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Why getting patents is smart for domain name companies

Patent programs help employees focus on innovation and create a good defense against patent infringement cases.

Last week I was reviewing some of GoDaddy’s recent patent applications. When I write stories about patents, people often say that the patent is a joke or the invention is obvious. That may well be true in some circumstance. But GoDaddy’s (NYSE: GDDY) patent strategy is smart.

As a bit of background, I once worked in the intellectual property group of a Fortune 500 company. My job was to license non-patented software technology for commercialization, but I also saw the inner-workings of patent programs.

Many companies have patent programs that reward employees for patents upon filing, grant, or both. While building a company’s patent portfolio is part of the goal, I find that these programs also get employees to think more about innovation in general.

In my first job out of college, I submitted a patent through our company’s patent program for “Automated system and method for creating aligned goals”. U.S. Patent 7,110,988 was granted five years later. I don’t recall how much the company paid us for applying for the patent, but it was enough to get us motivated to spend extra time thinking about what we had developed and work with the lawyers to draft the patent application.

(Domainers will appreciate that the domain attached to our invention was Leadership.com.)

I’m also named as an inventor on a patent for an anti-phishing detection system as well as one for technology licensing analysis for a startup I co-founded.

Of course, a key goal of corporate patent programs is for the value of patents themselves. This comes both offensively and defensively.

I’m not aware of GoDaddy ever asserting one of its patents except in defense. It would cause quite an uproar if the company tried to extract royalties for things that are now considered commonplace at domain name registrars. But at the same time, an active registrar would be foolish to file a patent-infringement suit against GoDaddy when they are likely infringing one of GoDaddy’s patents.

Back in early 2013, Verisign (NASDAQ: VRSN) said it was going to work on monetizing its intellectual property. That talk has all but disappeared from the company’s investor conference calls and a site it created to feature its patents has been taken offline. Perhaps the company figured out that holding onto its .com monopoly means it’s not worth ruffling feathers. I wonder if it will re-engage its monetization plans if it gets out of its Cooperative Agreement with the U.S. government?

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