Fawlty Towers - TV Format Licensing

This blogger has happy memories as a teenager of family TV viewing of the BBC comedy series Fawlty Towers. Even today his generation will often - generally after a few beers - recall hilarious moments and catch phrases ("I can speak English. I learn it from a book") from the show. Even his children love the show as its humour is timeless. So it's not surprising that an Australian-based dinner show Faulty Towers is, according to the Australian Sydney Morning Herald, a great hit with tickets costing up to AUD 159. A UK run in the summer will see tickets of GBP 59. John Cleese has tweeted that he is amazed about the profits being made from the show, which has been running for a number of years.

Cleese seems to be looking for a licensing deal as he's added that there is nothing wrong with the show. The question is - how strong is his licensing rights? The formats of TV shows are notoriously difficult to protect with different courts in different countries seemingly coming to different conclusions (the seminal case in the UK concerns the entertainer Hughie Green who attempts to stop TV New Zealand exploiting his "Opportunity Knocks" format - noted here). At least some courts have argued that they are "ideas" and not protected by copyright law. On the other hand some of the catch phrases at least might be protected under copyright law and certainly the names of the characters might have an element of originality. The strongest rights tend to come under trade mark law and there is - at least in this author's view - a degree of similarity between "faulty towers" and "faulty towers".  Rather surprisingly this author could find only a trade mark registration in the UK data from 1996 and a more recent 2015 international registration, which apparently only covers the Republic of Ireland. So it looks as if the case for a trade mark infringement could be weak. There's also an interesting question about whether any rights could still be asserted as  the Australian attempt to register their own trade mark in the UK dates back to 2010 when it was withdrawn because of an opposition.

So - will Mr Cleese be successful? The Australian company have responded robustly online and the IP rights situation may not be particularly favourable to any assertion of rights to license the format. The international success of the formats Idol, Got Talent, Bake Off, Master Chef, etc. show just valuable internationalisation of TV formats can be. Back in the seventies, when Fawlty Towers was first broadcast, the BBC probably only considered selling the show onto its partner public broadcasting networks in the Commonwealth. Today shows are international. And this blogger has even discussed Fawlty Towers with a Norwegian friend of his who seemed to know the plots better than he did.

The Pharmaceutical Pricing Problem: A Call to Exercise Bayh-Dole Act March-In Rights Heard?

The United States is struggling with the high cost of healthcare.  Notably, one cause of the high cost is the price of pharmaceuticals.  The importance of the issue and the pressure is exemplified by the focus of the various presidential candidates.  Not only are the Democratic candidates Bernie Sanders and Hilary Clinton concerned, but so is Republican candidate Donald Trump.  Interestingly, California, through an initiative, may directly confront pharmaceutical pricing for many Californians. 

One critique of the current system is that many pharmaceuticals were developed using government funding.  Thus, at least partially, the development costs to create a pharmaceutical may have been borne by the public.  Then, the argument goes, the public must pay again (in many cases) through the supra-competitive price set by a pharmaceutical company because of a patent. The public essentially pays twice for the pharmaceutical.  The Bayh-Dole Act essentially allows this to happen.  However, the counter argument has been that without the patent private industry would be unwilling to invest in commercializing the invention.  We would end up with the pre-Bayh-Dole Act problem—inventions languishing on the government shelf.  The government, through the Bayh-Dole Act, does retain some rights in government funded inventions.  One such right is the ability to exercise march-in rights.  March-in rights can be exercised in the following situations:

(a) With respect to any subject invention in which a small business firm or nonprofit organization has acquired title under this chapter, the Federal agency under whose funding agreement the subject invention was made shall have the right, in accordance with such procedures as are provided in regulations promulgated hereunder to require the contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the contractor, assignee, or exclusive licensee refuses such request, to grant such a license itself, if the Federal agency determines that such-- 

(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;

(2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; . . . .

Section 201 in 35 U.S.C., subsection (f) defines “[t]he term “practical application” [to] mean[] to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.”  Part of the problem is defining what are “reasonable terms.” Some scholars have rejected arguments that “march-in” rights should include concerns with pricing.  Additionally, the argument against the exercise of “march-in” rights is that the uncertainty interjected into the ordinary process of the Bayh-Dole Act would provide a disincentive for private industry to invest in the commercialization of Bayh-Dole Act funded inventions.  To date, March-in rights have never been exercised. 

Notably, over 50 congresspersons sent a letter to the Director of the National Institutes of Health [NIH] requesting that the NIH issue guidelines defining when “march-in” rights should be utilized.  The belief is apparently that the existence of guidance may provide an incentive for pharmaceutical companies to set prices “reasonably” because of fear of the actual exercise of rights.  Apparently, right now, the belief is that they will never be exercised. On March 16, in congressional hearings, BNA reported that the Director of the NIH noted that they are “open” to exercising the rights.  Will the indication of “openness” to exercise rights cause the pharmaceutical industry to pause before setting the price of a government funded pharmaceutical?  Is current pressure from presidential candidates and from a state like California enough to rethink the setting of the price of pharmaceuticals? 

Private Finance Initiative and IP

Transporting may be a well-known book by Irvine Welsh and later a reasonably successful film, but it is also a hobby enjoyed by thousands of teenagers  - mostly boys - in the UK. This blogger has to confess that he too was one of those that used to spend Saturdays collecting numbers of the DMUs and EMUs as well as locos as they passed him by. So it was with great pleasure that I recently read a story and IP and railways in the UK's premier railway journal Modern Railways.

Those of you who have visited London in the last few years will know of the Oyster card. It's basically a contactless payment card which you use to check into and out of the Underground and more recently on the suburban network. It's a prepaid card and the fare for the journey is debited from your account. 

Its introduction was facilitated by private finance. Basically Transport for London (TfL) drew up a tender for installing the gates and setting up the system. The contract was won in 1998 by a consortium called TranSys and was scheduled to run for a number of years. At first the system was beset with problem. I can remember spending time at one station where none of the gates would open and eventually the station manager just let everybody go through a side gate to release the crush. Transport for London therefore decided to exercise a break option (apparently to save costs). There was a problem - the IP was held by TransSys, including the trade mark Oyster. Eventually TfL had to purchase the rights to the brand name. The BBC reported at the time that this cost TfL £1m, which actually seem quite inexpensive given the brand recognition of the trade mark. 

What it does show, however, is that whilst private finance initiatives may help governments invest in infrastructure and balance their books, the contracting agencies need to understand how the IP is going to be owned. Probably most of the readers of this blog understand how IP can be used to promote business, but government agencies tend to be less sophisticated and the example of TfL is not the only one know to this blogger in which an contractor has had an advantage in a tender because of the IP gained through the previous project - and sometimes filed rights on it.

UCLA to Receive Over $500 Million for Royalty Rights in University Developed Invention

This is supposed to be a “record breaking” deal for a University of California developed technology that was transferred to industry.  The invention is the prostate drug Xtandi.  UCLA’s Chancellor Gene Block stated:

Xtandi is the result of a unique collaboration between researchers from various academic units across campus and an outstanding example of basic science leading to a therapy that is bringing extraordinary benefits to prostate cancer patients worldwide.  By selling future royalty rights to Royalty Pharma, we are strategically supporting one of our essential missions — funding and generating research with practical applications that serve the public good. Facilitating equal access to education also is a campus priority, and we will use a portion of the sale proceeds to support scholarships and fellowships.

Wow!  Talk about a dream deal for UCLA.  I am sure that every technology transfer office in the world and supporter of the Bayh-Dole Act generally will point to this deal as justifying all of the changes that the Bayh-Dole Act may have brought to academia.  Notably, the press release states that federal funding for research has been declining and, here, technology transfer is not only helping with more research funding, but also supporting scholarships and fellowships.  It is hard to argue with $500 million.

The press release also notes that:

By selling the royalty interest and prudently investing proceeds, UCLA seeks to provide stability and minimize risk associated with the volatility of the pharmaceutical industry marketplace.  UCLA will hold its share of the proceeds in a broadly diversified portfolio managed by the University of California’s office of the chief investment officer. Based on the pool’s average annual returns, UCLA anticipates it will receive approximately $60 million annually until 2027.

Not a bad idea for sure.   I found this statement in the press release particularly interesting: “UCLA has no role in the marketing or sale of Xtandi.”  Is that UCLA’s way of stating that they are not responsible for the pricing of the drug (and the amount of money spent on marketing)?  The other way to look at this is to say that the public may be paying for the invention twice.  But again, would we have had it or not?  I have to say that I am happy for the good news for UCLA and that there is a successful drug for treatment of prostate cancer. And, congratulations to Westwood Technology Transfer!  (Hat Tip to Technology Transfer Central)

If you did not see "Gods of Egypt", you weren't the only one

The business of movies has three characteristics that have longed intrigued this blogger. The first is the dynamic whereby a small number of successful movies not only constitute a profit center, but also subsidize the majority of a studio’s movies, which are usually much less successful. Something similar goes in the book business, although the costs to produce a new book are usually only a fraction of what it takes to commercially launch a movie. The second is the notion of the “franchise”, where the initial movie is followed by multiple sequels, such the “Star Wars” series. As with any successful brand, the goal is for repeated custom, this time by the movie goer. The third is the notion of the “flop”, which seems to describe a movie made at a high cost under the belief that success is all but assured. When the flop is the maiden voyage of what the producers had hoped would be a multi-movie franchise, the pain is magnified.

This is not to say that movie makers have not been warned. In his classic book, Adventures in the Screen Trade Adventures, the screenwriter and author, William Goldman, famously wrote—

"Nobody knows anything...... Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out it's a guess and, if you're lucky, an educated one.”

His observation is oft-quoted, but it does not keep movie mavens from continuing to delude themselves that this time is different. When they are wrong, they call it a flop.

We are now witness to the first major movie flop of 2016— “Gods of Egypt.” As described by Wikipedia,

"Gods of Egypt is a 2016 fantasy film featuring ancient Egyptian deities. The United States-Australia production is directed by Alex Proyas and stars Brenton Thwaites, Gerard Butler, Nikolaj Coster-Waldau, Chadwick Boseman, Elodie Yung, Courtney Eaton, Rufus Sewell, and Geoffrey Rush. Butler plays the god of darkness Set who takes over the Egyptian empire, and Thwaites plays the mortal hero Bek who partners with the god Horus, played by Coster-Waldau, to save the world and rescue his love."

This blogger must confess that there is little in this description that would have driven him to catch the 7:00 pm showing of the movie at his local movie theatre. But Lionsgate, the studio responsible for Gods of Egypt, did not have this blogger in mind. As the studio behind the mega-successful movie franchises “The Hunger Games” and “Divergent”, Lionsgate was probably seeking to lure the same youthful movie goers to the Gods of Egypt and thus build it into another blockbuster movie franchise.

Au contraire. With an apparent overweening sense of confidence that failed to take heed of William Goldman’s admonition, over $140 million was sunk in the making of the movie. But after the crucial first weekend, Reuters reported that the paltry take amounted to only $14 million across 3,117 movie theatres in the U.S., with an additional $24.2 million received from 68 international markets. According to Wikipedia, the overall take was a bit more, $48.4 million. Whatever the exact weekend take, the likelihood that there will be a sequel, much less that the movie will become a bona fide franchise, seems slight to non-existent.

Before blog readers take out their tissues to commiserate with Lionsgate, however, there is another data point that should be taken into consideration. As reported, Lionsgate’s CEO has assured investors that the company’s exposure was less than $10 million. This is so, because the company received an unspecified amount of foreign pre-sales and a tax credit from the Australian government for 46% of the film’s budget.

As for the pre-sales, that is a private matter between business types, where there will be winners and losers, as in any business arrangement. As for the tax credit, however, one wonders why the tax payers of Australia need become part of Lionsgate’s movie-making plans. The continuing ability of the movie industry to obtain tax benefits as an inducement to carry out production in a given locale seems to remain a constant, even if the benefits to the taxpayers are doubtful. To this extent, at least, William Goldman was wrong.

The New York State Science and Technology Law Center Innovation Review Newsletter

In a recent post on IP Finance, I discussed the late Syracuse University Law School Professor Ted Hagelin’s excellent casebook titled, Technology Innovation Law and Practice.  Professor Hagelin was the founder and Director of the very successful Technology Commercialization Law Program at Syracuse University College of Law; Director of the New York State Science and Technology Law Center; Crandall Melvin Professor of Law; and Kauffman Professor of Entrepreneurship and Innovation.  When I wrote that post, I did not realize that University of Wisconsin Law School’s Vilas Research Fellow & George Young Bascom Professor in Business Law Shubha Ghosh had been hired by Syracuse.  This is an excellent hire and quite a coup for Syracuse.  Professor Ghosh will be the new Crandall Melvin Professor of Law at Syracuse University College of Law and director of the Technology Commercialization Law Program.  Professor Ghosh is a leading law professor in the U.S. and has authored over 20 articles as well as several books including Identity, Invention and the Culture of Personalized Medicine Patenting (Cambridge University Press 2012), and Transactional Intellectual Property (West 2^nd ed. 2012). 

The New York State Science and Technology Law Center also has a newsletter: Innovation Review.  The recent edition is filled with interesting and helpful information, including a discussion of the pending cases at the U.S. Supreme Court concerning enhanced damages, the Obama budget for the USPTO, and a recent Sixth Circuit case concerning licensing.  Notably, the Center is offering the following free webinar seminars taught by Professor Ghosh:

Lab-to-Market Spring Webcasts on Upcoming Supreme Court IP Cases

The NYS Science & Technology Law Center is pleased to announce that Professor Shubha Ghosh, the new Crandall Melvin Professor of Law at Syracuse University College of Law and director of Technology Commercialization Law Program, will be presenting a series of webcasts regarding upcoming Supreme Court cases. The cases include: the combined Halo Electronics Inc. v. Pulse Electronics, Inc. and Stryker Corporation v. Zimmer Inc.; Cuozzo Speed Technologies, LLC v. Lee; and Kirtsaeng v. Wiley & Sons. Each webcast will last for approximately an hour and 15 minutes and provide time for questions. There is no fee but registration is required. To learn more about the cases to be presented, and watch other webcasts presented by the NYS STLC, please visit our website.

The webinar on the Halo Electronics v. Pulse Electronics & Stryker Crop. v. Zimmer, Inc. cases will be held on March 21.  The webinar on Cuozzo Speed Technologies will be held on April 21. Here is a link to a page with the subscription fields for the newsletter. 

Oxfirst Free Webinar: The European Telecommunications Standards Institute Patent Policy

Our friend at Oxfirst, Roya Ghafele, has let us know about another timely webinar sponsored by Oxfirst.  Dirk Weiler, Board and IPR Special Committee Chairman of European Telecommunications Standards Institute [ETSI] & Christian Loyau, Legal and Governance Director of ETSI will present: “The ETSI Patent Policy”.  The talk will cover: “[An] explain[ation of] the main elements of ETSI’s IPR policy, the current challenges and the way changes to the policy are agreed [to] via a consensus based process taking into account all affected stakeholder interests.”

Mr. Weiler’s biography states: “Dirk Weiler is Chairman of the ETSI Board and the ETSI IPR Special Committee, and Head of Standards Management & Horizontal in the Networks Business of Nokia. With 30 years of technical and management experience in the telecoms industry he regularly speaks and writes about standardization, patents and the interplay of both. He holds an advanced degree in physics (Diplom-Physiker) from the University of Cologne.” Mr. Loyau’s biography states: “Christian Loyau is also the Legal Director of ETSI. He served for 12 years as Legal Director for International Affairs for the French telecommunications company Matra Communication and was involved in the IPR group of ETSI from 1993 to 1996. He then served as General Counsel and Secretary of the Board of the French IT company ATOS-Bull for 14 years.”

 

This talk follows Oxfirst’s recent webinar on IEEE’s standard setting process.

The talk is scheduled on March 11, 2016 - 14.00 British Standard Time / 15.00 CET/ 09.00 EST.  To register please follow this link: https://attendee.gotowebinar.com/register/141738416756401924  (Please note from Oxfirst that: “We only accept registrations undertaken with professional email addresses (i.e. we can’t accept registrations from yahoo, gmail or similar private accounts)”)