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Executive Interviews

The Reexamination Center Executive Interview: Richard Levick on “Reexaminations and the Media”

February 26th, 2010

Reexaminations can have huge collateral impact on patent owners, alleged infringers, and other stakeholders and interested parties. It thus behooves all involved to be aware of the public impact of reexaminations and how best to manage and react to public scrutiny. We are most pleased to be able to address this topic in this interview with Richard Levick, Founder and CEO of Levick Strategic Communications (www.levick.com).

Richard Levick, Founder and CEO of Levick Strategic Communications

Richard Levick, Founder and CEO of Levick Strategic Communications

1. Richard, Welcome.  Before we go to the meat of this topic, would you please give us a little about your background and what led you and your team to focus on this reexamination area?

Our firm is a world leader in high-stakes crisis and litigation communications. For more than a decade, we’ve been directing strategic crisis and litigation communications engagements in the highest-profile global matters for countries and companies. We are the exclusive global communications Joint Business Relationship partner with PricewaterhouseCoopers (PwC). Intellectual property has long been an important part of our litigation practice, and reexaminations are, of course, an important part of IP litigation strategies. We have represented many of the world’s leading intellectual property law firms, and we’ve supported client initiatives in Asia, Europe, and throughout the world. Importantly, we have directly represented their clients – from the largest corporate portfolios on the planet, to entrepreneurial companies across a range of industries – at every stage of the litigation process, before, during, and after legal decisions are rendered. Every litigation matter is unique. Fact patterns and causes of action differ, and opponents vary. The one constant is the need to meet the challenge of litigation communication head-on and not allow the opposition to define the case – and the audience’s perception of your company – for the media and your critical target audiences.

2. Now turning to our topic at hand, from a public communications standpoint, what are the benefits of success in a reexamination?

There is a logical, direct connection between the legal benefits of success and the benefits that naturally accrue from a related communications initiative. Obviously, a favorable outcome at the PTO – whether you’re defending or challenging a patent – can affect future court deliberations, short- and long-term stock prices, capitalization, acquisitions, and other transactions. For defending companies, success represents a vote of confidence that deters competitors or others by sending the clear message that your patents are strong. A strong communications campaign will leverage that success to the hilt on an ongoing basis. When, for example, the Electronic Frontier Foundation sought re-examination of a C2 Communications Technologies patent (No. 6,243,373), C2 Executive Vice President, Secretary and CFO Stephen Weintraub spoke to PC World, confidently and effectively underscoring the company’s current strength by referencing past success: “We don’t expect that they’ll be successful…the company and the patent office both have examined its validity and not found any problems, and the service providers that C2 sued couldn’t find a way to strike it down either.” The faster such messages get sent, the better. The more prominently and virally, they appear online, the more of a deterrent impact it will have on potential challenges. If you are challenging a patent, and the outcome is positive for you, the same viral news dissemination puts an enormous burden on the defending company to explain the result to their shareholders and other vital constituents. It can torpedo their stock values instantaneously and significantly weaken their negotiating position. The experience of Tessera Technologies Inc. in 2008 is a well-known case in point, as stock values tumbled immediately upon the Patent Office rejecting every claim of that company’s 6,133,627 patent in ex parte reexamination.

3. Which leads to the next question – from a public communications standpoint, how can those defending companies manage that burden if the reexamination is adverse?

An adverse reaction to an unfavorable reexamination is best managed if a company is prepared beforehand. There should be a communications plan already in place to address a negative result before that result occurs – just as there should be such a plan in place to leverage a positive outcome or respond to mixed news. To prepare for all three possibilities, the following materials should be developed before the PTO delivers its decision:

  • News releases addressing all possible outcomes so the appropriate version may be posted on an electronic news wire and distributed to media and shareholders as soon as the decision is announced. Regardless of the outcome, the news release should offer insight on what the company intends to do next, and whether it intends to pursue further litigation;
  • Statements, if only brief “holding statements” attributed to the CEO for each scenario. Along with sending them to interested reporters, the statement can also be posted on digital forums, such as Twitter, to provide a wider public with the company’s immediate response.
  • Q&As to prepare for difficult questions that consumers and shareholders as well as reporters may ask. Once the PTO’s decision is announced, relevant questions drawn from the Q&As can be posted on the company’s website along with the PTO decision itself.
  • A list of key reporters and bloggers to contact once the PTOs decision is announced. The list should include IP/legal reporters like Susan Decker at Bloomberg, as well as reporters who cover your company or industry in general. High-authority legal and industry blogs must also be identified, monitored, and, as appropriate, contacted.
  • They include PatentlyO, IP Watch, and the National Law Journal’s BLT: The blog of Legal Times. The best practice is to always treat high- authority bloggers – those that are respected, well read and linked to – just like any major traditional media journalist. These bloggers are the ones who increasingly decide what the traditional reporters will cover and, of course, their own distribution is much faster.

Connect with these key media and blog contacts early. Develop personal relationships with them now, before you need them. They’ll be much more amenable to conveying your messages if they understand and trust you first. Especially if your company is a major industry player, consider launching an industry blog or company news site. This forum may be used to tout your products, thought leadership, and messages before, during, and after legal disputes.

4. What actual messages should these diverse communications venues disseminate if the reexamination ends adversely for the defending company?

In typical situations, there are generally two messages. The first addresses the immediate situation by confirming that the PTO decision is not necessarily the final outcome and that there is further recourse. The specific recourse should be spelled out so that intelligent persons can understand it without law degrees or years of experience as patent examiners. It must be both credible and easily communicable. Second, and very important, address what’s at stake for consumers and shareholders. For example, the message may be that the patent in question is not the company’s sole crown jewel or even all that important to future earnings growth; and that the company continues to innovate other products and services that are driving real growth for the company. Strategically, it’s an example of something we often talk about: the transformation of adversity into opportunity. What begins as a threat – a bad result in a reexamination – becomes a chance to highlight all the presumably greater things that the company is doing, and that have nothing directly to do with the reexamination. Should a company’s patent be invalidated, the very patent at issue may have no bearing on an entire product, nor necessarily halt the company’s use of the product. A company should therefore move quickly to separate itself from situations like the one that nearly collapsed RIM’s Blackberry in its litigation with NTP, by highlighting all the ways in which a negative ruling does not significantly impact its business. Conversely, RIM strengthened its position in its pending U.S. litigation against Motorola after a UK court recently invalidated Motorola’s patent. RIM underscored the broader business implications the case has on its competitor by saying, “Motorola has been trying to compensate for its losses in the marketplace and its inability to sell its mobile division by resorting to court actions.”

5.   What are the best practices to mitigate fear among shareholders?

First, put yourself in the shareholder’s shoes: What questions would you ask if a company in which you’ve invested money just had an adverse PTO ruling? Clearly contextualize what the reexamination results mean for the business, which may indeed be very little. The problem for shareholders is the intimidating mystique of IP and the queasy feeling they get when they don’t quite understand what’s happened. So help them understand it. Here too, clarify what was lost in this one case versus the strong assets that the company still commands and the upcoming gains that lie in store. Watch for any signs of confusion. As with many types of crisis communication, use pictures as much as possible. By pictures, I mean, literally draw them a map that shows every stage of the process that has occurred so far, and every stage that lies ahead. One company we worked with took just such a painstaking approach to simplifying a multifaceted patent and commercial dispute. They didn’t just win. They were indefatigable in letting the world know they won. Suffice it to say that, by the end of the day, it acquired one of the companies that had challenged its patents. I’d conclude by emphasizing the need – whether it’s a positive or negative situation, or whether you’re talking to shareholders or consumers – to always use technology smartly. Monitor the entire blogosphere on a 24/7 basis and, of course, fully optimize everything you post, of course. Utilize social media like Twitter and Facebook as aggressively as possible. The importance of the digital media in these situations is all the greater, especially for defending companies when their message is that they’re developing state-of-the-art technology that minimizes the impact of the adverse reexamination. Who is going to believe that message if it’s not communicated in a technologically savvy and proficient way? No one, really. The medium is a big part of the message in all public communications that have to do with technology.

Chairman Comment

Thank you Richard for sharing all of this deep insight and practical advice.  No doubt, as more reexams are ordered against important patents, particularly those in concurrent patent litigation, the more important what you are addressing will become.