TLH EP.45 IP Strategy, Legal Innovation, and the 5th Industrial Revolution
Hello, Legal Helm listeners!
Today, we’re honored to welcome David Carstens, founding partner at Carstens, Allen & Gourley, and a nationally recognized leader in intellectual property law. With dual engineering degrees, a law degree, and an MBA, David brings a truly rare mix of technical, legal, and business insight to the world of IP strategy. Over the years, he’s helped clients across technology, medical devices, telecom, and cosmetics turn their intellectual property into powerful competitive assets.
At The Legal Helm, we’re passionate about exploring how innovation, leadership, and technology are redefining modern legal practice. In this episode, we’ll dive into how AI, digital transformation, and the fifth industrial revolution are reshaping the very foundation of legal strategy—and how forward-thinking firms can adapt to stay ahead.
Thanks for tuning in!
Your host
Bim Dave is Helm360’s CEO. With 20+ years in the legal industry, his keen understanding of how law firms and lawyers use technology has propelled Helm360 to the industry’s forefront. A technical expert with a penchant for developing solutions that improve business systems and user experience, Bim has a knack for bringing high quality IT architects and developers together to create innovative, useable solutions to the legal arena.
Your guest
David Carstens distinguishes himself not only through his comprehensive knowledge legal protection of Intellectual Property (IP) but also through his innovative approaches to IP strategy and valuation. With an educational foundation that is as diverse as it is solid—holding bachelor’s degrees in both Electrical and Mechanical Engineering from the University of Texas at Dallas and Texas A&M University, respectively, a J.D. and an MBA from Southern Methodist University, along with completing the General Management Program at the Wharton School at the University of Pennsylvania—Carstens offers a distinctively strategic perspective in this specialized legal domain.
Bim Dave: Hello everyone and welcome to The Legal Helm where we explore the evolving intersection of law and technology. I’m your host, Bim Dave, CEO of Helm360. Today’s guest is someone who sits at the intersection of legal expertise, technical acumen, and business strategy. David Carstens is a founding partner at Carstens, Allen and Gourley a nationally recognized authority in intellectual property law. With two engineering degrees, a law degree, and an MBA. David brings a rare, multidimensional perspective to IP strategy. His clients span industries like technology, medical devices, telecom, and cosmetics, and he’s known for turning IP into a competitive business asset. It’s a real privilege to have him on the show today and to explore how legal strategy must evolve in the age of AI, digital transformation, and the fifth industrial revolution. David, welcome to the Legal Helm.
David W Carstens: Thank you very much, Pam. It’s a pleasure to be here.
Bim Dave: So as, as I mentioned in your intro, you’ve had a very interesting educational background and career today. Maybe you could just give us a little intro in terms of the journey that’s kind of led you into this space.
David W Carstens: Sure, I’d love to. So when I was growing up, I was always fascinated by, by technology even as a young kid. And consequently I thought when I went to college, maybe I would study engineering. And so I did my initial degree in mechanical engineering, which has always been probably my first love.
Just the ability to design stuff, build stuff, you know, understanding materials, understanding thermal properties of materials just always fascinated me. But I also want to understand a little bit more about how people go about protecting innovation. And so from. That undergraduate education, I went into law school and with a focus from the very beginning to go into intellectual property work understanding patents, trademarks, copyrights, and trade secrets.
Because I thought that that would be a, a fascinating career and it has been.
Bim Dave: Amazing. No, it’s, and it certainly sounds that way. So with, with that kind of interdisciplinary background, how has that helped you anticipate or navigate some of the, the kind of waves of technological disruption that’s been happening in the market over the years?
David W Carstens: Well it, it has because we’ve been living through some rapidly changing times with regards to technology. I recognized that when I first got out of law school even, and I realized, gosh, mate. My first engineering degree was a good start, but maybe not enough. And so I actually went back and, and finished up a, a degree in electrical engineering as well because I thought there’s so much change and the space, especially around computers and so forth, that I simply needed to be more equipped to understand, you know, so much of what we do in intellectual property work is we’re having to deal with new and novel.
Inventions and the quicker you can get up the learning curve where you can actually talk to the, in the inventors and understand what they’re doing the better. And it’s hard to, to do that if you can’t speak their language. And so consequently, the second engineering degree was particularly useful.
Bim Dave: No. Amazing. Sounds like they were very, very helpful in, in, where you’ve ended up.
David W Carstens: Yeah,
Bim Dave: so I believe you, you’ve recently been lecturing on the, on the Fifth Industrial Revolution. Maybe you could start us off by framing what it is, how is it different to the fourth?
David W Carstens: sure, sure. I’m always fascinated by the way technology’s evolved sometimes in fits and spurts and, the fifth industrial revolution is a phrase we use for some of the latest technologies that we’re going to transform our economy in, what I consider a very revolutionary way. And so for instance, you know, we look at technologies like ai, blockchain quantum computing virtual reality, and, and in some level advanced materials as kind of the five driving forces.
Behind this new industrial revolution. Now, a lot of times people will say, well, yeah, how are we already up to the fifth? What, you know, what when was the first industrial revolution? And so love to chat about that even for a second, just because to give you some context about why I think things are going to change so rapidly.
Bim Dave: Yeah, please, I’d, I’d love to hear more.
David W Carstens: Yeah, happy to. So sometimes people will talk about the first industrial revolution as being something that was driven. By the improvement of the steam engine by James Watt back in the 1780s, James Watt was in England. He was actually Scottish, but he, he did most of his work while he was in England.
And the steam engine had been around but had not been very efficient and not very effective. He studied it and came up with a, a. Dramatically improved version of the steam engine. And this revolutionized the way factories operated in England because it suddenly became a viable substitution for human physical labor.
And over the next 60 or 70 years it transformed England’s economy. And the nice thing about that was of course, it, it made England very powerful and it also made England very wealthy because the game of manufacturing superpower of the time. The second industrial revolution really started occurring here in the United States, and it was driven by men who, whose names you probably already know, you know Westinghouse and, and Edison and Tesla, and their thoughts were around the ability to generate electricity and simply send that electrical power over lines to factories, but also to homes, which was new.
And so that second industrial revolution occurred really around creating electrical grid systems. And that took a long time, but, you know, over a period of 40 years or 50 years, it transformed America’s economy. The third industrial revolution was really driven by men who worked in electronics.
And so, for instance you might remember. Old vacuum tubes being used for amplification while the real revolution occurred when a man named Shockley developed the transistor. And the transistor acted both as a, as a switch for electricity as well as a a means for amplifying electrical signal.
And then I have to give a shout out to Jack Kilby here from DA from Dallas, Texas. Jack developed the integrated circuit and both those men, of course, won the Nobel Prize for their work. But that was really the basis for what I’d call the third industrial revolution, which was what do we do with electricity now that it’s in homes?
You know, how do we manipulate it to do useful things? And of course there were, there were secondary things, you know, televisions and radios and so forth. But really it was the underlying electronics that made those things possible. The fourth industrial revolution is really what we’ve been living through.
You know, BIM, I’m sure you’ve watched the fascinating evolution of the, of the internet you know, the widespread adoption of computers, the ever increasing sophistication of computer software, and, and you’ve seen the amazing productivity that’s, that’s come around from, from those technologies of, of the fourth industrial revolution.
The nice thing about those second, third and fourth revolutions was they primarily happened here in the United States, and it’s one of the reasons why the United States is, you know, is the economic superpower. It is these are, are revolutions in the truest sense in that they, turnover old ways of doing business in, in term and replace it with something new.
So here we are at the fifth, the fifth industrial revolution. And I think everyone kind of senses it’s happening because we’ve seen what AI has already done in the last year. You know, three years ago people were kind of still talking about AI as some future thing that might be useful. You know, but once Chat GPT came out and crock and some of these other, other useful tools, I think everyone is amazed at how good they are.
And as good as they are today, imagine what they’re gonna be like in three years, you know, they’re gonna be even better. So that’s why we believe that we are already in the fifth industrial revolution.
Bim Dave: Yeah, it’s, it’s, it’s a fascinating history and, and it’s, it’s kind of interesting ’cause I, I’ve obviously kind of grown up in the fourth and, and seeing into the, the fifth, but it’s quite interesting that even just basic things like when I started my first job, the way we would access information.
Technology information would be in a series of books, right? So we would literally have a a little mini library with lots of programming manuals and things like that to go and get an answer to a question. So you would take time to go research and then go again, answer. And I’m sure it’s the same for you in, in the, in the practice of law. But just being able to explain. to like my 8-year-old child who’s in a completely different generation is, is is pretty interesting. Right? Because she’s like, why, why do you need to look in a book? Like you can just search on or Google or, or wherever.
David W Carstens: I know, I, I kinda, I worry about it a little bit with my kids because I don’t know if they even know what an index in a book was. You know, we used to have to go to libraries and find the books on the shelves, flip through the indexes, and then try to figure out, okay, well it’s, it’s on page 243. Okay, well that start going through that, you know, that was a, I don’t know, you know, sometimes I think that those kind of scholarly skills should still be taught.
I worry that sometimes information’s a little too easy for people to find and I think it it doesn’t develop some sort of certain critical thinking skill that forces you to pre-filter the way you go about searching for stuff.
Bim Dave: Yeah, in Indeed. There’s definitely something to be said for that. It, it would be interesting to hear from you in terms of like how, obviously you’ve been lecturing I believe it’s SMU
David W Carstens: SMU law school Yeah. For almost 30 years.
Bim Dave: Yeah. Tell us a little bit about that journey because it’ll be interesting to see how you see you know, even just the way that you are, you are teaching and the things that you are teaching over the years have probably changed pretty dramatically as well.
David W Carstens: Yeah. Yeah. No, I’ve, I’ve always enjoyed teaching. I, I graduated from law school back in 1989. In 1992, I started to go back and, and be one of the adjunct professors at SMU Law School. Initially taught patent law and then for a couple of years I picked up a class called Legal Protection of Computer Software.
It was a very focused type of intellectual property course that was just looking at the specific issues around how do you protect software. At the time in the, the kind of mid nineties, that was a fascinating topic because a, the software software industry was, was blowing up in America. It was, you know, becoming bigger and bigger.
And the, the questions about how do you keep people from taking the innovative improvements made by other companies. Really came to the forefront. And so consequently, how do you patent computer software? How do you you know, what are the limits of copyright protection and software? Whereas the, or the trade secrets and trademarks fit into the protection scheme.
The protection strategy was a really interesting and, and evolving, rapidly evolving area of the law back in the mid nineties. In 1995, the patent office came out with some guidance that kind of settled a lot of issues and, and consequently it became less of an, an intriguing issue for me. So I, I moved on from that class and started teaching international IP law.
’cause we were seeing in our own practice this rapid acceleration in globalization. And, and what I mean by that is we have clients who suddenly were selling products overseas and, and they were. More and more interested in getting patents in Europe and in Japan and in Korea. And at some level, they even were starting to want to patent their stuff in China.
And so for the last 20 years or so, I’ve, I’ve consistently taught international IP law which is again just a, a fascinating topic as you see how the world has also evolved. Its understanding of intellectual property and its value.
Bim Dave: Yeah, no, ab absolutely do. Do you think that legal professionals need to develop new skills in this era? So things like data science ethics, policy, interpretation, just so that they relevant with things changing so fast.
David W Carstens: Yes. I, I mean, I, I I thoroughly believe everyone always needs to be on a journey of constant education. And so it’s not just attorneys, but since attorneys are entrusted with with client matters and clients have to, you know, have faith that their attorneys are, are current on topics, I think it’s important that attorneys constantly educate themselves about the, the limits, particularly ai.
You know, I think there’s a. There are already kind of anecdotal stories that we hear regularly about attorneys who, when pressed for on a deadline, will simply let an ai servant generate for instance, a brief they file with the court that’s playing with fire. And you know, obviously some attorneys are already getting burned when it turns out that the, the brief was not very good at all.
In fact. Hallucinated and made up cases and and such.
Bim Dave: Absolutely. Yep. You gotta be careful.
David W Carstens: Yes
Bim Dave: what, what would you say from, from a law firm perspective what should they be doing now to kind of stay ahead of the curve when it comes to IP strategy, in particularly in like tech heavy sectors?
David W Carstens: there are some fundamental, draw how to say this, not drawbacks, but there are some fundamental hurdles that have to be acknowledged when coming up with IP strategy. The first is it is always a little uncertain how the patent office will respond when you apply for something in the field of software implemented inventions or something around ai.
Incorporated inventions. And so you may have a very good strategy, but find that the patent office does not cooperate with that strategy. Another aspect of, of any strategy is understanding who your real competitors are and keeping an eye on what they’re doing. How are they creating a mode around their processes?
How are they potentially blocking you from doing what you’re, what you wanna do, which, what, what your client wants to do. And so it’s important to always be thinking in terms of what can I actually protect? And more importantly, what are my competitors already protecting?
Bim Dave: Yeah, no, indeed. And just getting into some of the, the kind of IP strategy, particularly in the ae, the age of AI and blockchain. Like they’re fundamentally like reshaping the I IP landscape. Right.
David W Carstens: Yes.
Bim Dave: you see as the most pressing risks or legal challenges now for firms and IP holders?
David W Carstens: Hmm.
I’d like to start by by talking a little bit about the types of intellectual property and I, I talk about patents and trademarks and copyrights, but you know, keeping in mind that those are fundamentally different types of intellectual property. Patents would be something we’d use for inventions, you know, new methodologies.
Maybe that methodology is implemented in blockchain maybe involves some sort of an AI aspect. Copyrights are used to protect written works of authorship which might be software code. Trademarks might be your branding. You know, how do you go about branding your, your products and services?
And then trade secrets are how we protect. Information that may be technical, maybe it’s business information, but it’s information that has value to your company because you have kept it secret. It’s not generally well known, and you’ve taken reasonable precautions to keep it secret. And so every good strategy has to kinda look at all of those aspects.
Now when we talk about patents, one of the biggest risks is a, you’re communicating. What are very, very cutting edge, complex concepts to the US Patent and trademark Office, or perhaps the European Patent Office. Or the Japanese patent office. But in every case though, you’re still dealing with a person, a human being who’s an examiner at one of those organizations who may or may not really understand what’s, what’s the core of the invention.
And so one of the very first hurdles is simply being able to effectively communicate what is the the invention. You know, it’s easy to throw around lots of buzzwords, but at the end of the day, you have to paint a picture that’s so clear that an examiner at one of these patent offices can review it and in just a few hours, truly understand why it’s unique.
That’s the first hurdle. The second hurdle is every one of these organizations around the world view things in a slightly different way. The US Patent Office is driven by its own internal policies on how it examines these sorts of cases. It’s driven in a large part by the law, established by federal courts.
In other words while there is a statute the patent law, that statute has been interpreted by federal courts, including the US Supreme Court. And so for instance, in 2014, there was a famous case, the Alice Case that came out of the US Supreme Court that dealt with how do you examine cases involving software implemented business methods.
And the case caused a terrible disturbance at the patent office because of how the holding was written. They had to redo their entire examination process according to what the justices at the Supreme Court told them to do. And consequently, allowance rates at the patent office for those sorts of cases went from 70 and 80% allowance rates down to about 5% allowance rates.
Fundamental shift in how cases were examined. Likewise, when you deal with the European Patent Office, you know, it has its own set of thoughts and procedures around software related cases or AI related cases. And so the strategy has to look at the individual patent offices and how that affects your overall global strategy for pr creating protection.
Bim Dave: So is, is it, is it fair to say that like traditional IP strategies kind of have to have to evolve because I think they’ve probably built more for tangible innovations, right? Physical things that you can.
David W Carstens: Ab Absolutely true. Absolutely true. The, the patent office has never had an issue with tangible inventions. You know, something where it’s, easy to look at it, easy to conceptualize what it’s doing. Yeah, physical apparatuses, that’s the patent office is spectacularly good at those sorts of cases.
What the Patent Office does though, and it, it evolves, you know, it it understands the challenges it’s facing and, and honestly, I think the US Patent and Trademark Office does a remarkably good I job of handling an incredibly difficult task. You know, you’re asking an organization within the federal government to make an assessment within a reasonable amount of time about whether something is novel, whether it’s inventive, the scope of the protection that should be granted to a particular invention.
And every one of the cases is brand new and different, and hundreds of thousands of cases get filed every year. You know now to do that, they a have grown, there’s about 8,000 examiners at the US Patents and Trademark Office. Every one of ’em has got some sort of a technical background, and then they get clustered in what we call technical centers.
And there are approximately nine technical centers. One of ’em you know, is focused mostly on electronics. Within that group, there are subgroups and those subgroups. Are clustered around types of technologies. And so consequently there is there is a lot of specialization that occurs at the US Patent Office to help them deal with the, the, this rapidly evolving technology landscape.
And, and so for just, for example, technical center, 3,600 is, is what we call it. You know, is around electronic commerce. You know, and within it, it has various subgroups that, that handle different different groups of sorry, I’m kind of rambling here a little bit because it’s hard to explain how the technical centers are, are, are designed, but technical centers are the, the methodology that the patent office uses to make sure that the best examiner.
Gets assigned to whatever case arrives on their doorstep.
Bim Dave: Yeah, no, make, makes sense. So I’m just thinking about some of the, some of the, the products that we’re seeing kind of being launched into the market at the moment where it’s really a blend of two things. It’s a d it’s a, it’s a device, or it’s a, it’s a physical product that has now been infused with ai.
So, example, I recently got a pair of meta glasses, right. AI glasses and,
David W Carstens: Good for you. How do you like them?
Bim Dave: They, they’re, they’ve actually surprised me. So this is the first time I’ve needed to wear, wear reading glasses, right? So I went to the store to go and pick up a regular pair of glasses and I looked at the price of the ones I liked, and it was basically the same price as these ones.
So I thought, I’m, I’m a tech guy. I, I want to explore the technology. So I, I, I tried them on and they, you know, the, the super light and, and work well. and yeah, I’ve actually ended up using them more than I thought I would for things.
I didn’t expect, like taking pictures and listening to music on my commute to work and, and stuff like that.
And even telephone calls
David W Carstens: Yeah.
Bim Dave: a very good job of it. So that, but that blend of physical product and then AI being you know, driven into those products to be able to produce something else. How, how does that play out in, in the world of IP in, in your world of IP strategy? ’cause presumably
David W Carstens: with every patent application, there is a section in it called the claims. The claims are what we use to define the kind of the boundaries of what we consider to be the invention. And so, for instance these as, as I recall, meta has an arrangement with RayBan to provide AI infused glasses which are, are, are quite attractive act actually the ads I’ve seen makes me wanna buy a pair as well.
So when we claim something like that the first thing we have to do is we have to understand what’s already in the prior art. Prior art represents anything that was already disclosed to the public prior to the filing date of the application for, for instance, the, the meta branded glasses. And so for instance, you might remember 8, 9, 10 years ago, Google came out with something called Google Glass.
And that was one that actually was on the market that people had heard about. But, you know, a lot of times there are there’s prior art out there that people applied for for patents that they may never have actually commercialized the product. And so we try to get a, a, a good sense of what’s already out there what’s already been disclosed to the public, whether in the form of publications or in the form of patent applications or issued patents.
We then ask ourselves how does the new thing, the, the meta glasses, how does that differentiate itself from what’s already in the prior art? Then we try to write claims that focus on those differences.
Bim Dave: No, very, very good. Do, do you think that
David W Carstens: The.
Bim Dave:legal frameworks are keeping up with the pace of these kind of technologies that they’re supposed to govern? And if not, what, what, what do you see as the biggest gaps?
David W Carstens: I think that’s a, that’s a great question because right now, as I’ve mentioned, foreign primary categories in the United States for intellectual property, patents, trademarks, copyrights, trade secrets. Other countries also have a, a form of protection called utility models. You know Australia for instance has an Australia utility model legislation.
And these are, are for inventions that are useful and important, but not necessarily terribly inventive. It’s typically for a shorter period of time, it goes through a little bit lighter examination process. It’s kind of an intermediate. Form of patent protection. I have sometimes wondered if the United States shouldn’t adopt some sort of utility model concept for the protection of software and then only give it a four or five year term.
Right now, a utility patent is good for 20 years from the date of the application’s filing honestly, in the software. In the world of software, 20 years is maybe too long. I’m not sure that it if software is ever terribly relevant, 20 years after its introduction later versions of that same software might be relevant because of new features, but the original version, maybe not.
So I would like to see the United States at least examine the chance of introducing a new type of protection that would be focused just on software. That would sub assume also ai
Bim Dave: Hmm. Yeah, no, that, that makes a
David W Carstens: a lot sense.
Bim Dave: it?
David W Carstens: Yeah.
Bim Dave: So if I’m, if I am correct, I understand that you are under consideration for a US Department of Commerce Committee.
David W Carstens: Yes.
Bim Dave: is that right?
David W Carstens: Yeah, I my, my hopes are that will work out, but, within the Department of Commerce, there are a number of committees, but there is one on advanced technology that I’ve been nominated for. Right now the committee has nine members. They’re wanting to expand it next year to 15 members.
Bim Dave: Mm-hmm.
David W Carstens: they typically bring people in, mostly from large companies.
You know, the Microsoft, Google, IBM’s all have representatives. They’re looking for people who have. Broad technical background. And also some, some connection hopefully with, also with venture capital which I do. And, the benefit of it is that meet regularly in DC and then you have to make a report to Congress and, and again, this would be relatively new and, and ultimately the Secretary of Commerce has got to approve me. So we’ll find out hopefully within the next month or two.
Bim Dave: Well, I wish you luck and congratulations on getting nominated.
David W Carstens: Well, thank you. Yeah, it’s exciting.
Bim Dave: a big
David W Carstens: It’s exciting. The like I said, I don’t wanna, you know, count my chickens before they hatch, so to speak. So
Bim Dave: sure.
David W Carstens: we’ll see. Hopefully it works out.
Bim Dave: Indeed. Indeed. so how, how do you see public policy influencing legal innovation and IP enforcement going forward?
David W Carstens: Oh boy, that’s a great question. I will tell you because the Trump administration does want to compete effectively against all challengers, particularly China you’ve already seen, fallout over the last from his first administration forward and how he is dealing with innovation policy as it relates to China.
Here are a couple little points. China does have a global view on. Advancing to first world status with regards to innovation. They have done that through in many cases inappropriate ways. Friends of mine who work for the Department of Energy, for instance, have told me horror stories of the number of Chinese nationals who have taken technology outta the Department of Energy and in just the most blatant ways.
You hear terrible stories about US companies that set up joint ventures in China and under Chinese law are forced to kinda share and leave their technology behind. So if they pull out of the Chinese market, they leave a, a perpetual license to the technology with whoever their original partner was.
Those sorts of techniques have been very effective and. What you see now is that China, in fact is has kind of moved to first world status as an innovator. You may not like the the means by which they accomplished that, but they have accomplished it. And in fact, when you look at who’s filing for patent applications in the United States Chinese based companies apply for more US patents now than US companies.
So they have effectively, tide, if not started to kind of pass us in certain technology fields. With regards to public policy, back to your, back, to the, the, the kernel of your question. I think that it is clear that the US appreciates that there are certain technologies that will drive economic growth in the near future.
For instance, quantum computing. Is an area that you can see that the US is wanting to promote. And you see that China is wanting to promote it and they’re doing it through different methods, but it will be one of those breakthrough technologies that will lead to rapid innovation in other areas.
So public policy does affect. Intellectual property policy in the United States in that sense.
Bim Dave: Yeah,
David W Carstens: Hmm.
Bim Dave: And talking off Trump I believe he’s been in the news lately around the tax on patents.
David W Carstens: Yeah.
David W Carstens: Boy, that’s a, that’s a crazy proposal. So the Trump administration and the Secretary of Commerce Lutnick have now proposed. And again, this is just in the early stages. They not even put this out for public comment yet, but but they’ve proposed a one to 5% basically property tax on patents.
So in other words, let’s say a patent was worth a million dollars, you might have to pay $50,000 a year as a tax on the value of that patent. This is a, this is a, I don’t think a well thought through concept yet. And again, I’ve only heard the headlines portion of it. I haven’t seen the details. But first of all, it’s hard to come up with the value of a patent, you know unless it’s being actively licensed or if it was recently sold.
It’s hard to say that we have a fair market value for any particular patent. Any one patent may be valuable on its own, but maybe it’s only valuable as part of a larger group of patents. And so in isolation, maybe it doesn’t have much value. So coming up with valuation is, is difficult. It’s not like a used car where there’s 10,000 other used cars just like it, and you can get a bunch of data and be within a couple hundred bucks of the right answer.
Almost by definition every patent is on its own unique and its own unique value. So I think that is a first struggle, first hurdle. The second one is the second struggle is patents already have an ongoing fee placed on them in the form of what we call maintenance fees. After a patent issues you have to pay three maintenance fees to keep the patent valid for its entire life, you know, and that, you know, roughly speaking, you know.
Eight to $10,000 worth of fees already being placed on them. But it’s predictable. You understand what it’s what it’s gonna be, and and can work that into your, your business your business model of how you’re exploiting that patent. This might throw some real uncertainty into this sort of burden placed on a patent.
I’ll mention a third hurdle, third problem with it, which is. Patents can fluctuate in value greatly. In other words, what may seem like a fantastic technology one year may very well be completely subverted by a new innovation by another company the next year, in which case its value may go from many millions of dollars to zero overnight.
I don’t know how you adjust an annual tax. When you’re in a rapidly changing technology environment. So again, those are all hurdles that they’ll have to think through when, with regards to this proposed property tax on patents I’ll throw out one other thing too, which is it’s already a little unfair in the sense that, for instance, the Patent and Trademark office is a self-funding organization.
It doesn’t take tax dollars, it’s user fee. Funded. In other words, all the filing fees, these maintenance fees, that’s what actually pays for the, for the patent office’s existence. Now it’s going to be turned into a profit center. So I’m not so sure about that, but, you know, we’ll see how that, we’ll see how that proposal evolves.
Bim Dave: Indeed. Yes. He, he likes to keep everybody on their toes, right?
David W Carstens: It does, doesn’t he?
Bim Dave: yes. So, so just looking ahead to the future, David if you kind of, you know, look out to the next five years, what, what do you think are the kind of emerging technologies that you think will be most disruptive, out there?
David W Carstens: Well, certainly ai it will be hard to, to overlook its widespread ability to disrupt. I’m deeply concerned about its effect on employment, particularly entry level, white collar jobs. We just simply see too many offerings that replace that sort of entry level position. And I worry about the, the kids in college right now who are, you know, working hard in school only to find that the, the job they’d kind of hoped to.
Use as their starting point is no longer available, it’s been replaced. That said, I think there has to be a balance struck between job displacement from AI and job reintegration through universities. I think universities have got to evolve to be able to rapidly retrain. Young people back into skills that will allow them to become employable.
And I think there’s just going to be this, this weird balance between job displacement and, and, and new job integration that’ll have to occur. The second thing I’ll, I’ll throw this out just because I think it will be relevant, is in the blockchain field, I think that there is brand new business models that we’re saying that implement are implemented because of the blockchain that will displace current incumbent companies.
I think when you look at the, you know, 500 largest companies that list is going to greatly, greatly change as some of those companies are simply gonna be knocked out because their business model no longer, no longer works.
Bim Dave: Yeah. Yeah. No, indeed. It’s gonna be,
David W Carstens: It’s gonna be interesting to, to see.
Bim Dave: unfold, to be
David W Carstens: Yeah. Yeah. So part of, part of the strategy is to not be that that company, part of that strategy is to always be placing at least some bets on, on disruptive technology. And right now I think blockchain and AI are probably the most likely to be the disruptive factors in destroying an existing company’s business model.
Bim Dave: Hmm. Yeah, I agree. That’s good. Great. Good, and great, great advice.
David W Carstens: Yeah.
Bim Dave: So just finally on this, on this topic if you could give one piece of strategic advice to tech founders or IP council navigating this shifting terrain, what would it be?
David W Carstens: Gosh. I understand the landscape you’re getting into from an IP perspective. If you’re a founder, and let’s say that you’ve gotten $3 million of initial. Funding from some venture capital organization. The last thing you want to do is to spend that 3 million developing something that you later find out you’re not allowed to make user sell because a competitor already has it patented.
The single worst thing you can do is to just assume that this great idea you have hasn’t already been developed or thought about by somebody else. I’ve, I’ve seen a number of examples of this happening where a company will come to us two years into its existence and then are shocked to find, oh my gosh.
You mean there are patents in this field already? You know, that would block me from being able to do something. What do I do now? Well, those are questions you should be asking early, early in the process, not late in the process. So.
Bim Dave: Yeah, totally. Yeah, it’s very, very good
David W Carstens: yeah. Early understanding of your landscape, of your IP landscape.
Bim Dave: Yeah. Yep. good. So I just wanna move to some wrap up questions, if I may.
David W Carstens: Sure.
Bim Dave: The first of which being, if you could borrow Doctor who’s time machine and go back to yourself for age 18, what advice would you give yourself?
David W Carstens: Well, that’s a good question. At 18, what would I do differently? I would have spent a little more time doing computer science courses while I had three or four as part of my engineering training. I wish I’d had more more still you know, especially yes, computer software I would’ve gone to business school a little sooner.
Bim Dave: Mm-hmm.
David W Carstens: that’s the other thing. I found that when I got out even out of law school, my understanding of just fundamentals of how to run a business were really pretty weak. Nothing that they really teach you in law school or engineering school. I might have considered doing a, a JD MBA combination. Instead, I, I waited almost 15 years before I did my MBA after law school.
So. Yes. More, more computer software more computer architecture and and more business education.
Bim Dave: Excellent. More, more degrees to add. To add to the list.
David W Carstens: Well, I tell you as much as I’ve learned, what I really realize is that I’m, I’m that’s so much more that I don’t know. Yeah, it’s an old adage, but it really is true.
Bim Dave: It’s, it’s,
David W Carstens: It’s.
Bim Dave: to keep learning, right? It’s the way to, it’s the way to stay ahead. So, yeah. No, I, I appreciate that.
David W Carstens: Yeah.
Bim Dave: And just finally what’s keeping you inspired right now, outside of the legal world?
David W Carstens: Well I’m starting to wear a second hat. I have started a venture capital fund called Five IR Funds five IR again for Fifth Industrial Revolution. We have seen such a, such a growth in the number of patent filings in these fields. And we’re, we’re starting to see the emergence of some great companies with really clever disruptive ideas.
And with the, I’ve, I’ve started a number of companies in my, my life you know, besides the law firm started a bank, started you know, an innovation management platform. I decided to go ahead and bring in some partners and we’re in the process of raising $200 million. We have already made commitments to probably six companies that we’ve done a lot of due diligence on.
Some in the AI space, some in the blockchain space, some in the VR space. We’re evaluating one in the quantum space right now that we think is very exciting. That’s what I’m very, I’m very passionate about it because it ties in both sides in the sense that again, I get to see some absolutely fantastic technologies.
I’m always amazed by how, how clever people can be when confronted with a problem or an inefficiency and they, they think about ways of, of changing that or, or overcoming it. And then of course if they can have a good management team in place that they can actually build a business. I think there can be some great returns for investors consequently five IR funds.
That’s what’s keeping, that’s something I’m very passionate about right now.
Bim Dave: Yeah, it sounds, sounds really
David W Carstens: Appreciate,
Bim Dave: sharing
David W Carstens: yeah.
Bim Dave: Well, David, it’s been fascinating talking to you and learning about IP strategy and, and what’s happening in the future. I really appreciate your time today.
David W Carstens: Thank you bi I appreci. I appreciate the time and the opportunity to be on your show.