Friday, 19 May 2017
A European Commission DG Growth initiative described in its Roadmap on Standard Essential Patents for a European digitalised economy aims to increase information on SEPs so implementers can get a better idea about which of these they might be infringing. Additional disclosures on how patent claims might read on the standards could be beneficial. Requirements should reflect the dynamics and uncertainties in standards development and patent prosecution and must not be onerous to patent owners. These are issues for standards development organisations to consider.
A report DG Growth commissioned in support of its initiative entitled Transparency, Predictability, and Efficiency of SSO-based Standardization and SEP Licensing (the CRA report) proposes that SDOs or the European Patent Office could also help meet this objective by being appointinted the central assessor that would screen patent disclosures to determine and count which patents are truly essential. This would be undesirable intervention with various adverse consequences. As I wrote here for IP Finance in detail very recently, third-party determinations on large portfolios are inherently subjective, inconsistent and unreliable.
The creation of this EC-ordained “patent counting” database would also lend it to being used as an interventionist means of valuing SEP portfolios. In conjunction with the unwarranted imposition of maximum cumulative rates (i.e. royalty caps), this could facilitate the ill-conceived price regulation alluded to by the Competition Commissioner.
The CRA report also embraces defective patent hold-up and royalty stacking theories. General theories on hold-up and “Cournot complements” are misrepresented and do not apply to patents. There is a lack of supporting evidence on alleged patent hold-up, royalty stacking and much of it to the contrary including that for opposing effects from patent hold-out (i.e. patent trespass).
SDO IPR policies are commonly misrepresented with the bogus notion that patent owners should be deprived a share of value from use of patents in standards. Neither the economics nor the law is settled here. Sharing in the “gains from trade” incentivises risky investments.
Private ordering has worked very well in 2G, 3G, 4G and it will continue to work well in IoT including 5G. Prospects are no more uncertain now than they were when these previous-generation standards were introduced and helped transform the communications markets. Decades of fruitful progress indicates it is not “too soon to tell” how things are playing out. By all measures these markets are extraordinarily competitive and successful, with large research and development investments, extensive resulting innovation, massive growth in subscribers and data consumption, reducing quality-adjusted prices, and dramatic shifts in market shares with new market entry, market exits, low and decreasing concentration in supply. I have been showing this with facts and figures here, here and here for many years, and as others have confirmed.
The CRA report is right to reject a mandatory switch to chip-based royalty rates and licensing, and to recognise the legitimacy of charging different royalties depending on “field-of-use” (e.g. an IoT lightbulb versus an augmented reality headset or a self-driving car). This well-established principle aligns costs with functionality used and value generated.
IoT is expected to be worth up to the teens of trillions of dollars to the global economy by 2025. That is 500 times more than the cost of licensing the communications technologies that are already providing the growth fulcrum for IoT developments. Undercutting royalties will diminish gains that could otherwise be obtained widely by leveraging reinvestments in intellectual property.
With it being much more difficult to obtain injunctions than it used to be, as the CRA report and Justice Birss in Unwired Planet v. Huawei also observes, the scales have already been tipped significantly in favour of implementers versus technology developers in terms of bargaining power. The balance here needs to be redressed here not swayed further. Royalties are flat or declining while opportunities and demands to invest in R&D for the good of all in IoT and 5G are increasing.
DG Growth should not interfere with SDO governance or try to pick winners among these or their IPR policies. Rather than speculating about how much aggregate licensing costs could be, costs should be measured by asking licensees what they are actually paying in cash royalties. Compare that with the value the resulting technologies deliver in the market.
Private ordering is preferable to public ordering and intervention is unnecessary. SDOs, patent pools, other licensing platforms and bilateral licensing under FRAND conditions can continue to serve the industry well and to the benefit of consumers.
However, if EC decides to intervene there should be impact assessments before intervening and empirical analysis of effects thereafter. DG Growth should also measure the results previous rulings— including those affecting the availability of injunctions— have already had on royalty rates and how long it takes to complete licensing agreements.
DG Growth’s analysis should be as open and transparent as possible, for scrutiny by all.
The above is a summary to my full article, here. This supplements my response to the DG Growth consultation on this topic in 2015.
Friday, 12 May 2017
The Roadmap onStandard Essential Patents for a European Digitalised Economy from the European Commission’s DG Internal Market, Industry, Entrepreneurship and SMEs (DG Growth) sets out how it believes increasing transparency on standard-essential patents and its other objectives with SEPs and FRAND licensing might be achieved.
A study report commissioned by DG Growth in support of this initiative on Transparency, Predictability and Efficiency of SSO-based Standardization and SEP Licensing (the CRA report) proposes, among various other recommendations, that declared patents and patent applications should be centrally assessed by standard-setting organizations or by the European Patent Office to determine whether they are actually essential to standards including those developed by ETSI for 3G, 4G and 5G.
A path to price regulation
This intervention is unwarranted and results would be unreliable. It would introduce various inaccuracies with significant subjectivity, biases and would be very costly in any attempt to do such a massive job thoroughly. Parties should be entitled to use, internally and in bilateral or multilateral agreement and in litigation with others, whatever patent-evaluation techniques they wish. That is entirely different to a particular “patent-counting” methodology and assessor being imposed.
DG Growth also headlined in its Roadmap that it would like to make SEP values and FRAND royalties clearer to prospective implementers. If it prescribes the creation of a centralized SEP assessment database, as described above, this inevitably will also lead to it being used to determine a patent owner’s share of SEPs and FRAND royalties. This is problematic due to the inaccuracies described and it would also troublingly lead to the setting of prices on a company-by-company basis, which is not and should not be the role of the European Commission or instruments it controls.
Justice Birss concludes in Unwired Planet vs. Huawei that “in assessing a FRAND rate counting patents is inevitable”. The parties in the case did indeed use that among other valuation methods, but their respective patent counts differed very widely – for example, by a factor of five for the total number of LTE SEPs. However, the judicial process enables the court to figure out where the biases and inaccuracies lie in case-specific circumstances and make sense of differences in opinion.
Intervention with centralised essentiality assessments would be a blunt instrument that would be subject to political and other adverse influences. The regime would lack the flexibility to adapt that exists in the marketplace among companies acting independently and that occurs among parties in litigation with due process in the courts.
An impossible Holy Grail
The implicit assumption that objective and accurate determinations of portfolio essentiality, patent strength and value can be made with extensive assessments of numerous patents, or with in-depth evaluations of relatively small samples of these, is deeply flawed. Evaluating standard-essentiality is a fact-intensive, complex and highly subjective task, as is assessing patent validity and patent value. Only a court of law can make definitive determinations on these issues.
|Disagreement on LTE Essential Patent
Regression shows extremely weak correlation between two studies’ results (R2=0.0008)
Expanding my analysis to include many more publicly available studies since then also reveals very wide disparities. For instance, LG’s share of LTE patents judged essential by various assessors range from 2.9 percent to 23 percent – a factor of eight. Huawei’s share of judged-essential LTE patents range from 0.6 percent to 10 percent – a factor of seventeen. Nokia’s share of judged-essential LTE patents range from 2.3 percent to 54 percent – a factor of 23.
A Few Among Many Wide Variations in Shares of Judged-Essential LTE Patents Among Patent-Counting Studies
Portfolio-wide assessments are necessarily shallow due to the large number of patents and work required per patent. They are therefore inherently imprecise. There is no precision or certainty in determinations absent the impossibility of in-depth patent-by-patent court determinations for entire portfolios of thousands of patent families.
Conducting in-depth assessments on relatively small samples of patents does not fix this shortcoming. The proportion of SEPs in portfolios cannot be projected from random samples of patents with the precision of predicting the results of coin tossing. Patent selections (e.g. those applicable to devices rather than networks, or which patents in a patent family) and essentiality determinations are with significant personal judgement, bias and uncertainty. Consensus is that patent values are highly skewed. Many patents are worth little or worthless because they would likely be found invalid or not infringed by a court. As shown in Commonwealth Scientific and Industrial Research Organisation v. Cisco, with one patent licensing at around one dollar per unit in comparison to very little for most WiFi patents, some patents are worth hundreds of times more than the average SEP in a standard. This is all probabilistic.
In other words, determining overall essentiality across thousands of patent families and among many patent owners with standards such as 4G LTE is so subjective and potentially unreliable that any assessor’s count of the number of SEPs owned by a given company is questionable. The corresponding patent strength or patent value that might be subsequently derived, in absolute terms or in relation to other patent owners, is even more contestable.
Conflicting demands, bureaucratic competence and impartiality
Authorities should only make assessments and publish figures that are reliable and can be measured reproducibly – such as “weights and measures” and in official statistics such as demographic figures and the national accounts– which SEP counts are not. Patent attributes should be assessed as they currently are in the marketplace as the market and its participants see fit, with owners’ disclosures and various third-party assessors of SEPs. Parties should also be able to consider other factors and make different assessments based on, for example, their own technical analysis of declared patents. Market forces can determine and change which standard-essential technology factors and assessments suit the market best, while bureaucracies struggle to get it right and can be very resistant to needed change. Where disputes arise, the courts can make determinations with due consideration of industry practices.
Implementers of SEP-based technologies have the legitimate concern that it can be difficult to determine exactly which patents they are infringing, from whom they must seek licenses and how much in FRAND royalties they should pay. In response, ETSI’s IPR policy requires that patent owners provide information on patents and patent applications that they believe might be essential or might become essential to standards such as 3G WCDMA and 4G LTE. ETSI does not police or audit what is submitted to its IPR database. Disclosure requirements might reasonably be increased to include more information on how patent claims map to the standards, but judging this for essentiality or commercial value is not a job for a standards development organisation or the patent office. Antitrust restrictions preclude SDOs from getting involved in valuing patents and setting licensing terms including FRAND royalty charges.
Patent disclosures to SDOs including ETSI were purposely intended to be conservatively-large, including patents which might be or could become essential to standards, but the goalposts are being moved. ETSI’s IPR policy helps ensure that the maximum number of patents will be identified and will be available for licensing under FRAND terms. However, it also tends to result in significant over-disclosure so that patent owners can avoid penalties, such as compulsory, royalty-free licensing if they do not disclose a patent that ends up becoming essential as the patent is prosecuted and as the standard changes in its development. With so much attention on SEP counts and use of these as a proxy for portfolio patent strength and value, some companies seek to maximize the number of patents they declare to justify a relatively high royalty.
Inaccuracies, biases in determinations and company disclosure tactics, as above, are why it would be unwise for SEP determinations, SEP counts and any other counts that are used to determine patent and portfolio values to be imposed on the market.
The wisdom of King Solomon’s (data) Mines
Any EC-prescribed centralized SEP assessment database tool would inevitably result in parties becoming, at least somewhat, obliged or pressured to use it to “split the baby” in determining patent owners’ shares of SEPs and FRAND royalties in licensing. Established and emerging practices would be eroded or marginalized including:
· Use of comparable license benchmarks from hundreds of executed licenses and billions of dollars in royalty payments over many years,
· In-depth bilateral discussions on patent claims and how they map to the standards, and
· The counting of approved contributions to the standards.
Patent counting usefully complements these other SEP evaluation methods in licensing negotiations, but this technique should not be the bureaucratic means of setting prices on a company-by-company basis that would emerge from stipulating patent counting and emphasizing it over other valuation methods. Centrally imposed assessments would likely become increasing dysfunctional and corrupting as the system, its administrators and its operators are gamed or courted for political and commercial gain. Government agencies would do better to keep clear and let licensing parties and third parties in face of market forces decide for themselves which facts, figures and studies they would like to use in licensing deliberations and in litigation.
My entire article, here, supports my conclusions by showing methodically how very inconsistent determinations of LTE essentiality and patent strength are among all the different third-party evaluators. It shows that such methods are particularly unreliable in valuing patent portfolios.
Wednesday, 10 May 2017
Relecura, the data analytics firm, has released its interesting and thorough Internet of Things – Technology Landscape and IP Commercialization Trends Report. The report includes a helpful slide on the technology stack in IOT to understand the layers of relevant technologies necessary and another slide on hot application growth areas. The report also includes a breakdown of key players in the space and strategy. The patent landscape portion of the report includes the following “high level findings”:
The top patent holders are from diverse sectors like consumer electronics (Samsung, LG, Sony); telecom (Huawei, Ericsson, Korea Electronics Telecom, ZTE), and software (IBM, Microsoft).
• Qualcomm is the leading filer in multiple jurisdictions as well as PCT filings. This suggests an intention to license its technologies worldwide.
• The network layer has the highest number of patent filings and accounts for 62% of all the IoT patents. • Samsung is a key patent holder in most layers of the IoT technology stack and its patents address multiple application areas.
• IoT patent transactions per year have shown an increase after 2011.
• Patent filings related to the upper layers of the IoT stack were relatively less till 2011, but have increased significantly starting in 2012.
Helpfully, the report contains a wealth of other information including top patent holders and assignees with a breakdown by industry. It also includes the top cited patents and the high quality patents and patent holders by Relecura’s metrics. The report also covers patent transactions. The report is available, here.
Tuesday, 9 May 2017
The Electronic Frontier Foundation (EFF) has started a program called Reclaim Invention. The premise of the program is to ensure that universities, particularly public universities, are not licensing patents to so-called patent trolls. There are basically two prongs to the effort: 1) mobilizing people involved with universities to pressure universities to sign a patent pledge—essentially volunteering to engage in certain conduct concerning university inventions and licensing; 2) pushing state legislatures to adopt legislation restricting universities licensing practices. The EFF’s proposed legislation includes the following two thrusts:
First, it requires university technology transfer offices to adopt a policy committing them to manage patent assets in the public interest. University policy should include:
- researching the past practices of potential patent buyers or licensees;
- prioritizing technology transfer that develops inventions and scales their potential user base;
- endeavoring to nurture startups that will create new jobs, products, and services;
- fostering agreements and relationships that include the sharing of know-how and practical experience to maximize the value of the assignment or license of the corresponding patents.
The second part of the legislation voids any agreement to license or transfer a patent to a patent assertion entity. [emphasis added]
The EFF’s program is based on research by Professor Robin Feldman concerning Intellectual Ventures relationship with universities.
Notably, legislation taking the EFF approach has been introduced in the state of Maryland. So far, the status line on the Maryland legislature webpage states: "In the House -- Unfavorable Report from Appropriations -- Withdrawn." Notably, the synopsis of the bill states that it conditions student financial assistance and research funding from the state on adopting the policy. It will be interesting to see if the legislation (or some modified form of it) passes. For a critique of the EFF’s approach, please see this article in Forbes by noted property rights scholar Richard Epstein.
Friday, 5 May 2017
The talk is first of its kind to draw together a range of different publicly sanctioned sources that provide instructions on how to value intellectual property. We apply these to illustrate how damages can be assessed under the IPRED. In doing so, we seek to contribute to a more educated way of how to assess damages under the IPR Enforcement Director.Dr Roya Ghafele has been the Director of OxFirst, an off-shot from Oxford University, since 2011. She has held academic positions with Oxford University, Harvard, U.C. Berkeley and the School of Law at Edinburgh University. Prior to that, she worked as an economist with WIPO and the OECD.
In doing so, we fill an important gap: While the IPRED contains a host of principles discussing how to assess damages, there are no guidelines, commentaries or further explanations that would help the Court to understand how to translate these overarching guidelines into concrete assessments of the economic worth of the damage due. This, in our view, leaves an important shortcoming, which could lead to otherwise avoidable inconsistencies. Taking a bigger picture, the practice of IP valuation remains unclear to many practitioners.
By consequence, it finds much lesser application than it should. There is a clear need to increase market actors’ confidence and certainty in IP valuation methods as a way to assess damages in litigation, but also in licensing negotiations and other IP transactions. This will allow judges and practitioners alike to better understand the business and the value of the IP itself and even provide decision makers with the required information to decide whether to enforce or to license IP.
Rasmus Kamstrup Bogetoft is an assistant attorney with the Danish law firm Plesner. He is also external teacher in IP law at the Copenhagen Business School. He studied law and economics at Yale University and holds a LLM in law from the University of Kopenhagen.
Please use this link to register
Monday, 1 May 2017
In a recent article by Claire Huang, The Business Times has announced a $1 billion fund in Singapore designed to help a number of small to medium sized enterprises (SMEs) with strong intellectual property portfolios to “go global.” The fund is a collaboration between the government of Singapore and the private equity firm Makara Capital. The article notes:
Makara's managing director Ali Ijaz Ahmad listed five areas of focus for the fund:
- Urban solutions including logistics and security;
- Alternative energy;
- Advanced tech such as artificial intelligence and cyber-security; and
- Healthcare and bio-medicine.
The companies will be selected based on criteria such as having a defensible IP, strong managerial talent and pan-Asian growth potential. They will be able to tap into Ipos's expertise and networks and Makara's commercially-driven approach to turn their innovations into assets and revenue through Singapore.
The article is available, here.
Friday, 28 April 2017
Google and Intertrust have announced the creation of Patent Shield, which is designed to protect startups. Essentially, the exchange is access to a patent portfolio for an equity stake in the startup. It seems to put startups in the position of a much more resourced company with a portfolio of patents and presumably freedom to operate. This appears to be another attempt to get ahead of something like the patent troll problem; however, it seems to be aimed at patent demands from entities that are practicing not absolute non-practicing entities because the portfolio is supposed to provide leverage against the entity asserting infringement initially. Interestingly, this appears to be a great way for Google and Intertrust to find licensing partners for their patented technology without looking like a “bad guy” by operating through patent demand letters—let them come to us. Very clever. It also gives Intertrust the opportunity to offer its IP services to startups, and maybe a chance for additional investment/acquisition opportunities through notice about great new startups that have attracted the attention of established players in the market. Very, very clever. For more details, please see here.
Thursday, 27 April 2017
The U.S. Government Accounting Office (GAO) has issued a report titled, “Financial Technology: Information on Subsectors and Regulatory Oversight.” The GAO Report provides a description of the FinTech industry broken down by sector. The sectors include: Marketplace Lending; Mobile Payments; Digital Wealth Management; and Distributed Ledger Technology. For each sector, the Report describes “what it is and how it works”; “who uses it”; “potential benefits”; “potential risks”; “industry trends” and “oversight and regulation.” The introduction to the Report states:
Advances in technology and the widespread use of the Internet and mobile communication devices have helped fuel the growth in financial technology (fintech) products and services. Consumer access to these new technologies has resulted in changes in their preferences and expectations regarding how they conduct financial transactions, such as using their smartphones to make payments or purchases. Fintech products and services include small business financing, education refinancing, mobile wallets, virtual currencies, and platforms to connect investors and start-ups.
There is no universal definition of fintech. It is also difficult to quantify the size of the industry because data are not separately reported from existing financial services or products’ data, and because the industry is constantly evolving. Traditional financial service firms also provide fintech products or services (e.g., existing financial services firms introducing fintech products and services). The fintech industry is generally described in terms of subsectors that have or are likely to have the greatest impact on traditional financial services, such as credit and payments.
The Report is a helpful overview of FinTech and more reports are supposedly on the way. Hopefully, a report on IP and FinTech will be released.
Monday, 24 April 2017
Unless South Africa's Advertising Standards Authority receive $680 000 in funding before the end of the month, an application will be launched to liquidate the non-profit which will likely see the collapse of the self regulated body, and concern then that advertising and packaging disputes will be left to the state and the courts. The ASA and its business rescue partners are launching a fund raiser tomorrow for the bail-out.
Here is what you need to know about how the ASA got to this position, what they need to get out of it and how they propose restructuring the business going forward to ensure it remains solvent and relevant:
- The ASA is a non profit body that has been in existence for 50 years, set up to assist self regulate advertising disputes. When working effectively it has allowed for speedy and relatively inexpensive dispute resolution for both competitors and consumers.
- On 21 October 2016, the Advertising Standards Authority (ASA) went into Business Rescue (an intervention that attempts to prevent a company from its financial distress to prevent its liquidation).
- The reasons why the ASA is in distress are:
- lack of funding
- lack of membership participation
- high operational costs
- costly litigation (the Herbex (pending) appeal and a damages claim of +-$1.3 million, set down for 6 March 2018)
- decreasing use of its services (including competitor claims)
- On 25 April 2017 is the ASA's second meeting of creditors and a special AGM has been called by the business recue practitioners to table a number of resolutions based on their research:
- a new management team and board
- a leaner organisation structure (from 20 to 13)
- a long term funding model
- a streamlined adjudication process
- By 30 April 2017 the ASA needs to secure at least $384k to cover its historical debt. Within a short time thereafter, a further $296k is required to fund its operating capital in the immediate future. As a result a fund raising initiative is being launched at the special AGM.
- The special AGM is taking place at the SAB World of Beer 15 President Street Newtown at 10am on the 25th.
- The proposal for ongoing short term funding requires a commitment of $100k per month from its members in proportion to their ad-spend.
- A failure to secure short term funding will result in an application to liquidate the ASA which will be to the detriment of creditors, up to 20 people will lose their jobs and the ASA services will be lost and/or left to the courts (with cost and other disadvantages) and/or government (which will mean the advertising industry will be regulated by the state).
- In the longer term the ASA intends to cover its costs through a hybrid model which includes an advertising levy (66%) and a contractually negotiated rates from media (34%).
- The ASA has applied to become an industry ombudsman under the Consumer Protection Act. This could alleviate its litigation challenges (over jurisdiction) and over time resolve some funding issues.
- The ASA are attempting to also deal with potential jurisdictional challenges through stronger member contracts requiring media, marketers and advertisers to agree to be bound by their Codes (which incidentally include the Sponsorship Code).
- Their are various risks to accepting the Business Rescue Plan - the retrenchment process will be costly, there is an unquantified risk of a damages claim which could bankrupt the ASA, the ongoing jurisdiction battles over non members is subject to an appeal which could severely hamper the ASA if the appeal by them is not successful.
Posted by Darren Olivier 24 April 2017 with some help from Afro-IP
Sunday, 23 April 2017
What follows is that only a small number of products will be available for purchase and success is built on selling a large quantity of these limited product options. Thinking in terms of a statistical distribution, from the point of view of product sales, the two tails fall very quickly from the elevated and narrow central tendency. There are few sales beyond those enjoyed by the small number of market leaders.
By contrast, in a long-tail world, where digital distribution allows an almost unlimited number of products that can be displayed on digital “shelves”. As such, as explained by Investopedia,
"... products in low demand or with low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.”In other words, the sales of these items take place at the tails of the distribution. Unlike the bricks-and-mortar situation, consumers are navigating to on-line commerce, favoring niche products and markets over traditional main types.
As such, as optimistically characterized by Investopedia --
“…the demand overall for these less popular goods as a comprehensive whole could rival the demand for mainstream goods. While mainstream products achieve a greater number of hits through leading distribution channels and shelf space, their initial costs are high, which drags on their profitability. In comparison, long tail goods have remained in the market over long periods of time and are still sold through off-market channels. These goods have low distribution and production costs, yet are readily available for sale.”The problem with the notion is that it has proved difficult, extremely so, to identify instances where the long tail has taken place. A reminder was reported in the February 25th issue of The Economist (Print title: “Indie blues: happy ends are rarer than ever for those trying to profit from Indie films”) in connection with the indie cinema industry. Short for “independent”, the indie film business refers to a movie that has been produced outside the major film studio framework. Distribution will also likely take place outside the major channels. Indie films are also usually characterized by lower production costs, limited first release and greater diversity of artistic expression.
While not common, an indie film on occasion can rival a film produced by a major studio, if it has sufficient financial backing, effective distribution and promotional buzz. The winner of the most recent Oscar awards was best picture was “Moonlight”, which shares indie film characteristics. Another indie movie that received an Oscar was the film “Manchester by the Sea.” With movie-watching no longer solely a cinema-based activity and on-line viewing taking place via a number of digital platforms, one might be tempted to imagine that the long tail model has been a boon to the indie film business.
According to the article, however, the answer would appear to be “no”. In the words of the piece—
“For every success story, there are thousands of indie films that go unwatched. The digital age has made it easier than ever to make a film, but also harder than ever to break through the clutter of entertainment options to an audience. Chris Moore, a producer of “Manchester by the Sea”, compares the output of indie films now to trees falling in the forest. ‘Nobody is making a dollar off this business’, he says.”
But what about the potential for the long tail to ultimately make-up for these headwinds. Again, in the words of the magazine—
“But most minor films disappear online, since a viewer can scroll through only so many options. Even the streaming sites themselves, says Anne Thompson of IndieWire, a website, admit that ‘a cold start on one of their platforms can be very cold indeed’”.All in all, it would seem that, as far as the indie film business is concerned, the long tail is no tail at all.
Photo on lower left by Alex Dunkel
Thursday, 20 April 2017
The EMW Law Firm has released some information concerning Fintech patenting trends. EMW states:
The number of ‘fintech patents’ filed worldwide is continuing to rise sharply, reaching 9,545 in 2016*, up 6% from 9,045 filed the year before in 2015 and up 49% from 6,399 filed five years ago in 2011[.]
“Fintech patents” are defined by EMW as: “Patents relating to banking, exchanges, investment, insurance, payment architecture and calculation of taxation, filed with the World Intellectual Property Organisation.” For more information, please see EMW’s blog post, here. Corporate Counsel also discusses EMW’s blog post, here. The Corporate Counsel article notes the US lead over China in Fintech patenting. I am still holding out hope for a publicly available report on the IP landscape for Fintech.
The Milken Institute has released a report on April 20, 2017, titled, “Concept to Commercialization: The Best Universities for Technology Transfer.” The Report’s Executive Summary states some conclusions concerning technology transfer and then includes recommendations based on its findings. The Report states:
Universities that succeed at technology transfer and commercialization include both public and private universities. They are spread across the country; 13 of the top 25 universities are based in red states, all are in major metropolitan areas, and all range in size. These universities can be leveraged to boost and spread middle class job creation in their home states. While innovation is not confined to blue states, blue states have been more successful in leveraging university research for economic benefit.
University research funding can support the creation of both middle- and high-skill industry jobs through innovation, commercialization, and technology transfer. As products and services are created and licensed, there are a myriad of multiplier impacts felt across the economy.
Universities are a source of competitive advantage; they create a skilled workforce and through R&D and tech-transfer help create new technologies and new industries.
Universities that lead the Milken Institute’s University Technology Transfer and Commercialization Index actively promote tech-transfer, allowing other universities to learn from their strategies. The below articulates the Milken Institute’s recommendations based on our recent findings:
• maintain basic scientific research funding. Basic research provides long term economic benefits by allowing universities to take on research that has a low probability of quick commercial success, but potential to deliver a high reward and to create whole new industries.
• incentivize technology transfer through a new federal commercialization fund. The federal government should increase research funding under a special commercialization pool. Universities demonstrating greater commercialization success in the market should receive higher funding in this program.
• increase technology transfer capacity through federal matching grants. The federal government should commence a matching grant program with states to fund an increase in staff and resources in TTOs. Higher rates of academic entrepreneurship are essential to reviving declining startup rates and productivity across the economy. New firms have higher productivity as they are at the cutting edge of technology.
• increase technology transfer efficiency by adopting best practices. At the state level, policies should be implemented that incentivize the adoption of best practices in commercialization at public universities, including TTOs. Efficiency gaps between universities outside of the top 25 in our Technology Transfer and Commercialization Index should be narrowed.
The Report ranks 225 universities and is available, here. The Report specifically describes the attributes of some successful universities and includes a case study on life sciences. [Hat Tip to Glen Gardner]
Wednesday, 12 April 2017
Uber has launched a patent purchase program called, “UB3.” The program sounds very similar to the one founded by Google and run by Allied Security Trust. Indeed, the announcement by Uber references the Allied Security Trust program, “IP3.” The development of the program arrives during Uber’s much publicized suit involving Google. Interestingly, this is perhaps a move by Uber to build a patent portfolio to be used in acquiring negotiation leverage, and thus freedom to operate. Additionally, the value of some patents may be rising because of changing Federal Circuit law and the belief that the Patent Trial and Appeal Board at the United States Patent and Trademark Office is easing up on patents, so to speak. Uber’s press release states:
The current market for patents is extremely challenging, especially for sellers. There is a ton of friction in the secondary market for all parties, but with our new UP3 program, sellers will submit patent family details and a price they are willing to accept directly into our submission portal. By eliminating price negotiations and providing quick reviews, UP3 will reduce the total transaction time compared to a typical patent transaction.
It is also clear that sellers want the flexibility to package multiple patents into a single submission. That’s why the UP3 program allows sellers to submit portfolios of up to five (5) patent families in one submission. That way, sellers can group patent families that complement each other in a way that best markets their assets.
Our short timeline will speed up patent transactions. The UP3 submission portal opens April 24, 2017 and closes May 23, 2017. After the submission period ends, Uber will review the submissions and provide sellers with our decisions by July 7, 2017.
The Uber website includes helpful frequently asked questions with answers, the patent purchase agreement, additional information, and submission terms and conditions. The submission form will be available on April 24, 2017.
The American Association of University Professors (AAUP) has released its Annual Report on the Economic Status of the Profession (Report). For the most part, the Report addresses salaries of professors, administrators and part-time lecturers in the United States. Interestingly, the Report also reports on data concerning state investment in higher education. As noted earlier, there is an innovation deficit in the United States based on a drop in federal spending on research in terms of real dollars. And, as discussed previously, the Trump Administration budget is requesting a substantial cut in the amount of federal money invested in research. The Report notes that after the Great Recession the amount of state funding for higher education dropped substantially. Recently, there has been a slight overall uptick. The uptick may be found in states that lean democratic versus republican in leadership; although this is not always the case for some states such as Texas and Nevada. Hopefully, states continue to push more resources toward higher education and avoid pushing up tuition. The full Report is available, here. [Hat tip to my colleague Raquel Aldana.]
Friday, 7 April 2017
The George Washington University Center for Law, Economics, and Finance has published a helpful and accessible online fifty state survey of money transmission laws. The aim of the product is to “lower the information costs for FinTech startups, investors, and academic researchers among many others.” Thus, the website helpfully attempts to point out differences between the law of each state. The site notes, “we hope this can serve as proof-of-concept for how state-based FinTech regulation can become more accessible while maintaining its biggest strength—adaptability.”
And, in an article dated April 5, 2017, Bloomberg reports:
Almost 50 percent of financial services firms around the world plan to acquire fintech startups in the three to five years, according to a report Thursday by PricewaterhouseCoopers LLP. And eight out of 10 institutions foresee making strategic partnerships with peer-to-peer lenders, digital money transfer platforms, and myriad other firms that are reshaping the business of money.
The article suggests fear of loss of profits is the main motivation for acquisitions. The PricewaterhouseCoopers report, Global Fintech Report 2017: Redrawing the Lines: Fintech's Growing Influence on Financial Services is available, here, and contains a lot of interesting information concerning the future and FinTech. I have not seen an analysis of the IP landscape for FinTech yet. Does anyone know of one?
Thursday, 6 April 2017
As reported by Florian Mueller on the FOSS Patents Blog on April 5, a relatively new organization has been formed to raise awareness of and presumably lobby against patent assertion entities in Europe. The organization is called Intellectual Property 2 Innovate and its members include: Adidas, Google, Intel, Bull AtWios Technologies, Proximus, Spotify, Wiko, Daimler, the European Semiconductor Industry Association, and Syndicat De Industrie Des Technologies De L'Information. Notably, the Intellectual Property 2 Innovate website has references to a list of suits brought by patent assertion entities in Europe, media reports concerning patent assertion activity in Europe and third party studies concerning patent assertion entities in Europe. The website includes link to a helpful seven page position paper, which states in part:
Patents support innovation by allowing companies to protect their technology from copying, to share and develop new technology, and to obtain the freedom to operate necessary to bring new products to market. But a patent system that can be manipulated through abusive litigation tactics, including the assertion of low quality patents, will undermine rather than support innovation, disserving consumers and the economy by draining scarce resources from the development of new products.
The dramatic rise in patent litigation involving PAEs is a dangerous trend that merits the attention of EU policy makers. In the United States, lawsuits brought by PAEs have nearly quadrupled over the past decade.1 PAEs now account for a majority of all patent litigation.2 Small and medium-sized entities (SMEs) are frequently the targets of these assertions, facing lawsuits that can disrupt their business and even threaten their survival.3,4
In Europe, PAE lawsuits have begun to follow the same trajectory, growing in number and often targeting SMEs. PAE activity has long existed in Europe, accounting for roughly 10% of the lawsuits filed in Germany between 2000 and 2008 and in the United Kingdom between 2000 and 2013.5 More recent evidence, however, suggests that PAE activity is accelerating rapidly. An empirical study of the registers for recording patent ownership in Europe demonstrated that PAE purchases of European patents increased ten-fold from 2005 to 2015.6 Most of the transferred patents involved communications or computer technology and were purchased by PAEs based in the United States. Those purchases now form the basis of a growing number of PAE lawsuits in Europe against productive companies. European countries together received 80% of all PAE cases filed outside the US over the past five years.7 Germany receives by far the greatest number, with the large majority of those cases proceeding during 2015 and 2016.8 A recent study provides examples of lawsuits brought by PAEs in Europe.9 According to this study, while PAEs account for 19% of known patent lawsuits filed in Europe accounted for in the study, it is nonetheless a significant fraction which will undoubtedly come to increase in the next years. This rate corresponds roughly to the same level of PAE activity in the US in the early 2000s to mid-2005. Despite the alarming data and active discussions amongst the legal community, US public authorities nevertheless did not seriously tackle this problem which has led patent lawsuits to skyrocket in the US since then.
The position paper further suggests: increasing judicial discretion to minimize abusive patent practices and encourage higher quality patents as well as make better data available concerning patent litigation across Europe. According to the paper, these measures are necessary in light of the soon-to-be operational European Patent Court.
Monday, 3 April 2017
In a March 30, 2017 article, Billboard magazine breaks down recently released numbers from the Recording Industry Association of America (RIAA) concerning the U.S. music industry. The article notes:
It looks like happy days are here again: U.S. recorded music sales were up 11.4 percent in 2016. The industry brought in $7.65 billion in revenue, according to the RIAA, up from $6.87 million in 2015. Although the music business showed signs of a recovery at the half-year mark, the 2016 year-end results show more significant growth, led by streaming revenue.
This is the first time since 1998 that the U.S. industry has experienced a double digit increase in overall revenue. Back then, the industry enjoyed revenue of $13.7 billion.
The article further breakdown revenues based on streaming and vinyl sales among other categories. Notably, streaming revenue is on the upswing and is accounting for a lot of the growth. Interestingly, the article notes that the revenue is about half from the “good old days” of 1998. The RIAA report is available, here.