"The Fifa scandal is an "absolute disaster" for the multinationals who sponsor it - because they cannot escape taint from the perceived lapses of football's supreme governing body. That is the view of a range of very senior business people and marketing gurus to whom I have spoken. One said: "This is a nightmare for them - the reputational damage is huge".This blogger wonders if there is another issue: the nature of the toxicity of the sponsored or endorsed body itself. If Fifa was engaged with something viewed as damaging to the environment (pollution, reckless use of scarce resources etc) or something socially corrosive (eg child labour, exploitation of women, prejudice against ethnic or minority groups), public pressure on brand owners to divest and shareholder pressure to re-invest marketing resources elsewhere would be much stronger. However, the allegations here seem to point to more 'acceptable' forms of toxicity such as bribery and the 'victimlesss' crime of money laundering -- with few tangible outcomes other than the disappointment of those whose attitudes and aspirations are more honest (or less dishonest) and the inconvenience inflicted on a small number of overpaid athletes who will have to play World Cup football in Qatar in 2022. Where there is less outrage there is inevitably less pressure.
So why aren't these huge and powerful global companies doing what the UK culture secretary John Whittingdale has asked, and following the lead of Visa - which said it would review its sponsorship deal if Fifa does not clean up its act?
Well, part of the answer is implicit even in the less mild sabre-rattling of Visa. Because it is striking that even Visa only said it might review its commercial relationship with Fifa, not that it was doing so. The point, according to well-placed executives, is that Coca Cola, Hyundai, Budweiser, McDonald's, Gazprom and Visa (among others) have signed legally binding contracts. So they may not be able to get out of the contracts without paying spectacular damages - given that they are each believed to be paying Fifa up to $200m (£130m) over four years for the marketing opportunities associated with the World Cup.
"They are all asking their lawyers to examine whether they have 'moral' clauses in their contracts, which would allow them to get out because of Fifa's behaviour," said a businessman with links to the sponsors [this blogger finds it surprising, if not astonishing, that sponsoring and endorsing organisations do not insist on 'moral' clauses. The dangers of lending one's brand name to a subsequently toxic prospect have been known since at least as long as Ben Johnson's fall from grace back in the 1980s and are routinely mentioned in literature on the subject].
There is another point, though - put to me by a member of one of the sponsor's boards - which is that the World Cup is "the best sponsorship opportunity on the planet". How so?
Well, association football is arguably the world's most global sport - though the Olympics and Formula One also have serious worldwide reach. And the World Cup allows the sponsors to get their names in front of hundreds of millions of consumers, both in the rich West and in the faster-growing economies of Asia and South America.
What I am told makes World Cup sponsorship particularly special is that Fifa is far less prescriptive about how the sponsoring companies promote their brands and conduct their marketing than the Olympic Organising Committee.
"Fifa is the least anal and controlling of its sponsors," said a marketing executive. "And that is highly prized." [if this is so, it's not good news for those seeking to promote their brands elsewhere ...]
Or to put it another way, although all the sponsors want to be seen to be doing the "right thing" by putting pressure on Fifa to reform, they are fearful that if they completely incinerate their relationships with the World Cup, they may simply be providing a precious and rare marketing opportunity to their bitterest rivals".
Thursday 28 May 2015
Tuesday 26 May 2015
" ... I raised £10,000 for the publication of my book. Was it worth it? Would I recommend the experience to other writers? With publication over a month away at the time of writing, the jury is still out. Overall, however, my experience with the crowd-funding publisher Unbound (“a new way to connect authors and readers”) has been positive. Not just positive, actually, but also fun, frightening and exciting.
... Unbound was set up by three writers who were fed up with all the moaning ... Their model is generally hailed as innovative and modern. In reality, what they have done is to use the internet to revive the ancient practice of publishing by subscription. This is the way that Dr Johnson published his Dictionary and it is also the way that many novels were published in the 18th and 19th centuries.
... Unbound has to decide whether they want your book. It guards its gate as carefully as any traditional publishing house. Equally, however, it can afford to take a punt on a risky book in a way that other publishing houses often can’t. This is because, before Unbound publishes, the writer has raised the money in subscriptions (in my case that £10,000) to cover the production costs of the book. Unbound might not always win but it can’t lose. Clever, isn’t it? The financial deal they offer to authors is also attractive: once the book is published, the author gets 50% of royalties.
... I needed approximately 500 people to each pledge £20 in order to raise the £10,000 required. In return, these subscribers will get a beautiful hardback copy of the book with their name in the back. People who contribute more money can get other benefits such as an invitation to the book launch or lunch with the author. To help a writer raise the subscriptions, Unbound makes a video about you and your book, and sets up a web page with an extract from the book and a biography. ...
It can be embarrassing emailing your friends and neighbours again and again. You have to become adept at using social media, and you need to go to any writing-related event to which you are invited and market yourself shamelessly. ... The whole process is hard work – sometimes frustrating and sometimes bruising. You know exactly who has signed up and who hasn’t. You learn not to take it personally ...
Once you get the subscriptions you need – in my case, it took six months of hard work – Unbound operates as any traditional publishing house would, dealing with editing, proofreading, cover design and publicity. ...
Unbound believes that its subscribers will keep pledging. It is now publishing the second books of some writers, and reports that those authors are finding it easier to raise the subscriptions a second time around. That should be true. After all, you already have an email list of all the people who signed up before.This blogger recalls the large number of people who have urged authors and publishers to come to terms with the internet and new technologies and to come up with new business models rather than demand reforms of copyright law. This approach to publishing has the attraction of using the internet and the social media to good effect while adapting a model, based on subscription publishing, that is centuries old.
I would now be loath to return to traditional publishing, even if I could. Unbound was there when I needed it, while the mainstream publishing industry certainly was not; it just didn’t have the nerve for my book. And I won’t forget that fact. Other than the question of raising the subscriptions, I can’t see any downside to the Unbound model at the moment. ...
Monday 25 May 2015
Spain: A battle without winnersAside from being chosen as a location for filming part of the 5th season of the HBO series “Game of Thrones”, Spain has also hit the headlines because of other IP-related issues, like the recent modification of its Spanish Intellectual Property Act (an analysis of its implications can be found here), that includes the approval of royalty charge, to be paid by news aggregators indexing news published by Spanish newspapers (comments on the implications of this measure can be found here and here), that caused Google to cease offering their news aggregation services in Spain.Reactions to the so-called “Google Tax” (that has nothing to do with the British legislative project to tackle tax avoidance by multinational companies) have been mostly negative, with even editors for online Spanish newspapers siding with Google on the issue, stating that they wonder “how long it takes some traditional publishers — victims of their own initiative — to ask Google to reopen Google News”. The position held by the ones criticizing the reform is not baseless, considering the recent example of Germany, where all newspapers ended up asking Google to take them back into the system.
In Spain, we have had to wait some time for AIMC (Asociación para la Investigación de Medios de Comunicación or Association for the Research of the Media) to release the data reports for the traffic fluctuations in the past three months, so we could observe what the real impact of the “Google Tax” has been in the online news sector.
November 2014 (thousands)
First, we must look at what the data was before and after the reform of the Intellectual Property Act came into force, on 1 January 2015, looking at the unique online visitors the top three Spanish online newspapers had on November 2014 and on March 2015.
March 2015 (thousands)Leaving aside the eruption of Twitter (that was not included on previous reports), there is an undeniable decrease in the number of visitors of up to a 12.4% in the worst case (the almost 360K visitors lost by sports newspaper As.com), meaning that there has been an impact on viewership of online newspapers, but not so big, especially when we take into consideration the growth curve of the penetration index for the last years.Since 1999, there has not been a year with a growth level lower than +2.5%, remaining over the +3% from 2006 onwards, but suddenly, from April 2014 until today, there has been a clear deceleration in the growth rate, as it has only been able to jump +1,7%, way below the expectations of the market.Notwithstanding this, the slowdown in growth has not affected dramatically the outcomes of the major Spanish media companies. As recently featured in the Spanish media, the PRISA Group, which includes newspapers such as Elpais and AS, made an overall profit of 8,68 million Euros in the first quarter of 2015, while it closed the previous year with a high consolidated loss. Additionally, Unidad Editorial Group (Elmundo, Marca) has reduced its losses to 2.5 million, whereas in the same quarter of 2014 they exceeded 20 million Euros.Nevertheless, the previously mentioned improvement of the results is due to multiple elements and the revenues from digital media are only a small part of them, so a possible decrease would not have had a great significance on the overall picture yet. Actually, as data for number of subscriptions or revenue by advertising will not be shared by the owners of the newspapers until the summer, we can only speculate with the shortage of profits that this situation has caused, but it is undeniable that there has been a negative impact on the market, even though not as negative as in Germany.In this sense, we should take into account that revenues from online advertising are getting more relevance by the day, so any decrease in the number of visitors as well as subscriptions could have a negative effect in the future. Accordingly, this reduction of visitors will probably be significant for the coming media industry results.
As we await for CEDRO and the Ministry of Culture to determine the “fees” associated with this “tax” and the process collect to them, the first obvious consequence is that all visits that came from users who accessed the websites of Spanish newspapers after searching with Google News will not generate any payable sum, inasmuch as the Google News aggregation service has been replaced with a mere search engine, that does not fall within the services subject to the “Google Tax” regime.
Theories of dysfunctionality and abuse in patent licensing, with SEPs in particular, predict that alleged hold-up and royalty stacking will affect and harm markets and consumers in various ways by reducing R&D, slowing innovation, extracting excessive aggregate royalty payments, stagnating consumer prices, impeding or foreclosing market entry and increasing vertical integration.
- Consumer adoption and consumption increasing
- Innovation and technical progress accelerating
- Cellular technology R&D up 74% to $46bn since 2009
- Time-to-market for new standards shortening
- Technology/device OEM vertical integration collapsed
- Market entry downstream in smartphones burgeoning
- Concentration in handset OEM supply low and declining
- Smartphone prices falling on average, and dramatically so, on a quality-adjusted basis
- Patent royalties are a very small proportion of prices for consumer products and services
Friday 22 May 2015
"IP is on the brink of becoming a consistent, transparent transfer instrument and there is a need to explore how these ‘versatile articles of trade’ (McClure 2008) can be leveraged in more open and efficient markets for innovation.The registration URL is https://attendee.gotowebinar.com/register/6259358435034874369 (it's also accessible by phone). Good news is that Oxfirst no longer require registrants to have a business or corporate email address: your personal one will do.
The introduction of new market mechanisms related to IP such as securitizations, pooled patent portfolios, public auctions and a financial exchange offer new opportunities to diffuse and reward inventors. Alternative IP market techniques have the potential to promote enhanced transparency, security and liquidity in markets for technology that cannot be achieved through bilateral licensing agreements.
In this talk Patrick Terroir addresses the opportunities and pitfalls associated with efforts to establish markets for IP".
Wednesday 20 May 2015
What happens when an iconic store name is intertwined with one of the most iconic scenes in all of moviedom? Surely this must be a sure-fire recipe for brand success. Sadly, however, even being iconic is not enough—just ask FAO Schwarz, which announced last Friday that it was vacating its famous toy store on Fifth Avenue in Manhattan for a presumed relocation to a less pricey site.
I don't think I am unusual in saying that, when I first visited New York more than 50 years ago, one of the top destinations was the FAO Schwarz store. My aunts made a bee-line for several near-by retailers offering clothing that they could never afford. For me, however, there were only three places in Manhattan that I wanted to see—the Empire State Building, the Stature of Liberty and FAO Schwarz. I don't know how I came to know the saga of the store, growing up as I did many hundreds of miles away in a small town in Ohio. But so I did, as did all of my friends. By the time that I made it to New York, I knew that there were all kinds of toys in the store that we could never afford. No matter—it was enough to be able to enter and look at them, secure in my belief that the sons and daughters of the famous and wealthy would provide the custom to support the store.
If that were not enough, the store was the setting for the unforgettable scene in the 1988 movie—Big, in which Tom Hanks joined the boss of the mythical toy store (having been filmed at FAO Schwarz, something that we all recognized), as they played a duet on a foot-operated electronic keyboard, performing "Heart and Soul" and "Chopsticks." If any US toy store was iconic, it was surely FAO Schwarz, where the movie scene merely validated what I had long-known as a child—FAO Schwarz was a toy store like no other.
It was against that backdrop that I was so taken aback by the Reuters report that the store was leaving Fifth Avenue due to the high rent being charged and the other costs of operating the store at the Fifth Avenue location .By July 15th, the company, which was acquired in 2009 by the much less up-scale toy company, Toys "R" Us, will take an early exit from its lease. The exact financial details were not disclosed, although the store did state that it was looking for a new Manhattan location. Previously gone were the FAO Schwarz locations in other cities. At the most, the store advised, in addition to the relocation of the Manhattan site, it will maintain an online presence as well as some boutique presence in various stores of its parent, Toys "R" Us. The next day, Saturday, the store was packed with shoppers, many not even aware of the announcement of the previous day. Typical was.Laurent Orne, visiting from France with his family. He took a number of pictures of his six-year old daughter, aside the well-known toy soldiers adorned in red uniforms, observing that "we wanted to come here because this store is mythical".
Monday 18 May 2015
- Each specific transaction should be examined on its own merits since the fact that it is of a type that might, in other cases, have constituted trading is irrelevant.
- The trading requirement must be considered by reference to the partnership's business alone. Partners' borrowings and desired tax reliefs are irrelevant.
- An interest in making a real, commercial profit (taking into account the time value of money) is at the root of commerciality for trade loss relief.
Friday 15 May 2015
Oxford Science Industries is the latest attempt to cpaitalise on the commercialisation of intellectual property developed in universities. The Financial Times resported today that Oxford University together with its technology commercialisation subsidiary, Isis Innovation, had partnered with OSI to raise GBP 300 Million to exploit research from the oldest university in the UK (and this author’s alma mater…). The concept is certainly interesting, given Oxford’s succesful track record over the years in exploiting research from the university. The provision of early-stage capital is crucial in ensuring that university research is turned into successful products. More important will be, however, the support from the fund in the form of expertise and know-how to enable scaling up of the technologies.
This author has frequently seen promising intellectual property not being exploited because of the lack of understanding how business really works. He remembers negotiating for several months with one research group from a university (that will remain nameless) to obtain rights to some interesting research. The professor was convinced his IP could be commercially exploited immediately and the university wanted an appropriate remuneration. His company colleagues on the other hand pointed out the need for further development, testing adn certification. They saw only a long-term potential business and were not at all convinced of any immediate success. Both sides valued the technology and IP differently - and there was no way of bridging the gap. He can only wish the venture well in both managing the IP development and the expectations of the university with the requirements of potential licensees and investers.
Thursday 14 May 2015
|EPO's fee policy?|
Put in simple terms, there are two sets of fees. The first relate to the cost of filing and dealing with a patent application and these are incurred by all applicants. The second relate to the cost of renewal of a granted patent. While these are in theory incurred only by successful applicants, they are higher and are regarded as being more burdensome since it may be many years (or never at all) before a patent generates any sort of income, but non-payment of maintenance fees will lose protection in the relevant market.
In March of this year the European Patent Office (EPO) released its proposals for renewal fees, discussed on the IPKat weblog here.
On the assumption that the level at which official fees are pitched may determine the number of countries in which patent protection is sought or renewed, at least one influential body believes that the scale at which those fees are set may be sending out a message regarding domestic competitiveness. The following media release was issued by the Chartered Institute of Patent Attorneys (CIPA) in the UK, one of the largest and most articulate professional bodies within the patent profession. This is how it reads:
High fees could destabilise the European patent system, warn attorneysThis blogger is not aware of other professional bodies in the EU having issued their own statements concerning renewal fee levels, and would be grateful if any knowledgeable reader(s) could supplement his knowledge.
UK Patent attorneys are warning that setting high fees for the new European Unitary Patent risks destabilising the patent system across the continent. “If fees are too high they could send a message to the world that Europe is uncompetitive,” said Jim Boff, Chairman of the CIPA Patents Committee:
“Lower fees are far more likely to attract businesses that currently only file patents at their national offices, thus increasing the number of European applications, fostering competitiveness, stabilising the new system, and helping small and medium size businesses become big businesses.”The Court of Justice of the European Union last week dismissed the final legal obstacles to the setting up of a new patent system for Europe. However, the level of court and renewal fees for the new system remains a major issue for agreement among member states.
The lowest of the proposals so far made public is for patent renewal fees to be set at the equivalent of the combined cost of filing in the four countries with the highest number of patent validations (Britain, France, Germany and Netherlands). CIPA believes that setting fees at this level (or higher) risks destabilising the entire European patent system.
Netherlands is the third most expensive country in which to file after Germany (1st) and Austria (2nd), which means that a true “Top 4” calculation for renewal fees based on GB + FR + DE + NL would result in a fee level much higher than average patenting costs.
CIPA is proposing that at the outset renewal fees be set at a near “Top 3½” level as approximating the true average of renewal fees across all Member State signatories to the Unitary Patent Agreement).
Various considerations underpin applicants’ preference for GB, France and Germany among the Member States, but the provisions of the London Agreement, which make patenting in these countries financially attractive and easier as there are no translation requirements, is a key factor.
In CIPA’s view, the fees in these three countries offer a reasonable base line for setting out the Unitary Patent (UP) renewal fees level (even though Germany has the highest fees in Europe – a privilege it enjoys through being the biggest economy in Europe).
Under the Unitary Patent Court (UPC) Agreement, an inventor applying for a UP will be able to enforce this patent in the 25 Member States. Given the geographical scope covered by the patent, it would be understandable to charge more than the basic rate of GB + FR + DE.
CIPA also believes that this formula would align renewal fees with the objectives of the UP system, as set out in Article 12 of Regulation 1257/2012 which addresses various aspects of UP implementation.
In accordance to Article 12(1), the level of renewal fees should be high enough to cover the grant and administrative costs of the unitary patent and ensure that the budget of the EPO is balanced. Article 12(2) explicitly states that the renewal fees should be set at a level which makes the UP accessible to SMEs, facilitates innovation, fosters the competitiveness of European businesses, reflects the size of the market, and is similar to the level of national renewal fees for an average European patent. Our proposal meets these requirements.
If fees were set any higher than our proposal, we fear that: many SMEs would choose to spend their limited budgets on filing at their national office, rather than take the opportunity for broad European protection; and that a message would be sent to the world that Europe is not competitive.
CIPA’s proposal is for renewal fees during the initial stage of the UP. In the light of experience with take up of the UP the fees should be adjusted to ensure that they meet the requirements of the regulation and of European and UK businesses.
CIPA believes that setting fees at our proposed level would:
- encourage more users into the European patent system,
- increase income to the EPO
- stabilise the new UP system
- have a positive impact on innovation,
- increase the competitiveness of European businesses.
Tuesday 5 May 2015
"Following its successful inception in 2014, Premier Cercle is teaming up with Institutional Investor Magazine and Managing Intellectual Property to organize a sequel to IP Finance that will showcase and discuss the best practices of patent holders, entitled, investors, bankers, financiers, PE, firms, regulators, plaintiffs and defendants which make the most of their immaterial assets and intangible capital".This leads to the event's credo that
"... in today’s “knowledge economy” – after a century-long industrial revolution and a 30 year-long service economy – corporations are only now beginning to tap into the potential of IP, and that the recent multi-billion dollar deals on patent and trademarks portfolios and IP assets-backed financing have kicked-off a sustainable trend. We believe this innovative approach on IP -- as a new pillar of corporate finance -- is a rising trend that will consolidate and give a definitive edge to those who apprehend it now".
The second part of the programme addresses the IP transaction and, in particular, the evolving role of financial transactions involving patents (just take a pen and jot down as many types of patent-related financial transactions as you can, and you can appreciate how much there is to discuss here).
Burning the Ships author Marshall Phelps Jr on the topic "Deals of Distinction", the work aspect of the programme recommences with part three: "IP challenges". These challenges include non-practising entities both as trolls and as triggers for innovation, litigation and how to finance it, and what are politely termed "disruptive events" such as Patent Trial and Appeal Board proceedings, judicial rulings such as Alice v CLS Bank, which suddenly raised questions concerning the validity of lots of software patents and applications that investors had been busily betting their shirts on, and the decisions of standards-regulating bodies.
There are several highly active experts on the programme. While it is always invidious to pick out names, two that immediately spring to mind as being worth a mention are Alexander I. Poltorak (General Patent Corporation) and Bruce Berman (Brody Berman Associates), both of whom have done much to raise consciousness of IP finance issues in print, in conferences and via the social media.
[declaration of personal bias: this blogger founded that journal, was its original editor and is delighted to see that it is currently celebrating its 25th birthday]. Good news is that readers of the IP Finance weblog can attend this event at a discounted rate of $750 (a decent reduction from the official registration fee of $990). To register, just quote IPFMIP and email firstname.lastname@example.org.
Monday 4 May 2015
"creating a market place for patent files (both pending and granted) that have been “slated to be abandoned” by their owners".The monetisation of both applications and granted rights that are heading for oblivion is an interesting proposition: the fact that an application is about to be dropped or a patent not renewed is not necessarily a reflection on its inherent validity, commercial utility or anything else, but its strategic value to a purchaser, either as a stand-alone or more probably as part of a portfolio of patents, may be substantial. Inevitably the development of a market for such patents as a separate subclass will depend on the cooperation of patent attorney firms and in-house legal teams, since the fact that a decision has been made not to pursue an application, or to allow a granted patent to lapse, is not publicly available. This blog will watch developments with interest and will be happy to relate any readers' experiences of trading with lapsing patents and patent applications.
You can check out the Market2IP website here.
Friday 1 May 2015
Patent and Licensing Policies Disregard Government Standards on Information Quality and Impact Assessment
Standards have been established to safeguard the quality of information and assessments presented to the public by governments in support of their policies. Governments are held to high quality standards because the public relies on information and assessments disseminated by governments and their agencies to a much greater extent than it does with other sources. These standards have been established over decades as elected administrations, and their political leanings and objectives have fluctuated.
The European Commission also has information quality standards such as that for questionnaires in surveys-based statistical measurement. According to EC-issued guidelines, “[i]mpact assessment is a set of logical steps to be followed when you prepare policy proposals. It is a process that prepares evidence for political decision-makers on the advantages and disadvantages of possible policy options by assessing their potential impacts.” The EC has made clear that “all policy decisions should be based on sound analysis supported by the best data available.” At a minimum, non-legislative initiatives should describe “the most significant potential impacts of different approaches”.
While the blogposts include some articles that are of interest to anyone who is trying to find and then make some sense of the mass of commercially relevant information that is out there somewhere, including some news and thought-leadership items and pieces on royalty rates and transfer pricing, others are understandably more appropriately characterised as marketing material -- but the reader will not be confused between these two objectives.