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Rep. Collins speaks from IP experience at CIPU-GIPC innovation policy forum

On Tuesday an open briefing was held in Washington to better understand U.S. innovation and IP policy. Congressman Doug Collins (R-GA), a supporter of strong and certain IP rights, launched the event with a personal account of his exposure to IP rights growing up in rural Georgia. 

He said that a number of his relatives and neighbors were chicken farmers, “some of whom invented new and more effective processes to produce and process eggs and poultry that were protected under IP law.”

The keynote comments of the Congressman were part of a program, “Innovation Policy and Intellectual Property: Building on a Strong Foundation,” held by the Center for Intellectual Property Understanding (CIPU), an independent non-profit, and the Global Innovation Policy Center (GIPC), a division of the United Stated Chamber of Commerce.

House Judiciary Committee

Congressman Collins is a member of the House Judiciary Committee, and also is on the sub-committee for the Courts, Intellectual Property and the Internet. He was a sponsor of the recently enacted, and broadly supported Music Modernization Act, which passed the House 415-0, and has developed and supported other IP-friendly legislation. “IP is a part of the fabric of the nation,” he said. “American freedom is tied to an effective IP system.”

Other presenters included CIPU board member Marshall Phelps, former Vice President of IP Business and Strategy at Microsoft and prior to that at IBM. Mr. Phelps also served as head of Government Relations for IBM in Washington in the 1980s, and previously was head of Asia-Pacific. He spoke about the threat to technology posed by “Japan, Inc.” in the Eighties, and how the U.S. was able to surmount the threat with the right combination of incentives.

“The threat to IP and innovation from China is real,” said Phelps in his introductory remarks, “but too much policy and the wrong incentives can create bigger problems. Making patent certainty a higher priority should be the first priority. Putting IP properly on the balance sheet would help, too.”

Manny Schecter, Chief Patent Counsel of IBM, also a CIPU director, and president of the Intellectual Property Owners (IPO) Education Foundation, was a panelist, as were, Alan Marco, former USPTO Chief Economist, Rob Atkinson, a pro-IP economist and President of the Information Technology and Innovation Foundation (ITIF), and Professor Adam Mossoff, an IP scholar and policy expert at George Mason University Scalia School of Law.

Among the goals of the panel was to explore:

  • What is U.S. innovation policy?
  • How does it relate to intellectual property?
  • Who should be responsible for it?
  • How should success be measured?

Audience Response

One the audience members asked if the Supreme Court, with Oil States and several other decisions, was “anti-IP.” The panel did not believe so, but thought that SCOTUS members may be poorly informed about the purpose and use if IP rights.

Another audience member stated the false narratives around phrases like patent “trolls” were part of a long-term “public relations campaign” that has seeded anger and hostility toward IP rights in general. He thought a sustained educational initiative could help to make the role of IP clearer for various audiences.

Image source: GIPC

Patents for Financial Services Summit to examine IP system health

The 15th Annual Patents for Financial Services Summit will gather patent and IP counsel, as well as senior financial executives, to discuss recent trends in financial patent litigation, value, and patentability.

The Summit will be held July 25-26 at the Sheraton Times Square in New York. Presentations include updates on CBMs, IPRs, Oil States vs. Greene, FinTech patents, and strategies to navigate the current IP landscape.

This year’s keynote is Hon. Susan Braden, Chief Judge, U.S. Court of Federal Claims. The United States Court of Federal Claims is a United States federal court that hears monetary claims against the U.S. government. It rules on patent and copyright claims against the government, among other areas.

IP CloseUp readers receive a $200 discount when they use registration code IPC2XX.

Financial and Tech Leaders

Heads of IP, patents or senior IP executives from leading financial institutions and technology companies will be speaking. They include MasterCard, Citigroup, The Hartford, Wells Fargo and JP Morgan Chase. Additionally, the Clearing House Payments Corporation (a consortium of leading banks) will be represented, as will IBM, by Chief Patent Counsel, Manny Schecter.

American Express, Royal Bank of Canada, Visa and Microsoft also will have representatives serving as panelists. Joe Matal, former Acting Director of the USPTO and 2017 PFFS Summit keynote, is a member of the “101: panel.”

Panels titles include:

  • Assess the Health of the U.S. Patent System and Discuss the Erosion of Patent Rights
  • Embrace Change at the PTAB
  • Bitcoin, Alt Coin, and Tokens: A Primer on How Intellectual Property Laws Relate

SPOTLIGHT SESSION:
Pursue §101 Eligibility Reforms

  • IP Considerations for the Digital Transformation of the Financial Services Industry
  • Identify Opportunities for Partnering with FinTech Companies
  • Predict the Future of Cryptocurrencies
  • Explore the Patent Issues Confronting Artificial Intelligence

For the complete program, go here. To register, go here. 

Image source: PatentVue.com

Reactions to Oil States show that patent due process is not dead

Two days before World IP Day, on April 24, the Supreme Court of the United States relinquished significant judicial authority for patents to the executive branch in Oil States Energy v. Greene’s Energy.   

This decision upheld the constitutionality of the Patent Trial and Review Board. The Wall Street Journal stated in a thoughtful and uncharacteristically nuanced commentary, “This process [the inter partes review] was intended to discourage frivolous patent litigation, but is susceptible to political bias.”

Oil States overturns 200 years of judicial precedent and allows the federal government to revoke patents. Dissenting were Justice Gorsuch, President Trump’s appointee, and Chief Justice John Roberts.

” …the purpose of patents, which is to encourage innovation and reward investment, will be undermined if they can be nullified without due process and hearing before an Article III judge,” the WSJ concluded.

The WSJ’s editorial page got it right, even if SCOTUS did not.

Sin of Omission

James Carmichael and Brad Close writing in IP Watchdog, Despite Oil States, IPRs May Still be Unconstitutional,” reminds patent holders that the Court, by its own admission (or should that be “omission”?), ruled on a very narrow area of law and may have left the door open to further decisions that will strengthen patents.

“What was unfortunately never addressed in Oil States, and which the court specifically left the door open for, was that patents rights are still property rights for the purpose of Due Process–the inference being that IPRs may fail under the Due Process or Takings Clause.  Indeed the court seemed to lament that Oil States did not challenge the retroactive application of IPRs and their constitutional sufficiency on a broader basis.”

Carmichael and Close cite the justices tone in their written decision:

We emphasize the narrowness of our holding. We address the constitutionality of inter partes review only… our decision should not be misconstrued as suggesting that patents are not property for the purpose of the Due Process Clause or the Takings Clause.

Justice Gorsuch wrote that until recently, most everyone considered an issued patent a personal right—no less than a home or farm—that the federal government could revoke only with the concurrence of independent judges.

Dig In

Oil States did not go well for patent holders, but that was no surprise. What was somewhat unexpected was a strong stance from the US’ leading business periodical, the Wall Street Journal, about the shortsightedness of the Court’s decision, and that the Chief Justice and another member of SCOTUS also were not in favor of constitutionality for PTAB reviews.

Further judicial review of patents and patentability, if not the PTAB and IPRs, is order. If nothing else, Oil States puts a greater burden on USPTO Director Iancu to step-up and de-politicize PTAB administrative procedures and judges.

Despite the obvious loss, Oil States may prove to be the best reason for patent holders to dig in.

Image source: yahoo.com; law.com

59% of blockchain patents are owned by developers; BofA and IBM dominate financial and tech players

More than half of U.S. blockchain patents are owned by blockchain-specific developers, while 20% are owned by financial institutions, led by Bank of America (see pie chart below).

Number three, Fidelity, has about a third as many patents as BofA. Number two, MasterCard, some 50% fewer.

13% are owned by traditional technology businesses, led by IBM, which owns more than three times the next biggest tech holder, Dell.

This is according to the findings of a report prepared by Envision IP, an IP law firm specializing in patent research, as reported in the April Managing Intellectual Property.

According to another report, China claims to have more than twice as many companies than the U.S. in the blockchain top 100 patentees.

Outside of IBM, which supports many banks, leading technology companies like Google, Intel and Microsoft have been slow to pursue blockchain patents. MasterCard, which has 27 blockchain patents, the same number as IBM, is dubious about the reliability of crypto-currencies, such as bitcoin. This 2014 video explains some of the credit card business’ reservations. The firm’s thinking may have evolved.

MasterCard processes over $4 Trillion ($4,000,000,000,000) in more than 38 billion transactions each year, reports The Art of Not Being Governed, a bitcoin blog.  On each of those 38 billion transactions, MasterCard assesses fees to the merchant, accepting the payment. These range from .11% to .80% of the total, plus various fixed amount fees for each transaction. All told, it averages out to about 2% of every transaction.

“Bitcoin, on the other hand, charges little to no fees, and as such, poses a direct threat to MasterCard’s business,” says the blog, which reports that in 2014 someone moved $80 million on the Bitcoin network for a fee of $.04 (4 cents).

For the full Envision IP report, go here.

Image source: Managing Intellectual Property; Envision IP

 

USPTO Director Iancu will keynote 2018 IPBC Global in San Francisco

An impressive group of speakers, sponsors and supporters, led by USPTO Director and Undersecretary of Commerce, Andrei Iancu, will be featured at the 11th global Intellectual Property Business Congress in San Francisco, June 10-12 at the Palace Hotel.

Director Iancu has indicated that he will support the long-awaited move to greater certainty in the U.S. patent system.  In a recent speech to the U.S. Chamber of Commerce he said that “reclaiming our (U.S.) patent leadership is within reach.”

Attendees will be eager to hear about Director Iancu’s strategy for attaining this and other goals.

IPBC Global 2018 plenary’s and panels include:

  • Will the U.S. Continue to Lead in IP?
  • CIPO Scenarios: The Good, Bad and Ugly 

IP CloseUp editor, Bruce Berman (that’s me), will be a member of the patent quality panel:

  • Is patent quality a distraction? – all that really matters is patent eligibility

    -What is a quality patent?
    -Controversy around eligibility
    -The importance of predictability

For the AI panel, participants will include Bart Eppenauer, former Chief Patent Counsel at Microsoft and William LaFontaine, General Manager, IP, IBM.

  • The World of Artificial Intelligence 

For the IPBC Global 2018 program, go here.

For the full list of speakers and their biographies, go here.

To register, go here.

Image source: ipbc.com; ipwatchdog.com

Tax Cuts and Jobs Act: Some IP holders may benefit, most won’t

The Tax Cuts and Jobs Act of 2017 places some IP rights holders squarely in the sights of the tax collector, while providing others with an opportunity to license overseas without having to resort to international asset transfers to maximize returns.

Patent, trademark and copyright owners of all sizes would be wise to revisit the nature and tax implications of their transactions, including direct patent sales, as well as where their IP assets are best located. This is a direct result of the Tax Cuts and Jobs Act of 2017 (TCJA), the impact of which on IP holders is starting to be understood.

The new law is partly a response to businesses that hold massive amounts of revenue-producing assets outside the United States in so-called ‘patent boxes’ – devices which allow revenue on assets held within them to escape most local and all domestic taxes derived from IP-related revenue.

Like Wildfire

“Patent boxes have spread like wildfire,” Edward Kleinbard, former chief of staff of the US Congress’s Joint Committee on Taxation, now a law professor at the University of Southern California told the Intangible Investor. “Their success was doomed from the start. The international environment for intangibles and tax has evolved. With more products to license from sources worldwide and more revenue derived from them, these devices, which originally were restricted to a handful of nations, have become diffuse.”

The most famous (or infamous) product of the IP asset tax avoidance schemes, known as the “double Irish,” has been used by large corporations, including Facebook Inc, Google parent Alphabet, Inc and drug maker Allergan PLC.

The TCJA aims to lure IP locations back to the US, but whether the benefits are sufficiently attractive is still unclear. The Wall Street Journal coverage of the TCJA can be found here. For the American Enterprise Institute take on the Act, go here.

Rana Foroohar, a journalist who reports for the Financial Times, says in a video that a growing “tech-lash” (backlash) against the imbalance of power generated by U.S. tech giants extends to how they use proceeds from overseas licensing revenues to buy foreign bonds. Curtailing this activity has the potential to cause disruption in the bond market and interest rates, she says. Foroohar’s video clip on the potential ramifications of tax increases can be found here.

Self-Licensing

Rather than licensing to themselves (or the entities they control) to generate income that avoids taxes and use those proceeds to invest in corporate bonds, techcos might consider generating genuine IP revenues, as well as taking, and paying for, licenses they need from other holders.

For the full Intangible Investor story, “Identifying the impact of the US tax act,” in the May IAM magazine out this week, go here.

Image source: brodyberman.com

Cong. Collins & Jeffries, and expert panel, will look at innovation policy and IP on May 8 in Washington

WASHINGTON, DC –– What is innovation policy? What does it mean to U.S. competition and jobs? Who is responsible for it?

These are among the questions that will be addressed at an afternoon briefing held by the Center for Intellectual Property Understanding (CIPU) at the headquarters of the United States Chamber of Commerce headquarters in Washington on May 8.

The event will feature two leading proponents of IP rights, Congressmen Doug Collins (R-GA) and Hakeem Jeffries (D-NY), both members of the House Judiciary Committee, Sub-Committee on the Courts, Intellectual Property and the Internet.

“Innovation Policy and Intellectual Property: Building on a Strong Foundation” is being held by the Center for IP Understanding, an independent non-profit, and the Global Innovation Policy Center (GIPC), a division of the Chamber. Persons interested in receiving an invitation please contact CIPU at explore@understandingip.org.

Preceding the Congressmen will be a panel, “What is Innovation Policy? Why is it Necessary?” featuring leading experts on innovation, IP and the economy, including:

 – Manny Schecter – Chief Patent Counsel of IBM, board member of CIPU and the IPO Education Foundation
Alan Marco – former Chief Economist for the USPTO and now Associate Professor of Public Policy at Georgia Tech
Adam Mossoff – Prof. of Law at George Mason University, Center for the Protection of IP
Robert Atkinson – founder and President of Information Technology and Innovation Foundation (ITIF), an independent think tank

Discussion Will Follow

A networking break will follow the panel and a reception will take place at the conclusion of the program.

Go here for information about the “Innovation Policy and Intellectual Policy: Building a Strong Foundation.”

“U.S. innovation policy and IP focus are seriously lacking,” said Marshall Phelps, former Vice President of IP Business and Strategy at Microsoft and at IBM, and a CIPU board member. “Other nations take their policies more seriously. The timing is right to dissect what U.S. innovation policy means and how it effects jobs and competition.”

Briefing partners and supporters include the Michaelson 20MM Foundation, the Kellogg School of Management at Northwestern University, Berkeley Research Group, the Tusher Center for Intellectual Capital Management at UC Berkeley-Haas and Open Invention Network.

Image source: understandingip.org; nesta.org.uk; theglobalipcenter.com; 

 

Blockchain patent applications doubled in 2017 to more than 1,200

 1,240 blockchain patent applications were filed worldwide in 2017, up from 594 in 2016 and 258 in 2015. 

Among the leading filers were Bank of America, MasterCard, Goldman Sachs, Walmart, JP Morgan, and IBM.
According to data collected by the Korean Intellectual Property Office, and reported in CryptoCurrency, more than 1240 applications for blockchain-related patents were filed across South Korea, the United States, Japan, China, and Europe by the end of January 2018.

In December of 2017, CNBC reported that ‘patent trolls’ were coming for blockchain individuals and entire firms who seek to make fortunes off of amassing blockchain patents.

“Crush it”

“Nick (sic) Spangenberg, a notable patent entrepreneur,” reported the publication, said that his firm IPwe “is also looking to make big money by reforming the whole patent world.”

“It is a curious path how a collection of misfit trolls, geeks and wonks ended up here—but we are going to crush it and make a fortune,” said Spangenburg.

Image source: codeburst.io

China’s growth in European patent apps was three times the U.S. in 2017

The European Patent Office (EPO) 2017 annual report, recently published, revealed several surprising patent filing trends, including the rapid growth of China .

The People’s Republic of China filed 16.6% more applications last year than in 2016, three times more than the U.S., which filed 5.8% more.

The five most active patent filing companies were Huawei (China), Siemens (Germany), LG (Korea), Samsung (Korea) and Qualcomm (U.S.).

The U.S. comprised 26% of all European applications submitted in 2017; Japan 13%. German was the lead European filer with 15% of those coming from Europe and about 7% overall.

2017 European Patent Office Annual Report

Infographic with highlights of the EPO Annual Report 2017

 

After European patent filings dropped slightly in 2016 from 2015, they were up overall by 3.9% in 2017.

Top fields were Medical Technology, up 6.2%, and Digital Communication, up 5.7%. Transport was down 4.2%.

SMEs, individual inventors, universities and research institutions, comprised 31% of applications; larger enterprises 69%. Grants were up 10.1%. Among European nations, Denmark experience the greatest application growth, 13.1%

For the full 2017 EPO Annual Report, go here.

Image source: epo.org 

Pace of patent litigation declines; 2018 applications still flat

Early indications are that U.S. patent litigation for 2018 is on track to be among the lowest in since 2005.

So far in 2018, approximately 555 patent infringement suits have been filed (3,330 on an annualized basis). This is off from a peak of 5,874 in 2015, or an average of 979 every two months. In 2005, the lowest litigation filing year in recent memory, there were just 2,582 suits. In 2017, there were 4,072. January and February are early indications, and there is time for the rate to increase.

According to statistics provided by intellectual property research firm Patexia, January 2018 patent applications came in at 27,720, just 631 higher than 2017, 27,089, which was the lowest year for that month since 2012. February applications are running behind last year, which came in at 28,329 for the same month. Final figures are not yet in.

This trend in patent applications and litigation has been accompanied by a flattening of Inter Partes Review (IPR) petitions filed. IPRs have been fairly level for the past three years, peaking in 2017 at 1,725. So far this year (through February) there have been approximately 250 IPRs filed, putting 2018 on track for about 1,500, slightly below the last two years on an annualized basis. No information on the number or percentage of instituted petitions was provided.

Litigation, IPRs and CBMs Filed to Date

IPRs and Litigation

Difficulty obtaining software and business methods patents are a likely reason for the drop in U.S. patent applications, as well as the increased difficulty defending patents. Patent uncertainty and decreased need for defendants to take a license or engage in licensing discussions, as well as the high cost of litigation, are possible reasons for an increase in IPRs.

For Patexia live litigation statistics, go here.

Image source: patexia.com

E-cigarettes is the fastest growing patent class; followed by 3-D printing and machine learning

Vaping may not be a turn-on for everyone, but the fastest growing United States Patent and Trademark Office category over the past five years is e-cigarettes, with a compound annual growth rate of 45%.  

Much of e-cigarette growth, according to patent research company IFI Claims, who conducted the research, was in the subclass A24/47, “Simulated Smoking Devices.” The rapid growth within this classification may be due to full legalization of cannabis in some states, and prescription access in others.

Man smoking e-cigarette

Atria Client Services leads in this group with 90 published applications, followed by Philip Morris Products with 80.

The next fastest growing patent classification, with a five-year compound annual growth rate of 35%, is 3-D Printing. 2017 published application leaders in this area were General Electric (89), Xerox (78) and Boeing (50). HP Development came in at 48.

The third most active patent category at 34% was Machine Learning, sometimes known as artificial intelligence. Companies leading in predictive models and related areas include IBM (654), Microsoft (139) and Google (127). They were followed by LinkedIn, Facebook, Intel and Fujitsu.

Driverless Space is Active

Fourth from the top at 27% was Autonomous Vehicles, USPTO patent classification GO5D. Applications included automatic pilots for air and land vehicles. IBM was the leader in this category, too, with 80 published patent apps, followed by Ford Global Technologies (79), Shenzhen-based, SZ DJI Technology (63), followed by Toyota, Honda, GM and Bosch.

The remainder of the top eight looks like this: Moulding Materials, 27% (Boeing, 3M Innovative Properties, Saudi-based SABIC Global Technologies, Honda, Xerox, Nike and Hyundai); Hybrid Vehicles, 26% (Toyota, Ford, Hyundai, Honda, GM, Scania and Kia); Aerial Drones, 26%, (Boeing, Sikorsky, SZ DJI Technology, Airbus GmbH, Goodrich Airbust Ltd., and Bell Helicopter Textron); and Food, 24% (Nestec (related to Nestle), Abbott, Danone Group division, Nutricia, Dutch multinational DSM IP Assets, Malaysian-based sweetener producer, PureCircle, Conopco (Unilever) and Mars.) This classification is called “Foods, Foodstuffs or nonalcoholic beverages.”

For the complete “Eight Fast Growing Technologies” slide deck, go here.

Image source: ificlaims.com; psu.edu; nebraskamanufacturing.com; datasciencecentral.com

 

Why a $1.6B billion law suit for non-payment of royalties is not likely to affect Spotify’s March IPO

Spotify recently filed confidential plans for an initial public offering to take place on March 31 on the New York Stock Exchange were thrown a curve when it was sued by Wixen Music Publishing for damages of at least $1.6 billion and injunctive relief. 

Wixen accused the Swedish company of streaming thousands of its their artists songs without compensation. Wixen’s 2,000 members include Tom Petty, Neil Young, the Doors and the Beachboys, which Variety says represent between 1% and 5% of music streamed.

Spotify has an estimated valuation of about $19 billion and $3 billion in annual revenues. As of fall 2017, the leading streaming platform had accumulated 140 million regular users, including 60 million paid subscribers. Initially, its shares will trade privately, allowing some early investors to cash out.

It would be the first major company to carry out a direct listing, an unconventional way to pursue an IPO. Spotify plans to simply list its shares on the NYSE and let them trade, and, for now at least, will not raise additional capital.

Silver Lining?

Horacio Gutierrez, Spotify’s General Counsel, was recruited from Microsoft in 2016 where he learned the licensing business under the stewardship of Marshall Phelps, an IP licensing pioneer. Before establishing MS’s leading patent licensing program, Phelps helped generate more than $1billion in annual royalties for IBM.

My money is on Gutierrez to settle this suit in a timely manner and for Spotify to move on, uniquely positioned for success.

“Forcing Spotify to step up and enter into an agreement with a major publisher that is fairer to its artists may expose the streaming site to similar deals, but it will also solidify its reputation as the content leader amid streaming services,” an industry observer told IP CloseUp. “It will likely set a precedent for others industry deals of this nature and make it more difficult for Pandora, YouTube, and others to continue paying token royalties.”

Wixen’s lawsuit, reports Rolling Stone, follows several other lawsuits that have focused on Spotify’s alleged failure to pay [appropriate] royalties on a song’s musical composition. Recorded songs have two separate copyrights: The sound recording, which is typically owned by the record label, and the musical composition (also known as the “mechanical license”), which is owned by the songwriter and publisher.

In 2017, Spotify settled a class action brought by Cracker front-man and artists rights activist, David Lowery and another artist, for $43 million.

Proposed Changes

In the meantime, the Music Modernization Act, a bill introduced in the United States House of Representatives on December 21, would impact copyright holders suing over mechanical reproduction after Jan. 1, 2018, which helps explain the New Year’s Eve lawsuit filing.

“We are very disappointed that these services will retroactively get a free pass for actions that were previously illegal unless we actually file suit before Jan. 1, 2018,” said Wixen president Randall Wixen in a statement to The Hollywood Reporter. “Neither we nor our clients are interested in becoming litigants, but we have been faced with a choice of forfeiting rights and damages, or taking action at this time.”

Image source: slashergear.com; wikipedia.org

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