular. In the early 1980s, I worked at Northern Telecom’s (now Nortel) semiconductor process lab as a “process support engineer” and later in the engineering final test support group. One of the great challenges was to increase the yields. One product had a yield of around 45% which was far too low. I was in my 20s at the time and noted that there were no standardized or set procedures and thought that would be the problem. Experimenting with the testers I found that indeed this was the problem. I prepared a procedure for the test lab to follow and used SPC (statistical process control) methods to monitor the test results and improve the procedure over time. We started calibrating the machines every morning and cleaning the test contacts with Freon to reduce capacitance introduced by the oxidation of the contacts. I was quite pleased to see when in just a few months the yield had risen to over 80%. Another key was to co-ordinate with the QA groups to make sure we were all using the same machines and procedures. There was some concern at the time that the new procedures could lead to a large number of borderline passes that would later fail in the field. Luckily this didn’t happen.
Q: What was your first position in the industry? What did you do?
In 1989, after my second maternity leave, I was reentering the workforce. I saw a job advertized in the newspaper at a company called “Semiconductor Insights” (SI). At the interview they showed me a photomosaic of a chip and I was fascinated – seeing the individual transistors and gates laid out before me in a photomosaic. Though I had worked in a fab for years, inspecting many chips, I had never imagined that that you could read back or extract the circuit from a device. This was something completely new and different!
At the time, SI had just been spun out from Mosaid Technologies as a separate company. I was hired as a Microchip Analyst and when I started work on January 2nd 1990, Semiconductor Insights as a separate company was about one month old; and I believe I was employee number 6.
I saw my first patent around my 3rd week at work. It was an Intel patent on memory redundancy. It was around 30 to 40 pages long, took me an entire week to read through from front to back, and I still didn’t get it. I felt dismayed and disappointed that it took so long. So much in fact that I thought seriously of resigning, and telling my manager that they didn’t even have to pay me for the 3 weeks I had worked; I was that embarrassed.
Thankfully, I didn’t resign and when I went to my manager and explained that I was having, “difficulty in comprehending patents,” they suggested that I simply look at the drawings, front page, and claims. I took their advice and found that it worked! My second patent was an Inmos redundancy patent. This time it only took a few hours to understand.
Even back then, I was fascinated by claims language. When you read a claim, depending on when you paused, the claim could take on a different meaning. It was like a word puzzle and a technology puzzle combined – I was hooked.
Q: Did you have any mentors?
I have had several mentors over the years but one of my first and dearest is John Kling, who worked at Texas Instruments (TI) at the time. I would prepare claim sheets for him and we would have daily telephone calls to walk through the documents and help him understand the technology. Later on, John left TI and went to work for Mahr Leonard Management Company (MLMC), one of the early successful patent licensing and negotiating companies and the early investor in Semiconductor Insights. We would spend up to 3 hours a day discussing patents and claims sheets. It was a great learning experience for me as John was a patent attorney and I learnt a great deal about proper claims construction and the legal side of patents.
I developed an insatiable appetite for patents and must have read over a 100 patents in my first 6 months at SI. I was reading DRAM and SRAM patents from pioneers such as Intel, Mostek, Inmos, and National Semiconductor. Cutting edge at the time was 4Mb DRAM, and since patents always have a description of the background of the invention I became an expert on RAM.
John was a great help to me and several of my clients came to me through referrals from John. I’m very grateful for his help and friendship and we are still friends today. Later I worked closely with Bill Troner of Harris (now ATLC) and my apprenticeship in infringement and validity continued.
Q: What was your first taste of patent litigation?
I was working with Mahr Leonard on the Inmos patents owned by Thorn EMI of North America (TENA) and were being licensed by Mahr Leonard. The first litigation I was involved in was against Samsung in 1992. I was a 30(b)(6) witness and the trial was in Boston. It was quite exciting to travel to Boston as well. I took a camera and took pictures of the views from the conference rooms at the various law firms.
I was locked in a tiny room (not quite a broom closet) for 3 days. In those days, patent trials were decided by a judge, no jury. On the witness stand I showed die samples of the various levels of the memory chip (2 metal levels at the time). I was stepped through this by Bob Chiaviello (of Fulbright & Jaworski in Dallas). At cross examination I was asked the first question but before I could answer, Dave Leonard jumped up from the audience and objected. The judge threatened to eject him from the court room after which Bob repeated the objection. I never had to answer and, as this was the only question, I was sent back to the “broom closet”. I don’t remember what the question was, at the time it did not seem important. Today, I wish I had noted it.
Q: Who were the players and what was the technology most licensed back then?
Most of my work was with Texas Instruments and Mahr Leonard working with National Semiconductor’s and Inmos’ memory patents. I also worked on the Mostek patents. Mainly these were applicable to RAM, some to ROM, also but mostly to DRAM; 256Kb, 1Mb, and 4Mb and SRAM; 64Kb, 256kb, and 1Mb.
Q: You worked a lot with Mahr Leonard. What else can you share about them?
Mahr Leonard was George Mahr and Dave Leonard from Dallas; George was the business man while Dave was the lawyer and engineer. In a way they were the beginning of the infringement licensing industry. Although, Dick Thurston and John Kling were doing patent infringement licensing at Texas Instruments, the Mahr Leonard group were the first contingent patent licensing group and were the first to buy reverse engineering reports from Mosaid’s RE group. Mahr Leonard was the catalyst for Mosaid to spin off their RE group into what became Semiconductor Insights.
I believe that color coded claims charts was Dave Leonard’s idea; which everyone uses today. The idea was to clearly show infringement in order to close the deal quickly. The ideal negotiation was for Dave Leonard to spend one day on technical matters, using the claim charts, and George Mahr then going in the next day to discuss business terms.
Q: Were there any other interesting clients back then that left a strong impression on you?
Yes, there was Richard Robinson at SGS-THOMSON. Working with Richard was the complete opposite of working with Mahr Leonard. While George Mahr and Dave Leonard relied on Semiconductor Insights’ technical team, Richard put together his own group of experts to provide the reverse engineering and claim charts, this was around 1992. The team included such people as Jim Cunningham (semiconductor process), Dick Blanchard (analog), Mike Callaghan, and Joe MacAlexander (memories) and a few others.
Now Richard was interesting in that loyalty was very important to him. He was very loyal to his people and, in return, demanded loyalty from them. Richard needed additional reverse engineering skills on the team and a colleague and I went down to meet him; it was a test. At one point Richard took me aside, looked me straight in the eye and asked, “How can I trust you?” I returned the glare and answered, “Why shouldn’t you?” and I guess that was the right answer since I became part of his team.
The other team members were brilliant and I was the youngest person there. However, I was able to contribute since I had developed good claim construction skills. I felt there was a particular need for good claims interpretation within the group and identified some good patents that others had set aside. Engineers tend to read claims too narrowly, inventors are the worst. You need someone who will look at the bounds as defined by the claims and not be limited by the described preferred embodiment.
At the time much of the process analysis work was done at Evans California (now Evans Analytical Group) with circuits coming from SI. I believe that Joe McAlexander’s group at Cochrane Consulting also provided circuits fairly early in the ‘90’s.
Q: Who else did you work with at the time?
Well, other than the companies already mentioned, I remember working with Micron, Intel and Harris. Intel was in litigation with AMD at the time.
Q: Let’s talk about some of the other reverse engineering companies that were around?
Well the first one would be TAEUS, which was founded by Art Nutter in 1992. Art had been the US sales representative for SI. He didn’t really fit in with the SI corporate culture and was let go. About 6 months later we started hearing about TAEUS. I believe they were working with Lucent at the time. Now, Art wasn’t from a technical or legal background but he was able to surround himself with some brilliant people including Jim Adams. Jim is one of those people who I’m sorry I’ve never had the chance to work with.
I have to give credit to Art Nutter for turning technical patent analysis and reverse engineering into an industry. At the time, SI and eventually Chipworks, did not have the sales skills to do this. It was Art’s foraging into organizations such as LES (Licensing Executives Society), AIPLA and others that popularized the reverse engineering and patent analysis services. SI and Chipworks, as well as GIS, have contributed to these organizations through workshops and papers, but Art was the first to “go there”.
Q: Now all the companies you’ve mentioned so far are from the United States and of course, now patent licensing is an international activity. How did this jump occur?
It started to happen as early as 1993 when SI hired Ian Gibson to work in marketing & sales. Ian started visiting Asia; Japan and Korea, as well as the EU. However, most of this was connected with SI’s competitive intelligence service so very little patent related work came out of it. At the time, the majority of the sales at SI were from patent related work but IP was not seen as a growth sector and most of the planning was to support reports for competitive intelligence purposes. By now, Doug Smeaton was the president of SI and his 5-year plan had very little IP/patent content.
Q: In 1994 you left SI to join of Chipworks. How did this come about?
I was actually recruited by Terry Ludlow, the founder of Chipworks in May 1994. Chipworks had been founded a few years earlier but Terry acted as a sole consultant. Chipworks was moving into their first office when I was interviewed. It consisted of 2 rooms and probably occupied about 1,000 square feet (93 m2). Terry and I talked for about 8 hours on the patent licensing business and life philosophies and decided I should come to Chipworks. Terry had just gotten a large circuit readback project and had to hire someone with readback skills. The project was the circuit extraction of a 4Mb DRAM. He had hired Julia Elvidge on some form of part time basis to help with the project and also a Human Resource specialist. My goal at Chipworks was to sell the patent services and hire people to assist me in this work. A year later Chipworks had revenue that surpassed SI’s revenue. I was very proud of this.
I had developed quite close relationships with some of my clients while at SI and a few, such as Ed Andre from Harris (Ed later founded ATLC) followed me and became good Chipworks customers. I still remember some of the patents from that time. There was a ‘005 decoder patent and a ‘248 sense amp patent. The ‘248 patent, was originally assigned to Shell Oil company. The preferred embodiment described a seat belt sensor and my colleague, Danka Kurjanowicz, recognized that the claims described a data bus sensor used in semiconductor memories of the time– quite amazing if you think about it. This is a good example of the type of creative thinking that is required to be successful in patent licensing.
By the end of 1995 we were working with Texas Instruments, Harris, Mahr Leonard, ATLC, SGS Thomson and few others. Our first order from Japan was from Sony – I think this was in early to mid 1996. They had been in negotiations with Mahr Leonard and wanted to work with the people who had prepared Mahr Leonard’s claims charts.
Terry and I went to Japan in early 1996 on our first IP focused trip. SI’s competitive intelligence sales efforts in Asia made it easier for those types of sales, but it took some effort to get sales for our patent services. At that time Japanese and Korean companies preferred to do the patent analysis work themselves and so purchased competitive intelligence reports - not the most time or cost effective way of producing claim charts. I think our success related to Terry coming across as calm and open while they appeared to trust me just as Richard Robinson had earlier. In any case, we made a good team and managed to quickly get work from Fujitsu, NEC, Mitsubishi, Sanyo, and Toshiba, as well as from Samsung, Hyundai, and LG in Korea.
I believed that the trick to opening the doors in Asia was integrity. We would listen to find out what we could do for them, clearly explain our conflict policy, and made sure they got value from our reports and analysis.
Q. It was during this time that you made the decision to become a Canadian Patent Agent. How did that go?
Actually, I first wrote the exams in 1994 when I was still at SI. At the time I wrote the exams you had to pass all four exams (drafting, prosecution, infringement, and validity) in the same year. The first year, I studied on my own and managed to pass three exams, but under the rules, I still had to come back the next year and write all four again. I failed the prosecution exam, which is generally considered to be the easiest of the four.
Today, there are many non-lawyers in patent licensing but at the time; the majority of our clients were patent attorneys. Many of the patent attorneys did not trust a claim construction or patent evaluation done by a non-lawyer and I felt that I would bring credibility to SI if I became a Patent Agent. I didn’t draft or prosecute patents but infringement and validity is at the core of what I did. I always passed these exams but drafting – writing a full patent application with some 20 claims within 4 hours was a real challenge for me.
The second time I wrote I was also working on a job with Richard Robinson at STM. He thoughtfully gave me some coaching over a weekend while I was down in Texas. I again passed 3 out of the 4 exams. This time I failed drafting.
The third time was in 1997. This time I got further help from Ian Beshaw, who was working at Nortel, he lent me some very extensive study notes. Again I failed drafting but at least this time it was close.
I finally passed in 1999. I was in a study group with Christine Collard from Marks & Clerk and two other people from Gowlings. I also got some invaluable coaching in drafting from Dallas Smith from Gowlings.
By this time, the industry had matured so that credibility was not such an issue for non-lawyers involved in patent licensing but I had certainly learnt a great deal about patent law over those 6 years. In particular, I gained great insight in how to properly read and construe claims and developed a methodology to read and evaluate patents very quickly.
Q: So how did the patent licensing industry change over the decade from 1990 to 1999?
Well, it was certainly international by the late ‘90s. You had many players from Japan and Korea and you also had TSMC, Chartered, and ITRI from Taiwan. We were dealing with companies from the UK, France, Italy, and Germany in Europe and companies like Mosaid and ATI from Canada.
In 1990, there was the idea that reverse engineering wasn’t quite legal, and if it was legal it was somehow “dirty” to force people to take licenses. Those that did infringement licensing, did so with great preparation and solid proof of infringement. By 1999, everyone was trying to make money off their patents. Some of the “fly-by-night” (get rich quick) companies were more like “extortionists”. They would approach manufacturers with little or questionable proof of infringement and price their licenses so that it was cheaper to take an inexpensive license than to fight it.
My first trial testimony in 1992 was before a judge only – all other trials were in front of a jury. Also, Markman claim construction as a matter of law changed how we supported litigation.
Q: What lead you to found GIS in 2000?
While at Chipworks, in 1998, the economic crash in Asia, and in Japan especially, cut off 35% of our revenue. We had layoffs and a re-organization. Until that time, we had separate IP analysts and competitive intelligence (CI) analysts. The re-org grouped them together in a single group. To sell IP services, you have to be flexible and react quickly to meet the deadlines of IP clients. The CI analysts tended to not be flexible in time management and had difficulty multitasking. This caused difficulties in making delivery schedules and lead to a lot of stress.
More importantly, at its heart Chipworks is really a semiconductor reverse engineering company. This was their bread and butter and this is what they did best – even though 80% of their revenue was chip RE for patent support. I was also burning out from putting in many long hours of work and wanted to settle into a patent consulting company.
My solution was to found GIS on my own. At first, I kept things small; I had a loyal client in Harris and many law firms counted on me for their prior art searches, but I also needed more personal time to help out my sister who was very ill and wanted to spend more time with my daughter who was 16 at the time.
However, by 2003 we started to expand and hire people such as Ellen Brayton who is still with us today. The engineer contractors, such and Alexei Ioudovski, David Frank, Walter Kuzmenko are also still working with GIS. Other regular clients were ATLC and Texas Instruments and many others.
GIS operated out of the basement of my house, occupying 1,200 square feet, until June 2005 when we moved to an office of 2,500 square feet (232 m2). In 2006, we moved again to our present location on Iber Road.
Q: How did the licensing industry change after 2000, and what do you see for the future?
In the early 2000’s everyone wanted patent citation maps for their patent evaluations, only later to realize the most effective evaluation is done by a person actually handling and reading the patent or at least its claims. Patent Reform was discussed, debated and killed (at least for now). However, the biggest change in the patent licensing industry has to do with IP case law in the United States. KSR had the most affect on how we do our work, not just for validity searches but also when evaluating patents. Later LG vs Quanta and STM vs SandDisk had their own influence on how patent licensing is now approached.
Starting in about 2006, these cases and the changes they brought have made it quite difficult to realize a reasonable return on your investment through patent licensing. But, companies will continue to license patents. Right now, with the economy as it is, we seem to be in a bit of a lull period.
In the 1990 to ‘97 time frame many of the licenses were for 5 or 10 year periods. Now many more are for the life of the patent, hence it may be many years before a company has enough new patents granted to begin another licensing cycle. This reduces the amount of business for the RE firms supporting patent licensing.
The 2000s also gave birth to the NPE (non-practicing entities) such as Intellectual Ventures and RPX – there are others. NPEs have really changed the licensing landscape and this is probably what has lead to the change in case law since 2006. The NPEs will not go away but the new case law makes it more difficult for all patent owners to have a successful licensing program.
Despite Patent Reform and the new case law manufacturers will continue to protect their R&D investment with patents and the patent licensing industry will continue. However, I do not foresee an increase in NPEs and Patent Licensing Management firms for the future.
|
