Season 4 of the US TV show Silicon Valley aired earlier this year. For those that aren’t familiar with Silicon Valley, IPcopy notes that it is a comedy show that follows six people who have founded a startup company, Pied Piper, relating to an innovative data compression algorithm developed by one of the founders of the company.
The situations that the members of Pied Piper find themselves in feel, for the most part, plausibly accurate perhaps because one of the co-creators of the show, Mike Judge (of Beavis and Butthead and King of the Hill fame) worked in a silicon valley startup earlier in his career.
Since the show’s fictional startup is working in the Silicon Valley environment you might expect intellectual property issues to crop up now and then and this was indeed the case in the most recent season with a couple of episodes dealing with a patent relating to a decentralised, peer to peer network.
So, how did it do? Did it get its IP references correct or did it make an unholy mess like Suits?
In the third episode of Season 4, the aptly named “Intellectual Property”, the founder of Pied Piper is looking through some old notes belonging to a venture capitalist in relation to his “new” idea for a decentralised peer-to-peer network and is confused by what he thinks is a telephone number within the notes. It is later pointed out to him that the telephone number is in fact a patent number.
Leaving aside the fact that the founder of a Silicon Valley startup is so unfamiliar with patents that they mistake a patent number for a telephone number, the show does highlight that patents and patent applications can be identified by their unique number.
Patent applications are assigned an application number on filing. This number is generally accompanied by an indication of the country in which the application has been filed, e.g. GB0123456.7 indicates a UK patent application. Initially the contents of the patent application are not visible to the general public. However, the application will be published during the application process, at which point a second number is assigned to it: the publication number. Again, the publication number is accompanied by a country designation code, e.g. “GB” denotes a UK patent publication number, “EP” a European patent publication number and “WO” an international (PCT) patent publication number.
A patent application will generally be published eighteen months after its priority date. This is termed the ‘A’ publication. The publication number for such a publication is followed by the letter ‘A’, e.g. EP1234567A. Once a patent application is granted, it is published for a second time. This is termed the ‘B’ publication as the publication number now ends in the letter ‘B’, e.g. EP1234567B. The ‘B’ publication reflects any amendments made to the patent during the application process.
Assuming the patent referenced in the VC’s notes is a US patent then it is likely either in the format US1234567 (if it’s a granted patent) or USYYYY-1234567 AX (if it’s a pending application).
It’s possible to search for patents online and there are a number of free databases that anyone can access, e.g. Espacenet. Further information on searching can be found in IPcopy’s earlier post “Prior Art Searching ‘101’“.
Having determined that a patent number is not a telephone number the founder of Pied Piper is then told that the patent covers the same application that he is trying to develop (“…the perfect application of my algorithm belongs to [someone else]”). This news is (initially) regarded as a “roadblock” to the further development of the decentralised network.
The show has highlighted in this exchange that rather than granting an owner the right to practise an invention, a patent is actually a legal right enabling the owner to stop someone else making use of an invention.
Patents grant their owners exclusive rights to prevent others from making, using, selling, importing or distributing the patented invention without permission.
The scope of patent protection is defined in a patent specification, which is a document that describes the invention and defines the protected concept
Most patent specifications will follow a similar template. In general there will be a description section, a claims section, some figures and an abstract that is used for search purposes.
The description includes details on the technical field that the invention resides in, the background to the problem that the invention solves and a detailed description of at least one way of carrying out the invention. The description may also include a section that repeats the claims section. The figures are provided to support the description and sometimes to highlight differences or problems with prior systems or methods.
The claims are legal statements that define the scope of protection the patent provides; they aim to set out the essential features of the invention, without being limited by non-essential details.
Patents as Property
Although initially thinking that his decentralised network idea was blocked by the existence of the patent it is not long before the founder of Pied Piper comes up with a solution – to acquire the IP from the rights holder.
The show at this point is highlighting that patents are objects of property and like other property assets they can be assigned and licensed. The show’s solution therefore is for Pied Piper to acquire the patent in question in exchange for royalty fees and a share of company equity. The only mis-step the show seems to take at this point is to repeatedly refer to a “licence” agreement when the characters seem to be talking about transferring the patent via an “assignment” agreement. Still, kudos for working IP issues into the plot without taking the Suits route of just making up fictitious legal principles!
The issue of licensing and assigning IP touches on the fact that there are many reasons to consider filing a patent application to your invention. The classic use of a patent is to prevent others from using/working the invention described in your patent. However, there are other reasons to consider patents, namely:
- Patents can be used to raise money from investors. Just think how often the Dragons on Dragon’s Den ask if the product is covered by a patent.
- They can be important in Licensing and M&A proceedings
- They can be a deterrent to competitors
- They can control your supply line. Imagine you develop a new product and sub contract for the provision of certain components or parts that you’ve developed as part of the product. Your sub-contractor may be tempted to commercially exploit the components they’ve worked on but if you have a patent to the parts in question you can control what the sub-contractor can and cannot do.
- They can even, for example through the UK’s Patent Box regime, reduce your corporation tax. [For this to be an option in the UK however you need to have a granted UK or European patent (or a limited number of other granted patents in Europe) and a UK company.]
“But the show got it wrong. Pied Piper had a software invention. You can’t patent software”
Don’t believe the hype! As long as certain conditions are met, patents can be obtained for software inventions (or computer-implemented inventions) – (see also our 5 common misconceptions about software patents post).
It is true that there may be additional issues to consider compared to hardware based inventions and there may be instances where the invention in question falls within a class of subject matter that cannot be patented but this assessment is not necessarily obvious. It should also be appreciated that the approach in other countries (e.g. the US and South Korea) is different to the approach in Europe and the UK. So even if something is unlikely to be patentable here, it may still be patentable elsewhere.
When it comes to software related innovation the take home suggestion from us is: If you’ve developed something you think is new or cool/solves a problem then go and see a patent attorney for their input. You never know, something might be patentable!
So, overall, what’s IPcopy’s verdict on Silicon Valley?
IP Hit or Miss Verdict: IP Hit
Mark Richardson 26 October 2017
This article is part of an occasional series of articles that takes a light-hearted look at IP as it appears in the media (films, TV, news reports etc) as an excuse to talk about different IP topics. A vague rating of “IP hit or miss?” may also be given depending on how well the particular IP concept has been incorporated into the media in question.