- 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.
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:
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.