Sunday 31 March 2013

Scaremongering about SEPs

A post by Stefano Barazza on the IPKat weblog on 11 March caught the attention of Keith Mallinson (WiseHarbor), a regular contributor to IP Finance and a man who has taken a particular interest in the impact of standards and FRAND licensing on the ability of businesses in the telecom sector to compete with one another and in the extent to which voluntarily arrangements between competing businesses facilitate or chill investment.  This is what Keith writes:
Scaremongering about SEPs 
A recent article in the CPI Antitrust Chronicle entitled “Standard Setting Organizations Can Help Solve the Standard Essential Patents Licensing Problem”, that was reviewed by The IPKat, asserts that  
“specific circumstances affecting some industries like the information and communication technology (“ICT”) sector may limit the effectiveness of intellectual property rights” to “stimulate innovation, and to benefit consumers”. The authors (Kai-Uwe Kühn, Chief Economist, DG Competition, European Commission; Fiona Scott Morton, former Chief Economist, Antitrust Division, US Department of Justice (2011-12); Howard Shelanski, Director, Bureau of Economics, Federal Trade Commission) provide no evidence for such harm and mention only one example with “UMTS, or 3G.”
Widespread success and benefits in SEPs

Facts and figures show there is no such problem. On the contrary, the IPR licensing system is thriving with widespread benefits beyond patentees, in 3G and many other technologies. Standard-Setting Organizations can make adjustments to their rules and procedures where and when necessary; patent and contract disputes can continue to be dealt with by the courts.

In marked contrast, my analysis in the 16 articles I have published in IP Finance over the last couple of years has shown how very well (Fair) Reasonable and Non-Discriminatory Licensing is working for patented technologies used in ICT standards.  Major successes include cellular communications with GSM, WCDMA (UMTS) and LTE, and video encoding and compression with AVC/H.264 among many other flourishing standards. 
Despite the fact that all the above technologies are subject to thousands of Standard-Essential Patents, any of which can–according to detractors–block or “hold-up” standards entirely, these cellular and video standards are used by most of the world’s population every day. Sales of products implementing them, including mobile phones and other consumer electronic devices exceed two billion units per year worldwide. 
These standards-based technologies are as innovative as one could possibly expect or want. Furthermore, developments are highly collaborative. Hundreds of companies have declared in the ETSI IPR Database that 124,000 of their patents are possibly essential to these 3GPP cellular standards. Improvements continue apace to 2020 and beyond. Patent pool licensing for AVC/H.264 includes most of the standard’s patents with 30 licensors, 2,600 patents and 1,200 licensees at a royalty rate of no more than 20 cents per device. HD video is being enhanced in the H.265 standard with higher definition and increased compression for reduced communication bandwidth demands.

Consumers have more and more product choice with plunging prices, additional device features and increasing processing power literally in their hands. The first cell phones and color TVs cost thousands of dollars. Mobile phones sold without subsidy or service contract commitments were available for as little as $20 by the mid 2000s.  Similarly, smartphones that can stream TV shows among many other capabilities are also now available for less than $100.   Such low-cost devices will soon have the performance of handsets that cost several hundred dollars today.

Standards make technology more widely available because SSOs demand open disclosures, help make various technologies compatible and require members to offer patent licenses through (F)RAND declarations.  But what about the alleged harm to technology implementers such as device manufacturers from Patent Assertion Entities, or patent trolls as they are also disparagingly called?   These have mostly asserted non-SEPs and they have not fared particularly well when they have litigated, including SEPs. Furthermore, the courts are very reluctant or unwilling to issue injunctions when patent disputes are clearly about the price for licensing SEPs.

The CPI Antitrust Chronicle article represents personal views–not official agency positions–by these antitrust economists. In fact, some statements may contradict case law or agency policy. If and when the purported issues and problems appear, they can be and are effectively handled –without, for example, the proposed interventions on seeking injunctions and setting cash prices –in the normal course of business by SSOs and their participants, or through the courts when there are patent or contract disputes.  
SSOs are not monopolists or monopsonists and nobody is forced to join any SSOs. These voluntary organizations compete with each other on many fronts including rules of participation for members.  It is therefore fair and reasonable to let members decide among themselves what obligations, restrictions and other rules they want. In the absence of proven harm, there is no reason to fix a system that isn’t broken

Thursday 28 March 2013

The Fight Over Dell: Just How Hidden Is Its IP?

It was just a matter of time. Many of you might be following the recent events surrounding Michael Dell's efforts to lead a consortium to take the eponymous company private, and the two counter-offers submitted this week by investment heavyweights Carl Icahn and the Blackstone group. The underlying motivation for these investments seems to be the sense that only by taking the company private does it have a fighting chance to blunt its decline in the computer world, as the PC continues to give way to other computer hardware devices in the marketplace, while Dell has not come up with any substantial product alternatives.

So what "was just a matter of time"? No, I don't mean the high stakes competition for control of the company. I leave that for the myriad of experts in the M&A world who are way beyond my pay grade. Rather, I mean the attempt to turn IP into a potentially central aspect of the investment interest in the company. Consider the piece that appeared on the March 25th edition of Businessweek Technology Insider. Written by Roben Farzad, a well-regarded writer for the publication, the title says it all—"The Hidden Value of Dell: 3,449 Patents and Other Intellectual Property", here.

In effect, Farzad is summarizing a report that appears to have been published on March 8th by M*CAM, which is described as an IP valuation company located in the postcard-pretty town of Charlottesville, Virginia, here. According to the report, Dell has 3,449 patents and 1,660 patent applications. The report purports to have applied data-mining algorithms that give a commercial fitness measure as well as a measure of the transferability of each patent. The result: "47% of Dell's IP portfolio scored as commercial." The report ascribed a commercial fitness score of greater 50% in four out of 17 technical categories, namely graphics processing, data transfer, networks and switches." Using Farzad's term, the Dell transaction is merely the latest example of "IP wildcatting", following on the heals of the sale of AOL patents, the auctioning of the Nortel patents, the reported interest of Alcatel-Lucent to use Bell Labs IP as collateral and the Kodak patent portfolio

Let me be honest: I am skeptical about this. Consider the statement that "a source close to the deal says its bankers are cognizant of Dell's patent value." I seem to recall that it was the bankers who were flogging the $2.5 billion valuation of the Kodak portfolio in late 2011, only to see it later sold for barely $500 million. Sorry, I don't hold much credence in the bankers with respect to patent valuations. And then there is interest of the IP valuation company. Without suggesting anything untoward in the way that M*CAM has evaluated the IP position of Dell, either in its algorithms, heuristics, or conclusions, it should still be recalled that, since the Kodak valuation debacle, the industry has had a bit of explaining to do.

To be fair, the president of M*CAM states that "[t]he asset class [IP] is often misunderstood and difficult to price." That said, the report asks: "Does Dell truly not know it has strong it has market controls in its new business segments?" Does Dell not see that it could license its network technology to a third party, even a rival, thus generating a payment stream without really affecting its core business segments? Do most investors not really know, as suggested in the report, that IP can generate money for a company? Even a generation after we were told by Kevin Rivette and David Kline about the potential of exploiting IP Rembrandts in the attic, here, can it really be that Dell is still so very clueless about its IP position? Or are there other interests equally at work at playing up the company's IP potential? At the end of the day, is IP really the hidden story of the Dell transaction?

The LOTR and the One Armed Bandits: Part I

I love J.R.R. Tolkien’s Lord of the Rings and the Hobbit.  I’ve loved the books since I was a child and I love the movies as an adult.  I am sure there are other fans who love LOTR and the Hobbit more than me, but I am at least in the class of persons who owns multiple copies of the books, purchases tickets to the movies, buys the DVDs when they are released, purchases the DVDs that include the extended versions of the movies, and buys the video games based on the movie.  I am not in the class of fans that follows litigation concerning the LOTR and am thankful for LK Shield’s Deirdre Kilroy’s lead to this litigation.

On November 19, 2012, Fourth Age Limited, trustee for the Tolkien Trust, J.R.R. Tolkien Estate Limited, Harper Collins Publishers and others filed a complaint for: (1) Copyright Infringement; (2) Breach of Contract (3) Declaratory Relief -- Gambling Games and Downloadable Games; and (4) Declaratory Relief --Trademarks Service Marks and Services Licensing in Federal court, in the Central District of California (Los Angeles is located in the Central District), against Warner Brothers Digital Distribution, New Line Productions, Saul Zaentz Company d/b/a Middle-earth Enterprises, and others.   (Zaentz recently filed a counterclaim, which I’ll hopefully discuss soon).
The suit essentially revolves around the interpretation of a clause concerning merchandising rights in a 1969 license covering the film rights.  The complaint states that:
Specifically, defendants' predecessors-in-interest obtained the limited right to use the characters, places, objects and events referred to in The Lord of the Rings and The Hobbit "solely and only upon and in connection with the manufacture, sale and distribution of ... any and all articles of tangible personal property, other than novels, paperbacks and other printed published matter..." . . .  The original contracting parties thus contemplated a limited grant of the right to sell consumer products of the type regularly merchandised at the time (such as figurines, tableware, stationery items, clothing, and the like). They did not include any grant of exploitations such as electronic or digital rights, rights in media yet to be devised or other intangibles such as rights in services. To emphasize the limited nature of the grant, plaintiffs' predecessors-in-interest specifically reserved "the right to utilize and/or dispose of all rights and/or interests not herein specifically granted."
The Defendants apparently gave permission to a company that produces gaming equipment and more specifically slot machines to produce slot machines and an online game.  And, according to the complaint, many fans are not happy about this development—very unhappy.   Many also know that the LOTR and the Hobbit are viewed as incorporating Christian and Catholic meaning, but what does that mean (particularly with respect to IP claims)?  As a fan, I must say that I am not outraged, but which fans matter?  Other works of art have been apparently licensed to produce gambling devices such as the Wizard of Oz’s The Great and Powerful Oz slot machine.  (or is that fundamentally different because someone would create a Wizard of Oz slot machine?)  I can understand, of course, how the Plaintiffs want to protect the image associated with its brand and how other fans are upset; however, I am not sure that an argument that is essentially “we never would have agreed to allow this type of merchandising because it would upset our fans and is inconsistent generally with the merchandising of great works of art” is always true? Although once the court sorts out the trademark rights in the license in favor of the Plaintiffs, then Defendants and their licensees will cease selling slot machines and other gambling devices under the trademarks.  The fourth claim for declaratory relief states:
a. For a declaration that defendants do not have the right to license or exploit any services in any categories, nor the ability to register, use or exploit service marks in any categories in connection with The Lord of the Rings and/or The Hobbit; and

b. for a declaration of the parties' respective rights and obligations under the Merchandising License as they relate to the registration and/or use of Lord of the Rings and/or Hobbit-related trademarks and/or service marks and/or the ability to license or exploit services.
Is the value of the brand hurt by licensing the production of gambling devices?  I suppose it depends on the nature of the work, but from who’s perspective?  The LOTR is relatively violent.  What do you think?

Wednesday 20 March 2013

UK Budget and IP

Well, we have the shiny brand new patent box proposals coming in April anyway, so there were no big  IP expectations of this Budget – just as well, really!

There was one 'direct' IP announcement – the above the line R&D relief for large companies is increased to 10%, from the originally proposed 9.1%. This doesn't sound much of an increase, but it's a large improvement on the 6% that the current large company relief would be worth when the 20% corporate tax rate comes into effect. (A post on ATL is in the works …)

A 'coming soon' announcement was also hidden in the Budget documents – the Government plans to introduce consultation on tax reliefs for the visual effects industry. Presumably these will be modelled on the film/quality tv/animation/video games reliefs that we already have, but there's no detail yet beyond the announcement of consultation.

There were quite a few indirect announcements – things that will benefit IP companies by benefiting companies and sectors in general, including:

- the 20% corporation tax rate: a bonus for large companies, and fairly predictable
- the NICs allowance of £2,000 per business, reducing the costs of employing people
- the extension of the capital gains tax exemption on investment via SEIS: useful for startups looking for funding
- then the grants etc funding, including £1.6bn for Industrial Strategy, part of which will go into a £2.1bn fund for aerospace; a £15m competition for digital content production; and £8m for the Skills Investment Fund, focussed on the digital content sector
- and finally, various initiatives intended to make it easier to raise finance. In theory.

Apple v Samsung: The War Over "Cool"

Last August, we published a blog post--"Apple v Samsung: Don't Take Your Eyes Off the Brand and User App Ball" (here) in which we questioned whether Apple's successful verdict in suit against Samsung would be a game changer in the smartphone world. Views were heard far and wide than the case would have a major impact on the industry by forcing Apple's competitors to engage in more "genuine" innovation in the smartphone industry, both with respect to handsets and operating systems. Our sense was that this view was missing the mark on the role of IP; Apple's ultimate competitive advantage in this product space would be determined more by the power of its brand to connote a unique product ecosystem than by any victory in the patent wars.

At the time, our observation suggested that Apple would continue to be the winner because of the strength of its brand. With its stock reaching the $700 per share, this position seemed reasonable. But how times have changed: Apple was later denied the broad injunctive relief that it sought against the sale of certain Samsung smartphones in the US; the court cut by nearly 50% the jury award of more than $1 billion in favour of Apple, with perhaps further reductions to come; and Samsung has become the largest manufacturer of smart phones by volume of phones sold, as Apple struggles to find a convincing commercial response against Samsung's multiple price point product line.

But the most telling development was Samsung's widely-covered launch last week in New York of its new Galaxy s4 model smartphone here. For the first time, the launch of a smartphone product by an Apple competitor was being treated as a media event in its own right. While pundits differ on just how successfully "splashy" the launch really was, and just how game-changing the new features on the Galaxy s4 are here, one point stood out: many commentators opined that Samsung was on the verge of replacing Apple as the "cool" brand for smartphone devices. Thus, iPhones are for one's parents; Samsung is for the younger crowd. One noted interviewee on Bloomberg radio stated bluntly that Samsung has supplanted Apple as the product of choice, if "cool" is the driving factor in deciding what smartphone to purchase. As I recall, the patent wars were not mentioned at all during the interview.

The question is: how did this happen? How is it that the very symbol of high-tech "cool", the company that turned owning a phone into a form of fashion statement, is itself at risk at being perceived as holding the short end of the image stick? I want to suggest that it might be that the patent wars themselves have impacted on the public perception of Apple. In many popular circles patent litigation, rather than being seen as a last-resort means by a party to protect its core technology against an opportunistic and scrupulous defendant, is increasingly viewed as simply a means for hitting the jackpot of an award in the millions or even billions of dollars. When I show to colleagues or a lecture audience the design patents that were the focus of the U.S. case, the response is a combination of disdain or worse. The design patents at issue are viewed as trivial, rather than constituting the company's core technology. Moreover, in a market that is dominated by two actors, Apple's (ultimately unsuccessful) attempt to obtain wide-ranging injunctions were seen by segments of the public as a ploy to limit marketplace competition at the expense of the consumer. This is especially so when each new generation of smartphone is perceived as containing only incremental improvements in comparison with the previous model.

Apple's patent wars might make perfect sense as a matter of strategy, but they hardly reinforce the idea that the iPhone and its ecosystem are, in a word, "cool." In a world where branding and image may amount to more and more of a company's most valuable IP, Apple's patent wars may have only served to undermine the heart of the company's competitive advantage in smartphone branding. Six months later perhaps we see the result-—the company's products may be at risk of not being as "cool" as those of its competitors. If this is true, Apple would be well advised reconsider the role of its patent strategy in supporting the reputation and goodwill of the company's smartphone products. .

Tuesday 19 March 2013

More Thrift Shop Access or More Axcess: First Sale and the US Supreme Court’s opinion in Kirtsaeng v. John Wiley & Sons, Inc.

Today the US Supreme Court issued its much anticipated opinion in Kirtsaeng concerning application of the first sale doctrine.  Ms. Rosati at the IPKAT website has covered the opinion here.  I found a couple of portions of the opinion very interesting (although it will take some time to digest all of the opinions fully).  The first part concerns part of the Supreme Court’s use and analysis of some of the amicus briefs.  The second part concerns its analysis of the issue in the case in relation to the US Constitution’s Progress clause.  Here is the first part:

The “first sale” doctrine is a common-law doctrine with an impeccable historic pedigree. In the early 17th century Lord Coke explained the common law’s refusal to permit restraints on the alienation of chattels. Referring to Littleton, who wrote in the 15th century, Gray, Two Contributions to Coke Studies, 72 U. Chi. L. Rev. 1127, 1135 (2005), Lord Coke wrote:
“[If] a man be possessed of . . . a horse, or of any other chattell . . . and give or sell his whole interest . . .therein upon condition that the Donee or Vendee shall not alien[ate] the same, the [condition] is voi[d], because his whole interest . . . is out of him, so as he hath no possibilit[y] of a Reverter, and it is against Trade and Traffi[c], and bargaining and contracting betwee[n] man and man: and it is within the reason of our Author that it should ouster him of all power given to him.” 1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628).
A law that permits a copyright holder to control the resale or other disposition of a chattel once sold is simi- larly “against Trade and Traffi[c], and bargaining and con- tracting.” Ibid.
With these last few words, Coke emphasizes the importance of leaving buyers of goods free to compete with each other when reselling or otherwise disposing of those goods. American law too has generally thought that competition, including freedom to resell, can work to the advantage of the consumer. See, e.g., Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U. S. 877, 886 (2007) (restraints with “manifestly anticompetitive effects” are per se illegal; others are subject to the rule of reason (internal quotation marks omitted)); 1 P. Areeda & H.Hovenkamp, Antitrust Law ¶100, p. 4 (3d ed. 2006) (“[T]he principal objective of antitrust policy is to maximize consumer welfare by encouraging firms to behave competitively”).
The “first sale” doctrine also frees courts from the administrative burden of trying to enforce restrictions upon difficult-to-trace, readily movable goods. And it avoids the selective enforcement inherent in any such effort. Thus, it is not surprising that for at least a century the “first sale”doctrine has played an important role in American copyright law. See Bobbs-Merrill Co. v. Straus, 210 U. S. 339 (1908); Copyright Act of 1909, §41, 35 Stat. 1084.  ...
Used-book dealers tell us that, from the time when Benjamin Franklin and Thomas Jefferson built commercial and personal libraries of foreign books, American readers have bought used books published and printed abroad. Brief for Powell’s Books Inc. et al. as Amici Curiae 7 (citing M. Stern, Antiquarian Bookselling in theUnited States (1985)). The dealers say that they have “operat[ed] . . . for centuries” under the assumption that the “first sale” doctrine applies. Brief for Powell’s Books 7. But under a geographical interpretation a contemporary 21 Cite as: 568 U. S. ____ (2013). . . . The dealers say that they have “operat[ed] . . . for centuries” under the assumption that the “first sale” doctrine applies. Brief for Powell’s Books 7. But under a geographical interpretation a contemporary 21 Cite as: 568 U. S. ____ (2013) tourist who buys, say, at Shakespeare and Co. (in Paris), a dozen copies of a foreign book for American friends might find that she had violated the copyright law. The usedbook dealers cannot easily predict what the foreign copyright holder may think about a reader’s effort to sell a used copy of a novel. And they believe that a geographical interpretation will injure a large portion of the used-book business.
Technology companies tell us that “automobiles, microwaves, calculators, mobile phones, tablets, and personalcomputers” contain copyrightable software programs or packaging. Brief for Public Knowledge et al. as Amici Curiae 10. See also Brief for Association of Service and Computer Dealers International, Inc., et al. as Amici Curiae 2. Many of these items are made abroad with the American copyright holder’s permission and then sold and imported (with that permission) to the United States. Brief for Retail Litigation Center, Inc., et al. as Amici Curiae 4. A geographical interpretation would prevent the resale of, say, a car, without the permission of the holder of each copyright on each piece of copyrighted automobile software. Yet there is no reason to believe that foreign auto manufacturers regularly obtain this kind of permission from their software component suppliers, and Wiley did not indicate to the contrary when asked. See Tr. of Oral Arg. 29–30. Without that permission a foreign car owner could not sell his or her used car.
Retailers tell us that over $2.3 trillion worth of foreign goods were imported in 2011. Brief for Retail Litigation Center 8. American retailers buy many of these goods after a first sale abroad. Id., at 12. And, many of these items bear, carry, or contain copyrighted “packaging, logos, labels, and product inserts and instructions for [the use of] everyday packaged goods from floor cleaners and health and beauty products to breakfast cereals.” Id., at 10–11. The retailers add that American sales of more traditional copyrighted works, “such as books, recorded music, motion pictures, and magazines” likely amount toover $220 billion. Id., at 9. See also id., at 10 (electronic game industry is $16 billion). A geographical interpretation would subject many, if not all, of them to the disruptive impact of the threat of infringement suits. Id., at 12.
Art museum directors ask us to consider their efforts to display foreign-produced works by, say, Cy Twombly, René Magritte, Henri Matisse, Pablo Picasso, and others. See supra, at 10 (describing how §104 often makes such works “subject to” American copyright protection). A geographical interpretation, they say, would require the museums to obtain permission from the copyright owners beforethey could display the work, see supra, at 15—even if the copyright owner has already sold or donated the work toa foreign museum. Brief for Association of Art Museum Directors et al. as Amici Curiae 10–11. What are the museums to do, they ask, if the artist retained the copyright, if the artist cannot be found, or if a group of heirs is arguing about who owns which copyright? Id., at 14.
These examples, and others previously mentioned, help explain why Lord Coke considered the “first sale” doctrine necessary to protect “Trade and Traffi[c], and bargaining and contracting,” and they help explain why American copyright law has long applied that doctrine. Cf. supra, at 17–18.
The second interesting part contains language that may spawn a hundred law review articles by interested parties:
The Constitution describes the nature of American copyright law by providing Congress with the power to“secur[e]” to “[a]uthors” “for limited [t]imes” the “exclusive [r]ight to their . . . [w]ritings.” Art. I, §8, cl. 8. The Founders, too, discussed the need to grant an author a limitedright to exclude competition. Compare Letter from Thomas Jefferson to James Madison (July 31, 1788), in 13Papers of Thomas Jefferson 440, 442–443 (J. Boyd ed. 1956)(arguing against any monopoly) with Letter from James Madison to Thomas Jefferson (Oct. 17, 1788), in 14 id., at 16, 21 (J. Boyd ed. 1958) (arguing for a limited monopoly to secure production). But the Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain. Neither, to our knowledge, did any Founder make any such suggestion. We have found no precedent suggesting a legal preference for interpretations of copyright statutes that would provide for market divisions. Cf. Copyright Law Revision, pt. 2, at 194 (statement of Barbara Ringer, Copyright Office) (division of territorial markets was “primarily a matter of private contract”). [EMPHASIS ADDED BY BLOGGER]
To the contrary, Congress enacted a copyright law that (through the “first sale” doctrine) limits copyright holders’ability to divide domestic markets. And that limitation is consistent with antitrust laws that ordinarily forbid market divisions. Cf. Palmer v. BRG of Ga., Inc., 498 U. S. 46, 49–50 (1990) (per curiam) (“[A]greements between competitors to allocate territories to minimize competition are illegal”). Whether copyright owners should, or should not, have more than ordinary commercial power to divide international markets is a matter for Congress to decide. We do no more here than try to determine what decision Congress has taken.
So, here is the extra-special language again: “But the Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain.”  Yikes! (Monsanto Sweating?)
Notwithstanding that it is not entirely on point, it is kinda close and very amusing: [Disclaimer: Explicit Lyrics].

Monday 18 March 2013

Creating markets from research results: a new EPO event

Do you fall within the class of persons described as "senior-level decision-makers concerned with the commercialisation of public research, including national representatives of technology transfer offices (TTOs), representatives from ministries for education and research, higher education councils and funding agencies, the business and industry communities, and national patent offices"?  If so, a forthcoming event organised by the European Patent Office (EPO) might be just up your street.  Long gone are the days when the EPO confined its focus to the immediate functions of receiving, examining and granting patents and handling the large number of oppositions that followed: the EPO, like the other major regional and national patent offices, is increasingly aware of its interface with the business community. This conference represents continuing evidence of its commitment in this direction. You can register online here.

Creating markets from research results

Poster (JPG)6-7 May 2013
European Patent Office, Munich, Germany 

The role of universities in national innovation systems has expanded from the production of scientific knowledge for economic growth to include solving large scale challenges, such as climate change and energy and addressing social needs.
Without adequate strategies and policy support to manage IP effectively, there is a risk that inventions and ideas produced by universities and public research organisations may not be exploited. Such strategies and policies have therefore become a matter of top priority for policymakers, funding agencies and business, all of whom have a high degree of interest in the ability of universities to diffuse knowledge. Universities in turn have a strong interest in seeing their research put to good use for society and in enhancing their relevance to society, including through collaboration and economic development.
While the prospect of using the commercialisation of IP as a source of additional income for research is not a realistic priority for most universities, IP management remains an important element in any university’s strategy,particularly in the context of the EU Horizon 2020. The different roles, missions and resources of universities and public research organisations can lead to differences in IP policies and commercialisation practices, which can be a driver or a barrier to commercialisation. There is therefore a need for a deeper understanding of their impact on both research and commercialisation.
The conference therefore aims to:
  • promote understanding and awareness of the importance of IP policies and procedures for the long-term strategy and mission of universities and public research organisations;
  • promote the establishment of structures which will allow the implementation of IP management in universities;
  • identify novel practices for fostering and accelerating the transfer, exploitation and commercialisation of knowledge with a view to developing international best practice; and
  • encourage closer collaboration between universities and industry.

After Megaupload: what actually happens in the marketplace?

"Gone in 60 Seconds: The Impact of the Megaupload Shutdown on Movie Sales" is a fascinating piece of research by Brett Danaher (Wellesley College, Department of Economics) and Michael D. Smith (Carnegie Mellon University, H. John Heinz III School of Public Policy and Management). It's only 22 pages long, plus bibliography, and doesn't have too much algebra in it, and it takes a real-world look at what happened to the market for the sale of recorded movies in the wake of the taking down of the Megaupload file-sharing site.  According to the abstract of this article, which is available via SSRN,
"The growth of Internet-based piracy has led to a wide-ranging debate over how copyright policy should be enforced in the digital era. While some enforcement approaches involve policies designed to deter consumers from filesharing though incentives or penalties, other approaches target the supply of piracy by shutting down Internet sites that serve as major conduits for pirated content. In this paper we analyze how one such anti-piracy intervention, the shutdown of the popular Megaupload site, affected the digital sales of movies for two major studios.

Simply examining changes in sales after the shutdown would produce an inaccurate measure of its actual effect as sales are changing over time for a variety of reasons. Instead we exploit cross-country variation in pre-shutdown usage of Megaupload as a measure of treatment intensity. Controlling for country-specific trends and the Christmas holiday, we find no statistical relationship between Megaupload penetration and changes in digital sales prior to the shutdown. However, we find a statistically significant positive relationship between a country’s Megaupload penetration and its sales change after the shutdown, such that for each additional 1% pre-shutdown Megaupload penetration, the post-shutdown sales unit change was 2.5% to 3.8% higher, suggesting that these increases are a causal effect of the shutdown.

Aggregating these increases, our analysis across 12 countries suggests that, in the 18 weeks following the shutdown, digital revenues for these two studio’s movies were 6-10% higher than they would have been if not for the shutdown. Thus our findings show that the closing of a major online piracy site can increase digital media sales, and by extension we provide evidence that Internet movie piracy displaces digital film sales".
This blogger was particularly taken by the author's concluding comments, in which, without seeking to diminish the quality of their analysis, they do however qualify it:
"...  Megaupload was a very well-known cyberlocker and its shutdown was highly publicized. As such, the shutdown of Megaupload influenced the policies of several other cyberlockers focused on piracy, and our results necessarily measure the “net impact” of the Megaupload shutdown across the cyberlocker industry, as opposed to just measuring the impact of Megaupload. In addition, our results only analyze the impact of Megaupload on digital motion picture sales. We are not able to measure the effect of this shutdown on other motion picture channels (e.g., DVD sales, theatrical sales) or on other product categories (e.g., music, books). Because we only observe 18 weeks following the shutdown, we also do not know whether the sales increase will persist or if these consumers will eventually find their way back to alternative piracy channels (in spite of the fact that we see no clear indication of such a reversion in the 18 weeks in our data). Finally, we note that our study only measures specific benefits of this regulation - it does not measure either tangible or intangible costs of this sort of intervention, and such costs should be considered carefully as part of any policy decisions.

In spite of these limitations, we believe that our study makes several important contributions to the academic literature. First, our study is one of a small number of papers to use real-world sales data to analyze consumer behavior in online channels. Second, our study is one of the first in the literature to analyze the impact of anti-piracy interventions on sales, and the only one we are aware of to analyze supply-side anti-piracy intervention — an important policy question which thus far has not been informed by academically rigorous analysis. Third, our study contributes to the discussion of whether Internet piracy displaces movie sales and rentals, and is the first we are aware of that focuses on paid digital movie downloads. Finally, our analysis provides a methodology and approach that could be applied to other similar anti-piracy interventions in future research".
This blogger hopes that the work by Danaher and Smith will provide a useful building-block with which to construct an edifice of greater understanding of how consumers respond to events such as file-sharing shutdowns and the loss of cyberlockers.  Business based on the commercial sale of digital movies may be able to learn from consumer response and adapt their pricing and marketing mechanisms accordingly.  It would also be good to see how the adjacent markets for music and books behave: are movies the paradigm for all copyright-protected works or, given the relative speed at which films rise and fall in the market place, are they the exception to a different rule?

Thanks go to Chris Torrero for spotting this item.

Thursday 14 March 2013

Two More Stories of Access (and Creation): Veronica Mars and Semaphore Press

Following up on my last post, here are two more stories of access and creation.  Veronica Mars is a television series involving a young female detective played by Kristen Bell.  The television series has a strong and loyal following, but was cancelled after a few seasons.  Apparently, there were grumblings about creating a movie based on the television series, but nothing was happening.  Well, something has happened—in a little over one day via crowdfunding on Kickstarter over 2.7 million dollars has been raised to create the movie.  There are over 45,000 backers of the film.  Read more here, and hereThere are also incentives for various giving levels.  At the top, for one person who donates more than $10,000:

You will get a speaking role in the movie. Here’s the scene — Veronica is eating with the man in her life. Things have gotten tense between them. You are the waiter/waitress. You approach the table, and you say, “Your check, sir.” We guarantee you will be on camera as you say the line. Unless you go all hammy and ruin the scene and we have to cut you out, but that would be a sad day for all of us. Just say the line. Don’t over-think it. You’re a waiter. Your motivation is to turn over the table. In addition to appearing in the movie, you’ll receive a framed copy of the page of the script that includes your line. You’ll get an invitation to the premiere and the after party. You are, after all, in the movie. Think of yourself as Guy Fleegman from Galaxy Quest. People will surely want autographs. You’ll also receive the signed movie poster, the Blu-Ray/DVD combo pack, the digital version of the movie, the T-shirt and a pdf of the shooting script.

That actually doesn’t sound like a bad deal to me.  I wonder how much I would pay to appear in a new Star Wars movie—probably not as much as many other fans.  At the lowest gift amount, $10 or more, you receive a pdf of the script and updates about the movie.  Will Veronica Mars’ success change the game for filmmaking?  No, according to one Forbe’s author who points to the facts that the Veronica Mars project had a loyal fan base, a script and the buy in of Kristen Bell, the lead actress.  Great points, but I am a bit more optimistic--maybe with some tweaking it can change the game for some types of indie films. 

Semaphore Press is the brain child of Professors Lydia Loren and Joseph Miller.  Professor Loren is a intellectual property law expert, who specializes in copyright law at the Lewis and Clark Law School and Professor Miller is a intellectual property law expert, who specializes in patent law at the University of Georgia Law School.  Semaphore Press offers books for sale based on a suggested price:

What do you have to pay?
Each publication has a suggested price. We price full casebooks based on our belief that it is fair to ask a student pay about $1 for the reading material for each one-hour class session. Different schools use different calendars and credit hours, so we've settled on a suggested price for most of our casebooks of $30. We ask that you pay the suggested price either with a credit card (by clicking the appropriate link on our page), or by sending us a check, and then download a digital copy of the casebook. Note that if your professor has assigned, e.g., only 10 class sessions of material from a Semaphore Press book, then we suggest that you pay $10.

We have expenses that we need to cover. Our authors hope, and deserve, to receive some royalty revenue from the works that they've created. But we also recognize that law school is expensive. We've heard stories of students not buying the required books because they just can't afford them. These students - who want to learn just as much as those who can afford the books - borrow a classmate's book some days, read the copy that is on reserve in the library other days, and some days simply can't do the reading. We think that is not the best way to go about obtaining, or offering, an excellent legal education. Download the required reading and pay what you can, or what you think is fair.

Yes, you read correctly—you could pay nothing for their books.  And, I am sure that some choose not to pay.  How much do casebooks usually cost? Casebooks can cost as much as $180.  Semaphore Press currently offers three casebooks: Intellectual Property Law: Cases and Materials; Internet Law: Cases and Problems; and Interstate Compacts: Cases and Materials.  I have used the Intellectual Property Law: Cases and Materials book and I think it is excellent.  If you need a casebook concerning US intellectual property law, I highly recommend it.  And, I highly recommend you pay at least the suggested price.

Tuesday 12 March 2013

Great (IP) Brands (Products) Never Die

During the last election cycle, US Presidential candidate Mitt Romney attacked the beloved US children’s television show, Sesame Street, in a debate with Barack Obama.  In a bizarre exchange, Romney basically said he was going to shut down the Public Broadcasting Service show—Big Bird, the Grouch, the Count, Bert, Ernie and Elmo were in trouble.  My children, who watched the debate, were horrified.  At the time of the debate, my children were ages 8, 5 and 3 (we had to work to get them to focus).  After the debate, they would say things like, “We hate Romney,” and “Romney hates kids.”  I tried to explain to my kids that Romney is not against Sesame Street; Romney just doesn’t like the fact that the government is partially paying for the production of Sesame Street while our country has so much debt.  I also pointed out that Sesame Street is a very popular show and that a firm in the private sector would be sure to “pick it up”—they probably wouldn’t miss a show.  (trying to be objective here)  But, my kids were not having it.  They still, to this day, dislike Mitt Romney.  And, if you ask my now four year old what her religion is she says, “Democrat.”  (So much for Sunday school.  And, I do confess that there are other reasons my kids support the Democrats and they also think President Barack Obama is “very cool.”)

Here is another teaching moment.  The beloved American snack food and brand, the Twinkie, is reborn.  Last year, the Hostess company announced its bankruptcy.  Some of its brands were American icons such as Wonder Bread and Twinkies.  CNN reports that a joint venture of private equity firms is purchasing the Hostess snack food business, including Twinkies, for $410 million.  CNN has also reported that the “Wonder Bread” brand and Hostess bakeries has been purchased by Flower Foods for $360 million.  Looking forward to seeing Twinkies on the shelves again—although I confess I prefer Sno Balls. (I wonder if my kids are now going to love a joint venture of private equity firms.)

Sunday 10 March 2013

GE: Can the Eight-Hundred Pound Gorilla Successfully Operate a Health Care Investment Fund?

The question is a simple one: Can one of the world's largest multinational companies successfully operate an investment fund? The company at issue is GE and the focus of the fund is innovations in the health care area (especially through GE Healthcare). As part of the Stanford Technology Ventures Program, a spirited lecture in support of the proposition was recently given by Dr Susan Siegel, who was named in 2012 as CEO of Healthymagination, a GE initiative that was launched in 2009.

Looking for more information, I found the following description of the fund:
"The healthymagination fund is an equity investment fund focused on identifying, partnering with and growing highly promising healthcare technology companies. The fund invests in companies globally that have innovative technologies aligned with the strategic objectives of GE Healthcare and GE's global healthymagination initiative. The fund also targets healthcare companies developing innovative and unique business models and services."
The company states that the $250 million fund has an investment focus in three major areas: (i) Broad-based diagnostics; (ii) healthcare information technology: and (iii) life sciences, especially in biopharmaceuticals stem cells and vaccines. Given the sorry state of investment funding in the health and medical device fields, an initiative of the size of "Healthymagination" would seem to be a welcome one. And yet, one has to wonder what one can reasonably expect from the project. Unfortunately, a search for readily available information about how the initiative is doing did not provide much user-friendly guidance. As such, it is difficult to get a sense of just how well the funding initiative has been going (except perhaps for the statement by the company that "Healthymagination has grown to more than 50 validated products").

Against that background, I have the following thoughts:
1. From a macro view, one wonders whether it is better or worse that GE seeks to invest in innovative companies technologies "aligned with the strategic objectives of GE Healthcare." Might such an alignment of interests work as a counter-weight to what one would hope is the outcome of the initiative, namely provide the company with access to technologies and ideas that are not being successfully developed at the company itself. Perhaps GE is seeking out primarily companies that are already well down the development path, thereby enabling GE to "cherry-pick" those companies best-suited to its overall goals?

2. Can a company the size of GE really provide the panoply of services to its investment companies in a manner similar to those that can be offered by the best private funds? We are not speaking only about money, but more generally about management guidance on how best to develop and grow the company. Siegel argued that, despite GE's size, it could effectively provide its investment companies with a unique set of cross-platform corporate competencies. She may be right. Still, there is a lingering sense that the nimbleness that a small company requires might be poorly served by the 800-pound GE gorilla, no matter how good and vast the resources.

3. What is the time commitment by the company for the initiative? The company states that the initiative has set a goal of 2015 to meet certain targets. Since that is only six years from the inception of the initiative, one would reasonably conclude that 2015 is not an end-point. But what is supposed to happen after that time is not made clear. Health care and health care products being what they are, it is the extended time line that has posed such a daunting challenge to anyone who has sought to invest in this area.

It would be great if "Healthymagination" will move the needle in improving health care and products. Indeed, if it does, GE might be able to claim a new paradigm for R&D and product development. At the moment, however, it is just all too vague to reasonably know.
More on healthymagination here.

Wednesday 6 March 2013

Who Owns the Firms That Own IP?

Jonathan Band and Jonathan Gerafi have recently released at (March 5, 2013) a paper entitled, “Foreign Ownership of Firms in IP-Intensive Industries.”  In this paper, the authors examine the question of whether firms in IP-Intensive industries are owned by US companies or are foreign owned.  The general finding of the authors is that, in fact, many if not most firms in IP-Intensive industries are foreign owned—perhaps contrary to popular belief and the belief of policymakers.  The interesting conclusion the authors draw is that, "IP policies adopted by [the US] Congress and the [US] Executive Branch may benefit foreign corporations at the expense of U.S. consumers.” 

The report lists the following “key findings”:
Four of the “Big Six” publishers, the largest English language trade publishers, are foreign-owned. More than 80 percent of the global revenue of the Big Six is generated by these foreign-owned companies.  These foreign-owned companies publish more than two thirds of the trade books in the U.S.
Four of the five largest STM (science, technical and medical)/Professional publishers are foreign-owned.
More than 90 percent of the revenue of the five largest STM/Professional publishers was generated by foreign-owned firms.
Only seven of the world’s 50 largest publishers of all categories are U.S.-owned.
The book publishing industry in Europe has approximately twice as many employees as in the United States.
Of the top ten best-selling fiction authors in any language whose work is still in copyright, five are foreign.
A British author wrote three of the top five best-selling books in the U.S. in 2012.
Two of the three major record labels are foreign-owned. These two labels have a market share of 59 percent.
Thirteen of the twenty best-selling recording artists are foreign.
Of the 50 most popular motion pictures in the United States in 2012, 50 percent were filmed partly or entirely outside of the United States.
In 2013, the Oscar winners in thirteen of 24 categories were foreign. In 2012, the Oscar winners in eleven of 24 categories were foreign.
Seventy percent of the most recent generation of game consoles were manufactured by Japanese companies. Japanese companies have manufactured 92 percent of all game consoles ever sold.
In 2011, foreign companies obtained 7,000 more U.S. patents than U.S. companies.
In 2011 and 2012, seven of the top ten companies receiving U.S. patents were foreign.
57 percent of the global revenue of the fifteen largest pharmaceutical companies was generated by foreign-owned companies.
The majority of the employees of both the U.S. and the foreign-owned pharmaceutical companies work outside of the United States.
And the paper states that:
Since 2008, foreign companies have obtained more U.S. patents each year than U.S. companies. . . .  Additionally, in 2011 the number of patents obtained by U.S. companies grew less than 1 percent, while the number of patents obtained by foreign companies grew more than 3 percent. . . .  A total of 29,220 U.S. patents were issued to the top 10 companies; 66 percent—19,319—were granted to foreign companies.
(Hat Tip to Professor Michael Carroll at American University Washington College of Law for notice about the paper.  Professor Carroll is also the Director of the Program on Information Justice and IP).

Monday 4 March 2013

Intellectual Property, Cultural Appropriation and Value(s)

The intersection of intellectual property and cultural appropriation raises many issues and is rife with controversy.  The allegations of the, at least immoral if not unlawful, taking of cultural property, traditional cultural expressions or biological resources for “outsider” commercial exploitation are not new.  The use of intellectual property to then protect and exclude others (including insiders) from using that property is also not new.  Here is a recent allegation of cultural appropriation by MSNBC reporter Melissa Harris-Perry concerning the viral “Harlem Shake” videos.  The usual suspect of issues exist concerning  allegations of cultural appropriation such as “who is the owner of “Harlem Shake” the term and the dance?”; “who has the power to include or exclude others to the original dance or term?”; “what is fair attribution or respect for use of the dance or term?”; “what is fair compensation for use of the term or dance?” in light of “Western” notions of intellectual property.  (Hat tip to Professor and Associate Director Steve Jamar at Howard University School of Law in Washington DC for the lead to the video.  Professors Lateef Mtima and Jamar lead the Institute for Intellectual Property and Social Justice at Howard University.) 

Patent valuation: how much does it cost?

A reader has contacted this weblog to ask the following request for information:
I need to know the typical or average fee charged to clients for "patent valuations." I have found a few Powerpoint presentations, papers, and the like downloaded on the Internet, which indicate a typical fee ranging from a low end of roughly $1,500 US per patent "family" for a so-called "internal" valuation (I assume this must be a "down and dirty" or bare bones valuation), up to about $40,000 per patent family for valuations done for banks, etc. I take it the latter would be the full-blown, more extensive approach, involving detailed market analysis and full pat scope studies, etc.
This blogger has no direct experience of patent valuation and imagines that the cost would be a function of various things: the methodology adopted, the nature of the patent(s) being valued, the magnitude and complexity of the prior art and even the purpose for which the valuation was sought. Can readers be of any assistance at all in giving some guidance in this matter?

Sunday 3 March 2013

Quantifying maximum benefits of law reforms: questions about Hargreaves

Veteran copyright and information science expert Professor Charles Oppenheim has keen keeping an eagle eye on the predicted benefits of the promised/threatened UK digital copyright reforms outlined in the hastily-conceived and even more hastily-composed Digital Opportunity (the Hargreaves Review, which you can read all about on its very own web page here). Apparently questions have been asked in the House of Commons:
""John Whittingdale (Maldon, Conservative [and Chairman of the All Party Parliamentary Intellectual Property Group]) asked Secretary of State Vince Cable MP why the estimates of maximum financial benefits from the implementation of the Hargreaves Report have been cut, following on from the news that the revaluation had brought the gains down from £27 billion to to £790 million through the Modernising Copyright plan.

Jo Swinson (East Dunbartonshire, Liberal Democrat), responding, stated that the reason for the reduction in net gains to the British economy is due to the fact that Modernising Copyright does not contain the creation of the single EU patent or the Digital Copyright Exchange (DCE)".
Comments Charles:
"REALLY? Are the single European patent and the DCE going to be that valuable to the UK economy (and over what period?) I'm amazed!".
Comments this blogger (who shares Charles's amazement), what does the new patent package have to do with the valuation of the benefits of a new digital copyright regimes anyway?  He also thinks that the real reason why the DCE will not confer vast value on the British economy is that most digital products are ripe for being exploited globally via the internet, while the DCE can hardly confer benefits that extend beyond the jurisdiction.