Interview with Cheryl Milone – Article One Partners

Having formerly practiced as a patent attorney and advocated before the US Patent and Trademark Office with Darby and Darby, Cheryl Milone has become quite an expert on all things “patent”.  She now sits affront of her 5 year old startup company: Article One Partners. Article One Partners is the world’s largest patent validation community.  What makes Article One Partners so unique is that the company adds a crucial level of review to the US patent system – strengthening legitimate patents and reducing unjust patent monopolies (surely she doesn’t mean us Patent Trolls right?).  Upon further discovery of Article One’s success, we we’re fortunate to have an opportunity to discuss Article One Partners, Patents, Patent Trolls, the Patent System with none other than the patent expert herself – Cheryl Milone.

Patent Troll: How did Article One begin?

Cheryl Milone: I grew up working in some of the intellectual property boutiques in New York, doing patent prior art research. This is where I developed an appreciation for this type of research. I realized there must be a more efficient system then flipping through all these old, dusty patent files. My founding of Article One was out of my passion for providing efficient data to the market place. Currently, there is inefficiency in not having comprehensive accurate data which creates a high a risk level. Article One reduces this risk with our research.

Patent Troll: What is your opinion on Patent Trolls?

Cheryl Milone: First off, it is perfectly reasonable for anyone to monetize their patent assets, but the troll monitor, applies to an unreasonable way of doing it in an extortionist way. There’s no one that disagrees with that. It would be great to help other companies have a different path than being overwhelmed and financially burdened by these costs. Companies that conduct themselves in an unethical manner are taking advantage of the inefficiencies in the patent industry, which is harming innovation. This problem is due to the vast amount of limitations in our litigation process. The Patent Trade Office has been severely underfunded putting all kinds of pressure on the Patent System. This in turn, creates low quality assets. When there is serious money being made in the industry, people come into the market, which are simply looking to identify ways of getting a return and that’s the situation we’re in. People should be able to monetize their patents and they should do it in a upright high integrity way. I’m all for the patent system, I just want to remove the inefficiencies and manipulations of it.

Patent Troll: Do you think patents should be allowed to be so easily transferable?

Cheryl Milone: There have been a lot of suggestions for which transactional model can address this issue. In my opinion, the one that best fits is the notion of putting an idea on paper is laudable, but the ability to commercialize is an enormous next step. The kind of damages claims that paper patents can achieve, with no commercialization, excludes a critical step. It’s sort of like my going to get investment for my company and I don’t have any financials. Should the owner of that paper patent be allowed to extract a level of damages that assumes the commercialization of the patents? There should be a commercialization requirement for a company.

I think that the judiciary is an ideal place for much tighter standards. Bilsky is a great example with business method patents. In the decade it took to get through the US Supreme Court, the amount of valuable application of standards case law that was lost discredited the industry. Finally when the Supreme Court came out with their decision, it didn’t advance the thinking. In fact, it maintained or decreased the level of guidance that the industry has on business method patents. The judiciary should be at a higher level in providing guidance to the industry.

 I think the patent office is a real stand out in terms of progress and effort. The industry feels that the leadership there has been revolutionary compared to history and they’ve been implementing changes to improve patent quality. There is still a lot to be accomplished due to all the various components, including stakeholders, who really need to step up and help out.

Patent Troll: Have you had any personal encounters with NPEs(Non-Practicing Entities)?

Cheryl Milone: I don’t think anyone is going to come after me because I have the best resources to defend and I will aggressively defend if I have to. This is where Article One Partners has a huge potential to bring these resources to the SMB (Small and Medium Businesses) market.  My goal is not to add to SMBs’ economic burden. I want to provide a rational economic formula for companies with these resources. I would love to extend my view of my own status in the industry to others. People get so shell shocked from getting notice of a patent litigation – I wouldn’t be.  I’m comfortable in that environment. Having a group of people, whether it’s an insurance provider or a company like Article One, can provide a lot of support and resources for a cost efficient solution. I aspire to extend the notion of Article One to SMBs. The dollar shouldn’t be wasted and should be put back to R&D.

Patent Troll: How should SMBs defend themselves against Patent Trolls?

Cheryl Milone: Well, there are a few answers. First off, instead of reacting to the patent based purely from a notion of concern and defensiveness, SMBs should be following their own patent applications. SMBs should take use of the provisional application system, which is very inexpensive, and gives you a provisional on file at the PTO. The notion of the patent system should not be forwarded until someone gets a notice of allowance. Any business owner should educate themselves because of the tremendous recognition of patents as an asset class. Educating yourself is vital and cost efficient. This is no different than having your financial projections for your investors, it’s that important.

On the defensive side, companies should work with an institutional investor, which is a good place to get support. There are also a number of programs out there, including Article One, that offer insurance and other approaches to support SMBs when they receive letters of notice.

Another option would be for SMBs to join a defense group. If you look at patent lawsuits, there are big companies that react to these notices of allowance in an aggressive, confident manner. A lot of times these companies are sued in a large drawn defense group, which includes worldwide brands. SMBs should join these joint defense groups and try to take advantage of the fact that some of these larger companies have dealt with these situations in the past.

Patent Troll: Professor Colleen Chien has noted in a study that some startups are choosing to ignore the notice of infringement from Patent Trolls, is this a reasonable strategy?

Cheryl Milone: Yes it is because a notice of infringement is not legally actionable. There is a possibility, that by ignoring it, the startup will put the burden back on whoever sent the notice. There are NPEs that are properly using the patent system, and there should be no limitations to their ability to do that. However, for those NPEs who are clearly improperly using the patent system, are simply looking for quick settlements. The more difficult you make the process for these companies to get to a resolution, the less likely they will want to engage with you in legal action. There’s no point for a small company to acknowledge a notice of infringement because it doesn’t put the company in a new or different position.

Patent Troll: Where do you see Article One heading in the future?

Cheryl Milone: The success of Article One is our due to our community. We always talk about the client side of the industry because that enables us to present our request for patent research to our community. The most gratifying part of our company is the ability to provide our community with work, which has been the most rewarding experience for me. We have been told from members of our community that this is the most exciting thing that’s happened to them and that this research can provide full time income. We have paid over $3 million in compensation over the past three years. We want to give them more opportunity and more tools to succeed on the platform.

We also are extremely fortunate to work with worldwide IP leaders and startup companies. Our big clients are asking not only to help with patent research on litigation defense but other use cases throughout the patent life cycle. In response to that, we’re broadening our products to be able to meet the request for additional work from our clients which, in turn, allows us to give more work to our community.

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