Brexit and IP Practice: What does it mean?

As we all know, Brexit happened yesterday (I guess depending on your time zone).  I am disappointed by the vote, but that is democracy.  It was relatively close, but over 17 million voters unhappy with the status quo is significant.  I am not a European IP attorney, but I thought it might be helpful to collect some of the links to advice concerning the IP fallout from Brexit.  Here are a few: 

Freshfields Bruckhaus Deringer

Carl Oppendahl

Afro IP via Darren Olivier (Brexit implications for Africa)

Fashion Law Blog

Olswang

Foley & Lardner via National Law Review

Kluwer Patent Law Blog

Shepherd Wedderburn

Bird and Bird

World Intellectual Property Review

Collateralization of Intellectual Property in Singapore and China

The efficient collateralization of intellectual property is a way for small and medium size enterprises to obtain financing for continued expansion, and additional research and development.  As reported by Ellie Wilson on the IPKat blog, a loan with IP as collateral was recently approved in Singapore. The Press Release from the Intellectual Property Office of Singapore states: 

While using tangible assets such as machinery and inventory to apply for loan financing is a common practice for companies, using intangible assets in the form of patents is a recent development.

3.      Singaporean entrepreneur, patent owner, founder and Group Chief Executive Officer of Masai Group International, Mr Andy Chaw, shared, “We are honoured to be the first company in Singapore to have successfully obtained the IP financing to unlock the value of our intellectual property. With the financing, we will continue to invest and strengthen our global IP portfolios and brand marketing, as well as continue our research and development efforts in new technologies and products development.”

4.      The IP-financed loan was supported by DBS Bank (DBS), one of the scheme’s three participating financial institutions (PFI). DBS’ Group Head of Small-and-Medium Enterprise Banking, Ms Joyce Tee, said, “As the principal banker for the Masai Group, we recognised that the patents acquired would essentially translate into future earnings. We are very pleased that the collaboration with IPOS to monetise these intangible assets, recognising the patents as an alternative security, has worked well. With this as the first successful case of an IP-backed loan in Singapore, we will continue to build a sustainable capabilities platform so that we can help our SMEs unlock the hidden wealth in their intangible assets and convert into cash for their business growth.”

5.      UOB, another of the scheme’s PFI, has a strong pipeline of IP financing cases to help companies capitalise on the value of their intangible assets. Mr Eric Tham, Head of UOB’s Group Commercial Banking, said, “As businesses evolve with the changing times, intellectual property will increasingly form a significant part of an enterprise’s value. We welcome IPOS’ forward-looking enhancements to the IPFS, as more companies in Singapore would be encouraged to innovate and help create the ‘Silicon Valley of the East’.”

More PFI, IP Valuers and Qualifying IP Asset Classes for IPFS

6.      Effective 1 July 2016, IP owners can look forward to monetising other IP asset classes such as registered trade marks and copyrights through IPFS. The addition of new IP asset classes, over and above patents, is aimed at spurring an intellectual property and innovation-driven economy in Singapore.

7.     The scheme will also be extended for another two years till 31 March 2018, as applications are expected to increase. The all-time high IP filings in Singapore is a testament of the current buoyant innovation climate. To meet the anticipated surge in demand for IP loan financing, IPOS has appointed a fourth PFI and expanded the panel of IP Valuers from three to seven. This move will allow companies to work with a larger number of PFI and competent IP Valuers for successful loan applications.

8.      Mr Daren Tang, Chief Executive of IPOS, said, “As Singapore’s economy becomes more innovation-driven, IPOS is stepping up our efforts to help local companies and entrepreneurs realise that IP is not just about protection of their legal rights; it is about using it to grow their business. He added, “IPOS will continue to work with more partners to provide opportunities for companies to go beyond IP protection to monetisation. The IPFS is one such scheme and we hope that local companies with valuable IP will take full advantage of it, as we continue to look for new ways to help them succeed in the global innovation market.”  

Lexology reports that:

Recently, the State Administrations of Industry and Commerce (SAIC) made an announcement that, after July 1, 2016, 25 local Administrations of Industry and Commerce (AICs) may receive pledge applications of trademark rights on behalf of China Trademark Office. Applications filed through the local AICs are free of charge.

Are there any other developments concerning collateralization of IP in Asia?  

How long can cable television support the business of professional sports?

This is a good basketball time to be from Northeastern Ohio. This blogger, having grown up in the Cleveland, Ohio area, is basking in the victory of the hometown Cleveland Cavaliers in the finals of the National Basketball Association playoffs. The final game of the series on Sunday evening attracted one of the largest television viewing audiences ever for a basketball

game. Lebron James, the leader of the Cavaliers, makes Croesus-like amounts of money. While others do not earn his gargantuan sums, the compensation being paid to professional athletes is such, that it raises the question: is this sustainable?

Based on a recent piece by Louis Menand (“Show Them the Money: Is the sports business a bubble?”) about the financial structure of professional sports, which appeared in the May 16, 2016 issue of The New Yorker magazine, the answer may be “no”. Relying on the analysis set forth by Matthew Futterman in his book, “Players: the Story of Sports and Money, and the Visionaries Who Fought to Create a Revolution”, Menand describes how this salary cost structure, with its overreliance on broadcast-based revenues, may be leading professional sports to a deep and painful fall.

The principal reason for this dystopic vision of professional sports going forward is, according to Futterman, that the industry has overshot the scope of its audience. In Futterman’s words, “One of the great illusions of the sports industry is mass fascination.” The intention is not the Olympics or the World Cup, or even Euro 2016, all of which still attract a large audience for a short period. But what about the rest of the time? It is claimed that the day-by-day audience for most sports is in fact, “tiny”. Thus, far from the spotlight of the playoffs, the NBA attracts an audience of less than 3% for its local games.

The only exception to this is that National Football League, which is distinguished by the fact that its games are broadcast via television networks, which means that it is possible to get a reasonably accurate indication of actual viewership. For most other sports, however, broadcasts of games are provided through arrangements with cable companies, and in that lies the nub of the problem. Why is this so? It all has to do with bundling. As anyone who pays a monthly bill for cable (at least in the U.S.) knows, a viewer is offered a bundle of programs, many of which the viewer has no interest in ever watching. No matter—the bill is then split according to a formula among all the channels provided by the carrier.

It transpires that approximately 20% of the average cable bill goes to the channels that broadcast sporting events, which then pays out to the various sports teams a certain (and substantial) amount for the right to broadcast their games. These amounts are paid whether or not any given viewer actually is watching a game, with the result that the sums paid out to the teams bear no direct relationship to the actual number of viewers. In the words of Menand, this “means sports are currently enjoying a very large subsidy from a public that doesn’t watch them.”

But this subsidy may be coming to an end. According to Menand, the cable industry may be on the way to “disaggregation”, which means that viewers will then pay only for the programs that they actual view. If this comes to pass, the sums being paid will reflect the small numbers of viewers for all sports except for American football, and these amounts will not be able to support the current salary structure. What will happen to the sports teams in a post-subsidy world is a matter of various speculation, none of which is positive for the sports industry.

Something that is not sustainable ultimately cannot be sustained. Is this the path for professional sports, based on its current funding model?

Beijing Regulator Issues Injunction Against Apple iPhone 6

Ali Qassim authored an article titled, "Expect Frequent Fast Injunctions in China, Says US Lawyer," on June 7, 2016 published in Bloomberg BNA.  The article reported on the remarks of a Beijing based-US attorney at a conference concerning the availability of remedies, including injunctions in China [behind a pay wall]. Today, June 17, 2016, Eva Dou of the Wall Street Journal has reported in an article titled, "Beijing Halts Sales of iPhone 6, Citing Patent Infringement" that a regulator in Beijing has issued an injunction against the sale of the iPhone 6 for infringing a design patent of Shenzhen Baili.  The article notes: 

It wasn’t immediately clear what impact the order would have. Some mobile-phone stores in the city said they had already stopped selling the two models months ago, switching to newer models. Apple will soon end production of both models, according to a person familiar with the production plans.

According to The Street, shares of Apple are falling.  Should we expect more investment in research and development, and patenting in China given the reported easy availability of remedies in China's huge market?  

 

Brands and innovation: the case of health-related apps

This blogger has for some time been considering the question of how trademarks and brands are connected to innovation. From WIPO on down, the mantra has been that the connection between the two is robust. But in this blogger’s view, the relationship between them is far from self-evident. In particular, we have suggested that the kinds of innovation fostered by brands are found only in a narrow range of circumstances, where a strong brand may be leveraged to support a product

extension or, less frequently, a new product line, that rises to the level of an innovation. Moreover, this tends to occur most frequently in the consumer products space, leaving a broad swathe of product categories unaffected. If this be true, the role played by brands in innovation may be of less importance than often stated.

Against this background, this blogger was fascinated by a piece that appeared in The Economist on March 12, 2016 (“Things are looking app”). The upshot is that the relationship between brands and innovation may be more promising, at least when medical apps are involved. In terms of raw numbers, the medical apps world is exploding. According to the piece, there are now over 165,000 health-related apps that run on either IOS or Android. PwC foresees that by 2017, health-related apps will have been downloaded over 1.7 billion times. Despite these impressive numbers, the reality is that few such apps are ever used. The interesting question that arises is how an app developer in the health field can gain market traction.

One might be tempted to believe that new actors will emerge as the purveyors of successful health-related apps run on either smartphones and wearables. More likely, however, the surest way to commercial success will be through the leveraging of well-positioned health brands into the health-app business. In the words of The Economist,

“The fragmented, nascent m-health market seems likely to consolidate in time, with its most promising startups perhaps being bought by, or entering alliances with, trusted health brands. That would help it to realise its substantial potential to help patients, doctors, health insurers and researchers alike.”

The upshot is that the big health-related brands will get bigger through their health-related apps, while newcomers seeking to market an innovative health-related app will have a substantial battle in doing so. Stated otherwise, health apps are different from smartphone entertainment apps in the form of Angry Birds and Candy Crush Saga. There are at least two reasons for this.

First, the role of trust in the brand is inextricably intertwined with the health function offered by the app. True, brand gurus speak of consumer trust in the context of the strength of any brand, but when health is at issue, the role of trust is magnified. A customer losing trust in his breakfast cereal brand may have negative consequences for the brand owner as the consumer switches to a competing product, but it does not involve a consideration of health and safety. When these concerns are front and center, the strength of a trusted brand becomes more important for all concerned.

Second, the role of the strong brand may be a partial substitute for administrative regulation of health-related apps, at least in the short term, As the article itself recognizes, such regulation is still in the formative stage. As long as this is so, a strong brand can provide a degree of security for the consumer about the reliability of the product.

None of this detracts from this blogger’s s work-in-progress thesis that brands and innovation may be less important than often believed. But the potential role of strong brands in fostering innovation in the health-app business shows that the subject is more nuanced than he may have once thought.

3000 Yahoo Patents for Sale

The Denver Post has published an interesting article titled, "Yahoo Lines Up Bids for About 3,000 Patents."  The article discusses recent efforts by Yahoo to publicize the sale of almost 3,000 patents and pending applications by auction assisted by Black Stone IP.  Notably, some of the patents "date back to 1996" the company's founding--which begs the question about remaining term length--and cover the core search business of Yahoo.  This patent sale is separate from the core business sale and represents a significant difference in value, according to the article.  The estimates of the value of the core business was placed at around $4 to $8 billion apparently with (most of) the patents.  Verizon supposedly bid $3 billion, but this did not include the patents for sale.  So, does that mean the patents are valued between $1 and $5 billion?  In valuing around 2,000 of the patents, Maulin Shah of Envision IP arrived at a figure between $965 million and $1.34 billion.  The article states that this is based, in part, on past historical licensing revenue.  In addition, the article notes that Yahoo has collected "$600 million in patent sales and licensing fees in the last three years."

Given the state of U.S. patent law, the valuation of the patents and ultimate sale price will be interesting.  Joff Wild of IAM (Intellectual Asset Management) recently authored a blog post for the IPKat which essentially reviews the current state of patent valuation.  Notably, there could be some patent bargains right now.  Given Enfish and TLI Communications, the U.S. patents will need a very careful analysis.  However, if the patents are purchased for defensive purposes only, then maybe the analysis will not be so careful.  Google is rumored as a potential buyer--competition issues? 

Free OxFirst Webinar: Dr. Eleanor Rosati on Neighboring Rights

Our friend at Oxfirst, Roya Ghafele, has let us know about another timely webinar sponsored by Oxfirst.  The brilliant Dr. Eleanor Rosati, Lecturer at University of Southhampton will present “Neighbouring rights for publishers: are national and (possible) EU initiatives lawful?”.

A description of the talk states:

Currently the EU Commission is considering whether a neighbouring right for publishers – whether in the press sector alone or also other sectors – should be proposed for adoption at the EU level. Against this background, this talk discusses: (1) the compatibility with EU law of national legislative initiatives that have resulted in the creation of ad hoc rights for press publishers; and (2) whether a neighbouring right for publishers may be adopted at the EU level and, if so, what changes of the copyright acquis are required. It concludes that, while the former may be contrary to Member States’ obligations under EU law, the latter may be pursued by amending relevant directives.

Dr. Rosati’s biography states:

Dr Eleonora Rosati holds a lectureship in intellectual property (IP) law at the University of Southampton, a guest lecturer in copyright law at EDHEC Business School, and is Editor in Chief of the Journal of Intellectual Property Law & Practice (Oxford University Press). Previously she was a post-doctoral legal research associate at the University of Cambridge, and worked in the IP departments of Bird&Bird LLP in Milan and London. Eleonora has authored several contributions on IP issues, and regularly contributes to specialist blogs The IPKat and The 1709 Blog, for which she reports and comments on IP-related news from all over the world.

The talk is scheduled for Friday, June 17, 2016 3:00 PM - 4:00 PM BST.  To register please follow this link: Registration URL: https://attendee.gotowebinar.com/register/4739425455434769153.  (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)”)

Nothing New in the World of Patents: "Patent Licensing and Secondary Markets in the Nineteenth Century"

In a recent blog post "Nothing New Under the Sun: “Patent Trolls” Have Been Around Forever," I discussed Professor Zorina Khan's review of Nineteenth century patent assertion entities.  In a recent essay, Professor Adam Mossoff of George Mason University Law School provides another supportive account of patent licensing and secondary markets in the Nineteenth century.  Specifically, Professor Mossoff, in a short and readable paper, "calls out" those commentators who assert that the "patent licensing business model" is a new phenomena. Professor Mossoff summarizes and reviews Professor Khan's research as well as the research of other historians that demonstrates there really is nothing new (at least not much) in the world of patents. 

Professor Mossoff provides the example of three inventors who licensed their patents.  He discusses Charles Goodyear (process for vulcanized rubber), Elias Howe, Jr. (lockstitch in sewing machines), and Thomas Alva Edison.  About Goodyear, Mossoff notes, "Some of Goodyear's assignees and exclusive licensees, who were patent licensing companies themselves, filed hundreds of lawsuits in the nineteenth century; they sued firms, individuals, and even many end-users such as dentists, for patent infringement."  He further states that, "Contrary to many claims today, end-user lawsuits even by patent licensing companies are nothing new in America's innovation economy."  

Notably, Mossoff states that Howe used "third-party litigation financing."  Howe also joined "the first patent pool in American history."  "[Howe] made almost the entirety of his fortune on the basis of the royalty stream from his license to this patent pool, which further licensed his rights to other companies."  Mossoff makes an interesting point about Edison.  Interestingly, he notes that Edison was famously a terrible businessman, but a great inventor.  The point here seems to be that specialization matters--licensing for commercialization to those who know how to do it is critical to getting patented inventions to the public. Not all inventors will be good businessmen--experts in manufacturing or finance. Edison's "employ[ment of] the patent licensing business easily meets today's definition of an 'NPE.'"  

Professor Mossoff also provides interesting examples of the secondary market, which include the classified advertisements in the magazine Scientific American. The classified advertisements included numerous "ads for the sale of patents and patent rights."  Moreover, he discusses the research of economists Naomi R. Lamoreaux, Kenneth Sokoloff, and Dhanoos Sutthiphisal: "Their research revealed the fundamental and significant role performed by a group of market intermediaries known at the time as 'patent agents.'"  Professor Mossoff asserts that these "patent agents" are "predecessors of today's patent aggregators." 

Finally, Professor Mossoff states that a historian notes "after detailing the problems for nineteenth-century inventors who usually lacked manufacturing and commercial finance skills, that 'given the risks associated with manufacturing, many nineteenth-century inventors preferred to either sell or license their patents.'"  He concludes that, "In sum, it is simply false to assert that these commercial mechanisms for bringing patented innovation to market are a new phenomenon today." What should be the role of this type of research given the state of the debate on NPEs/PAEs today?  Does it change the analysis concerning the merits of NPEs/PAEs?