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Increase Your Odds at Patent Poker

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Small business owners may be stunned the first time they face the critically serious issue of patent infringement. Comparing it to any game may appear to be flippant.  However, numerous analogies can be made between playing poker well and successfully dealing with patent disputes.  This is not surprising since both activities involve risk and the need to make decisions with incomplete and possibly conflicting information.  Understanding these analogies should help you work more effectively with your lawyer and other advisors.  Both benefit from knowledge and skill that transcend the mere mechanics and rules of play.  Consistently successful poker players understand that rules mastery is only a start and in no way ensures success in playing the game.  Similarly, knowing the law and the legal process are only minimum requirements in preparing for any potential patent conflict. 

There is a key difference in the risks between a casual card game and patent poker.  You have a choice in whether to play cards and what stakes to risk.   In contrast, your business may be forced to play patent poker by a competitor claiming patent infringement that may risk your business’ very existence.  In addition, your company may be gambling away the value of its intellectual property assets by not actively protecting them. Ignoring potential patent issues for any reason doesn’t eliminate their risk to your business.  Just by being in business, you are reserved a seat in a very high stakes game.  

Below are some tips drawn from the card game that will provide perspective when you are forced to play patent poker defensively or when you decide to invite others to ante up in a game at your table. 

  1. Objectively assess the real strength of your hand.

Good poker players understand the probabilities for winning with the cards they have been already dealt and the opportunities for improving their hand during the course of play.  In a patent dispute, understanding the strength of your position at the onset and what additional information would improve your understanding is equally valuable. Getting this information requires time and/or money. Be aware that venue selection may have a larger impact in patent suits [1] than minor differences in house rules for the card game.

  1. Study how your opponent plays.

It is not necessary to have even one royal flush or win every hand to win a poker tournament. You just need to play consistently better than your opponents. To do so, it is important to learn as much as possible about how others play the game. Often this is done by observation of any mannerisms, or “tells”, or other clues that might help you predict the strength of their hand. Public information may be available on how your opponent has asserted their patents against others or responded to patent infringement assertions in the past. While past play is no guarantee of future play, an investment in understanding the history of your opponent may help you plot an effective strategy.

  1. Keep your cards close to your vest.

In poker, any knowledge of other cards removes some of the uncertainty in assessing the probability of winning with your own cards. There is no need to show your own cards when you fold, or if you win the hand by attrition when everyone else folds. Don’t rush to make announcements about your strategy in a business dispute until you’ve gathered the necessary information to understand your response.

  1. Accept that a strong hand does not guarantee winning the pot.

You win a hand of poker against an opponent, not by exceeding some universal reference. Most everyone would consider four aces to be a very strong hand. It almost always is enough to win—unless someone has a straight flush. While the probability of having a straight flush in 7-card poker is five times less than that of having four of a kind [2], there is a finite risk that you will be beat even when you are holding all four aces. Even if you hold a royal flush, you are only guaranteed a tie since someone else may hold a royal flush in another suit. In a patent dispute, you may not win with what you consider to be a very strong position due to the human element of interpreting and understanding claim terms and testimony. Include these risks in your business decisions.

  1. Never forget that a weaker hand can win if skillfully played.

If your opponent is successful in making you think your position is weaker, you will naturally consider folding early and limiting your potential loss. Such a decision will be based on the perception of the relative strength of your position or your ability to stay in the game long enough to win. For the same reason, a negotiated settlement with another party adds perceived strength to an asserted patent’s value, even if the patent’s strength has not really been tested yet. Objectively assess the strength of your position in a patent dispute on a real-time basis to avoid making emotional decisions.

  1. Don’t play high stakes poker emotionally or drunk.

If your interest in playing poker is purely entertainment and the stakes are consistent with this, then have as much fun as you can afford. You can’t lose in this case regardless of mental impairment. In business disputes, ego may impair good judgment in assessing the cost of losing. Winning also has a cost in the impact on your business from the distraction of the dispute as well as the expense in pursuing the victory. If you are overly excited about a patent dispute, objective outside advice may help moderate any excess adrenalin that could impair better business judgment.

  1. Respectfully deal with your opponent.

You are likely to sit down at the table with the same opponent in the future. Being a sore loser, or potentially even worse, a sore winner, may remove some of your future options. Don’t motivate your opponent to raise your stakes in a future game where you may have a weaker hand. Keep the conflict commercial, not personal.

  1. Folding a hand may allow you to continue playing the game.

Losing a hand in a game of poker doesn’t mean you will lose the game, unless you chose to go all-in. Regardless of your contribution to the pot so far, good players know that some hands are not worth continuing to play. By cutting their losses, they conserve money for future hands with higher odds for success. As in any business decision, you need to consider which patent investments are worth ongoing funding from a strategic risk and reward perspective.

  1. Don’t rely upon luck.

In a short story by Mark Twain, “The Science vs Luck”, poker is found in a Kentucky court to be a game of science, rather than a game of chance [3]. 90 years later, the U.S. House is considering this question anew in an effort to regulate internet gambling [4]. To paraphrase Bob Dylan in “Idiot Wind”, you can’t help it if you’re lucky. But you can’t count on it. Luck always helps, but it is insufficient for sustained success with poker or patents. Bask in the glow when fortune shines on you, but rely upon experience and objective information to see you through over the long run.

  1. Don’t play for high stakes unprepared.

As a hand of poker progresses, the strength of each player’s cards changes. What started as a marginally strong Texas Hold ’Em hand may be strengthened by the right flop cards, but subsequently weakened by a poor turn or river card. Although the information is incomplete, the best poker players mentally determine what to bet based upon knowledge of what might happen in the future using knowledge of what cards have already been exposed. Additional bits of information on the cards and opponents are factored into each successive round of bidding. Developing this skill takes investment, usually by playing lots of games for lower stakes where only pride and pocket change are risked. In serious poker play, there is no discussion of the hand in play nor any advice solicited or offered. Each player must play his own hand and do his own instantaneous SWOT (strength-weakness-opportunity-threat) analysis. In common with the ruling in the Twain story, success with patent poker is dependent on science. Although a competitor may force you into a game of patent poker, fortunately you don’t have to make snap decisions without assistance. If you have assessed your patent position and that of your competitors in advance, you may avoid costly mistakes due to a reactionary response. More importantly, if you are prepared to act quickly as soon as you are invited to a game of patent poker, you’ll have time to assemble your team of advisors to help you objectively consider your position and options on how to respond. One way to summarize the overall analogy discussed here is the following quote from noted poker commentator, Lou Krieger: “In poker, as in business, the secret is in knowing how to manage risk and capitalize on opportunity.” [5] Managing risks and identifying opportunities takes preparation and dynamic assessment of how the relative strength of your position is changing and might further shift in the future. At each exchange in patent poker, the impact of new information should be consciously factored into your selection among future options. The most appropriate response for your company in any single patent dispute may change over time due to any new SWOT analysis input, not just from the details of the patent dispute. Although these comparisons to poker may help when you are confronted with a potential patent dispute, it would be cavalier to consider this as just a game. The stakes often start far too high for any company to treat patent risks lightly. Take advantage of the ability to play as a team in a patent dispute as you apply the other analogies from the poker tips above. Even with high stakes, the more you and your advisory team understand tactical and strategic patent options, the higher your probability for continuing business success.

This article provides only a general perspective on a complex topic which should be used only for educational purposes. For specific assistance with your IP strategy, contact Dan Whittle at Patent Leverage LLC.  Contact

1 “Forum Shopping in Patent Cases”, Kimberly A. Moore, North Carolina Law Review, Vol. 79, May 2001.

2 Professor Brian Alspach at http://www.math.sfu.ca/~alspach/comp20/  .

3 The story can be found online at http://www.readbookonline.net/readOnLine/1540/.

4 An interesting article on a Harvard University meeting was a cover story in the Wall Street Journal, May 3, 2007. The Twain reference was in a corresponding letter to the editor from Daniel Tinkelman published on May 17, 2007.

5 More Hold’Em Excellence, Lou Kreiger, 1999.  

 

Reprint Permission: This paper may be freely reproduced if done without alteration in its entirety including all source and copyright information.  

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