UK intervention on SEPs including rate setting swims against the tide

The UK Intellectual Property Office’s 2025 consultation on standard essential patents proposes measures to improve licensing transparency and efficiency. These include searchable SEP databases, essentiality checking services, and mechanisms for aggregate rate setting to facilitate top-down approach FRAND licensing rate apportionments. While these initiatives aim to support UK innovation – particularly for SMEs – they risk undermining a licensing system that has successfully evolved through decades of commercial practice and judicial developments.

The UK’s Prime Minister and Chancellor have recently pledged to promote economic growth by slashing red tape and taking out regulators. The IPO’s proposals fly in the face of that.

In my response submission to the IPO’s consultation, I focus on interventions that could do more harm than good: essentiality checking and essentiality rate estimating, aggregate royalty setting and top-down rate apportionment. My concerns are similar to those previously raised in response to the EU SEP consultation in 2023 and 2024.

Checking essentiality – along with infringement and validity – are important and are economically achieved on handfuls of patents to reliably establish that licensing is required. Comparable licences are then the generally preferred method of determining FRAND rates. Where these do not yet exist or are unavailable, parties are best placed to determine rates through discussion and negotiation.

Estimating essentiality rates of entire patent portfolios and for all patents reading on a standard is a far more demanding and costly endeavour, even when only random samples of patents are checked. Results are inaccurate and unreliable.

Setting aggregate royalties and then apportioning them based on counts of declared essential or checked essential patents is also very problematic.

My consultation submission can be downloaded here.

Alliance for Regenerative Medicine: 2019 is Second Best Year in History for Regenerative Medicine Financing

The Alliance for Regenerative Medicine (ARM) has recently released its annual report.  Notably, ARM states that 2019 was the second-best year in history for regenerative medicine financing.  A whopping $9.8 billion US was raised globally.  $7.8 million was raised for gene modified and cell therapy.  Tissue engineering received $442 million.  The report further specifies deals for significant sums as well as public offerings.  The financing numbers are also broken down by type, such as venture capital, with comparison to 2018 and 2017 numbers.  VC financing is up almost a billion dollars in 2019 over 2018.  Financing numbers are also reviewed for the EU and Israel.  The report also specifies that there are 1,066 clinical trials proceeding at the end of 2019.  New approvals and expected approvals are also discussed. 

Top 100 Universities Granted US Utility Patents in 2016

The National Academy of Inventors and the Intellectual Property Owners Association has released a list of the top 100 universities granted U.S. utility patents.  The top 10 of the list includes: 1) The Regents of the University of California: 505 patents; 2) MIT: 278; 3) Stanford: 244; 4) Cal Tech: 201; 5) Tsinghua University/Graduate School at Shenzen: 181; 6) Wisconsin Alumni Research Foundation: 168; 7) John Hopkins: 167; 8) University of Texas: 162; 9) University of Michigan: 142; and 10) Columbia University: 118.  The top 10 non-US universities include: 1) Tsinghua University/Graduate School at Shenzen; 2) Korea Institute of Science and Technology; 3) King Fahd University of Petroleum and Minerals; 4) National Tsinghua University; 5) Korea Advanced Institute of Science and Technology; 6) National Taiwan University/National Taiwan University Hospital; 7) King Saud University; 8) Industry and Academic Cooperation at Yonsei University; 9) Ramot and Tel Aviv University; and 10) National Chiao Tung University.  On the overall top 100 list, National Chiao Tung University has 53 patents and is ranked 44.  Interestingly at least 31 universities (or university foundations) are non-US based.  Also, the first European institution on the list appears to be École polytechnique fédérale de Lausanne ranked at 59 with 42 patents.  Cambridge Enterprise LTD is ranked at 97 with 25 patents.  Some of the Japanese institutions include University of Tokyo ranked at 69 and Kyoto University at 72.  At least eight of the top 100 are in South Korea and only two appear to be in Europe. [Hat tip to Technology Transfer Central].  

Biotechnology Stock Value: Uncertainty the New Normal or Just the Same Old Deal?

In a recent article in the Wall Street Journal, What's Behind the Biotech Sector's Rebound: Biotech ETFs are Getting Hearts Pumping Again, Gerrard Cowen discusses the swings in the value of biotechnology stocks.  Last year was a relatively poor year for biotech stocks—perhaps attributed to the election campaign rhetoric about reforming drug prices.  This year biotech stocks are looking up, and why?  The article discusses several reasons provided by experts: 1) Trump was elected and he’s likely to treat the sector more favorably than Clinton despite his rhetoric; 2) merger and acquisition activity is likely to increase in the coming year because of likely Trump tax changes; 3) Trump may streamline FDA regulations; and 4) biotech companies were undervalued last year.  The article also outlines risks to the sector which mostly revolve around problems with uncertain politics and difficulty in valuation. 

Interestingly, the article notes that despite difficulty with valuation one helpful baseline, so to speak, is “patent protection.”  I can understand why the author points to the exclusivity of patents—supposedly hugely important to the industry—as a “steadying” factor especially when compared to other industries where perhaps patent protection may not protect a market as well as in biopharmaceuticals.  However, patent protection in the U.S. has been anything but stable.  Indeed, as one example, patent eligible subject matter is a mess and efforts to “clean it up” are moving through the U.S. Congress championed by American Intellectual Property Law Association and the Intellectual Property Owners Association.  If those proposals are enacted, it will be interesting to see how the U.S. Supreme Court interprets those provisions.  And, what of the future of trade agreements?  The basic point is that patent law is ever evolving and despite that change the belief in its ability to protect a market continues—and thus draws capital for hopefully socially productive uses.  The belief may align well with reality for the biopharmaceutical industry.  For more on belief and patents, see Professor Mark Lemley’s article Faith-Based Intellectual Property. 

And, for more on politics and patents, what about the security of patents (and trade secrets)?  Will things change substantially in the coming years?  One article I find particularly interesting is Professor Richard Epstein’s The Constitutional Protection of Trade Secrets and Patents Under the Biologics and Price Competition Act of 2009.  

Intellectual Property Owners Association Adopts Resolution to Amend Patent Eligible Subject Matter

The Intellectual Property Owners Association (IPO) board of directors has adopted a resolution which advocates for amending section 101 of the Patent Act in the U.S. to essentially overturn Mayo v. Prometheus and Alice v. CLS Bank.  The reason for the resolution is the development of inconsistent application of the so-called Alice/Mayo test.  Indeed, there have been a number of relatively recent decisions attempting to clarify Alice/Mayo which find patent eligible subject matter satisfied, including DDR, Enfish, McRO, Amdocs, and Cellz Direct.  How does this happen: the development of panel splits at the U.S. Court of Appeals for the Federal Circuit.  Notably, the United States Patent and Trademark Office (USPTO) has worked extremely hard in attempting to provide guidance to patentees and arguably is doing quite a good job.  I think the USPTO deserves a lot of credit for attempting to bring clarity and predictability to the field.  My personal opinion (shared by others) is that section 102 and 103 could provide a better gatekeeper than section 101 even though early resolution may be difficult.  I do think that the USPTO’s attempt to place certain claims in a “streamlined” analysis seems to be a good idea.  Claims drafting gamesmanship and looking at the claim as a whole will always raise issues though (that pesky Diamond v. Diehr!).  Here is the proposed language amending section 101:

101(a) ELIGIBLE SUBJECT MATTER
Whoever invents or discovers, and claims as an invention, any useful process, machine, manufacture, composition of matter, or any useful improvement thereto, shall be entitled to a patent for a claimed invention thereof, subject only to the exceptions, conditions, and requirements set forth in this Title.

101(b) SOLE EXCEPTION TO SUBJECT MATTER ELIGIBILITY
A claimed invention is ineligible under subsection (a) if and only if the claimed invention as a whole, as understood by a person having ordinary skill in the art to which the claimed invention pertains, exists in nature independently of and prior to any human activity, or exists solely in the human mind.

101(c) SOLE ELIGIBILITY STANDARD
The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard as to the requirements or conditions of sections 102, 103, and 112 of this Title, the manner in which the claimed invention was made or discovered, or the claimed invention’s inventive concept.

New York's Silicon Alley: the once and future (?) IPO wasteland

With all of the talk about Silicon Alley, the name given for high tech

activity in New York, the fact remains that successful technology IPOs emanating from New York have been few and far between. How few and far between was brought home last week in a report that Etsy (located in what is called the Dumbo neighbourhood of Brooklyn) is preparing for an IPO some time as early as Q1 2015. The company is reportedly seeking to raise up to $300 million. The last time that a tech company from the New York area raised such an amount was during the dot-com bubble of nearly 15 years ago.

Etsy offers a website that enables people to sell both handmade crafts and vintage goods (think of a 1957 turquoise Royal Quiet De Luxe typewriter). As such, the company can be said to engage in the craft niche of the e-commerce space, where 800-pound gorillas in the form of Amazon.com and Alibaba enjoy a pre-eminent position. Approximately 26 million items are listed for sale on the Etsy site. Its revenues derive from a 20-cent charge for sellers to list products and it takes a 3.5% cut from each item sold. It also earns sums from advertising and payment processing. The report states in 2013 the company posted $1.35 billion in gross merchandise sales, and it is presumed that this figure was greater for 2014.

There is something quite extraordinary in the fact that New York seems to be a wasteland for generating tech companies with significant IPO potential. One only has to compare this (lack of a) track record with the oversize IPO success of Israel, which continues to create hi tech companies that attract public funding. The question is—why? A piece by Jeremy Quittner, “A Tale of Two Cities: Why Silicon Alley Isn’t the Next Silicon Valley (Yet)”, which appeared last year on Inc.com, offered some thoughts.

1. “NYC is a strong market for advertising technology, financial technology, some commerce, and a few other smaller segments, but it's not aligned with where most venture dollars are going these days," quoting Dave Zilberman, a partner at Comcast Ventures who moved about from New York to Silicon Valley.

2. Zilberman pointed to software as a service, cloud computing, network and computer security and enterprise computing a start-up areas attracting big money. It seems that New York is not strong in any of them. Recall that Etsy Crafts itself is a niche e-commerce site.

3. Culture was also mentioned. Again, quoting Zilberman, “Silicon Valley has a stronger culture of risk-taking than New York City. It's simply a function of people with the right skill set and risk tolerance to work for a startup."

4. Drilling down further, it appears that the bulk of job growth in New York has been in designing, managing, and operating computer systems. Notable in this regard is digital media and software publishing. What is missing, however, is what is described as areas “heavy on engineering and new product development--jobs more likely to lead to innovation and starting ups.”

5. As observed by says Ross Fubini, partner at Canaan Partners in Menlo Park, California, "Innovation and creating great companies is all about the people--and Silicon Valley is special in that regard, because of the number of entrepreneurs, investors, engineers, and the culture that come together in a uniquely effective and creative way."

In light of Quittner’s piece, the obligatory question is—can New York ever change the situation? Most certainly the issue continues to be raised and many in New York wrestle with the problem. All those engineering graduates from Berkeley and Stanford certainly give Silicon Valley a leg-up, but New York is still a magnet for creative and ambitious types. Nevertheless, whether that is enough to ever create an environment ripe for successful establishing tech companies with notable IPO potential remains an open question.

Biotech Hopping at Wall Street and Biotech Patenting on an Upswing--More Patenting to Come?

The Wall Street Journal reports that there have been 16 biotech IPOs (it is unclear what is defined as biotech) since the beginning of this year raising over $1.1 billion.  (for more on venture capital backed IPOs generally see here)  To put that in context, in 2004 there were 25 IPOs bringing in close to $1.17 billion.  In the last ten years, at this point, this year would be tied for the second best year and the future looks bright for more biotech IPOs.  The Wall Street Journal also speculates that the rise in IPOs along with their general success is attributable to R&D and clinical trial successes.  For example, the article states that: “Last year, the Food and Drug Administration approved 39 new drugs, according to the agency, a figure not reached since 1997. This year, the agency has approved 13 new drugs.”  With the supposed dried up pipeline of Big Pharma, this is welcome news.  Also, the surge in IPOs with more funding may mean more money for patenting efforts in the biotech space with more investors looking to biotech.

On the patenting side, Nature Biotechnology’s Bioentreprenuer reports on statistics on biotech patenting provided by IP Checkups.  It is also unclear what is defined as “biotech,” but the numbers are interesting.  There is a general upswing in biotech patents granted since 2008 from 657 to 850 in 2012 in the United States.  Interestingly, the article also notes the average number of biotech patents by university.  (it is unclear whether these numbers are for granted patents or for patent applications—or full applications or provisional--but it is more likely applications or some of the other numbers don't add up).  If you add up the average number of patents per year between 2008 and 2012 for U.S. universities listed (not all U.S. universities apparently), you get around 880 patents in the United States per year.  The article also has the numbers for patenting at the EPO.  The patenting in the United States is quite a bit higher than the patenting at the EPO.  This could be, in part, because of cost.  Any opinions on the data?