Transcript of Alexander Poltorak's Radio Interview with the Wall Street Reporter, March 17, 2000

In this in-depth interview, Dr. Poltorak describes the fields of patent enforcement and technology transfer in detail, and discusses what separates GPC from our competition.

Interviewer: Sam Stone

Interviewee: Alexander Poltorak

Sam Stone: "Recorded live from our studios located in the financial district of New York City, this is Sam Stone for Wall Street Reporter magazine. My guest today is Alexander Poltorak. He is Chief Executive Officer of privately held General Patent Corporation. Alex, welcome to the program."

Alex Poltorak: "Thank you Sam. Thank you for inviting me."

Sam Stone: "We are delighted to have you on the show today. Why don't you begin by giving our audience a brief history and an overview of General Patent Corporation."

Alex Poltorak: "General Patent is an intellectual property management firm. We have been in business over ten years, specializing in patent licensing and enforcement, IP portfolio management and technology transfer. Our clients include individual inventors, small R&D companies, larger corporations, research institutions, as well as overseas clients. We provide our clients with IP strategy and help them implement it in the best way."

Sam Stone: "Tell us a little bit about the business model and how the revenue streams works at GPC. If you could just define the marketing strategy a bit more specific to our audience, please."

Alex Poltorak: "It depends on what clientele we deal with. Our corporate clients, we serve as a consulting company advising them on the issues of IP strategy, IP portfolio, audit and valuation, licensing and technology transfer. In these instances we charge on an hourly basis, as all consulting companies do. With respect to patent licensing and enforcement as it relates to smaller companies and individual inventors, we employ a different model. You see, many inventors have patents that may be infringed by other companies, but they are out of luck in helping themselves in this situation because patent infringement law suits cost an average of $1.5 million dollars. Therefore, they are not able to retain a law firm to represent them in this patent infringement situation. We represent these individual inventors and small R&D companies on a contingency basis. We undertake the case in all its aspects including financing the case, managing it, negotiating licensing agreements, settlements, etc. In this arrangement we share in the revenues with our client."

Sam Stone: "What separates your business from the competition. Alex, if you had to single out perhaps one or even two areas that you truly feel separates General Patent Corporation from the rest of the pack, what would that be?"

Alex Poltorak: "I would say that this is patent enforcement and international technology transfer. In the latter area we are unique because the people who work in this company have different backgrounds - they come from different countries. We have people who not only speak different languages, but are intimately familiar with various foreign cultures, business laws, business environments, etc. We do quite a bit of international technology transfer work. In the field of patent enforcement, I think we are pretty much unique as well. We are, I would say, a premier firm in the United States, and I do not know of many such firms in the world which do what we do, representing individual inventors on a contingency basis, helping them to license and enforce their patents."

Sam Stone: "Customer service - it's obviously a poor value in any given business today. Alex, what does customer service represent to your business at General Patent Corporation? What does it mean to your business on a day-to-day level?"

Alex Poltorak: "It means staying involved with our clients on a long-term commitment basis. We don't get involved in one-shot deals. Speaking of corporate clients, we are talking about a long term relationship whereby we help the clients to develop the strategy from the very beginning and see the strategy through all phases of its implementation, which includes various steps such as IP portfolio audit, portfolio mining, identifying those patents which represent the core patents for the company which need to be vigorously guarded and enforced, identifying useless patents which need to be dropped to save the maintenance fees, identifying non-core but valuable technology that could be licensed out or used in some other form of technology transfer such as strategic alliance, joint venture, etc., which would turn around these unused assets of the company and turn them into revenue generators."

Sam Stone: "Let's talk a little bit about your management team. If you could tell us about some of the key individuals who help run General Patent Corporation a day-to-day basis, including yourself, with a brief description of your background."

Alex Poltorak: "We have here very, very good people and our staff is the key to our success. To begin, Paul Lerner is our Sr. Vice President and general counsel. He is a very experienced patent attorney who has been in private practice for many years as a patent attorney, and he also served as general counsel for some large companies including Black & Decker and others. He came recently to our company and he is a very valuable addition to our management team, bringing to us years of experience in legal and corporate management. Valeria Poltorak is heading our biotech division. She is a biophysicist by training. She worked at the Institute of Virology in Moscow and at Rockefeller University in New York. She brings a lot of experience in the field of biotechnology and pharmaceuticals. I come from quite a diverse background. I am a physicist by training. I taught in a variety of colleges and universities, including Cornell University and others. I was the CEO of a public company, Rapitech Systems, in the '80s that was a computer company. I was in the venture capital business, and for the past 10 years I am running General Patent Corporation."

Sam Stone: "Let's talk a little bit about some of the challenges as we look into a new millennium, a new year. Alex, tell us about some of the challenges, opportunities and perhaps milestones that General Patent Corporation will ultimately face as we look into the coming year and beyond, a new year."

Alex Poltorak: "Well, our challenges, Sam, are of a good kind. We are experiencing tremendous growth. We have now more business than we are able to process with our current staff so we are in the process of hiring more people, and we anticipate an explosive growth in the future and therefore our biggest challenge is controlling this growth in a sensible manner. We are dealing with intellectual property and this is an exploding field. I would say that today we find ourselves in the midst of the gold rush that relates to patents and intellectual property. Even people who are far from this field are, perhaps, getting a sense of it just from the many articles on this topic in business and general media. Almost every business and even consumer publications are coming out now with stories about the importance role the patent system plays in today's business. This patent system is actually facing tremendous challenges in today's economy because the very nature of the way we do business has changed. We are moving away from the brick and mortar business into the e-commence environment where the old standards don't necessarily work very well. And the relatively recent court decisions that allowed algorithm patents, software patents, and most recently patents on methods of doing business, present tremendous challenges for business in general and e-commerce business in particular. We see how almost every e-commerce business is embroiled in patent infringement litigation. We all have heard about the Amazon v. Barnes and Noble case, and almost every other company is involved in similar patent infringement litigation. And it gets only worse with time because, under the U.S. patent system, patent applications are kept secret in the patent office and it takes usually something like three years for the patents to issue. There are thousands of patent applications related to various ways of doing business on the Internet, various types of e-commerce applications that are pending now in the patent office. They are going to be coming out in the next months and years. And what people are going to find out is that most of the e-commerce companies are going to be infringing somebody's patent, and we are all going to find ourselves in the midst of lots of patent infringement litigation. There is going to be a very challenging time for all players in this field: for the courts on how to interpret these new patents, how to judge their validity; and a very challenging time for the patent office on how to prosecute such patent applications and find their prior art. It is an extremely challenging time for the entrepreneurs and business managers: how to manage their IP portfolio; how to deal with these situations; whether to license the patents that are asserted against them or to fight them in court; and how to build their own patent portfolios. And for us, of course, as the players in this arena, it is a very challenging time because we have to advise our clients how to behave in this situation and what is the best strategy."

Sam Stone: "The bulk of our audience listening today, Alex, is made up of worldwide press, institutional investors, analysts, money managers - for the most part you are talking to a financial audience in question here. What do you see? What should our audience clearly see as the real strengths and certainly real advantages that General Patent Corporation International certainly has that distinguishes the company as a true leader in today's and tomorrow's marketplace?"

Alex Poltorak: "We help companies to identify their perhaps most important assets, the IP assets, and these assets most likely are under-reported in their financial statements. Let's not forget that the intangible, intellectual property assets are the most underreported assets. This is a real problem, particularly for public companies. We help these companies to identify these intellectual property assets, to utilize them, to maximize their value and thereby maximize their value to shareholders. We help these companies to communicate this value to the shareholders, analysts, and the financial community at large. I think that the financial community has to remember that in today's business what is important for long term success of the company is not so much how much money they have, how much land or equipment or machinery they many own, but it is important how many patents they have, how many patents they file a year, a month, and how well these patents are cited by other patent applications. Recently there was an article by Baruch Lev, Professor at New York University, published in the Financial Analyst Journal, showing how the long term stock performance of a technology related company is in direct relationship with such parameters as how many patents they file a year, how many patents they have in their portfolio, particularly how well their patents are cited by other patents applications, etc. So what I would like to underscore is the tremendous importance that intellectual property in general, and patents in particular, play today in e-commerce and business in general."

Sam Stone: "Let's have a web site address and perhaps a telephone number for contact for our audience, Alex."

Alex Poltorak: "Sure. Our web site is www.generalpatent.com, and our telephone number is (845) 368-4000."

Sam Stone: "Alexander Poltorak, I want to thank you very much for your time today. Alex is Chief Executive Officer of privately held General Patent Corporation. Once again Alex, I want to truly thank you for your time today."

Alex Poltorak: "It's a pleasure to be with you."

Sam Stone: "Covering America and the world's leading business concerns, this has been Sam Stone for Wall Street Reporter Magazine."