If Uber turns to self-driving vehicles, what is to become of its brand?

Think of the sharing economy and Uber is usually the first company that comes to mind. What could be more appropriate than providing the infrastructure for the service, while the drivers supply their own vehicles. As the middleman, Uber simply brings together customers and drivers, taking a cut from the transaction. Even given the various legal issues and boardroom intrigues that have been plaguing the company, the fundamentals of the business model have remained unaltered, at least until now. But change may be on the horizon, as the company seeks to get ahead of the potential disruption posed by self-driving vehicles.

That is the gist of an article by Shira Ovide, published on November 20th as a Bloomberg Gadfly column. Ovide describes an announcement made earlier of last week, according to which Uber has agreed to buy from Volvo 24,000 SUV’s, meant to serve as the foundation for a future fleet of self-driving vehicles. The value of the transaction is approximately one billion dollars, with delivery to take place between 2019-2021. To some extent, the deal complements an earlier partnership transaction between Uber and Daimler, whereby Daimler will make its own self-driving vehicles available to the Uber network.

The upshot of the Uber-Volvo transaction is that Uber goes from being a mere middleman to the owner of substantial physical assets in the form of DUV vehicles. This carries with it all the obligations that come with owning a fleet of cars, such as readying them for daily use and maintaining such necessities as tyres and the interiors, all the while that the vehicles themselves will be subject to capital depreciation. According to the report, there are few details about how Uber ultimately plans to integrate these vehicles into its business.

In effect, the overarching question is: what kind of business model will emerge? It is true that a direct result of self-driving cars, if they take hold as a preferred means of transportation, will be that human drivers will be made redundant (although this blogger suspects that the transition to self-driving vehicles will be gradual and a certain sub-group of customers will continue to insist on human drivers). As Ovide has observed, will the company then seek to—

“make money by continuing to be a middleman for drivers and riders and for other categories including restaurant orders?”

Or will it simply—

“collect[] fees from rides, that looks more like Hertz than a traditional two-sided market place consisting of matching supply and demand?”

If the purchase of the Volvo vehicles presages (or even more, mandates) that the company will sooner or later need to reformulate its business strategy, then what does this say about Uber’s brand? Even within the current shared economy model, Uber has seen its operations effectively taken over in China by Didi Chuxing, while in some Asian jurisdictions, it is playing second fiddle (or no fiddle) to local competitors, such as Grab in Singapore. As for the US, competitors such as Lyft seek to nip at Uber’s heels.

But perhaps another way to view it as a bold attempt by the company to get ahead of the curve and remake its business model in light of the changes that will be wrought by self-driving vehicles. What comes to mind is Netflix, which began in the 1990’s as a DVD sales and rental business, before soon moving on to the DVD by rental business. When that model faced obsolescence due to the rise of video streaming, the company embraced the video streaming space that is identified with it today.

During each of these remakes, the company managed to enjoy the continuity of the Netflix brand as the badge of the company to the consumer public. Based on Uber’s current high valuation (Ovide indicates it is 68 billion dollars), there is both promise and risk in maintaining the value of the Uber brand in the face of a remake of the company’s business strategy. Stay tuned.

Tickbox TV: Concerns for Content Owners, Cable, and Silicon Valley

Tickbox TV provides a set top box, which allows users to access content on the internet.  Apparently, the device can be used to access and display copyrighted content, such as movies and television shows, through the use of Kodi (an open source media player) and add ons. Many content owners, represented by Munger Tolles & Olson, have filed a complaint for inducement and contributory infringement.  The case is somewhat similar to the classic Sony, Napster and Grokster type cases.  Joe Mullin of Arstechnica provides a very nice description of the case, here.  The Los Angeles Times recently reported on the ownership of Tickbox TV in an article titled, “How an Atlanta Power Couple’s Business Has Heightened Silicon Valley’s Piracy Anxieties.” 

I can understand the anxiety of content providers and some Silicon Valley companies.  As the Los Angeles Times article points out, Tickbox TV (with the software) is dangerous to some content owners (including those in Silicon Valley) because it operates similar to devices that some users may be more comfortable using—so, think of your technology adverse grandparents.  It is like plugging in a VCR.  This may also be a group of consumers who are paying “full price” for content and do not ordinarily illegally access material.  This should make cable and satellite services companies very concerned.  From the perspective of some in Silicon Valley, the case may lead to increased lobbying from content owners concerning stronger copyright protection depending on how the case turns out.  It appears that Tickbox TV is now receiving some counsel and is attempting to insulate itself from liability through the use of disclaimers. 

We are celebrating Thanksgiving in the United States today.  Happy Thanksgiving! 

Evolution and Survival: Technology Transfer Offices

The Association of Land Grant and Public Universities has released a November 2017 report titled, “Technology Transfer Evolution: Driving Economic Prosperity”.  The report identifies numerous opportunities for technology transfer offices as the system matures.  Importantly, technology transfer offices should focus on general regional economic development.  In reviewing opportunities and providing examples of successful programs, the report also highlights obstacles.  In particular, the report examines, “Redefining Expectations of Technology Transfer Offices,” and identifies obstacles to a successful, revisioned technology transfer office that serves to promote local and regional economic prosperity.  The Report states:

• Many senior administrators, faculty, trustees, and alumni are primarily focused on the revenue generation potential of technology transfer operations and less on the societal benefits that can be reaped by moving intellectual property of all kinds into the marketplace, even those that may not result in immediate, high revenue returns.  

• For many institutions, economic development and engagement as a central mission component is new and has led to confusion regarding the roles and responsibilities of individuals and units involved, including technology transfer offices and related professionals. New outreach duties often require coordination across multiple campuses, schools, departments and units, which makes collaboration and reporting a challenge. Many technology transfer offices lack the adequate staff, training, or resources necessary to meet the evolving expectations placed on them in the context of economic engagement.  

• Institutions sometimes face difficulty in giving credit where credit is due, for instance, when technology transfer offices are sharing partnership development responsibilities with other units. On many campuses, technology transfer offices used to be the main externally facing office for the university in the realm of business and industry. This is often no longer the case, and the new reality requires a level of coordination that is not typical practice. Moreover, reporting lines and measures of success are not consistent across different kinds of university offices, and it becomes very difficult to execute strategic, campus-wide partnerships involving external audiences.

I’ve previously written on redefining goals of technology transfer offices, here.  In redefining technology transfer offices, I would focus on their role in promoting the education of students within the university.  It is important to remember that the primary method of university knowledge transfer is teacher to student--for sure, patents are important, but let's keep our eye on the ball.  The technology transfer office, in collaboration with faculty, can play an important role in providing valuable experiential opportunities to students--leading to potential employment opportunities.  This places technology transfer offices squarely within the "core" mission (and "business") of the university and fits them nicely with partnerships in academic units that run business clinics, for example.  It may even lead to fundraising.  

China Changes Policy on Transfer of Technology for Market Access?

As previously discussed, China has been criticized for outright theft of trade secrets as well as requiring the disclosure of trade secrets to do business in China.  Keith Zhai, Bloomberg Technology, has reported in an article, “China Says Foreign Firms won’t be Forced to Turn Over Technology,” that a senior Chinese official has stated that market access in China will not require disclosure of trade secrets.  Notably, the article also states that China “pledged . . . to treat all companies equally" and the timing of the announcement came “close in time” to Trump’s exit from China.  It will be interesting to see if there are meaningful changes. 

A pioneer in the world of university tech transfer to share his insights in a free webinar

IP Finance has been informed of an exciting free webinar that will take place next Wednesday, November 15, at 3:00 PM- 4:00 pm British Standard

Time. The topic of the program, under the auspices of OxFirst, will be "Academic Entrepreneurship & IP Management in Universities" and the speaker will be the distinguished Professor Graham Richards. Prof Richards was a founding member of Oxford University’s tech transfer office and a successful inventor, whose IP formed the foundation of a multi-million publicly traded company. He will talk about the core elements of turning science into business.

About the Speaker

Professor Graham Richards is a pioneer of British technology transfer. The university spin out that he established -- Oxford Molecular Group, was the first university spin out after the UK introduced a regulatory change that attributed the IPR generated in a university context to the university itself. Under the leadership of Professor Richards, Oxford Molecular Plc grew from a £350,000 start-up to a £450 million public company. He is also a founding member of the Technology Transfer Office of the University of Oxford and he was a director there for over 20 years. Another flagship project is the publicly traded company IP Group Plc. Originally created out of the necessity to attract further funding for the chemistry department of the University of Oxford, it is nowadays one of the most important investors in technology generated by universities. IP Group Plc is a FTSE 250 company with a market cap of £1 billion.

How to Join

Please sign up here with your professional email account. The program organizers will not accept a registration from a personal email address.

Chemical Company Joins the LOT Network Against Trolls

Covestro, a chemical company which uses digital technologies to build better products, has joined the LOT Network.  As previously discussed, the LOT Network was started to thwart patent trolls.  Essentially, each member agrees to provide a license to the other members of the network if their patent is transferred to a patent troll.  Covestro’s press release states:

“With the convergence of the chemical industry and digital technologies, our sector has increased exposure to PAE litigation,” said Gilbert Voortmans, Vice President, Head of Intellectual Property Rights at Covestro. “Innovation is core to our business, and we feel it’s important to take a stance against anything that could interfere with the fair use of intellectual property.”

Interestingly, this is the first chemical company to join the LOT Network, according to the press release.  We’ll have to see whether other companies in industries generally thought not to be subject to troll suits will join the network, particularly as digital technologies influence almost all industries.  Moreover, I count around 170 members listed on the LOT Network website, including companies ranging from Alibaba to Crate and Barrel to Wells Fargo to Uber to Target to Honda. I wonder if universities should create something like the LOT Network to protect themselves from future suits by university based patents.  

Ending Soveriegn Immunity for Tribes from Inter Partes Review

U.S. Senator McCaskill has introduced a Bill that would remove sovereign immunity as a defense against Inter Partes Review of patents for Indian Tribes.  The Bill is refreshingly short.  It states:

A BILL

To abrogate the sovereign immunity of Indian tribes as a defense in inter partes review of patents.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Abrogation of tribal immunity in certain patent claims.

(a) Definition.—In this section, the term “Indian tribe” has the meaning given the term in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703).

(b) Abrogation of immunity for purposes of inter partes review.—Notwithstanding any other provision of law, an Indian tribe may not assert sovereign immunity as a defense in a review that is conducted under chapter 31 of title 35, United States Code.

As previously discussed, the Bill is directed at Allergen’s recent attempt to use sovereign immunity of Indian Tribes to insulate patents from Inter Partes Review at the PTO by transferring its patents to the tribe in exchange for cash.  Notably, Judge Bryson (of the Federal Circuit), sitting at the trial court level, recently asked Allergen to demonstrate that its transfer is not a “sham."  Judge Bryson further found the Allergen patents to be obvious.  

When naming the company after yourself might make good business sense

For trademark professionals, dealing with a name usually means encountering an objection to registration on the ground that the surname is not inherently distinctive. The name of the game, at least from the point of view of trademark registration, is to either argue that the mark is not in fact an objectionable surname, or, even if it is, to show the name has acquired sufficient distinctiveness. But in so doing, we tend to ignore the threshold question: why adopt a surname as a trademark at all, especially if we know that it will likely encounter difficulties in registration? A brief report in The Economist, published on August 19th, discussed an article by Sharon Belenzon, Aaron K. Chatterji and Brendan Daley, entitled “Eponymous Entrepreneurs” and published in the American Economic Review, offers some interesting economic insights regarding eponymously-named entities, i.e., entities named after their owner (think of an enterprise such as Bloomberg).

In their article, the authors argue that eponymously-named enterprises result in better performance as measured by the return on assets (3% percent greater). The authors develop an explanation for this finding, centering on what they call signaling, noting that--

“[s]pecifically, eponymy creates a stronger association between the entrepreneur and her firm that increases the reputational benefits or costs of having the market hold a favorable or unfavorable impression of her ability (or of the quality of her firm). Consequently, high-ability entrepreneurs are more drawn to eponymy than are low-ability ones.”

Contrary to common perception—

“Our key assumption is that greater levels of the signaling activity (i.e., a stronger association between the firm and the entrepreneur herself) are not directly costly, but instead increase the reputational impact of successful or unsuccessful outcomes.”

Lying at the heart of their results is what kind of person is more likely to choose to put his or her name on an enterprise. An eponymous company name puts at stake the reputation not only of the entity, but the person behind it. This may especially so when a start-up is involved. What seems to be suggested is a bit of self-selection. People of higher ability are more likely to select an eponymous name for their company, and customers are likely to understand the signal in this manner, thereby viewing the company more favorably (at least for the intermediate term, although it seems to leave open the question of the long-term value as a positive market signal).

A second aspect of the study deals with the impact of whether the surname is common or unusual. Here, the authors found that while the link between performance and eponymy will be greater when an uncommon name is used, entrepreneurs with uncommon names will be less likely to adopt an eponymous naming strategy. It seems that having an uncommon name serves as “a barrier to entry” with respect to adopting the name for one’s company, but those who do so will be more likely to show even greater levels in the performance of their company. In effect, their signal to the market is stronger than that which is received from an eponymous company with a common name.

One further point merits attention, even if it is less central to the heart of the study. The authors find that 19% of the entities studied (consisting of a database of approximately 1.8 million firms) adopted an eponymous name. Interestingly, the authors are of the view that this is a “relatively uncommon” event. To the contrary, this blogger was surprised about how large this number is. From his anecdotal experience in the trademark registration world, the percentage of companies that seek to register an eponymous mark is much lower than 19%. It suggests that entrepreneurial companies are less likely to seek trademark protection of their eponymous company name. if that is the case, perhaps trademark practitioners need to do a better job of alerting their clients to the potential value of an eponymous company name.

Photo on lower left by Keith Cooper licensed under Creative Commons Attribution 2.0 Generic license

By Neil Wilkof

Another Case of Pharma Weakening the Patent System (and University Technology Transfer)

The LA Times recently published an article, "UCLA’s Efforts to Patent a Costly Patent Cancer Drug in India Hurts the Poor, Critics Say,” concerning Pfizer’s drug, Xtandi.  Xtandi, which is used to treat prostate cancer, was developed (with U.S. government funding) and licensed out by University of California, Los Angeles.  Recently, in a royalty securitization deal, UCLA received more than $500 million in exchange for future royalty rights from Royalty Pharma.  Notably, UCLA is now seeking patent rights for Xtandi in India, which it states it has a contractual obligation to do.  The article states:

“What’s special about this case is the fact that the University of California is going against their own licensing policy by aggressively seeking a patent in India on this drug,” KEI Director James Love said.

That policy, as UCLA summarized in a statement to The Times, is “intended to facilitate all populations having access to medications and other products and services made possible by UCLA innovation.”

But UCLA also noted the “concerns about prescription drug pricing” among the activists and others and said it was willing to explore the problem further.

The school said “we are convening a working group to evaluate our approach to technology licensing in ways that benefit California, the nation and the developing world” while also continuing to give drug companies enough incentive to commercialize its discoveries, just as Medivation did with Xtandi.

In the meantime, the activists contend that a daily dose of Xtandi is selling in India for roughly 40 times a person’s daily income in that nation, which they called “excessive and shamefully unaffordable.”

Notably, the University of California is a signatory to the In the Public Interest: Nine Points to Consider in Licensing University Technology White Paper.  Point 9 of the White Paper states:

Consider including provisions that address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world

Universities have a social compact with society.  As educational and research institutions, it is our responsibility to generate and transmit knowledge, both to our students and the wider society.  We have a specific and central role in helping to advance knowledge in many fields and to manage the deployment of resulting innovations for the public benefit. In no field is the importance of doing so clearer than it is in medicine.  

Around the world millions of people are suffering and dying from preventable or curable diseases.  The failure to prevent or treat disease has many causes. We have a responsibility to try to alleviate it, including finding a way to share the fruits of what we learn globally, at sustainable and affordable prices, for the benefit of the world’s poor. There is an increased awareness that responsible licensing includes consideration of the needs of people in developing countries and members of other underserved populations.

The details involved in any agreement provisions attempting to address this issue are complex and will require expert planning and careful negotiation.   The application will vary in different contexts.  The principle, however, is simple.  Universities should strive to construct licensing arrangements in ways that ensure that these underprivileged populations have low- or no-cost access to adequate quantities of these medical innovations. 

We recognize that licensing initiatives cannot solve the problem by themselves.  Licensing techniques alone, without significant added funding, can, at most, enhance access to medicines for which there is demand in wealthier countries.   Diseases that afflict only the global poor have long suffered from lack of investment in research and development: the prospects of profit do not exist to draw commercial development, and public funding for diseases suffered by those who live far away from nations that can afford it is difficult to obtain and sustain. Through thoughtful management and licensing of intellectual property, however, drugs, therapies, and agricultural technologies developed at universities can at least help to alleviate suffering from disease or hunger in historically marginalized population groups.

This appears to be another case of a company making a decision based on pricing that will likely undermine confidence in the patent system, particularly undermining technology transfer from universities.  Universities should exercise care in licensing to ensure that they have the final word on enforcement as well as patenting in other countries (see follow-up patenting noted by Professor Lisa Larrimore Ouellette).  Let’s not kill the "golden goose."  Perhaps UCLA can use part of the $500 million for a fund for people who need access to the drug in India.