Friday, 15 November 2019

US Supreme Court will hear Google v. Oracle Copyright Suit

The United States Supreme Court has just granted review of the Google v. Oracle Copyright law suit.  This is a huge case concerning copyrightability and the scope of fair use of software.  Additional information, including briefs, can be found at the SCOTUS blog, here.  Hat tip to Dmitry Karshtedt.  

Saturday, 9 November 2019

US State of Wyoming Ready to Charter "Blockchain" Banks

US State of Wyoming enacted a law concerning the creation of special purpose depository institutions which concern digital assets.  The legislature’s findings in the new law state: 

(a) The legislature finds the following: 

(i) The rapid innovation of blockchain technology, including the growing use of virtual currency and other digital assets, has resulted in many blockchain innovators being unable to access secure and reliable banking services, hampering development of blockchain services and products in the marketplace; 

(ii) Federally insured financial institutions are not generally permitted to manage accounts in virtual currency or hold other digital assets; 

(iii) Blockchain innovators have greater compliance challenges with federal customer identification, anti-money laundering and beneficial ownership because of the complex nature of these obligations and the unfamiliarity of regulators with blockchain innovators' businesses;

(iv) These intricate obligations have resulted in many financial institutions in Wyoming and across the United States refusing to provide banking services to blockchain innovators and also refusing to accept deposits in United States currency obtained from the sale of virtual currency or other digital assets; 

(v) Compliance with applicable federal and state laws is critical to ensuring the future growth and reputation of the blockchain and technology industries as a whole; 

(vi) Most financial institutions today do not have the requisite expertise or familiarity with the challenges facing blockchain innovators which is required to provide secure and reliable banking services to these innovators; 

(vii) A new type of Wyoming financial institution that has expertise with customer identification, anti-money laundering and beneficial ownership requirements could seamlessly integrate these requirements into its operating model; and

(viii) Authorizing special purpose depository institutions to be chartered in Wyoming will provide a necessary and valuable service to blockchain innovators, emphasize Wyoming's partnership with the technology and financial industry and safely grow this state's developing financial sector.

The full bill is available, here.  More information concerning the law is available, here

Friday, 1 November 2019

OxFirst’s 4th Symposium on IP and Competition suggests views on FRAND licensing are far from converging


On October 18, IP economic consultancy OxFirst held its 4th Symposium on Globalization and fair, reasonable and non-discriminatory (FRAND) licensing of Standard Essential Patents (SEPs). Academics, judges and policy makers convened at St Cross College of Oxford University to debate FRAND licensing rates, terms and conditions. The symposium, which was chaired by Judge Fabian Hoffmann of the German Federal Court, offered arguments from both legal and economics perspectives.

First the economics: FRAND licensing disputes are on the rise. Compared to non-SEP disputes, patent families containing SEPs were 6.4 times more likely to be exposed to infringement actions than non-SEPs. At the same time, SEPs are also 9.5 times more exposed to validity challenges than non-SEPs.

Of particular interest is the strong involvement of non-practicing entities (NPEs) in FRAND disputes. The data presented showed that in the US, 77.5% of SEP infringement and validity actions involved NPEs.  In Europe that same figure amounted to 43.9%.

As to the role of NPEs in the innovation eco-system, research sponsored by the French public authorities showed that NPEs do not necessarily foster the diffusion of innovation. Rather, they can have the opposite effect. Professors Valerio Sterzi of the University of Bordeaux and Gianluca Orsatti of the University of Turin used forward patent citations as a proxy for a technology’s use. They found that patents passed on to NPEs see systematic falls in forward citations. Their suggestion is that patents held by NPEs lead market participants to seek to stay away from such IP -- an insight that is intuitive, but now has the data to back it.

Legal scholarship presented at the conference discussed extraterritorial constraints. The pros and cons of anti-suit injunctions and global FRAND licensing rates were addressed. Particular attention was paid to issues such as forum shopping, controlling the costs of litigation, and the relationship of such acts to the sovereignty of other nations. The effects that setting a global FRAND licensing rate can have on licensing negotiations were addressed by Roya Ghafele. Ghafele presented arguments that underline the need to set a balance between the interests of the licensor and the licensee.

The symposium concluded with an outlook on possible solutions to the FRAND licensing challenge. That there is a need to come to grips with the licensing of SEPs was undisputed. After all, the Internet of Things thrives on interconnectivity; and standards will continue to play an instrumental role in establishing such interconnectivity. The experts invited were far from having a conclusive, let alone homogenous, view on the topic.

Should regional institutions be established to resolve the issues at stake? Should the global community at least strive to achieve a minimal understanding of what terms and conditions a FRAND licensing agreement should entail? Or should the issue be solved by simply enlightening the market on how to calculate FRAND royalty rates? 

The conference concluded with an outlook on what is clearly the most pressing issue in this matter. Namely, how to manage an increasingly international economic order under the parameters set by a territorially limited patent system.

Thursday, 31 October 2019

US Collegiate Athletes may Profit from Name, Image and Likeness

The National Collegiate Athletics Association, an organization which essentially regulates collegiate athletics in the United States, has voted to begin the process of allowing student athletes to profit from the use of their name, image and likeness.  This vote was made in light of California’s recent decision to allow collegiate student athletes to be paid for playing.  Historically, collegiate student athletes were prohibited from receiving payment.  The NCAA press release states: 

Board of Governors starts process to enhance name, image and likeness opportunities

Each NCAA division directed to immediately consider modernization of bylaws and policies

October 29, 2019 1:08pm

In the Association’s continuing efforts to support college athletes, the NCAA’s top governing board voted unanimously to permit students participating in athletics the opportunity to benefit from the use of their name, image and likeness in a manner consistent with the collegiate model.

The Board of Governors’ action directs each of the NCAA’s three divisions to immediately consider updates to relevant bylaws and policies for the 21st century, said Michael V. Drake, chair of the board and president of The Ohio State University.

“We must embrace change to provide the best possible experience for college athletes,” Drake said. “Additional flexibility in this area can and must continue to support college sports as a part of higher education. This modernization for the future is a natural extension of the numerous steps NCAA members have taken in recent years to improve support for student-athletes, including full cost of attendance and guaranteed scholarships.”

Specifically, the board said modernization should occur within the following principles and guidelines:  

  • Assure student-athletes are treated similarly to non-athlete students unless a compelling reason exists to differentiate. 
  • Maintain the priorities of education and the collegiate experience to provide opportunities for student-athlete success. 
  • Ensure rules are transparent, focused and enforceable and facilitate fair and balanced competition. 
  • Make clear the distinction between collegiate and professional opportunities. 
  • Make clear that compensation for athletics performance or participation is impermissible. 
  • Reaffirm that student-athletes are students first and not employees of the university. 
  • Enhance principles of diversity, inclusion and gender equity. 
  • Protect the recruiting environment and prohibit inducements to select, remain at, or transfer to a specific institution.

The board’s action was based on comprehensive recommendations from the NCAA Board of Governors Federal and State Legislation Working Group, which includes presidents, commissioners, athletics directors, administrators and student-athletes. The group gathered input over the past several months from numerous stakeholders, including current and former student-athletes, coaches, presidents, faculty and commissioners across all three divisions. The board also directed continued and productive engagement with legislators. 

The working group will continue to gather feedback through April on how best to respond to the state and federal legislative environment and to refine its recommendations on the principles and regulatory framework. The board asked each division to create any new rules beginning immediately, but no later than January 2021.

“As a national governing body, the NCAA is uniquely positioned to modify its rules to ensure fairness and a level playing field for student-athletes,” NCAA President Mark Emmert said. “The board’s action today creates a path to enhance opportunities for student-athletes while ensuring they compete against students and not professionals.”

Friday, 25 October 2019

OxFirst Webinar: FRAND injunctions - A summary of recent case law

by Joan Ng & Roya Ghafele. 

OxFirst’s latest webinar on Oct 24 featured Prof Dr Peter Georg Picht of the University of Zurich. Prof Picht highlighted several issues that have surfaced in recent cases dealing with injunctions pertaining to standard essential patents. He started off by using the overall Huawei vs ZTE framework to highlight under which conditions injunctions can and cannot be issued under CJEU case law. 

Ultimately, said the OxFirst speaker, all parties must behave in a proactive manner. This is the case even if the other party may be non-compliant at a particular point in time. Also, on the issue of conditional injunctions and FRAND injunctions in the UK, the OxFirst speaker noted that the UK has produced fewer SEP- and FRAND-related cases than Germany. Nevertheless, cases heard in the UK have been high profile ones, particularly when it comes to granting what has come to be known as a 'FRAND injunction.'

Particularly noteworthy, he said, was the case of Unwired Planet v Huawei ([2017] EWHC 711 (Pat)), in which the court allowed a conditional injunction only. This is important because it signifies that FRAND is not only about content but also about conduct. Parties should behave in a FRAND compliant manner. The injunction would be in force only if the implementer failed to agree to take a global FRAND licence set by the court, said the speaker. That case was however heard by the Supreme Court this week and its decision in this matter is to be expected in the next couple of months.

In addition, on the issue of anti-hold-out injunctions, the speaker noted the offer of a grace period in the case of TQ Delta v Zyxel Communications ([2019] EWHC 745 (Pat)). Rather than award an injunction immediately, there was the suggestion of a grace period for Zyxel to fulfil some necessary commitments.

Finally, on the issue of anti-suit and anti-anti-suit injunctions, the speaker recognized the complicated nature of case law given that multiple jurisdictions are involved. Prominent points were that it is important that parallel proceedings are not necessarily vexatious or oppressive, because there is some flexibility for such a judgement. But at the same time, it is important that the patentee is able to seek judicial help.

Broadly speaking, the OxFirst presenter pointed out that injunctions have gained relevance in SEP licensing negotiations over time, but that there is still no certainty on when and how injunctions will be granted. He sees, however, a tendency for courts to compete for patent cases, and a grant or refusal of injunctions is one of the points on which courts would tend to compete. The conflict between national case law and global patent law remains to be resolved.

 - The views expressed in this webinar are those of Professor Picht and cannot be attributed to OxFirst, its affiliates, staff, or consultants.-

Friday, 18 October 2019

Reducing Costs in the Fast-Changing Regulations of Foreign Direct Investment

I think this is a fascinating idea.  Latham & Watkins has released a free app that covers the regulations of several countries concerning foreign direct investment.  Here is the press release

Latham & Watkins LLP1 is pleased to announce the launch of the Foreign Direct Investment Regimes (FDI) app, an interactive tool designed to summarize key aspects of the Committee on Foreign Investment in the United States (CFIUS) and other foreign direct investment regimes around the world. The FDI app is available as a free download in the Apple App Store and Google Play that can be used on iPhone, iPad, and Android devices.

The Latham FDI app is organized by select countries around the world, including the US, Australia, China, France, Germany, Italy, Spain, Russia, Saudi Arabia, Singapore, United Arab Emirates, and the UK. After choosing a country, users can click through to read summaries of information pertinent to the respective jurisdiction, such as:

  • Legal authority responsible for foreign investment review
  • Mandatory filings
  • Voluntary filings
  • Timelines
  • Filing fees
  • Penalties
  • Definitions of key words and phrases

“Businesses looking at cross-border investments must consider and be prepared for national security reviews by the jurisdictions in which the business has or would have operations,” said Les Carnegie, a partner in Latham & Watkins’ Washington, D.C., office and co-leader of the firm’s CFIUS & US National Security Practice. “We are excited to launch this first-of-its-kind app that will bring enormous value to foreign investors around the world by summarizing information and procedures that have become increasingly fundamental to successfully executing cross-border transactions.”

Steven Croley, a partner in Latham & Watkins’ Washington, D.C., office and co-leader of the firm’s CFIUS & US National Security Practice, added, “Latham aims above all to provide exceptional service to our clients. We are therefore constantly looking for creative and innovative ways to address their most pressing business needs. Clients are increasingly focused on the growing prominence of regulatory programs and foreign investment review both in and outside the US, and our goal in developing the FDI app is to provide a summary that is quickly and easily accessible.”

“Evaluating and preparing for reviews by CFIUS and other foreign direct investment regimes has become a critical component to cross-border deal-making in today’s geopolitical environment,” said Luke Bergstrom, Global Vice Chair of Latham’s Mergers & Acquisitions Practice. “Latham’s CFIUS and national security lawyers are deeply experienced in helping clients navigate the CFIUS process and related agency reviews. This offering is part of the firm’s global, integrated approach to helping clients achieve market-leading transactional results.”

The Latham FDI app is the latest addition to a suite of information produced by the firm on the topic of CFIUS and other foreign direct investment regimes.

A summary and analysis of the US Department of Treasury’s recently-proposed regulations to implement changes that the Foreign Investment Risk Review Modernization Act (FIRRMA) made to CFIUS’ jurisdiction and processes is available here. A comprehensive primer, “Key Questions Answered on CFIUS,” is also available here.

For additional resources and more information about Latham’s CFIUS & US National Security Practice, please visit

Improving the Allocation of Resources: Artificial Intelligence to Predict Future Clinical Success of Basic Research

In a new paper published on October 10, 2019 titled, “Predicting Translational Progress in Biomedical Research,” authors B. Ian Hutchins, Matthew T. Davis, Rebecca A. Meseroll, and George M. Santangelo describe a new way to use artificial intelligence to measure and predict which basic research type findings are likely to be translated into clinical advances.  The abstract states: 

Fundamental scientific advances can take decades to translate into improvements in human health. Shortening this interval would increase the rate at which scientific discoveries lead to successful treatment of human disease. One way to accomplish this would be to identify which advances in knowledge are most likely to translate into clinical research. Toward that end, we built a machine learning system that detects whether a paper is likely to be cited by a future clinical trial or guideline. Despite the noisiness of citation dynamics, as little as 2 years of postpublication data yield accurate predictions about a paper’s eventual citation by a clinical article (accuracy = 84%, F1 score = 0.56; compared to 19% accuracy by chance). We found that distinct knowledge flow trajectories are linked to papers that either succeed or fail to influence clinical research. Translational progress in biomedicine can therefore be assessed and predicted in real time based on information conveyed by the scientific community’s early reaction to a paper.

The full paper is available, here.  This appears to have the promise of mitigating some significant investment risk.  

OxFirst Conference: Globalization and FRAND

OxFirst is hosting a very interesting conference on FRAND and globalization on October 18, 2019 at the University of Oxford.  The press release states: 

The decisions of national courts on fair, reasonable, and non-discriminatory (FRAND) licensing rates have the potential to impact the licensing and litigation of standard essential patents (SEPs) internationally, according to speakers at OxFirst’s 4th intellectual property (IP) and competition forum.

“The global FRAND licensing framework is meant to strike a balance between the rights of the Standard Essential Patents (SEPs) holders and the needs of downstream innovators,” says Dr Roya Ghafele, founder and CEO of OxFirst.

“Decisions made at the national level, by national courts, bear the potential to affect licensing negotiations in other jurisdictions. It is therefore important that such decisions take into account the increasingly global nature of commerce,” Ghafele adds.

SEPs have become central to patent wars in information and communications technology because the use of these patents is essential for compliance with technical standards. Standards such as 3G, 4G, GSM or UMTS have been instrumental for the establishment of wireless communication. The advent of 5G bears the potential to be a crucial element for the internet of things. (IoT) As such, there is a lot at stake.

OxFirst’s conference, titled “Globalisation and FRAND: Coming to grips with the interplay of IP and competition law”, addresses issues facing the various players in these patent wars.

The conference, held Oct 18 at St Cross College, at the University of Oxford, is attended by academics, government officials, and IP experts in the commercial world.

Among the speakers at the conference are Hon Judge Fabian Hoffman, a judge of the Bundesgerichtshof (Federal Court of Justice of Germany); Prof Eric Sergheraert, from the University of Lille; Prof Valerio Sterzi, from the University of Bordeaux; and Prof Thomas Cotter, from the University of Minnesota.

OxFirst is scheduled to host its next IP and competition symposium in Brussels in February 2020. OxFirst Conferences are fully accredited for continuous legal professional education for the legal profession.

About the conference:

Wednesday, 16 October 2019

Patent Eligible Subject Matter Reform in the United States: The Pendulum Will Swing Too Far (again)?

In the United States, the law of patent eligible subject matter has become a big mess.  There are many different ways to frame how we got to this point.  One narrative tracks the concern with so-called patent trolls and the issuance of poor patents by the USPTO.  For sure, many have had concerns about the enforcement of patents and there have been a number of issued poor quality patents by the USPTO.  Part of the problem with the reform effort may have been that there were just too many proposals adopted to confront the issues.  In a perfect world, I suppose that a proposal would be enacted and then we would gather data and try to assess its impact.  We essentially made many policy changes creating perhaps an even larger mess with different problems--perhaps to the detriment of innovation.  Indeed, perhaps the changes to patent eligible subject matter law by Alice and Mayo may have gone too far—in light of other changes to the U.S. patent system designed to curb troubling enforcement and poor patent quality.  

One of the main current problems seems to be the application of the Alice/Mayo test and the failure to achieve consistency in its application.  Unfortunately, one casualty of Alice/Mayo may be collegiality amongst U.S. Court of Appeals for the Federal Circuit judges and the institution itself—the recent opinion, American Axle & Manufacturing v. Neapco Holdings, issued on October 3, 2019 is an interesting example.  Basically, Judge Moore writing the dissent is accusing Judge Dyk, author of the majority opinion, for engaging in judicial activism among other things.  I believe that most think that judges should “call it as they see it.”  However, the problem may be the test itself—it’s just too difficult to apply with consistency and that a reasonable application could result in problems, particularly if there is an underdeveloped record.  For sure, the attempt to utilize patent eligible subject matter as a way to eliminate cases early has been eroded by some panels of the Federal Circuit.  Does this mean that the main value of the test has been lost?  Should we stick to obviousness as the gatekeeper of patentability?  Can Congress actually fix this without overshooting eligibility resulting in more and different problems?  What about the concern with drug pricing?  Is the current test for patent eligible subject matter unfixable?  Do we need to think harder about different patent eligible subject matter rules for different industries?  Does it look like the Federal Circuit is properly using doctrines as policy levers across different industries?  I do think we would likely agree that keeping the Federal Circuit is a good idea (there are some that disagree).  

Friday, 11 October 2019

A Greater Appreciation for the Contribution and Value of Some Intangibles (particularly "free" intangibles)?

In a recent speech titled, “Trucks and Terabytes: Integrating the 'Old' and 'New' Economies,” at the 61st Annual Meeting of the National Association for Business Economics, Federal Reserve Chairman Jerome H. Powell challenged the underlying data concerning measurements of economic growth.  He asks: “with terabytes of data increasingly competing with truckloads of goods in economic importance, what are the best ways to measure output and productivity? Put more provocatively, might the recent productivity slowdown be an artifact of antiquated measurement?”  In considering the question, here are his comments: 

How Should We Measure Output and Productivity?
Let's now turn to the second question of how to best measure output and productivity. While there are some subtleties in measuring oil output, we know how to count barrels of oil. Measuring the overall level of goods and services produced in the economy is fundamentally messier, because it requires adding apples and oranges—and automobiles and myriad other goods and services. The hard-working statisticians creating the official statistics regularly adapt the data sources and methods so that, insofar as possible, the measured data provide accurate indicators of the state of the economy. Periods of rapid change present particular challenges, and it can take time for the measurement system to adapt to fully and accurately reflect the changes in the economy.

The advance of technology has long presented measurement challenges. In 1987, Nobel Prize–winning economist Robert Solow quipped that "you can see the computer age everywhere but in the productivity statistics."6 In the second half of the 1990s, this measurement puzzle was at the heart of monetary policymaking.7 Chairman Alan Greenspan famously argued that the United States was experiencing the dawn of a new economy, and that potential and actual output were likely understated in official statistics. Where others saw capacity constraints and incipient inflation, Greenspan saw a productivity boom that would leave room for very low unemployment without inflation pressures. In light of the uncertainty it faced, the Federal Open Market Committee (FOMC) judged that the appropriate risk‑management approach called for refraining from interest rate increases unless and until there were clearer signs of rising inflation. Under this policy, unemployment fell near record lows without rising inflation, and later revisions to GDP measurement showed appreciably faster productivity growth.8

This episode illustrates a key challenge to making data-dependent policy in real time: Good decisions require good data, but the data in hand are seldom as good as we would like. Sound decisionmaking therefore requires the application of good judgment and a healthy dose of risk management.

Productivity is again presenting a puzzle. Official statistics currently show productivity growth slowing significantly in recent years, with the growth in output per hour worked falling from more than 3 percent a year from 1995 to 2003 to less than half that pace since then.9 Analysts are actively debating three alternative explanations for this apparent slowdown: First, the slowdown may be real and may persist indefinitely as productivity growth returns to more‑normal levels after a brief golden age.10 Second, the slowdown may instead be a pause of the sort that often accompanies fundamental technological change, so that productivity gains from recent technology advances will appear over time as society adjusts.11 Third, the slowdown may be overstated, perhaps greatly, because of measurement issues akin to those at work in the 1990s.12 At this point, we cannot know which of these views may gain widespread acceptance, and monetary policy will play no significant role in how this puzzle is resolved. As in the late 1990s, however, we are carefully assessing the implications of possibly mismeasured productivity gains. Moreover, productivity growth seems to have moved up over the past year after a long period at very low levels; we do not know whether that welcome trend will be sustained.

Recent research suggests that current official statistics may understate productivity growth by missing a significant part of the growing value we derive from fast internet connections and smartphones. These technologies, which were just emerging 15 years ago, are now ubiquitous (figure 3). We can now be constantly connected to the accumulated knowledge of humankind and receive near instantaneous updates on the lives of friends far and wide. And, adding to the measurement challenge, many of these services are free, which is to say, not explicitly priced. How should we value the luxury of never needing to ask for directions? Or the peace and tranquility afforded by speedy resolution of those contentious arguments over the trivia of the moment?

Researchers have tried to answer these questions in various ways.13 For example, Fed researchers have recently proposed a novel approach to measuring the value of services consumers derive from cellphones and other devices based on the volume of data flowing over those connections.14 Taking their accounting at face value, GDP growth would have been about 1/2 percentage point higher since 2007, which is an appreciable change and would be very good news. Growth over the previous couple of decades would also have been about 1/4 percentage point higher as well, implying that measurement issues of this sort likely account for only part of the productivity slowdown in current statistics. Research in this area is at an early stage, but this example illustrates the depth of analysis supporting our data-dependent decisionmaking.

The full speech is available, here.  The paper concerning measuring value using volume of data, titled, "Accounting for Innovations in Consumer Digital Services: IT Still Matters," is available, here.  

OxFirst Webinar featuring Professor Peter George Picht: "Injunctions in SEP/Frand Cases"

Our friends at OxFirst have another interesting free webinar titled, “Injunctions in SEP/Frand Cases,” scheduled for October 24, 2019, starting at 16:00 BST (14:00 CET).  The speaker is Professor Peter George Picht.  Here is his bio: 

Prof Peter Georg Picht studied law at Munich University and Yale Law School, did his PhD (summa cum laude) at Munich University/the Max Planck Institute for Innovation and Competition, and holds a masters degree from Yale Law School.

He has been working, i.a., with the EU Commission’s DG for Competition, as a Senior Research Fellow with the Max Planck Institute for Innovation and Competition, as well as with two international law firms.

Prof. Picht now holds a chair for Economic Law at the University of Zurich and is head of the University’s Center for Intellectual Property and Competition Law (CIPCO). He remains affiliated to the Max Planck Institute as a Research Fellow and is an Of Counsel with the law firm Schellenberg Wittmer. His further affiliations include board memberships in the Academic Society for Competition Law (ASCOLA), the Association Européenne du Droit Èconomique (AIDE), and the Munich IP Dispute Resolution Forum. In 2019, he will be a Visiting Professor at King’s College, London.

Prof. Picht’s academic teaching and writing, as well as his counseling activity, focus on

· intellectual property law

· competition law

· international private and procedural law, in particular commercial arbitration (mainly IP and Competition), trusts and estates.

In these fields, he advises governments, companies, foundations, trusts, as well as private persons and families. Prof. Picht is admitted to the bar in Germany and Switzerland (Art. 28 BGFA).

For further information, see:

Here is a link to register:, and here are the details concerning registration: 

Attention, please sign up with your professional email account. We don’t accept registrations from personal email addresses. Participation is limited at 100 participants. We reserve the right to eliminate participants.

Saturday, 28 September 2019

US Treasury Department CFIUS Proposed Regulations Released

The U.S. Treasury Department has recently issued new regulations for review concerning the Committee on Foreign Investment in the United States (CFIUS).  CFIUS reviews transactions implicating national security concerns.  The Fact Sheet concerning the new proposed regulations from the U.S. Treasury Department states: 

FIRRMA Provisions on Non-Controlling Investments

FIRRMA expands CFIUS’s jurisdiction beyond transactions that could result in foreign control of a U.S. business to also include a non-controlling investment, direct or indirect, by a foreign person that affords the foreign person: 

access to any material nonpublic technical information in the possession of the U.S. business;  membership or observer rights on the board of directors or equivalent governing body of the U.S. business or the right to nominate an individual to a position on the board of directors or equivalent governing body; or any involvement, other than through voting of shares, in substantive decisionmaking of the U.S. business regarding— the use, development, acquisition, safekeeping, or release of sensitive personal data of U.S. citizens maintained or collected by the U.S. business; the use, development, acquisition, or release of critical technologies; or the management, operation, manufacture, or supply of critical infrastructure.  

This new authority only applies to a non-controlling investment in a U.S. business that:  produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies;   owns, operates, manufactures, supplies, or services critical infrastructure; or maintains or collects sensitive personal data of U.S. citizens that may be exploited in a manner that threatens national security.

FIRRMA also requires that CFIUS prescribe regulations that further define the term “foreign person” in the context of non-controlling investments by specifying criteria to limit its applicability over certain categories of foreign persons.

Key Aspects of the Proposed Regulations Regarding “Covered Investments”

Types of investments covered:  Non-controlling investments that afford a foreign person certain access, rights, or involvement in certain U.S. businesses (referred to as “covered investments”).

Largely a voluntary process:  Process remains largely voluntary, where parties may file a notice or submit a short-form declaration notifying CFIUS of a covered investment in order to receive a potential “safe harbor” letter (after which CFIUS does not initiate a review of a transaction except in certain limited circumstances).  In some circumstances, filing a declaration for a transaction is mandatory.  In particular, FIRRMA creates a mandatory declaration requirement for specified covered transactions where a foreign government has a “substantial interest”.  Additionally, FIRRMA authorizes CFIUS to mandate declarations for covered transactions involving certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies.  

U.S. businesses covered:  The new provisions on covered investments only apply to investments in U.S. businesses involved in specified ways with critical technologies, critical infrastructure, or sensitive personal data—referred to as “TID U.S. businesses” for technology, infrastructure, and data.  

 Critical technologies:  CFIUS may review transactions related to U.S. businesses that design, test, manufacture, fabricate, or develop one or more critical technologies.  “Critical technologies” is defined to include certain items subject to export controls and other existing regulatory schemes, as well as emerging and foundational technologies controlled pursuant to the Export Control Reform Act of 2018.  

 Critical infrastructure:  CFIUS may review transactions related to U.S. businesses that perform specified functions—owning, operating, manufacturing, supplying, or servicing—with respect to critical infrastructure across subsectors such as telecommunications, utilities, energy, and transportation, each as identified in an appendix to the proposed regulations.  

 Sensitive personal data:  CFIUS may review transactions related to U.S. businesses that maintain or collect sensitive personal data of U.S. citizens that may be exploited in a manner that threatens national security. “Sensitive personal data” is defined to include ten categories of data maintained or collected by U.S. businesses that (i) target or tailor products or services to sensitive populations, including U.S. military members and employees of federal agencies involved in national security, (ii) collect or maintain such data on at least one million individuals, or (iii) have a demonstrated business objective to maintain or collect such data on greater than one million individuals and such data is an integrated part of the U.S. business’s primary products or services.  The categories of data include types of financial, geolocation, and health data, among others.  Genetic information is also included in the definition regardless of whether it meets (i), (ii), or (iii).  

 Foreign person and excepted investor:  The regulations create an exception from “covered investments” for certain foreign persons defined as “excepted investors” based on their ties to certain countries identified as “excepted foreign states,” and their compliance with certain laws, orders, and regulations.  The regulations do not except these persons from control transactions previously subject to CFIUS jurisdiction; investments from all foreign persons remain subject to CFIUS’s jurisdiction over transactions that could result in foreign control of a U.S. business.

FIRRMA Provisions on Real Estate Transactions

In FIRRMA, Congress authorized CFIUS to review “the purchase or lease by, or a concession to, a foreign person of private or public real estate that”

“is, is located within, or will function as part of, an air or maritime port…” 

“is in close proximity to a United States military installation or another facility or property of the United States Government that is sensitive for reasons relating to national security;”

 “could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property; or”

 “could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance.”

 Pursuant to FIRRMA, this authority does not extend to “a single ‘housing unit.’”  This authority also does not apply to “real estate in ‘urbanized areas’ . . . except as otherwise prescribed by [CFIUS] in regulations in consultation with the Secretary of Defense.” (emphasis added)

 FIRRMA directs CFIUS to “prescribe regulations to ensure that the term “close proximity” refers only to a distance or distances within which the purchase, lease, or concession of real estate could pose a national security risk.”

 FIRRMA also requires that CFIUS prescribe regulations that further define the term “foreign person” for real estate transactions by specifying criteria to limit its applicability over certain categories of foreign persons.

The full text of the regulations is available, here

U.S. House of Representatives Passes Marijuana Banking Law

Congress is one step closer to resolving one of the very thorny issues concerning the legal marijuana business in the United States—access to banking because of its illegal status at the Federal level.  The SAFE Banking Act of 2019 has reportedly passed the U.S. House of Representatives and must then be passed by the Senate.  Of course, the bill will still have to be signed by President Trump, which may not be a sure thing.  He seems to change his mind on this issue frequently, and we are approaching an election year. There is also speculation that because of the current impeachment controversy in the Congress concerning President Trump that very little will be accomplished from a legislative perspective—that could also impact passage of patent eligible subject matter reform and drug pricing legislation.  A summary of the Safe Banking Act of 2019 states: 

This bill generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate marijuana-related business. Specifically, the bill prohibits a federal banking regulator from (1) terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate marijuana-related business; (2) prohibiting or otherwise discouraging a depository institution from offering financial services to such a business; (3) recommending, incentivizing, or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business; (4) taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased or sold to such a business; or (5) penalizing a depository institution for processing or collecting payments for such a business.

As specified by the bill, a depository institution shall not, under federal law, be liable or subject to forfeiture for providing a loan or other financial services to a legitimate marijuana-related business.

The bill is available, here.  I’ve previously written on this issue, here

Wednesday, 18 September 2019

Oxfirst Webinar: Balance Requirements for Standard Development Organizations

Our friends at Oxfirst have another exciting webinar scheduled for October 2, 2019 at 1600 to 1700 (British Standard Time) titled, “’Balance’ Requirements for Standards Development Organizations: A Debate between Professor Contreras and Professor Larouche.”  

Here is a description of the webinar:

“Antitrust and Balance of Interests in Standards Development - Lessons from NSS Labs v. Symantec”

The recent decision of the District Court of the Northern District of California, in NSS Labs. v. Symantec sheds light on the requirement that Standard Development Organizations (SDO) achieve a balance of interests in their procedures. Whilst the court ultimately did not rule on this point, the U.S. Department of Justice (DOJ) intervened in the case to insist – correctly in our view – that SDOs must meet that requirement in order to benefit from protection against antitrust liability under the Standard Development Organization Advancement Act (SDOAA).

Here are brief bios of the speakers: 

Professor Jorge Contreras
Jorge Contreras is a Presidential Scholar and Professor of law at the University of Utah in Salt Lake City, Utah, USA.  He holds a JD from Harvard Law School, all conferred with honors.  Prior to entering academia, Prof. Contreras was a partner in the Boston, London and Washington DC offices of the international law firm Wilmer Cutler Pickering Hale and Dorr. His current research focuses on intellectual property transactions, standard setting and science policy. He has edited six books and published more than 100 scholarly articles on these topics, and has received numerous awards for his scholarship and teaching. His latest books include the 2-volume edited series, The Cambridge Handbook of Technical Standardization Law (2018, 2019). He has been quoted in the NY Times, Wall Street Journal, Economist, Washington Post, and Korea Times, has been a guest on NPR, BBC and various televised broadcasts, and his work has been cited favorably by the U.S. Federal Trade Commission, European Commission and courts in the U.S. and Europe. 

Professor Pierre Larouche

Pierre Larouche (1968) is Professor of Law and Innovation at Université de Montréal, where he is in charge of the new PhD Programme on Innovation, Science, Technology and Law. Until 2017, he was Professor of Competition Law at Tilburg University (Netherlands), where he founded and directed the Tilburg Law and Economics Center (TILEC) and created the Bachelor Global Law. Prof. Larouche has also taught at the College of Europe (Bruges) (2004-2016), and he has been a guest professor or scholar at McGill University (2002), National University of Singapore (2004, 2006, 2008, 2011, 2013), Northwestern University (2009-2010, 2016-2017), Sciences Po (2012), the University of Pennsylvania (2015) and the Inter-Disciplinary Center (IDC, 2016). His research centers around economic governance, and in particular how law and regulation struggle to deal with complex phenomena such as innovation. He follows a meta-comparative and inter-disciplinary method. He currently teaches competition law, economic regulation, tort law as well as patents and trademarks.

Registration is free and available here:

And, here is some "fine print" from Oxfirst concerning registration:

"After registering, you will receive a confirmation email containing information about joining the webinar.

Attention, please sign up with your professional email account. We don’t accept registrations from personal email addresses. Participation is limited at 100 participants. We reserve the right to eliminate participants. By joining the OxFirst webinar you agree to our Privacy Policy (found here) and to receive forthcoming information on our webinars, newsletters and events."

Tuesday, 10 September 2019

Going After FAANG in the United States: States Attorneys General Begin Investigation into Google

An interesting question is when do you regulate a new technology.  Do you regulate it early, potentially impeding its development?  Or, do you give it time to develop and the industry around it?  One issue with respect to waiting to regulate concerns the difficulty in doing so because of public choice issues.  The industry becomes too powerful to regulate effectively, or essentially captures the agency regulating it.  Some may argue that the United States, through the federal government, has failed to effectively regulate the FAANG companies—Facebook, Amazon, Apple, Netflix and Google.  However, another set of potential regulators exist in the United States—State Attorneys General.  Indeed, state attorneys general have led lawsuits against many industries, including tobacco and more recently the pharmaceutical industry.  Those attorneys general may be subject to similar public choice issues; however, sometimes they still act.  And, now, 50 attorneys general are going after Google.  Here is the press release: 

Attorney General Ken Paxton today announced that Texas is leading 50 attorneys general in a multistate, bipartisan investigation of tech giant Google’s business practices in accordance with state and federal antitrust laws.
The bipartisan coalition announced plans to investigate Google’s overarching control of online advertising markets and search traffic that may have led to anticompetitive behavior that harms consumers. Legal experts from each state will work in cooperation with Federal authorities to assess competitive conditions for online services and ensure that Americans have access to free digital markets.
“Now, more than ever, information is power, and the most important source of information in Americans’ day-to-day lives is the internet. When most Americans think of the internet, they no doubt think of Google,” said Attorney General Paxton. “There is nothing wrong with a business becoming the biggest game in town if it does so through free market competition, but we have seen evidence that Google’s business practices may have undermined consumer choice, stifled innovation, violated users’ privacy, and put Google in control of the flow and dissemination of online information. We intend to closely follow the facts we discover in this case and proceed as necessary.”  
Past investigations of Google uncovered violations ranging from advertising illegal drugs in the United States to now three antitrust actions brought by the European Commission. None of these previous investigations, however, fully address the source of Google’s sustained market power and the ability to engage in serial and repeated business practices with the intention to protect and maintain that power.

Monday, 9 September 2019

IP Valuation for Investment Purposes -- Part 1

Here is the second post by Dr. Roya Ghafele.  It is the first part of a two part series on the importance of IP Valuation.  

IP valuation for Investment Purposes – Part 1

By Roya Ghafele, OxFirst Ltd.

With the European Central Bank’s interest rate decision continuing to be at 0%, investors are forced to put their funds to work in different ways.  Can patents, the underlying rights to an invention, offer such an alternative? 

Any type of investment decision is hinged on an adequate appraisal of risk and return rates of an investment. Ideally, an investment yields high returns, while risk rates are kept as low as possible. The investment in intellectual property forms no exception to that.

The adequate valuation of intellectual property can hence play an important role in the promotion of technology markets. It is through this instrument that investors can make an educated placement of their funds. In spite of the instrumental role that IP valuation could assume, it is often ignored in the financial community. 

The problem does not seem to be that it is not possible to value IP for investment purposes or that IP has any intrinsic features that would prevent its valuation. The problem is a lack of awareness of the many opportunities provided by IP valuation. If investors have IP on their radar screen at all, then they tend to contend themselves with counting patents (apparently, the more, the better seems to be the premise) or to check if the company is involved in any legal proceedings. As to early stage technology companies, investors will at best consult a patent attorney who can undertake a freedom to operate analysis of the underlying patents of a technology. While such an assessment can provide helpful legal insights, it does not allow to understand how IP relates to potential business performance.

IP managers in technology companies on the other hand side do often also not know how to best communicate the value of patents to financial analysts, angel, VC or Private Equity Investors. Current accounting standards that allow to only partially reflect the value of patents do not make things easier.[1]  This leads to market inefficiencies, where valuable technology sits gathering dust, while investors are not able to scope potentially attractive financial opportunities. Already in 2014, the European Commission called for an enhanced usage of IP valuation as a means to better link those in search for funding with those eager to put their money to work.[2] Equally, the UK Intellectual Property Office launched an initiative inviting the City of London to ‘Bank on Intellectual Property.’ [3] Those initiatives have so far shown little results and the best practice for leveraging IP in financial transactions still seems to stem out of Silicon Valley, where some financial institutions have been reported to use IP valuation for investment purposes. [4]  Yet, institutions like these are the worthy exception, rather than the norm. 

So, with a lot to gain from overcoming the little understanding that prevails on IP valuation, the question arises what technology entrepreneurs can do to attract investors to their business.

I turn to this question in the part 2 of this comment, where I will seek to offer some practical tips that may help to better link IP to cash flows.

[1]  GHAFELE, R. ‘Accounting for Intellectual Property?’ Oxford Journal on Intellectual Property Law & Practice, Nr. 5/7 2010, at 37

[2] EUROPEAN COMMISSION, Report of the Export Group on Intellectual Property Valuation.  (2014) at 7, 22-23, 57, 91,

[3] UKIPO ‘Banking on Intellectual Property? The role of intellectual property and intangible assets in facilitating business finance’ available at: (2014) at 221

[4] See About Silicon Valley Bank, (disclosing that Silicon Valley Bank’s clients include 50% “of all venture capital-backed tech and life science companies in the US” and that Silicon Valley Bank was established in 1983).

Thursday, 29 August 2019

Welcoming Dr. Roya Ghafele to the IP Finance Blog!

IP Finance is delighted to announced that Dr. Roya Ghafele, the Director of OxFirst, will join our permanent team of bloggers.  I’ve pasted a short bio of Dr. Ghafele below.  Dr. Ghafele is planning to author a series of posts on IP valuation and management.  Please find her first post on IP valuation below.  We are very excited to have her join us!  

Here is her bio:

Dr Ghafele has been the Director of OxFirst, an award winning IP law and economics consultancy, since 2011. In addition, she has held academic positions in International Political Economy and Business with Oxford University since 2008 and was also a tenured Lecturer (Assistant Professor) in IP Law with Edinburgh University. Prior to that she had post-doctoral assignments at Harvard and U.C. Berkeley. From 2002-2007 she worked as an Economist with the U.N.’s World Intellectual Property Organization (WIPO) and the OECD. She started her career with McKinsey in corporate finance.

Her Ph.D. was awarded the Theodor Koerner Research Prize by the President of the Republic of Austria. Dr. Ghafele was trained at Johns Hopkins University, School of Advanced International Studies, the Sorbonne and Vienna University. During the course of her studies she was fully funded by the Austrian Government because her academic merits were continuously of outstanding quality. She is native in German and fluent in English, French and Italian.

Specialties: IP valuation, FRAND Royalty Rate Determination, IP and Competition Economics

Here is her first post: 

IP valuation – Why it Matters

The major challenge does not seem to be that patents or other forms of intellectual property cannot be valued or that IP disposes of any intrinsic features that would prevent its valuation. The challenge is that many IP managers are still rather ignorant when it comes to the valuation of intellectual property.  This can have a series of adverse effects. On the one hand, intellectual property may be inadequately managed. On the other hand, others in the company may in all honesty wonder what the bottom-line contribution of IP is to business. Without an adequate understanding of the value of intellectual property, much IP risks gathering dust and not being put to work in the most effective manner.

This raises the question how intellectual property can be valued. While there are many different methods that allow to value intellectual property, there currently exist three overarching principles that allow to value IP assets. These principles are in no way different from the valuation of any other assets, be they tangible or intangible in nature. These are the income, market and cost approach. Each of these methods offers different insights. Hence, depending on the situation, they can complement each other. The income method, measures value in terms of future revenues that can be generated from the asset. It looks at upcoming revenue streams and seeks to determine the current value of these assets. As the method is hinged on an outlook of what the future may hold, it is crucial to determine the discount rate, which reflects risks and probabilities associated with such potential future income. This method can be quite helpful if one is keen on enhancing the management of a patent portfolio. It gives the manager an insight as to how much the IP could potentially generate. This can help formulate a forward-looking IP strategy. The market method again looks at comparable rates that kind of similar IP could fetch in somewhat similar market transactions. As such the insight gained is what a typical rate could be for the IP. Such a method can give a helpful first insight when one is for example seeking to sell or license IP. It can allow to understand if one’s asking price is somewhat in the range of what others have wanted. That being said, it can be challenging to find such information and the method says nothing about the specific worth the patent has in a specific business context. The cost method again can help determine costs associated with IP creation. This can be useful when seeking to minimize costs in an IP Department.  

Each of these paradigmatic approaches have their strengths and weaknesses. They also vary in terms of the effort needed to find relevant information. But overall, they can help optimize expected results from intellectual property. Important to know is that any IP valuation is an off-book valuation and this makes it harder to systematically make use of data which has undergone the scrutiny of controlling. To the keen IP manager this is however nothing but a small stumbling block that should not prevent her to systematically manage IP for value generation.