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Why do many businesses prefer lawsuits over licensing deals — and what does IP capital mean for innovation?

Phil Hartstein, co-founder of Soryn IP Capital and former CEO of Finjan Holdings, shares insights from orchestrating almost $500 million in licensing deals. He explains why patent licensing has shifted from corporate boardrooms to courtrooms, and discusses the economics of patent enforcement, the role of litigation finance in supporting legitimate innovators, and how AI is transforming IP strategy.

Phil reveals what makes patents valuable, why most portfolios contain only single-digit percentages of enforceable assets, and his perspective on patent monetization as a strategic responsibility rather than defensive last resort.

Key Takeaways:

• Most patent portfolios derive value from only single-digit percentages of total assets
• Corporate defendants now manage 50-100 active patent lawsuits simultaneously
• Patent litigation costs range from $2-20+ million and take 3-5+ years to resolve
• Licensing discussions once happened in boardrooms over 9-12 month periods
• Modern product cycles compress multiple technology clusters into shorter timeframes
• IP capital helps innovators compete against well-funded corporate defendants
• AI tools like ChatGPT are transforming patent analysis and claim construction workflows
• Patent monetization strengthens both business balance sheets and the broader innovation ecosystem
• The U.S. patent system's constitutional foundation drives American technology development
• Strategic patent enforcement requires demonstrating credibility, capability, and resources

About the Guest:

Phil Hartstein is a technology investor, inventor, and intellectual property strategist. He co-founded Soryn IP Capital and previously served as CEO of Finjan Holdings, a public company now owned by Fortress. At Finjen, he oversaw licensing and enforcement of pioneering cybersecurity patents, orchestrating more than $300 million in licensing deals. Phil holds more than two dozen pending and issued patents and has been twice recognized as a top 40 IP dealmaker.

00:00 - Introduction to Phil Hartstein
01:44 - Why companies prefer lawsuits to licenses
03:03 - Boardroom licensing era vs today
04:16 - Soryn IP Capital's role in leveling field
06:35 - Corporate litigation dockets explained
08:47 - Patent lawsuit economics and timelines
10:23 - Funding plaintiffs vs bad actors debate
13:10 - Making capital available for innovators
15:36 - Patent quality and portfolio value
18:07 - Supreme Court's Unwired Planet decision
20:16 - The Alice decision's ongoing impact
23:40 - Patent valuation and market adoption
26:25 - PTAB's role in patent examination
29:14 - Working with litigation finance
31:40 - Evaluating patent portfolio strength
34:22 - International IP enforcement landscape
37:08 - Germany's patent system advantages
39:30 - AI's impact on patent prosecution
42:42 - Racing vintage cars as analog escape
44:40 - Patent monetization as strategic duty

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Allison Gaul, senior counsel at BCG-X, an invention development and commercialization company, discusses the evolving AI landscape, where intellectual awareness meets real-world strategy.

As both a former patent examiner and litigator with a Harvard graduate degree in business analytics, she offers insider perspectives on how companies secure IP rights, why investors now prioritize AI risk policies, and how open source licensing drives market adoption.

The conversation explores copyrighted training data challenges, how small learning models compete with foundational LLMs, and why publicly available doesn't mean free to use. Gaul shares practical IP protection strategies for startups and established companies navigating content attribution, energy-efficient blockchain solutions, and the misconceptions engineers hold about software patents.

Key Takeaways:
• Small, targeted-use models (SLMs) trained on specific datasets are gaining traction because of their relevance and efficiency
• Investors are now scrutinizing AI startup' risk and compliance policies more carefully
• Open source licensing has become a significant tool for capturing market share
• Publicly available content is not automatically free to use; not all LLMs ascribe to this
• Blockchain offers potentially reliable solutions for IP tracking despite energy concerns
• IP and AI strategy require balancing innovation with responsible ethics
• Gen AI adoption began with easy productivity wins across industries
• Businesses that are mindful of AI risk are in a better position to attract capital

Subscribe to Understanding IP Matters on your preferred platform or visit understandingip.org for more episodes exploring intellectual property with leading innovators and experts.

00:00 - Introduction to Allison Gaul
01:07 - AI race and investor expectations
02:36 - Risk policies investors demand
03:01 - How companies leverage Gen AI
04:21 - Working with foundational model providers
05:34 - Day in the life of a product attorney
06:40 - Multi-dimensional AI competition
08:34 - Open source as market strategy
09:10 - Small learning models vs LLMs
11:02 - Copyright challenges in AI training
13:29 - Content attribution and data rights
15:41 - Licensing deals and fair use debate
17:34 - Legal frameworks catching up
19:20 - Transparency in AI systems
21:25 - Attribution standards discussion
23:38 - Geographic variations in AI law
25:44 - EU regulations and global impact
27:50 - Cross-border compliance challenges
29:33 - Energy concerns in AI development
31:18 - IP education for engineers
33:11 - Patents in software development
35:27 - Ethical IP strategy and responsibility
37:54 - Patent troll misconceptions
39:50 - Attribution vs permission clarified
40:54 - Blockchain solutions and limitations
42:08 - First exposure to IP rights

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When creativity meets intellectual property, innovation has no boundaries.

Eric Bear has licensed intellectual property to all major U.S. studios and Fortune 500 companies while maintaining a successful acting career. With over 100 patents covering software and video technology, Eric's seamless expansion invention was popularized by The Matrix and licensed to Disney, Fox, and other major studios. This conversation explores how he balances roles as inventor, entrepreneur, actor, and university professor while navigating patent litigation and startup IP protection. Discover how unconventional career paths can drive business trademark protection and commercial success.

Key Takeaways:

• How Eric licensed technology to all major Hollywood studios
• The connection between acting, invention, and entrepreneurial thinking
• Navigating patent litigation while maintaining creative pursuits
• Building companies around intellectual property course principles
• The role of performance capture technology in modern filmmaking
• Protecting IP rights while collaborating with Fortune 500 companies
• Career advice for young creators balancing art and business
• How AI impacts creative industries and performer rights
• The importance of following passion over financial incentives
• Screen Actors Guild protections for digital likeness rights