Friday, 15 September 2017

Gaming Amazon Using Fake IP Claims for Competitive Advantage

CNBC has published an interesting article about fake IP claims on Amazon titled, "Amazon was Tricked by Fake Law Firm Into Removing a Hot Product, Costing This Seller $200,000."  The article alleges that competitors of sellers on Amazon are filing fake intellectual property complaints against sellers resulting in Amazon's immediate take-down of their product or service.  These claims appear to be timed before big sales days and at very profitable products.  Interestingly, part of the problem is that Amazon is overwhelmed with complaints and apparently doesn't have the time to review the claims carefully.  My guess is that the software Amazon uses to police and handle claims is not able to discern fake and legitimate complaints well.  Perhaps better software is the answer.  I am hopeful that some Internet companies that rely on software will hire more people instead to handle these complaints.  Because Amazon controls the platform and sellers make so much money using it, I doubt many sellers will push Amazon too hard.  Although continued complaints and lost sales may open the door for a competitor to Amazon, which may be a good thing.  

U.S. Copyright Office Releases Database Concerning Its Views


The U.S. Copyright Office has released a new publicly accessible database of information concerning copyright matters.  The database contains amicus briefs filed by the U.S. Department of Justice with Copyright Office assistance, Register of Copyright Review and Questions concerning Royalty Board decisions, filings by the Copyright Office in civil actions in which they have an interest, and Copyright Office Review Board decisions since April 2016.  The Copyright Office notice concerning the database states:

Under the Copyright Act, the Copyright Office is responsible for advising the courts on issues of copyright law. This advice manifests itself in many forms. For instance, based on advice received from the Office, the Department of Justice files briefs in federal court on behalf of the federal government on issues of copyright law. In addition, the Copyright Office issues binding opinions on questions of copyright law to the Copyright Royalty Board.

These briefs and legal opinions are valuable resources for those seeking to understand the Copyright Office’s view of copyright law. Today, for the first time, the Copyright Office has published at one place on its website an archive of these briefs and legal opinions. The Office plans to periodically update this archive with new documents and any older documents it discovers.


Wednesday, 13 September 2017

Gaming IP: Smart or Damaging the Entire System

Here is an interesting case of gaming the IP system.  I believe this type of tactic hurts the IP system as whole even if we may disagree about the need for reforms. 

The New York Times has an informative article titled, “How to Protect a Drug Patent?  Give It to a Native American Tribe.”  The article describes how Allergen, the pharmaceutical company:

will pay the [Native American] tribe $13.75 million. In exchange, the tribe will claim sovereign immunity as grounds to dismiss a patent challenge through a unit of the United States Patent and Trademark Office. The tribe will lease the patents back to Allergan, and will receive $15 million in annual royalties as long as the patents remain valid.

As discussed in the article, this is apparently a strategy to protect the patents from Inter Partes Review Proceedings at the United States Patent and Trademark Office.  As discussed in other posts, public universities have successfully claimed sovereign immunity under the 11th amendment of the U.S. Constitution from IPR Proceedings.  I doubt this strategy will last long.  I can understand how Allergen may think this may play well with the public because Native American tribes will receive much needed funding, but really?  This looks very bad.  Of course, folks are going to start asking what that funding is being used for.  

Wednesday, 6 September 2017

China's Move Toward More Enforcement of IP


As China continues to work toward a services/innovation based economy, China has made several efforts to improve intellectual property enforcement.  Professor V.K. Unni of the Indian Institute of Management of Calcutta has authored a short, concise and interesting paper concerning intellectual property courts and enforcement in China, titled, Specialized Intellectual Property Enforcement in China: Implications for Indian Companies” in LiveLaw.in.  Professor V.K. Unni notes that, in addition to the IP specialized courts in Beijing, Shanghai and Guangzhou, China is creating “four new specialized IP Tribunals in Nanjing, Suzhou, Chengdu and Wuhan.”  He states that these tribunals will have jurisdiction that is regional and will extend beyond city limits.  Notably, he speculates that China may create a “national” appeals court similar to U.S. Court of Appeals for the Federal Circuit.  Professor V.K. Unni also states that: “It has been reported that during 2015 in the 63 IP disputes filed with the Beijing IP Court where foreigners were complainants, all the cases were won by foreigners.”  Notably, this progress is followed by the recent decisions concerning New Balance and Michael Jordan.
As reported by Bloomberg, China's Ministry of Commerce responded to Trump's action recently by stating that the U.S. should "cherish" its relationship with China and not harm the "business interests" of both countries' companies.   

Sunday, 27 August 2017

The World Turns on IP: Trump, China and New Balance


As the world turns on intellectual property, Trump has refocused efforts on China and intellectual property.  He apparently leaned off China supposedly because of concerns with obtaining China’s help with North Korea.  Now he’s apparently back on track.  Interestingly, The New York Times has recently published a strongly worded Op-Ed by Dennis C. Blair (“former director of national intelligence and a former commander in chief of the United States Pacific Command”) and Keith Alexander (“former commander of the United States Cyber Command and a former director of the National Security Agency”) titled, “China’s Intellectual Property Theft Must Stop.”  The Op-Ed is strong endorsement for Trump’s focus on China’s asserted intellectual property theft.  The Op-Ed states in part:

Chinese companies, with the encouragement of official Chinese policy and often the active participation of government personnel, have been pillaging the intellectual property of American companies. All together, intellectual-property theft costs America up to $600 billion a year, the greatest transfer of wealth in history. China accounts for most of that loss.

Intellectual-property theft covers a wide spectrum: counterfeiting American fashion designs, pirating movies and video games, patent infringement and stealing proprietary technology and software. This assault saps economic growth, costs Americans jobs, weakens our military capability and undercuts a key American competitive advantage — innovation.

Chinese companies have stolen trade secrets from virtually every sector of the American economy: automobiles, auto tires, aviation, chemicals, consumer electronics, electronic trading, industrial software, biotech and pharmaceuticals. Last year U.S. Steel accused Chinese hackers of stealing trade secrets related to the production of lightweight steel, then turning them over to Chinese steel makers.

Perhaps most concerning, China has targeted the American defense industrial base. Chinese spies have gone after private defense contractors and subcontractors, national laboratories, public research universities, think tanks and the American government itself. Chinese agents have gone after the United States’ most significant weapons, such as the F-35 Lightning, the Aegis Combat System and the Patriot missile system; illegally exported unmanned underwater vehicles and thermal-imaging cameras; and stolen documents related to the B-52 bomber, the Delta IV rocket, the F-15 fighter and even the Space Shuttle.

Citation to data backing up the claims in the Op-Ed would be helpful.  It is important to remember though that back in 2015, the New York Times published another article concerning China’s new antiterrorism rules for various foreign companies doing business in China.  The upshot of the rules basically required access to computer source code as a condition to doing business in China.  Industry was objecting at that time for several reasons, including national security as well as intellectual property.  It looks like that problem has not gone away. 

On a positive note, reports from China seem to indicate an uptick in enforcement for intellectual property law theft.  I’ve heard some say this is part of China’s transition to an innovation/services based economy and that they are hard at work at changing beliefs concerning intellectual property.  Notably, New Balance recently received a $1.5 million award concerning trademark infringement from a Chinese company in Suzhou.  This is reportedly the largest award by a Chinese court against a Chinese company in favor of a foreign company.  This award follows the recent decision favoring Michael Jordan and another $500,000 award in Hangzhou concerning New Balance. 

Trump Nominates New Head of USPTO

Trump has nominated Andrei Iancu to lead the United States Patent and Trademark Office.  Mr. Iancu is managing partner of the very well respected Los Angeles based law firm Irell and Manella.  Irell and Manella is home to one of the leading intellectual property law litigators in the United States: Morgan Chu.  Here are a few observations about this pick: 1) former Chief Judge of the Federal Circuit, Randall Rader, was not chosen; 2) Andrei Iancu is based on the west coast in Los Angeles; 3) His clients are from many different industries: biotechnology companies, medical device companies, medical research institutions, computer hardware and software companies, and internet companies; 4) He's handled at least one trademark matter and appears mostly to handle patent cases; 5) He co-teaches patent law at UCLA Law School; 6) He has written a number of papers of varying length concerning patents, including inter partes review proceedings, software patentability and the Eastern District of Texas; 7) He has co-authored (with two associates) a relatively clear and balanced analysis of the pros and cons of inter-partes review proceedings; 8) He has a background in aerospace engineering; 9) He obtained over $1.6 billion in payments for his client TiVo against AT&T, Motorola, Microsoft and Cisco among others; 10) He represented Ariosa Diagnostics against Sequenom; and 11) His firm represented Trump among others involving copyright claims and The Apprentice television show.  This appears to be a strong pick by the embattled Trump Administration. 

Tuesday, 22 August 2017

Two New Valuation Seminars


There are two interesting valuation seminars coming up.  The first is by the American Intellectual Property Law Association and is free.  It is tomorrow, Wednesday, August 22, 2017 and remote participation is possible.  The event is titled, “Assessing the Value of Intellectual Property in Rapidly Changing Markets and Law.”  Here is a summary of the event:

Rapidly changing markets and products affect the value of intellectual property.  Traditional methods of valuation are highly challenged, as comparable transactions, costs to develop "equivalent" IP and measuring income streams are all compromised by abbreviated time lines.  So, too, innovation at an increasing pace in certain sectors and rapidly changing intellectual property law (Alice, PTAB developments) heavily impact valuation approaches and outcomes.  Listen to our panel discuss these intriguing challenges.

The Speakers: Philip W. Kline of 284 Partners, LLC; Brian Scarpelli of ACT | The App Association; and David Stein of Cooper Legal Group, LLC

Wednesday, August 23rd, 2017, 12:30 PM ET


The Southern Methodist University Dedman School of Law in Dallas is holding a symposium titled: “The Value of Intellectual Property.”  The description states: “A one-day symposium exploring the latest news, legal developments, and judicial decisions, including panels on: What Drives Innovation; Perspectives on the Value of Intellectual Property; Patent Eligibility; Patent Valuation and Complex Products; The Supreme Court’s Recent IP Cases; and The Patent Trial and Appeal Board.”  The “featured speakers” are: Manny Schecter, Chief Patent Counsel, IBM and Phil Johnson, Senior Vice President – Intellectual Property Strategy and Policy (ret.).  The event is on Friday, September 29, 2017 in Dallas at SMU, Dedman School of Law. 

Wednesday, 16 August 2017

USPTO Releases Report on Public Views on Patent Eligibility Rules


The United States Patent and Trademark Office (USPTO) has released a report titled, “PATENT ELIGIBLE SUBJECT MATTER:  REPORT ON VIEWS AND RECOMMENDATIONS FROM THEPUBLIC” (Report) concerning the comments of participants at USPTO sponsored roundtables concerning the patent eligible subject matter requirement, particularly post-Alice/Mayo.  The USPTO summary of the Report states:

Much of the feedback we received highlighted the complexities of determining the appropriate boundaries of patent subject matter eligibility. Commenters confirmed that the recent Supreme Court cases have significantly changed the standards for determining patent subject matter eligibility. Several commenters expressed concern that these decisions have created inconsistency, uncertainty, and unpredictability in the issuance and enforcement of patents, particularly in the life sciences, software, and e-commerce industries.

A diverse group of representatives from academia, industry, law firms, and legal associations proposed legislative changes aimed at reversing the recent trend in the law and restoring, in their view, a more appropriate dividing line between eligible and ineligible subject matter. In contrast, a sizable portion of representatives from the software industry argued that the Court’s two-step test provides an appropriate standard for patent subject matter eligibility. This group cautioned against legislative redress and instead recommended that the common law should be allowed to evolve.

The following is a list of the views against the new rules: “1) Decisions are Legally Flawed; 2) Exceptions are Overbroad; 3) Two Step Test is Unclear and Causes Unpredictability; 4) Preemption Conflates 101 with other Patentability Requirements; 5) Jurisprudence Stifles Innovation and Hurts Business; and 6) Consistency of U.S. Law with International Norms.” Here is a list of the views in favor of the new rules: “1) Common Law Process at Work; 2) Weeds Out Overbroad Patents; 3) Requires Claiming a Specific Way and Not a Result; 4) Litigation Tool Against Patent Assertion Entities; and 5) May Give U.S. Entities an Advantage.” 

On the point in favor of the new rules based on May Give U.S. Entities an Advantage, the Report states:

Even if the Supreme Court’s new eligibility standard differs from standards abroad, a few commentators projected that the difference could actually operate to the benefit of the United States. For example, one commentator argued that because foreign entities have an increasing stake in the U.S. patent system, “[g]eopolitical considerations . . . weigh heavily in favor of” the Supreme Court’s Mayo and Alice decisions.246 In fact, she cautioned that if the U.S. were to adopt an overly expansive patentability standard, then not only would “American inventors, American companies, American investors, and the American public” benefit, but an “equal or greater benefit [would] inure to foreign inventors, foreign companies, and, in some cases foreign governments.”247 Another participant asserted that “if a company is innovating because it can get patents in Germany or Europe but it may not be able to get as much protection in the U.S., that innovation is still happening.” 248 And, she added, “if our consumers can benefit from the additional competition that a lack of patent [protection] provides and pay lower prices here” and “the innovator can still get their investments recouped by getting monopoly profits elsewhere” that may not be a bad deal for our consumers.249

Members of the life sciences community were relatively united in their critique of the new patent eligible subject matter rules.  The computer/related technologies community was apparently less united on whether the patent eligible subject matter rules were a good thing or not. 

There are also several legislative proposals for change, including: Replace the current test with a technological arts or useful arts test; Expressly define exceptions to eligibility; Distinguish eligibility from other patentability requirements; and Establish a research exemption to infringement. 

The text concerning the research exemption states, in relevant part:

Several commentators proposed a legislative amendment to recognize a research exemption from patent infringement for experimentation conducted to better understand or improve a claimed invention.427 According to these commentators, such an amendment would address the Supreme Court’s preemption concerns, i.e., concerns that patents on foundational technological tools may stifle scientific progress by tying up the basic building blocks of human ingenuity.428 One commentator suggested that the exemption could be tailored such that “patents on research tools would be unaffected, but research on a patented invention itself would not be subject to infringement allegations.”429  

The USPTO should be applauded for its hard work in trying to make the patent eligible subject matter rules and their application accessible, and obtaining the public’s viewpoint. 

Tuesday, 15 August 2017

University Endowment Size and Patenting


The National Association of Colleges and University Business Officers has released its report concerning U.S. University Endowment Size in 2016.  The top 10 in endowment size, include: 1) Harvard ($34,541,893,000); 2) Yale ($25,408,600,000); 3) University of Texas System ($24,203,213,000); 4) Stanford ($22,398,130,000); 5) Princeton ($22,152,580,000); 6) MIT ($13,181,515,000); 7) University of Pennsylvania ($10,715,364,000); 8) Texas A&M University System ($10,539,526,000); 9) University of Michigan ($9,743,461,000); and 10) Northwestern ($9,648,497,000).  I recently reported on top universities for patenting in the U.S. in 2016. The top 10 of the list includes: 1) The Regents of the University of California: 505 patents; 2) MIT: 278; 3) Stanford: 244; 4) Cal Tech: 201; 5) Tsinghua University/Graduate School at Shenzen: 181; 6) Wisconsin Alumni Research Foundation: 168; 7) John Hopkins: 167; 8) University of Texas: 162; 9) University of Michigan: 142; and 10) Columbia University: 118. There is some overlap on the list, including, MIT, Stanford, University of Texas and University of Michigan.  Interestingly, the endowment of Cal Tech is ranked at 39th at $2,106,724,000 and the University of Wisconsin is at 23rd at $2,419,161,000.  Additionally, universities in the University of California System have separate endowments which appear to be different from the overarching University of California endowment, which is 13th in endowment size at $8,341,072,000. 

Saturday, 12 August 2017

The PTAB Ruining the American Dream (?)


The BBC has a wonderful video of a “patent burning” outside the United States Patent and Trademark Office.  Who is burning patents?  American inventors who are protesting the Patent Trial and Appeal Board (PTAB), once called the, “Patent Death Squad,” by former Chief Judge Randall Rader.  The inventors are upset that the PTAB is killing the American Dream and are making an appeal to President Trump to overturn the Obama Administration’s creation.  (Yes, it is the PTAB not skyrocketing home ownership costs that is ruining the American dream.  I guess that bubble will pass as well.) 

This is a nice angle to take since getting the U.S. Supreme Court to overturn itself is much more difficult.  I wonder how attempts to overturn Alice legislatively are doing in Congress. 

Wednesday, 2 August 2017

More Matchmaking: Aqua Licensing Offers Access to More than 60,000 Patents


In another attempt to create an efficient marketplace for patents, Aqua Licensing is offering access to a substantial portfolio of patents—“more than 60,000.”  The patents are part of the portfolios of AT&T, Rambus, Lenovo and Entegris, among others.  According to the Aqua Licensing website:

Startups submit business plans to the pool as they would to a venture capital investor, at which point the team of patent experts at AQUA identify IP assets that will improve the defensive position of the company and contribute to its long-term growth and value potential. When a match is made, the IP is offered to the startup in exchange for equity, rather than cash, as part of their next-round of financing. This structure enables the startup to secure the Strategic IP Investment from the technology leader prior to pricing the financing round, allowing the benefits of the secured IP and strategic investment to be reflected in the valuation of that round. In many cases this allow for an immediately accretive acquisition of assets.

This sounds similar to one of Google’s recent efforts.  At least one study has shown that supposed patent trolls may target new companies near significant events such as IPOs.  This type of portfolio may provide defensive protection against practicing entities—which is a valid concern, of course.  According to Bloomberg BNA, Aqua’s program is closer to a marketplace because it can result in patent ownership. 

Trump Administration Suspends Program for Visas for Entrepreneurs


The Trump Administration suspended an Obama Administration program about to go in effect that would provide visas to entrepreneur immigrants.  According to the Wharton School of Business, the program would help create jobs in the United States and had little downside.  The program is apparently similar to others created in Canada, France and Argentina.  Notably, the Trump Administration is supporting new legislation to radically reform the immigration system in the United States by moving to a supposed “merit” based system designed to reduce immigration by 50%.  The Wharton School of Business states:

Immigrants make up about 12% of the U.S. working population, [Hsu] added. Among STEM (science, technology, engineering and math) workers, immigrants make up 24% of bachelors and 47% of doctorates, he continued. “So [immigrant entrepreneurs] are punching above their weight in the talent pool for the workforce that we desire in the U.S.,” he said. He pointed to one much-cited statistic: foreign-born entrepreneurs make up about half the founders in the so-called “billion dollar club” of startups that are worth at least a billion dollars each. 

In an Op-Ed in Crain’s New York Business, Orin Herskowitz, the Senior Vice President of Intellectual Property and Technology Transfer of Columbia University and President of Columbia Technology Ventures, states that:

The rule, one of President Barack Obama’s final acts in office, provides so-called “startup visas” long sought by Silicon Valley. It is narrow, allowing foreign entrepreneurs to live in the United States for 30 months while building their companies. To qualify, applicants must show that they have reputable investment in their company of no less than $250,000 and the potential for a positive impact on economic growth and job creation. The rule has now been delayed until next March, and the Department of Homeland Security has given notice that the administration will propose rescinding the program before then. . . .

There are other storm clouds on the horizon. The president’s proposed budget reduces funding for basic science. And the legal playing field is beginning to tilt against innovators, most dramatically through a retreat from the respect for patent protection recognized by our Constitution more than two centuries ago as a bulwark of our economy. The former director of the U.S. Patent and Trademark Office, David Kappos, points out that a series of court decisions have rendered many biotech and software inventions un-patentable or at best uncertain in the U.S., causing the abandonment of promising research, or the repositioning of that research overseas to China, where affirmative steps have been taken to strengthen patent protection.

[Hat tip to Technology Transfer Central for the lead to the articles.] 

Friday, 21 July 2017

Yet another article on the 10-year anniversary of the iPhone

An extra-terrestrial alien visiting Earth in 2007 and returning, now, one decade later, might, at first glance, notice little difference in smartphones between times. For example, most-recent iPhone models superficially appear very similar to their predecessors including the first iPhone model in 2007. The external designs have remained fundamentally much the same including thin form factors, rounded corners and relatively large displays (with multi-touch operation) in comparison to featurephones.

                                                    Spot the difference



                           iPhone (2007)


However, superficial appearances are very misleading: technological capabilities in mobile phones have improved massively with numerous valuable innovations from various contributors over the last decade, as did capabilities over the preceding couple of decades since the introduction of the first cellular “bricks” in the mid 1980s.

Another major milestone in cellular technology developments towards 5G


Recent new technology deployments with Gigabit LTE at Telstra in Australia, Sprint in the US and EE in the UK highlight how much cellular communications technologies have improved since the introduction of mobile data services with circuit-switched and then packet-switched offerings from around 20 years ago. Peak and average user data speeds on cellular networks have increased by a factor of 10,000 over 20 years. By way of comparison, microprocessor performance doubling every couple of years, as predicted by Moore’s Law, has increased only one thousand-fold over that period. Cellular performance improvements are therefore quite spectacular given the vagaries of connecting through the ether up to hundreds of metres, as well as processing those signals in the confines of around one square centimetre of baseband processor silicon!


2016 iPhone 7 is 1,000 times faster than the 2007 model


Whereas Apple has done an outstanding job in improving its iPhones in various ways and in motivating its customers to upgrade to later models, it is significantly dependent on other companies for many technical innovations that it includes in its devices.

While marketing departments and the press look for eye-catching new features on specific device models that might surge demand for the latter, it is relentless standards development work with innovations and performance improvements in cellular technologies to increase speeds, network capacity and reduce power consumption that provide the crucial underpinnings for these ––particularly for HD, 4K or even 8K video that sends or receives very large volumes of data over the mobile networks.

Inspiration and perspiration


Development work for this including 4G and 5G technologies is largely undertaken by a hard core of several major technology-developing firms. Research on attendance records of all the 3GPP working group meetings between 2005 and 2014 reveals that a few highly-active firms are largely responsible for the technical developments in that standards development organisation. Over this period, a total of 3,452,040 man hours were spent in 825 working group meetings, mostly in the development of 3G and 4G standards. Distribution of contributions to 3GPP is highly skewed, with a few firms submitting the vast majority. For example, the top two percent of firms (i.e. 9 of them) are responsible for submitting 60 percent of all contributions. Furthermore, approximately one-third of all participating firms (i.e. 161 of them) have not submitted a single contribution to 3GPP.

However, most of the activity in the public records of standards development organisation 3GPP is the mere tip of the iceberg in terms of the total amount of development work undertaken, with even more extensive other activities submerged from public view.


As I noted in a report on innovation and intellectual property protection, it is a popular misconception that innovation is random or serendipitous. In fact, it takes many ideas to find a few initiatives worth experimenting with, which may then enable some to be identified that are worth investing in significantly and might ultimately lead to a winner or two with sufficient development effort and investment. This work is largely undertaken outside of SDO meetings.

The numbers of patents and patent applications declared to the ETSI IPR database as possibly being essential to these cellular standards are also very skewed. A small number of mostly the same companies as above account for a large proportion of patent declarations. When I last checked, seven companies including Ericsson, Huawei, Nokia, Qualcomm and Samsung accounted for 70 percent of the many thousands of patents declared in the period 2008 to mid 2015.

Value for money in cellular patent licensing


Licensing fees paid in the smartphone industry are substantially for standard-essential patents and in some cases for non-SEPs. Total patent licensing costs for Apple and other smartphone OEMs at around only a few percent of revenues are good value given the development efforts and performance improvements delivered by technology developers.

Licensing fees pale in comparison to the profits generated by Apple. The original iPhone was introduced in June 2007 at a price of $599 in the US. This and subsequent iPhone models have generated very large profit margins, as illustrated by the difference between retail prices and manufacturing costs.

Substantial mark ups and profits to Apple on iPhone


2007
2011
2016
Model
Standard/technology
2G EDGE
3G HSPA
4G LTE- Advanced
Version (storage)
8GB
16GB
32GB
Full retail price*
$599.00
$649.00
$649.00
BoM cost*
$222.55
$178.82
$246.91
Markup ($)
$376.45
$470.18
$402.09
Markup (%)
169%
263%
163%
* Source: TechInsights/Portelligent

According to Strategy Analytics, Apple sold 231 million iPhones with an operating profit (i.e. after some other operational costs) averaging $239 per phone in 2015. That represents 36 percent of its $669 average selling price that year.

Following the introduction of a new model every year at gradually increasing prices, “the 10th anniversary iPhone, the next model, expected to be massively redesigned and packed with state-of-the-art technology, could sell for as much as $1,200 to $1,400, according to some estimates”.
Analysts also estimate patent licensing fees paid to Qualcomm average about $10 to $20 per iPhone. Apple has stated that Qualcomm charges it "at least five times more in payments than all the other cellular patent licensors we have agreements with combined."

On that basis, Apple is paying a total of between $12.50 and $25.00 per iPhone in fees for licensing from all cellular patent licensors. That is equal to between two percent and four percent of iPhone prices. Licensing fees as a percentage of consumers’ total cellular expenditures over a smartphone's approximate two-year service life, including operator service fees averaging around $40 per connection per month in the US, for example, are considerably lower.


Happy anniversaries

It is also ten years since I published my abovementioned report, noting as well that innovation can occur in many ways, with a variety of different business models and that fully vertically-integrated companies had become a rarity in technology industries. I stated that explicit recognition of value through licensing was increasing innovation, competition and customer choice with third-party supply of IP, in addition to that for components and manufacturing. That conclusion still holds.


Wednesday, 12 July 2017

Google's Competitors Take a Swipe at Google's "Academic Influence Campaign"

The Campaign for Accountability (CA) has released a report on Google's "influence" on academic papers.  Notably, The Chronicle for Higher Education states that "The Campaign for Accountability" is funded by Google's competitors.  The Wall Street Journal has followed up with an article titled, "Paying Professors: Inside Google's Academic Influence Campaign -- company paid $5,000 to $400,000 for research supporting business practices that face regulatory scrutiny; a 'wish list' of topics."  The CA report notes that "the influence" extends to direct funding of work by researchers, or researchers who were affiliated with institutions that were receiving funding.  The CA report then states that 66% of the papers funded did not disclose Google funding and that 25% of the directly funded papers did not disclose Google funding.  The information underlying the CA report was apparently partially obtained through state Freedom of Information Act Requests from professors at public universities.  Thus, there may not be a full picture of Google's activities--"influence" at private institutions. 

Here are a few preliminary thoughts.  First, Google is not the only company that strategically acts to influence academic research in fields that impact it.  As the Wall Street Journal points out, this happens in many industries.  My guess is that Google's competitors are acting similarly.  They just may not be as good at it, haven't had the light shined on them, or not have as many academics with similarly aligned values.  But, again, that is a guess.  Second, my impression is that Google's actions seem aimed at "rewarding" or "encouraging" research that it likes--not so much that it is paying people to make specific findings or skew research results.  Google encouraging research by people who have values aligned with Google doesn't seem too nefarious. This doesn't seem to be the same as paying for skewed or specific (incorrect) findings.  Third, my guess is that it is highly irregular to disclose every funding source that an institution has with whom you may be publishing or presenting an article.  I don't know the details, but that likely makes the numbers in the CA report higher. 

Fourth, it is plausible that the 25% number of directly funded papers that did not disclose Google funding could be an "oversight."  Importantly, it is unclear from the report when the funding was provided for all of the papers--either before, while, or after the papers were written.  I am assuming that the Wall Street Journal is using the most "damning" examples in its article.  Notably, some professors appear to have been in communication with Google about their papers in draft.  The point that some professors want feedback from the entity who they are writing about or in the industry is a pretty good one.  A conscientious professor would want to make sure they are accurately representing the way a particular technology or system or company operates.  Fifth, my understanding is that it is not entirely clear what should be disclosed and not disclosed in papers concerning source of funding.  I am sure my institution receives money from many sources, and I've never believed that I had to disclose those funding sources.  And, if Google or any other company sponsored a conference I presented at, I wouldn't mention that as a matter of practice in a paper.  Moreover, I find it hard to believe that if I received funding from Google once (or twice) that in the future I must disclose that every time I take a position that may support a position Google may have.  Sixth, public/private partnerships are not unusual and private funding of research happens somewhat regularly.  Professors frequently consult with private companies.  Seventh, this CA report (and the press it is receiving) may lead academics and companies to be more careful about disclosing funding sources.  That may be a good thing--within some reasonable bounds. [Hat tip to Professor Caron's Tax Prof Blog for a link to the Chronicle of Higher Education article and the CA report.]

Newspapers Fight Back Against Facebook and Google for Stronger IP Protection


In most intellectual property law courses and many property courses in the U.S., the INS v. AP case is taught.  In that case, the U.S. Supreme Court created the INS misappropriation claim which essentially protects the gathering of “hot” or “fresh” news from free riding competitors.  The decision was a close one and has been criticized over the years.  Occasionally, it rears its head in cases dealing with financial information and in one case seemed to cover paparazzi photos.  My impression has always been that the U.S. Supreme Court was attempting to protect the news gathering business because of the importance of having an informed citizenry in a democracy. 
Interestingly, at the confluence of fake news and President Trump’s attack on the media, the Washington Post added a slogan to its website: “Democracy Dies in Darkness.”  Prior to the fake news issue and presidential attack on the media, the newspaper business had not done well—arguably because of digital media and the internet.  Newspaper businesses through the News Media Alliance are now attempting to obtain an exemption to antitrust law which will allow them to negotiate collectively against entities such as Facebook and Google.  The Los Angeles Times states:

By banding together news outlets would have more leverage against two companies that command more than 70% of the $73-billion dollar digital advertising in the U.S.  By comparison, newspaper ad revenue in 2016 amounted to $18 billion, down from $50 billion a decade ago, according to the Pew Research Center. 

According to the article, "pushing for" stronger intellectual property protection is part of the goal.  It will be interesting to see whether the Trump Administration grants the exemption. 

Saturday, 8 July 2017

UNCITRAL Considering Model Law of IP Licensing


The United Nations Commission on International Trade Law (UNCITRAL) is considering creating a model law concerning intellectual property licensing/transactions.  The Note by the Secretariat outlines the potential need and benefits from such a model law:

[T]he panel noted a gap in the law with respect to contractual matters. While some intellectual property laws contain a few provisions addressing contract terms, there is no general commercial law directed specifically to intellectual property licensing. Instead, contracting parties must rely on a general intellectual law merchant based on ad hoc rules and practices that often require specialized knowledge and experience. This causes increased transaction costs and barriers to international trade, and puts small and medium-size enterprises at a disadvantage.

. . . The panel referred to studies that show the benefits that States derive from increased intellectual property commerce. These benefits include: (a) superior access to finance and venture capital; (b) higher quality utilization of national human capital; (c) increased local inventive activity; (d) better access for local firms to technology: and (e) streamlined and enhanced access for the public to creative content. Realizing these benefits also requires legal support for commercial transactions in intellectual property, e.g. “licensing.” The lack of a general commercial law text specially crafted to the unique needs of intellectual property licensing constitute a barrier to realization of these benefits.

The Note by the Secretariat also lays out issues related to the feasibility of developing an international model law on intellectual property transactions similar to the CISG: 

"59. To establish the feasibility of the preparation of a uniform law text on intellectual property licensing, the panel then discussed a range of commercial issues that arise in typical intellectual property licensing contracts and ways in which they could be usefully addressed. These issues include the following: 

  (a) Scope of work: the proposed text should address intellectual property licensing issues that could be addressed with non-mandatory law rules that the parties could vary or derogate from, with the understanding that the text is not intended to alter provisions of intellectual property law;

  (b) Definitions and rules of interpretation: terms, such as “assignment”, “licence”, “exclusive”, “scope”, “use”, and other terms that would appear in the text, would need to be defined; also reference would need to be made to the general obligation of good faith and reasonable conduct;

(c) Contract formation: the question would need to be addressed whether there should be any special rules for the formation of an intellectual property licensing contract apart from a State’s general contract law rules on matters, such as written form and contract formation by electronic means; in this regard, it may be useful to review the Unidroit Principles of International Commercial Contracts;

  (d) Contract interpretation: a number of questions would need to be addressed, including whether: (i) the parties may agree to limit interpretation solely to the terms of a written instrument; (ii) if the written instrument is ambiguous, it is then proper to look to the conduct of the parties; (iii) a contract should be interpreted by neutral rules or whether there should be a rule in favour of one party (e.g. an author); and (iv) it is necessary to address interpretation of terms that call for successive performances, or that require performance to the satisfaction of the other party; 

  (e) Implied terms: the text would need to address the question whether an intellectual property licensing contract should be deemed to include implied terms, such as an implied representation about ownership or control of the intellectual property by the licensor, or a duty of cooperation, or mutual obligations to act in good faith;

  (f) Obligations and their performance: it may be necessary to address the general obligations of the parties (e.g. the licensor to enable use and the licensee to use according to the terms of the licence and pay royalties) and their performance; 

  (g) Transfer of rights and acceptance of duties: it may be necessary to address transfers of intellectual property rights by a licence agreement and transfers of contractual rights, for example, by an assignment of a right to payment, and to distinguish acceptance of duties from a transfer of rights; 

  (h) Breach of contract and remedies: it may be necessary to address situations that would constitute breach of an intellectual property licensing contract and the relevant remedies (e.g. whether exact or substantial performance is required, whether a distinction would need to be made between a breach that allows ending the contract and one that only allows damages, the measure and type of damages); and

  (i) Conflict-of-laws issues: the law applicable to an intellectual property licensing contract may also need to be discussed and in particular whether the parties may choose it and, if so, what matters may be covered by the law chosen by the parties. "