Monday 26 October 2015

1000 Angels hit the skies!

Today marks the launch of 1000 Angels -- billed as the world's largest digital-first, invitation-only network for select angel investors that are interested in venture investing. The idea is to allow members to build a venture portfolio free of management fees, carried interest, large capital commitments or unpredictable capital calls.

1000 Angels is launched by Onevest, whose ecosystem seeks to support founders and investors in building successful startups through crowdfunding of due diligence-checked offerings.

Let's keep an eye on 1000 Angels and see what it does (or rather, what they do) for the cash-hungry and ever-risky world of innovation finance. In our sector, even a thousand angels may not be enough!

Post-Alice/IPR patent purchase transactions: here comes a webinar

"Negotiating and Closing Patent Purchase Transactions in the post-Alice/PTAB Review Era" is the title of a free webinar which Lillian Safran Shaked (Shaked & Co. Law Offices) is running for patent research firm Patexia on Thursday, 12 November 2015. It begins at 10:30 am United States (GMT -07:00) Pacific.

According to Patexia:
Attendees will learn what the buzz words “patent monetization” actually mean and what entities in fact monetize patents (operating companies/NPEs). Attendees will further hear different reasons for the buying and selling of patents. The webinar will then present a few of the changes that have occurred in the market over the last couple of years (including, the Alice decision, PTAB/IPR proceedings, fee shifting) and the effects these changes have had on the market. In particular, we will discuss how such changes have affected the way patent purchase transactions are sourced, negotiated and drafted. Lastly, we will offer up some tips for how to successfully buy/sell patents in today’s market. 
Suggested Audience: Start-ups interested in gaining a further understanding of the pros and cons of holding patents, Operating companies interested in buying or selling patent assets, Venture capital professionals, Corporate counsel, CFOs and other IP and licensing professionals. 
Further details and registration here.

If any readers of IP Finance are going to be on this webinar and hear of any bright ideas and fresh perceptions, can they let us know so we can discuss them on this weblog?

Friday 23 October 2015

UK BEPS-compliant patent box proposals published

The UK announced on Thursday (22nd October) its (rather long awaited) proposals to update the patent box to make it compliant with the OECD BEPS proposals on amendments to patent/knowledge boxes. The UK proposals set out a series of questions for consultation, with draft legislation to come in December.
tl;dr version: it's more generous that it might have been on grandfathering, but companies had better get their accounting software ready to do some serious work in order to keep track once into the new regime. The added complexities that will be added may well put off companies from claiming.
There are no proposals to include software copyright as qualifying IP, although the BEPS project does permit this – and the Irish knowledge box draft rules, published on the same day, do include software (and the Irish knowledge box offers a 6.25% effective rate. Just in case you wondered).

Friday 16 October 2015

Mylan's EpiPen: Losing a Billion Dollar a Year Business Because of Trademark Choice and Usage?

In a recent Bloomberg Business article, How Marketing Turned the EpiPen into a Billion Dollar Business, authors Cynthia Koons and Robert Langreth describe how Mylan turned a $200 million a year combination drug and device auto injector of epinephrine—used to help people with emergency allergic reactions to peanuts and other substances—into billion dollar revenues.  Brilliantly, Mylan’s CEO Heather Bresch decided to focus on outreach to parents with children with allergies--along with careful attention to legislation.  After significant marketing—read education—and taking advantage of a substantial increase in allergies in children, Mylan worked with Congress to pass federal legislation “encouraging states to have epinephrine devices on hand in schools.”  According to the article, 47 states now require schools to have epinephrine devices available.  Mylan has given free EpiPens to 59,000 schools and spent 34.2 million on advertising the EpiPen in 2014 alone. Mylan also is working on legislation to require access to epinephrine devices at restaurants, hotels “and anywhere people congregate.”  Mylan also has raised the price of the EpiPen “32% in the last year”—perhaps feeling the pressure coming. 

What is the pressure?  A generic competitor and possibly genericide of the EpiPen mark.  A generic version of the EpiPen may hit the market this year pursuant to a settlement with Teva Pharmaceuticals—well before expiration of several of the patents covering the EpiPen.  Mylan does not appear to be worried.  Bresch stated: “You [will] not see the traditional market loss because of just the brand equity with EpiPen.”  I am not as optimistic because of the potential genericide of the EpiPen mark.  Genericide, and the consequential loss of protection for a mark, occurs when a mark essentially losses its ability to indicate the origin of the source of goods and merely becomes the word for the goods.  For example, marks such as Escalator and Elevator have lost trademark significance because the public came to understand those terms not as trademarks, but as names for classes of goods.  Ordinarily, a trademark for the patented product does not automatically become generic when a patent term ends.  However, it is possible that it might—depending on consumer understanding.  Mylan has a potential problem because of the incredible success of its device and the choice of a relatively non-distinctive mark—using the first three letters of the active drug ingredient coupled with a descriptive word for the appearance of the patented device.  Additionally, the stocking of EpiPens at schools may lead parents to believe that EpiPens are “the” product to be used to treat emergency allergy problems. 

Interestingly, most pharmaceutical related trademarks must not only qualify for trademark protection, but are also regulated by the Food and Drug Administration and other regulatory bodies to ensure that there is not confusion with other pre-existing pharmaceutical related trademarks—particularly with prescribing physicians--and that they do not mislead as to purpose or effect.  Moreover, some case law in the U.S. requires a lower threshold for proving trademark infringement for pharmaceuticals because of the increased danger to human health associated with customer confusion with pharmaceuticals.  Thus, there is essentially a higher level of scrutiny applied to pharmaceutical trademarks which could lead to a court or the US Patent and Trademark Office to lean toward a finding of genericide in a close case.  Notably, the Bloomberg News article stated:  “And for doctors, who write prescriptions for the name they know best, the EpiPen brand “is like Kleenex,” says Robert Wood, a pediatric allergist at Johns Hopkins University School of Medicine.”

Mylan may still have time to work on its trademark issues, but this case study highlights the importance of choice of trademark and monitoring trademark usage by relevant audiences.

Friday 9 October 2015

Trans-Pacific Partnership Agreement Leaked by WikiLeaks

The apparent final version of the Trans-Pacific Partnership Agreement (TPP) has been leaked by WikiLeaks.  A copy can be found, here.  While I have not reviewed the entire agreement in depth, here is the section concerning biologics that was apparently holding up the agreement, in part:

Article QQ.E.20: {Biologics}

1. With regard to protecting new biologics, a Party shall either: (a) with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic62,63, provide effective market protection through the implementation of Article QQ.E.16.1 and Article QQ.E.16.3 mutatis mutandis for a period of at least 8 years from the date of first marketing approval of that product in that Party; or alternatively (b) with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic, provide effective market protection: Without Prejudice

(i) through the implementation of Articles QQ.E.16.1 and QQ.E.16.3 mutatis mutandis for a period of at least 5 years from the date of first marketing approval of that product in that Party;

(ii) through other measures; and (iii) recognizing that market circumstances also contribute to effective market protection to deliver a comparable outcome in the market.

2. For the purposes of this Section, each Party shall apply this provision to, at a minimum, a product that is, or alternatively, contains, a protein produced using biotechnology processes64, for use in human beings for the prevention, treatment, or cure of a disease or condition.

3. Recognizing that international and domestic regulation of new pharmaceutical products that are or contain a biologic is in a formative stage and that market circumstances may evolve over time, the Parties shall consult after 10 years, or as otherwise decided by the TPP Commission, to review the period of exclusivity provided in paragraph 1 and the scope of application provided in paragraph 2, with a view to providing effective incentives for the development of new pharmaceutical products that are or contain a biologic, as well as with a view to facilitating the timely availability of follow-on biosimilars, and to ensuring that the scope of application remains consistent with international developments regarding approval of additional categories of new pharmaceutical products that are or contain a biologic.

[Footnote] 62 Nothing requires a Party to extend the protection of this paragraph to:

(a) any second or subsequent marketing approval of such a pharmaceutical product; or

(b) a pharmaceutical product that is or contains a previously approved biologic.

[Footnote] 63 Each Party may provide that an applicant may request approval of a pharmaceutical product that is a biologic under the procedures set forth in Article QQ.E.16.1(a)-(b) within 5 years of entry into force of this Agreement, provided that other pharmaceutical products in the same class of products have been approved by the Party under the procedures set forth in Article QQ.E.16.1(a)-(b) before entry into force of this Agreement.

[Footnote] 64 Drafters’ note: The Parties understand that Article QQ.A.5 applies to the provisions of this Chapter, including the definition of “biotechnology process” in this paragraph. Accordingly, the Parties understand that each Party may determine the meaning of biotechnology processes in its legal system and practice.

The Pharmaceuticals Research and Manufacturing Association (PhRMA) has already expressed displeasure with the term of data protection for biologics.   PhRMA’s president stated:

“We are disappointed that the Ministers failed to secure 12 years of data protection for biologic medicines, which represent the next wave of innovation in our industry.  This term was not a random number, but the result of a long debate in Congress, which determined that this period of time captured the appropriate balance that stimulated research but gave access to biosimilars in a timely manner.”

For more information on the Copyright provisions concerning the TPP, see the Electronic Frontier Foundation.  The TPP still must be approved by Congress, and recently Democratic Presidential Candidate Hillary Clinton stated she does not support the agreement—reversing her earlier opinion and putting her at odds with the Obama Administration.  [Hat Tip to Professor Irene Calboli at the Texas A&M University School of Law]. 

Making money from patent pools: a free webinar

Alfred Chaouat (Senior Vice-President Licensing, Technicolor, and the immediate past president of LES France) is in line to deliver the next Oxfirst webinar on 22 October 2015 at 15.30 BST. The subject is "IP monetisation through patent pools". This is a topic that Alfred should know about in some depth through his own personal experience, since he represents Technicolor in some patent pools.

What's this webinar about? Oxfirst explain:
In this talk we address the pros and cons of patent pools as a licensing vehicle and look at how and to what extent patent pools allow patent owners to maximize revenues from their patents.

High-technology product manufacturing requires access to a diverse pool of technologies that are owned by different organizations all over the world. The costs of licensing these disparate rights on a bilateral basis can be so high as to ultimately make the deal unviable. As IP commercialization tactics improve, innovative licensing mechanisms emerge that can help firms avoid many of these transaction costs, while allowing them to access complementary patents. By aggregating patents according to product requirements, manufacturers are able to license and cross-licenses all the necessary patents in a single transaction. Royalty income is distributed among patent owners according to the quality of patents submitted.
For further details email To register, click here. The webinar is free of charge.

Thursday 8 October 2015

Professor Rothman's Right of Publicity Resource

The likeness and name of a celebrity can be very economically valuable.  Notably, Michael Jordan recently disclosed in a trial concerning the unlicensed use of his likeness and name that he made $100 million in sponsorship deals in one year.  Jordan was successful in that suit with a jury awarding him almost $9 million in damages.  In the United States, the right of publicity is one of the legal rights used to protect one's likeness and name.  The right of publicity is also a matter of state law and the scope, duration and existence of the right varies from state to state.  So, there are potentially 50 different state laws concerning the right.  In a 2011 article titled, "Why a Federal Right of Publicity Statute is Necessary," Kevin L. Vick and Jean-Paul Jassy make convincing arguments for why a federal right of publicity law should be passed and that it should preempt state law.  Notably, one significant concern is the breadth and length of some states' right of publicity laws, particularly in light of First Amendment concerns.  The scope of the problem with patchwork state law can be seen elegantly with Loyola Law School's (Los Angeles) Professor Jennifer Rothman's new right of publicity website: Rothman's Roadmap to the Right of Publicity. The website helpfully sets forth the law impacting the right of publicity in all 50 states and includes commentary concerning the right.  Take a look for yourself, here. 

Friday 2 October 2015

Innovation in Latin America: the tunnel may still be there, but the light is still burning

The following report was provided by Felix Rozanski, based in Buenos Aires, who is the Coordinator at the Study Center CEDIQUIFA and Secretary of ASDIN (Intellectual Rights Association).
The Sixth Annual Latin America Seminar on “The Value of Intellectual Property for Innovation and Health” was recently held at Cayetano Heredia University in Lima, Peru. A varied group of public officials, judges and experts from throughout Latin America gathered to discuss the promotion of innovation, particularly from the perspective of the legal tools offered by patents and other rights available under the intellectual property regime. The process of awareness about the value of innovation and intellectual property can be said to have started in Latin America with the conclusion of the negotiations over the establishment of the World Trade Organization and TRIPs Agreement in 1995, this despite the fact that portions of these arrangements were (and to some extent still are) strongly resisted by many emerging economies. The bilateral trade agreements concluded with the United States after TRIPs, the educational campaign implemented by WIPO, the support provided by the lines of credit made available by the World Bank and the Inter-American Development Bank, as well as lessons learnt from the success of such countries as Israel, South Korea and Singapore, have been key contributory factors.

It is encouraging to note that a number of Latin American governments are giving explicit recognition to the crucial importance of innovation for increasing competitiveness and promoting growth at the national level. Therefore, although the proportion of investments directed to promoting innovation is still relatively low, the trajectory is positive and at an increasingly higher rate. Thus, it is currently estimated that investment in innovation in the region as a whole is 0.68% of the growth domestic product (GDP) (versus between 2% to 4% in more developed innovative economies). Only Brazil has reached a level of investment of more than 1% of GDP (albeit before its current economic crisis). In particular, the pharmaceutical sector continues being a major actor in private R&D investment. For example, in Chile, R&D in pharma and biotech is at the top of private investment in innovation (14.38%), followed by software (9.86%).

Still, Latin America continues to wrestle with the problem of how to attract private investment for R&D activities in the region. It is officially estimated that two-thirds of investments in innovation are made by the public sector, while informal estimates suggest that private investment is only about 20% of the total R&D. Regarding how innovation is promoted, each country in the region continues to set its own policies. For example, Peru has approved new tax incentives for R&D investments, effective as of January 1, 2016. Argentina also developed a scheme of providing tax benefits to promote biotech projects, but the law was not implemented. In Chile, research by the public agency CORFO has revealed that R&D-subsidized projects tend to cease as soon as the subsidies come to an end. In Ecuador, an innovative government scheme to hire retired senior experienced researchers to train and help design projects is facing strong headwinds in the face of plummeting international oil prices.

At the intra-country level, there is little coordination among the relevant national agencies in designing and implementing innovation promotion policies, and often such agencies work at cross purposes. There is even less collaboration among countries in the region; mistakes made in one country may be simply repeated in another. An independent Observer monitoring the processes of innovation in the region may be helpful. Such a proposal was made during the Seminar to the Peruvian representative of the Pacific Alliance Free Trade Agreement, comprising Colombia, Chile, Mexico and Peru. Indeed, the Pacific Alliance may be a good opportunity for more extensive collaborations, but to bring it to fruition both the academic and private sectors will need to be more actively engaged. At the enterprise level, only a few firms with activities across Latin America are involved in innovation. On the whole, private companies in the region still must still work on how to develop an innovation culture. Designing realistic long-term innovation strategies is necessary as is better training of staff to support such efforts. As mentioned, finance for innovation projects continues being scarce and while there are many startups in the region, few can be described as engaged in technology. Still, the forecast is that more Latin American companies will be investing in R&D in the future. 
As for IP, the biggest challenges are fragmentation at both the intra-national and transnational levels within the region as well inconsistent treatment of IP rights. For instance, regarding incremental inventions, such as new uses, there are substantial differences in the way that Mexico and Brazil deal with them, on the one hand, as compared with Argentina on the other, which provides thin patent protection for pharmaceutical and biotech inventions. Moreover, studies point to the fact that IP rights and the advantages that they offer for innovation and development are still poorly appreciated by public and private researchers in the region. 
At the most basic level, empirical data indicate that better IP effective protection means more foreign direct investment, which is essential for the region, even more so when growth is slowing. In this vein, the myth that patents work against access to medicines is strongly entrenched. In addition, confusion reigns between the process of patent grant and health-marketing authorization. The result is that there are far too few patents being issued. It is estimated that Latin America registers annually a total of 1,400 national patents. In contrast, a country such as South Korea, with less than 10% of the total Latin American population, registers more than 20 times the number of patents. Against this backdrop, the promotional and educational efforts made by the various national IP agencies should be expanded.

A particularly interesting panel at the Seminar dealt with compulsory licenses. The panel discussed the regime currently applied in Ecuador, where 33 applications for compulsory licenses of pharmaceutical products have been filed, out of which eight have been withdrawn by the applicants, five refer to patents that have ready already expired, ten have already been granted by the Patent Office, while the rest are in the grant process. In contrast, in other Latin American countries, such as Peru and Colombia, applications for compulsory licenses have been far less successful due to the failure by the applicants to provide sufficient supporting the request. Moreover, the regulatory regime for the compulsory licenses in place in Ecuador (Instruction 10-04 issued by IEPI, the I.P. Agency) is not consistent with international and national legislation, with the result that the granting of compulsory licenses under this provision has the perverse effect of de facto abrogating rights in pharmaceutical patents. In doing so, the end result is to send a negative message to foreign investors as to their property rights in Ecuador.

As for the protection of test data, the regulations in force in those Latin American countries that do accept test data protection for the registration of pharmaceuticals by the health authorities restrict such protection to new molecules. Here again, there is a contradiction between government efforts to promote innovation while, at the same time, not providing data protection for incremental innovations, which may well make more sense for developing countries than the invention of an entirely new molecule. In this regard, it is noted that Argentina and Brazil do not grant any type of test data protection for pharmaceuticals.

Overall, the principal take-away from this year’s seminar is that there is much work to do in the region to meet the challenge of attracting more private R&DS investments for innovation.