Tag Archives: IBM
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Center for IP Understanding is started by leading IP execs to raise awareness, improve attitudes

The Center for Intellectual Property Understanding (CIPU), an independent, unaffiliated non-profit dedicated to increasing IP awareness and improving negative attitudes towards patents, copyrights and other rights, was launched in New York last week. 

As reported in IAM, Law 360, World IP Review and other publications, the non-profit Center for IP Understanding was founded to address the uncertainty among audiences regarding patents, trademarks, copyrights and trade secrets — especially who do they benefit and their impact on new ideas and jobs.

“[The Centre’s] creation is in many ways a response to the battering that IP’s public image has taken over the last several years,” reported IAM blog, “particularly in the US. In that time a series of Supreme Court cipulogodecisions are widely seen to have undermined patent rights; the idea of efficient infringement has taken root; and the ‘patent troll’ narrative has gained wider traction in many parts the media.”

Outreach

Executives and advisors involved in CIPU on the board of directors or as informal advisors include Marshall Phelps (Microsoft, IBM, retired), Brian Hinman (Philips, active), Keith Bergelt (Open Invention Network, CEO), Harry Gwinnell (Cargill, Eastman Chemical, retired), and trade secret expert James Pooley (Orrick).

Also helpful in getting CIPU underway were Judge Paul Michel (Court of Appeals for the Federal Circuit, retire), David Kappos (Commissioner of the USPTO, retired) and film producer and author Irv Rappaport, former chief patent counsel at Apple and Medtronic, who has generated more than 20 patents, and Jonathan Taplin, a film producer, author and Director Emeritus of the Annenberg Innovation Lab a the University of Southern California’s Annenberg School for Communication and Journalism.

Among the CIPU’s goals for 2017 are a survey of IP awareness and attitudes among the general public and business owners; a research report on trends in media coverage of patent disputes; and a possible joint conference with Duke University on Innovation Policy.

The Center for IP Understanding also plans to provide outreach to educators, parents and business that help to facilitate better IP behavior.

Cultural Shift

“We have entered the ‘free-information’ era, where online content and patented inventions are readily pocketed by those who would never dream of shoplifting,” said Bruce Berman, CIPU Chairman, and CEO of Brody Berman Associates. “Products like music, books, novel designs, inventions and counterfeit goods appear to be there for the taking – or feel as if they should be. Uncertainty about what IP rights cover and their appropriate use compound the problem. CIPU will address these and other issues.”

“IP confusion is costly for consumers and businesses alike,” said Vice-Chairman Marshall Phelps, who is a member of the IP Hall of Fame. “Free-riders – unauthorized users of IP-protected products and works – come in many shapes and sizes. They impact performance and investment, as well as job creation. IP awareness and acceptable behaviors are too important to be left to audiences to decide on their own.”

For the IAM story go here.

For the Law 360 article go here.

For the full launch announcement go here.

For more information about the Center for IP Understanding, please visit www.UnderstandingIP.org. 

Image source: The Center for IP Understanding

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Pre-IPO Snap, with $25B valuation, paid $9M for 245 IBM patents

A soft market for patent licensing has not stopped the right patent portfolio from commanding a respectable price from the right buyer – at the right time.   

Snap, the corporate parent of Snapchat, reported recently in its S-1 pre-IPO filing that it had acquired a strategic patent portfolio from IBM, according to PatentVue, the data-focused IP blog.

In a well-researched post, PatentVue reports that approximately 245 of Snap’s 328 issued patents have been purchased from IBM.

“While the terms of its patent acquisition from IBM were not made ibmpublic,” says Maulin Shah, Managing Partner of Envision IP, “and with no mention of this patent transfer in the S-1, it appears that Snap may have paid roughly $9-10 million for the 245 patents and 207 pending US patent applications from IBM.

Excluding the patent applications, this means roughly $36-40k per patent.

Twitter acquired 945 patents from IBM in 2014 for a reported $36 million, in an effort to settle patent infringement claims brought against it by the technology giant. This comes out to approximately $38k per patent, again, excluding patent applications.

Similar Strategies

“Snap and Twitter’s patenting strategy at this point appear to be very similar,” concludes Shah, “with the vast majority of both portfolios predominately made up of acquired patents from IBM.”

The current IAM magazine features an article, “Big Blue’s new groove,” which examines IBM’s evolving patent strategy, and lists 34 patent and portfolio sales Big Blue has made between 2014 and 2016. Buyers include LinkedIn, Hulu, snap-ipo-riskRed Hat, Global Foundries and Lenovo. IAM subscribers can find the article here.

Snap, Snapchat’s parent, expects to raise approximately $3 billion from an initial public offering this spring. Despite a $25 billion valuation, Snap lost $514 million last year.

Facebook, Twitter, LinkedIn and others all sought patent portfolios before they went public, in part to justify their valuation, and perhaps because they had the cash to justify the instant leverage provided by a meaningful portfolio.

Today, patents’ more abstract M&A or financial transaction value can be more meaningful that its direct licensing or revenue-generating value.

The PatentVue post, can be found here. The blog’s original coverage of Snap’s mobile messaging patent acquisition, here.

Image source: computerweekly.com; techcrunch.com

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Experts: Void from U.S. patent “train wreck” is being filled by China’s patent system

In a few short years China’s patent system has gone from an IP rights wannabe to one of the most responsive and patent-friendly systems in the world.

Leading U.S. IP experts say that underlying this rapid evolution is a desire for China to become a science and technology powerhouse, with the ability to create new and formidable industries that employ many of its 1.4 billion people.

“China wants to be an innovation leader for multiple reasons,” Irv Rappaport, former Chief Patent Counsel at Apple and National Semiconductor, who served on the Uruguay Round of GATT, told IP CloseUp recently. “It is fascinating to see how the U.S. patent system is imploding, while the Chinese system is exploding with activity and purpose.

“For more than a decade the U.S. has been emasculating its patent system, while the Chinese have been studying it and adopting the benefits of a well-coordinated and fast-moving one. The U.S. has gone from being on the global cutting edge in IP in the 1990s, to becoming a patent backwater, because of a well-heeled, anti-patent faction among technology companies that want to stifle competition.

“Train Wreck”

“China has watched the U.S. train wreck and is moving fast to fill the void,”continues Rappaport. “It wants to become the world’s ‘Eastern District of TX,’ that is, a fair and fast adjudicator of disputes that respects patent holders’ rights. China will soon be the world’s largest economy with the biggest population and a middle class the size of England, France and Germany combined. Their commitment to innovation can not be ignored.”

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Peter Holden, CEO of ipCreate and former managing director with London-based Collar Capital and a founding executive with IP Value, has worked extensively with Asian companies and patents. He has traveled to Korea, China and Japan more than 100 times over the past twenty years. “The Chinese have learned from the U.S. and are sincere about making their IP system the best — one that will encourage innovation and help their nation to become the economic leader. It is not merely a thought. It’s an idea that they are dedicated to.

“China’s attitude towards foreign patent enforcement may not always be as generous as it is currently. It knows that it needs to bend over backwards to be fair if it is to be taken seriously on a global scale. To encourage competition there needs to be a level playing field.”

Counterfeits Still Rule

But China’s record on counterfeits is poor, with everything from luxury goods to pharmaceuticals sold domestically and exported globally. According the U.S. International Trade Commission, Chinese theft of U.S. IP in 2009 alone cost almost one million U.S. jobs and caused $48 billion in U.S. economic losses.

“Counterfeit goods are still an issue for China,” says Erick Robinson, a patent attorney in Beijing and author of Defending a patent case in the brave new world of Chinese patent litigation, in the current issue of IAM magazine. “However, sales of fake goods are no longer openly accepted and the government has been on the war path trying to stop them in different ways. Authorities know that in order to be taken seriously about IP rights, they cannot ignore the problem of counterfeit goods.”

For a prior IP CloseUp post summarizing the Robinson article, go here.

“Go-To” Jurisdiction

China is just beginning to build its giant tech companies. They have succeed with Alibaba and Huawei, and acquired Lenovo from IBM, which is now a $45 billion (USD) business. Their big businesses currently have less to lose from strong patents and quick dispute resolution than those in the U.S. and Europe. To create successful businesses and attract investment, incentives need to be provided, and strong patents and a reliable legal system for adjudicating disputes are great for encouraging that.

Perhaps when China has as many big tech players as the U.S. it will start to think more defensively, but for now it is the perfect setting for encouraging new ideas with strong patents and courts that make it easy to obtain injunctions.

“It’s interesting that the Chinese are encouraging large foreign corporations to sue non-Chinese companies in China,” opines Rappaport. “This suggests that they are looking to become the patent litigation go-to jurisdiction.” As their innovation grows and becomes more complex, I believe they will have less interest in exporting cheap knock-
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offs.  Their IP path is similar to that followed by many of today’s developed economies, such as Japan and South Korea.  You start off copying others and gradually move to internal innovation.”

Despite China’s success in facilitating stronger patents and more decisive courts, a huge question is just how prominent a role will patents play in new companies in a data-driven information age.

“Given the accelerating pace of technology development and nature of discoveries, which are frequently software driven, it’s not clear whether existing patent systems can remain relevant in the longer term,” says Rappaport. ” This effect may partially explain why patents currently seem to be less relevant in the U.S.  It remains to be seen whether this is a longer term development. It is a development that needs to watched.”

“100% Win Rate”

“Trust the Chinese government to do what is best for the Chinese people,” reminds Beijing-based Robinson. “It’s less about assisting foreign patent holders than establishing a really viable IP system that encourages innovation and growth, and that attracts foreign investment. Forty-percent of the smart phones in India are currently manufactured by Chinese companies. Innovation coupled with enforcement will drive China’s new businesses and help them grow.”

As reported by Robinson in IAM, “foreign plaintiffs notched a 100% win rate [65 – 0] in civil cases heard by the Beijing IP Court last year, according to a judge who has been on its roster since it was established in 2014.”

Wake-Up Call

A decade of weakening has taken its toll on the U.S. patent system and patent holders. It will not be quick to recover unless a concerted effort can be made to take IP rights seriously. Allowing U.S. patent policy to be dictated by those with the greatest financial success and market share may be appealing to shareholders, but it is not necessarily what is needed for the nation to remain competitive in a global economy, and to generate new businesses and jobs.

Hopefully, the wake-up call comes soon for the U.S. and it can retain the title of innovation leader it has held since the 19th Century but is slipping away.

Image source: insideiim.com; chinapatentblog.com; wsj.com

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Post-election “Patent Law & Policy” conference to be held in Washington

Many businesses are wondering what the patent terrain will look like after the U.S. elections in November.

Will further reforms will be forthcoming, or will there be a move toward stronger patents and greater certainty?

On November 15, the Tuesday following election day, at Washington DC’s Reagan Conference Center, those attending the 2016 Patent Law and Policy will be in a better position to find out.

Capitol Building in Washington DC USASpeakers assembled for this year’s IAM Patent Law and Policy conference will include senior government officials, members of the judiciary, corporate patent leaders, private practitioners and investors, who will discuss how court decisions and legislation are affecting US patent values and strategies.

The keynote speaker is US Patent and Trademark Office Director Michelle Lee. Other speakers include the chief judge of the Patent Trial and Appeal Board, David Ruschke, ex-USPTO Director David Kappos, and former Federal Circuit Chief Judge Paul Michel.

Also participating as speakers or panelists will be senior representatives from companies closely involved in the ongoing patent reform debate, including: GoogleQualcomm, Johnson & Johnson, Bristol-Myers Squibb and IBM. Lead counsel in two of the pivotal Supreme Court patent cases of the last decade, KSR v Teleflex and Cuozzo v Lee. Also present will be as several high-profile patent investors.

IP CloseUp readers are able to receive $100 off the $895 fee if they use the discount code PLAP100 (offer valid until October 7 2016).

For the complete program and speakers, go here. For registration go here.

Image source: ipo.org; ipwatchdog.com

 

 

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Will blockchain technology fuel a new patent war or prevent one?

The race is on to gain control of a new technology that has the power to reinvent banking and make transactions and other agreements between parties cheaper, safer and easier to complete.

Like disruptive inventions that preceded it, blockchain has businesses, large and small, jockeying for leadership. This means that patents are likely to play a significant role.

Blockchain is a shared database of transactions and other information, which is open to all and controlled by no one. It also can function as an autonomous semi-private network.

Blockchain began life as the trading infrastructure that permits secure recording of payments for bitcoin, the fledgling crypto-currency. But in the right hands the technology is capable of much more. A blockchain can handle complex transactions, even entire contracts.

IP Windfall?

It is no surprise that competition is building for patents that go beyond bitcoin and cover inventions that support a distributed public ledger. Call it blockchain 2.0. The race among a variety of disparate players is not likely to be a repeat of the smartphone wars, but it does have the potential to create an IP licensing windfall for early movers, leaving some volume users to pay unanticipated royalties.

The shared nature of blockchain (see diagrams below) makes it unlikely that any one or two players will explicitly control the technology. However, that will not prevent some patent holders from trying to profit.

The blockchain is a public database that by-passes money-based payments by recording all transactions screen-shot-2016-03-04-at-42158-pmdigitally. It forms the core of bitcoin and other crypto-currencies by maintaining a decentralized record of all transactions. Proponents say it has the potential to disrupt financial services by making payments and the settling of securities transactions, in particular, far cheaper. Reuters reports that financial institutions alone are expected to invest $1B this year and next in developing blockchain.

Some companies, like IBM, are hoping for a more open system, in the vein of Linux, while others, mostly software developers and some banks data carriers, are looking to have an IP leg up on the competition and to keep the technology at least somewhat proprietary. This would give non-financial and other players a chance to profit from licensing and encourage more investment.

Mysterious Origins

The story of blockchain and its early promotion as the technology underlying bitcoin is fascinating if not mysterious. It appears to start with Craig Wright, who claims to be the pseudonymous creator of bitcoin, Satoshi Nakamoto. Wright, an Australian, recently announced that he has filed 50 blockchain technology and crypto-currency related patents in the UK. Why the UK? That’s another question. And why has Wright announced his applications rather that wait to for them to issue or publish?

Where there are bitcoins and other crypto-currencies, reports, CoinDesk, an industry publication, there are patents, which could be worth far more than the currency if found to be valid and infringed. However, these patents will be difficult to prove valid. The USPTO and most courts (after the Supreme Court’s 2014 decision in Alice) are now taking the position that most software is not inventive, and merely automates previously established inventions.

However, not everyone agrees. Two Hogan Lovells attorneys say that “Viewed as providing an improved computer data structure, [our] proposed bitcoin method claim should be precisely the type of improvement to computer functionality that is still patentable under Alice.”

Blockchain patent applications have generated an unusual amount of publicity. Whether these patents will issue or if they are capable of sustaining validity upon PTAB and district court scrutiny is unclear. Business Insider obtained a copy of the US patent, filed on May 10, for a passcode blockchain that Verizon has apparently been working on for three years.

“There is quite a bit of excitement about having digital rights on a blockchain-type system. It could allow for pay-per-usage, for example, while smart contracts — the contractual clauses that form part of a transaction — could provide automatic payment distributions, according to a Moody’s Investors Service report.

“A blockchain of digital rights for consumer products — music and news articles, among others — could ensure that artists or authors are paid immediately once a consumer reads an article or listens to a song, with funds proportionally distributed as per contractual clauses.”

Goldman Sachs is among the big banks excited about the blockchain. Thirty banks have now signed up to the R3 or R3CEV partnership. R3, based out of New York, is trying to establish industry-wide standards and protocols for using the technology, as well as exploring potential use cases.

Business Insider’s coverage of blockchain is very useful for getting a handle on how it works and may be applied. Go here for a stream of articles with useful diagrams, including the triptych in this post.

Establishing Blockchain Standards

Establishing standards for blockchain will also be difficult.

R3 CEV, a startup working in blockchain which launched in September 2015, reports the Wall Street Journal, named the project Concord for the harmony it hopeblockchains to build among more than 60 banks participating in the project. The consortium originally started with nine multinational banks. The group currently includes Barclays PLC, Goldman Sachs Group Inc., and J.P. Morgan Chase & Co.

“Perhaps the most important difference between Concord and bitcoin and ethereum is the way transactions are recorded. With bitcoin and ethereum, every transaction is recorded, verified and disclosed immediately in their public, distributed ledgers. With Concord, while the transaction is verified via a distributed ledger, it isn’t publicly disclosed. The details are shared only by the parties involved.

“Figuring out the best way to use blockchain-based tools in the financial-services industry has become a hot topic. A number of firms, including Digital Asset Holdings, HyperLedger Project, Ripple, Microsoft’s Azure, and others are all working on products to take advantage of the new technology.”

A number of companies of various types and sizes have filed blockchain or related crypto-currency patents. The emphasis on patent applications, as most people in the IP world know, is more style than substance. CoinDesk reports eight companies filing and Quatrz comments on ten Bank of America’s patent applications publishing on December 17.

Leading patent recipient IBM is taking a more holistic approach to blockchain, integrating it under a recently announced new business unit, Industry Platforms, that includes cloud computing and artificial intelligence, and that will work closely with the financial services and other industries.

Industry Platforms will have company-wide responsibility for blockchain research and development, according to CoinDesk, in addition to helping foster open technology standards with the stated goal of accelerating market adoption. Project-based innovation leveraging open source technology has had great success in avoiding litigation in the core technology generated by these projects.

The new unit represents the next phase in IBM’s blockchain initiative, building on past activities that have resulted in a range of prototypes, and play a leading role in the Linux Foundation-led HyperLedger Project. In parallel and with the support of R3, HyperLedger is the largest and most organized Blockchain initiative.

“Truth Telling” Design

“Blockchain’s design prevents the owner of a currency token from committing fraud by spending it twice,” reports Bloomberg Business Week. “The first spend is recorded for all to see, so no one would ever accept a second spend.

alaindelorme-murmuration03“The truth-telling feature of blockchain makes it enormously useful to banks, which have been among the first to start testing it. Microsoft launched blockchain as a service last year. Smaller companies are building dozens of apps on blockchain, such as one for musicians to track and collect royalties on their works.”

“The poetic vision of a blockchain society is a flock of starlings at dusk: decentralized yet perfectly coordinated. Blockchainers like to show video clips of murmurations—those enormous clouds of birds that pivot and wheel, climb and dive, split and merge with amazing grace. Blockchain, in this vision, could replace gobs of bankers, accountants, and lawyers, as well as escrow accounts, insurance, and everything else that society invented pre-21st century to verify payments and the performance of contracts.”

Benefits for IP Holders 

The promise of blockchain to streamline important, voluminous tasks is uniquely important to IP holders. It could provide an opportunity to copyright and other IP dependent businesses and individuals (patent holders, too) to track and receive incremental payments that in the past were difficult to comprehend; blockchain could serve to minimize disputes in ways that the courts and PTAB have not.

Right now, no one really knows what blockchain has wrought or what it is capable of, but there is a strong feeling that the distributed public ledger technology can be a catalyst for new ways of doing business, and that IP rights will play a role. There are a lot of businesses pulling for blockchain to succeed, and hoping that it will be will be readily shared.

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UPDATE:

A Goldman Sachs patent application, published by the US Patent and Trademark Office (USPTO) on Sept. 8, 2016, was originally filed in March 2015. It outlines a distributed ledger that can process financial transactions in the foreign exchange market, reports Quartz. It’s Goldman’s first blockchain-related patent.

Image source: Goldman Sachs Global Research; businessinsider.com; mnn.com (Alain Delorme)

2015 Patents Top Ten

A record number of major holders were granted far fewer US patents

Many significant tech companies experienced dramatic declines in US patent grants, fueling speculation about the reasons why. 

While total patent grants were virtually flat, according to USPTO data, down just 53 patents from 326,032 to 325,979, and utility patent grants and applications were up, many top US holders received significantly fewer US patent grants in 2015. Patent reform and uncertainty are the most likely reasons why.

Notable declines in patents received include Microsoft, off 17.2%, Sony, down 23.8% and AT&T, which dropped 31.3% after increasing 14.4% in 2014. The immediate result has been a noticeable drop in US patent grants received in 2015 by information technology companies, both domestic and foreign based. Japanese companies led the foreign declines.

Businesses of foreign origin were issued a record of 52.8% in 2015 US patents. US company patent applications abroad was likely up.

Digesting the Declines

Fifteen of the top 26 US patent recipients (58%) were granted fewer patents by the USPTO in 2015 than in 2014.  Even IBM, a leading patent recipient for more than two decades, was down by 0.5%. (See IPO top 300.)

Bucking the trend with net increases among top ten patent recipients include Qualcomm, Google GE , Intel and Samsung Display. Biggest percent increases among the top 300 were from NXP Semiconductor (147.9%), Amazon Technologies (53.3%) and Ford Global Technologies (49.1%).

These are in contrast to 2014, when top US-based patent recipients were all up (see 2014-2013 chart below).

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Litigation Down, Too

It is too early to be certain about why the issuance declines among major IT holders are occurring, but if it is in keeping with the recently announced 30.7% drop in patent litigation for the first half of 2016 (see IAM story), a pattern may be emerging.

What this means for some major technology companies is that patent quantity is no longer king. The arms race may be abating, somewhat. It also indicates that US patents mean less today to many companies than in the past, and paying to secure and enforce all but the best few may no longer makes sense. (I will try to cross-check this with US company foreign filing in a future IP CloseUp.)

Decreases in IT company patent filings can be interpreted in several ways.

The Intellectual Property Owners Association (ipo.org) list of top 300 US patent recipients for 2015, published recently, illustrates a downward trend, with some exceptions noted above. It is difficult to tell whether NXP, Amazon and Ford are playing catch up or see an opportunity that others do not. Also, is it that semiconductors, e-commerce and financial transactions, and automotive are inherently more innovative and potentially combative.

“A combination of factors”

Clearly there are many IP rights in portfolios that should never have been issued, and would be invalidated under further review. Also, patents are less reliable than ever, so why bother? It may be that some companies want to rely on fewer, better quality patents, for freedom of action, but it also may be that they see less value in obtaining them or in identifying new inventions.

“It is a combination of factors,” one veteran patent attorney and analyst told IP CloseUp. “Businesses are seeking better patent quality, and chartoftheday_4260_top_10_patent_recipients_n
USPTO examinations are getting somewhat tougher. Also, there is 
pressure on software patents from the courts, frequent PTAB invalidity rulings, and a general anti-patent environment. Weaker corporate balance sheets also have led to cost cutting.”

The America Invents Act and PTAB reviews have made it much more difficult to license patents, and have diminished their defensive value, too. Patents role in some businesses’ corporate strategy and ROI is under scrutiny.

Interestingly, despite the 2015 drop in patents to top holders, corporate patent buying activity was relatively high. Rock bottom prices may have made portfolio purchases attractive to some.

Patent-dubious Google, which has been an active buyer through various programs (e.g. experimental Patent Purchase Program), as well as a more active filer, experienced a 10.9% increase in patents received in 2015. In 2014, it was up by 31.6%.

Image source: patentdocs.com; aulainip.com; statista.com

 

 

 

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Engaging IP book for students is free via iBooks or PDF, $.99 Kindle

The US intellectual property system has been the envy of nations everywhere. Despite this, confusion reigns about what are patents and other IP rights, and whom do they serve.

A new book has been published that makes it easier for college students and non-IP professionals, including inventors, engineers and investors to understand how IP rights work in the real world and how they affect peoples’ lives.

In an increasingly digital, knowledge-driven economy, an understanding of IP rights needs to be part of a core curriculum. The Intangible Advantage: Understanding Intellectual Property in the New Economy serves that mission admirably.

Compiled by an all-star team of writers, jurists, lawyers and professors, The Intangible Advantage (TIA) explains in clear, non-technical prose how the IP system works and the many audiences (aka stakeholders) it benefits. TIA is a revealing journey through the history and practice of IP in the United States. It is the first comprehensive text book for students that explains the IP system’s strengths and weaknesses, and dispels many of the myths surrounding them.

Clear and Concise

Chief writer, David Kline, is co-author of Rembrandts in the Attic (HBS Press), the first serious book about patents for business managers and investors. Kline is a former Pulitzer-nominated war correspondent, who has contributed to many business and news publications.

Serving as the book’s executive editor was David Kappos, Under Secretary of Commerce and Director of the United States Patent and lockup-ipad-verticalTrademark Office, 2009 to 2013. Prior to that Mr. Kappos was chief IP counsel at IBM. Also integral to the project was Hon. Paul R. Michel, Chief Judge for the Court of Appeals of the Federal Circuit (CAFC) who sat for 22 years on the bench, from 1988 to 2010. CAFC is the the highest patent court.

Giving Back

The Intangible Advantage is published by the Michelson 20MM Foundation. Established by Dr. Gary K. Michelson, an inventor, a spinal surgeon who responsible for 340 issued US patents and 953 worldwide. Dr. Michelson sold his company for $1.35 billion to Medtronic in 2010 as a settlement in a patent dispute.

The Michelson 20MM Foundation supports and invests in leading edge entrepreneurs, technologies, models, and initiatives with the potential to improve post-secondary access, affordability, and efficacy.  Dr. Michelson also founded the Gary Michelson Medical Research Foundation, which since 1995 has supported forward thinking initiatives in medical science by leveraging the collaboration of engineers, scientists, and physicians to solve real world problems; rapidly moving medical advancements into our society.

Separating Truth from Myth

The Intangible Advantage is written with clarity and charm, a Kline’s trademark that can be found in the books and articles about IP that he has written under his own by-line and those he has co-authored. IP professionals as well as students will gain from the historical insights the book provides, such as that despite media and hoopla about “trolls,” patent trials have remained virtually flat at around 100 for 30 years.

Given the explosive increase in patent filing and grants — About 325,000 US patents were issued each in 2014 and 2015 alone, and there are literally millions in force — the number of disputes that go to trial is extraordinarily low — not what the media would have us believe.

static1.squarespaceWhat The Intangible Advantage does exceedingly well is explain the US patent system and how rights can be used productively. It reminds readers that the system exists to facilitate sharing information about new inventions and stimulate new business, not to keep inventions secret or deter commerce. US IP rights differ markedly from others, especially the 18th and 19th century English system, which was more closely associated with privilege and class. The book underscores that the US system strives to use IP, especially patents, to level power, not to wield it.

TIA is un-intimidating at just 287 pages (1320 KB), a good length for those who want to know more without getting into legal minutiae. The book is available at iBooks for free and on Kindle for just $.99. An inexpensive print-on-demand edition (under $10) is also available. I downloaded a copy to my Kindle in about 15 seconds and read it over several days.

Start Learning Now

For the free iBooks version, go here or to your iBooks app store.

For the 99 cent Kindle version, go here or to the Kindle store.

For the $6.68 print on demand version, go here.

For the free standard Widows PDF version, go here.

The main Michelson 20MM Foundation resource page provides additional information.

In addition to Kline, editorial credits include:

Randall E. Kahnke (Author), Robert G. Krupka (Author), Kerry L. Bundy (Author), David Kappos (Editor),Paul R. Michel (Editor), Phillip J. Kim (Editor), Mayra Lombera(Editor), Marisa S. Moosekian (Editor), Gary K. Michelson (Preface).

The book is accompanied by a series of 3-minute animated videos available on YouTube answering such common questions as “Can I Patent That?”“Is it Fair Use or Infringement?” and “What If Someone Infringes Your Trademark?

Education – the Future of IP

IP literacy is no longer an option, it is a requirement. A rudimentary understanding IP rights and the patent system is essential for individuals to excel in a knowledge-based economy.

Until recently intellectual property has been taught primarily in law schools or the occasional business school seminar. The history and use of US IP rights is an amazing success story, whose impact needs to be conveyed accurately to wider audiences, and repeatedly over time.

The Intangible Advantage – not to be confused with my 2015 book, The Intangible Investor – is the first IP text book for non-IP professionals, especially college students, that makes it easy to learn about an integral part of American history and commerce.

Image source: 20mm.org; michelsonip.com

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Automobile industry convergence is the focus of Detroit IP conference

Over the past ten years or so the motor car of the 20th century has been transformed from a mechanical conveyance to a high-speed information technology platform.

Cars today draw upon networks of complex inventions and intellectual property rights that are destined for licensing and disputes.  

IP in the Auto Industry: Challenges and Opportunities in a Converging World will address these and other issues at an event that will take place at the Ford Motor Company Conference Center in Dearborn on May 3.

Speakers include Nick Psyhogeos, President of Microsoft Technology Licensing LLC, Kevin Rivette, co-author of Rembrandts in the Attic, and a former Apple, IBM and Nissan advisor, and William Coughlin, President of Ford Global Technologies.

IP CloseUp readers are being offered an exclusive discount of $150 off the full delegate rate. Register here by April 29 for an opportunity to network with over 100 thought and market-leaders. Use code IPCLOSEUP3 to receive the discounted rate of $745.

On April 12, Ford made public plans to build a state-of-the-art world headquarters campus designed by SmithGroupJJR, the same architecture and engineering firm that designed offices for Google, Microsoft and Tesla.

The redesign comes as automakers compete with Silicon Valley and Seattle to hire engineers, designers and other tech-savvy workers who will design the autonomous and electric cars of tomorrow.

Ford’s corporate-campus overhaul comes as Toyota is preparing a new North American headquarters in Plano, Texas, and as General Motors continues a $1 billion renovation of its Tech Center operation.

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“The focus on IP in the auto industry has intensified at all levels,” said Richard Lloyd, conference producer and North American Editor of IAM Magazine. “Issues such as branding, reputation management and counterfeiting are moving up the corporate agenda, while technological convergence means that patent protection and enforcement, licensing and collaboration have become more important than ever.”

IP in the Auto Industry will feature contributions from over 25 industry-leading companies, addressing the following issues:

  • Securing 360-degree protection – featuring representatives from Cooper-Standard AutomotiveHarman International and Tenneco
  • The implications of convergence – FordMicrosoftPanasonicUnited Technologies
  • The impact of new market players – 3LP AdvisorsUnified Patents
  • The development of robust policing programs – Cellport SystemsHarley-DavidsonMotor & Equipment Manufacturers Association
  • Spare parts and the after-market – FordGeneral Motors
  • Managing brand reputation – Dezenhall ResourcesMarx Layne

For the final conference program and the full speakers’ list go here. To register go here.

IP in the Auto Industry is produced by IAM in conjunction with World Trademark Review. 

Image source: autoalliance.org; globebcg.com

US-Patents

Samsung is the leading US patent holder, 24,000 ahead of IBM

Of the top eleven active US patent holders, only four are American companies.

But who gets the best return on their innovation rights is less clear. 

It is no surprise that many foreign companies are significant US patent holders. The leader in active US patents, Samsung, with 63,434, is now more than 24,000 issued invention rights ahead of the American leader, IBM, with 39,436. But US patentees are learning that they do not all need to be top banana to succeed.

What this tells us is that for some companies – especially foreign ones – the quantity of US patents still counts, even if quality appears to be somewhat of a moving target. And besides, big technology companies seldom put their patents to the test. US-Patents

“Depending on the stage of a corporation’s development, intellectual property may be a primary value driver,” according to an article, “The largest US patent portfolios are shrinking,” by Michael Chernoff of MDB Capital in the May IAM magazine.

“This list provides insight as to whether a company’s portfolio has been growing and the impact that those assets appear to be having within their technology verticals.”

Big and Growing

Of the top 100 holders, Alphabet (Google) had one of the highest three-year compound annual (patent) growth rates (CAGR), 16%. They were outdone only by Apple, 19%, Ford, 19% and Taiwan Semiconductor at 22%. Huawei’s CAGR was a 26%, but on a lower base.

Alphabet is #12 and Apple #26 on the top 100 active US patentees list. Microsoft is now four, displacing Panasonic.

Seven entities moved up the ladder and made it onto the US Patent 100 list during the last year: Avago Technologies (36), Kyocera (81), Merck (84), Huawei (86) Caterpillar (97), EMC Corp (98) and Halliburton (100). While most of these new entrants won their place as a result of sustained IP development, some are due to significant acquisitions, as noted in Chernoff’s article. (I understand that Google also, has been an active acquirer.)

Getting vs. Having 

While IBM has received the most patents granted by the USPTO every year for the past twenty years, or so, it does not have the most active US patents. Samsung does, and Canon has inched ahead of IBM.

2015-Patents-Top-Ten-IBM

This is one area where lack of leadership can be strength. IBM allows many patents to lapse once it knows that rivals will not secure them or they are not likely to provide much value. The company also generates many defensive publications that prevent others from securing patents on inventions it may wish to use or build trade secrets (consulting “know-how”) around.

Because IBM is more selective and may have a greater number of quality assets than some of its foreign rivals, the company’s patent portfolio is likely more relevant for out and cross-licensing, and occasional sales, which in past years it has engaged in with the likes of Facebook, Twitter and Google. Fewer active US patents also means lower maintenance costs.

Image source: http://www.diyphotography.net; www.thenextsiliconvalley.com

Top 4 Patent Sellers

Panasonic, NEC & Sony are battling with IBM for patent sales leadership

Despite dramatically lower patent valuations, some big companies, including under-performing foreign holders, have taken the number of U.S. sales to new highs.

While IBM still leads, over the past three and a half years, it has been joined by IP-conservative firms from Japan, notably Panasonic/Matsushita, NEC and Sony. All four of these companies have something in common: poor recent financial performance.

In the January IAM Magazine, the Intangible Investor looks at the latest trends in patent sales among the biggest sellers. Activity is up and emerging are new leaders, like Panasonic, which leads even IBM in U.S. sales for the first half of 2015.

Analysis conducted by Brody Berman Associates in conjunction with Envision IP, a law firm that specializes in patent research, reveals that “for the three-and-a-half year period from 2012 to early August 2015, the leading seller by far was IBM, with 5,356 patents. Buyers include Google, Facebook, Alibaba and Twitter. In 2014 alone, IBM sold 2,187 patents, the most in any year over the period by any of the 12 leading tech companies analyzed.

Leading Patent Sellers

“Surprisingly, the number two, three and four patent sellers in the 2012-2015 period were all Japanese companies,” writes this reporter. “Panasonic/Matsushita, NEC and Sony, with 4,203, 2,131 and 1,578 respectively. This is a dramatic shift for conservative Japanese electronics giants, which rarely litigate patents to generate revenue or enable others to.”

Subscribers can link to IAM’s January issue here.

Intellectual Venture’s 70,000 patent portfolio appears to contain no patents originally owned by Apple, Google or Qualcomm, as Envision’s findings indicate. Several patents owned by IV investors appear in its portfolio, including those of Nokia, Verizon, Microsoft and Sony. Only 268 of the 19,559 US patents owned by IV were identified as having a litigation history, representing less than 1.5% of the portfolio.

Top 4 Patent Sellers

Among the top companies IV purchased from are Kodak (1,057), American Express (643), AT&T (358) and Philips (313) and Ericsson (273).

A list of IV’s 35 top sources for acquisitions can be found here.

Image source: Envision IP, LLC

Perception-Reality

More patent holders (and buyers) are valuing perception over reality

Lack of certainty and the high cost of monetizing patents are motivating some businesses to acquire impressive looking patents, not necessarily valid or essential ones.  

A reputation for innovation or R&D prowess has become a far more valuable asset since the American Invents Act was passed a few years ago.

IBM, among others, has sold unproven patents for tens of millions of dollars to the likes of Alibaba, Twitter, Facebook and Google, attesting to the power of source brand when it comes to invention rights.

In all but a handful of instances, no one gives a hoot about what an IT patent is really worth in the marketplace or even whether it is valid. There Perception-Realityis nothing new about securing batches of patents for affect, especially if it is unlikely that they will be enforced and subject to the scrutiny of litigation.

With licensing revenue down and patent sale prices 30% or more lower, there is little motivation for an alleged infringer to take a licence or settle a dispute.  The search is on to identify alternative methods of profiting from IP. Drawing upon a portfolio or family’s implied value can have more meaning than its actual worth — which is becoming increasingly more difficult to establish.

As Good as Gold

In the current (November) IAM The Intangible Investor looks at “Perception is reality for some patent holders.”

A golden reputation for innovation is easier to establish than value for most individual rights. Thus, a patent portfolio or family in conjunction with a recognizable brand can constitute a formidable pairing. “Perceived patent value” holders, those with a
reputation for innovation, may be in a better position to profit today than business that actually hold valid and infringed patents. Proven patents need to survive the PTAB and perform in court, and require capital to monetize; a reputation for IP can be built over time and managed.

We may recall the Intel Inside® advertising campaign of a decade or more ago that touted the branded processor inside the PC. It not only encouraged product sales but provided the company with the ability to license at a premium the patents covering the component.

There was less a qualitative difference in the microprocessor (vs. say AMD’s) than an implied one based on Intel’s consciously cultivated, and largely deserved, reputation for innovation. 4If issued patents are even less reliable than in the past, then invention rights that appear to be good are the biggest winners. It is no coincidence that the most significant R&D spenders also happen to be among the world’s most valuable brands and significant patent holders. The top ones exceed or are just under $10 billion in annual R&D spend.

Reputation, whether it is deserved or not, makes buying decisions easier — a welcome relief to at least some cash-rich buyers in the market for coverage who cannot wait for patents to issue.

The full IAM piece, “Perception is reality for some patent holders,” can be found here.

Image source: askskipper.com; wparesearch.com

2010 2013 R&D JPEG 1

Higher R&D does not necessarily result in more or better patents

It is unclear that companies with the most significant increases in R&D spending are securing more, better quality or valuable patents. 

A random study of the R&D spending and U.S. patent granted three years following of 12 leading technology companies conducted by Brody Berman Associates shows that costly corporate research spending does not necessarily result in more patents or those with greater impact.

Cisco’s annual R&D spend, for example, increased 11.3% from 2010 to 2013, to just under $6 billion, yet the number of patents granted to it over that period was down 21% to about 900.

Google’s R&D increased 110% to $8B annually over that same period, but its patents granted were up 573%. According to Envision IP the majority were in US classes 455, 709, 370, 715 and the much observed 705. (See chart below.)

USPTPOclassificaUntitled

Granted there are many reasons why one company receives more patents than another: Is the business building its portfolio or merely maintaining it?  Does it do business in a mature or maturing sector? Is it planning to use the patents defensively or to monetize them through out-licensing?

2010 2013 R&D JPEG 1

2010 2013 Patents Granted JPEG 2

 

Microsoft’s R&D was up to about $10.5B in 2013 from 2010, but its patents received were down 14%. Is MSFT investing in fewer, better quality patents, or was the decrease merely the luck of the draw? Everyone except Cisco spent more on R&D, but not everyone necessarily received more patents for doing so. Qualcomm’s R&D was up 96% and its patent grants were up 220%. IBM’s $6B+ R&D, a 3% increase, resulted in 16% more patents. Were these of lesser quality than Microsoft’s. It would be interesting to compare.

Intel conducted the most expensive R&D of the group, nosing out MSFT for the spending lead. For its some $10.6B in 2013, a 60% increase over its 2010 budget, it received 12% fewer U.S. patents, or about 1,700. One would hope they are better patents. “The number of reverse citations for Intel increased from an average of 25 in 2010 to 30 in 2013,” says Maulin Shah of Envision IP.

“A higher number of reverse citations may indicate the relative validity of a patent – the more art that is cited on the patent and during prosecution lessens the pool of available prior art that may be used to challenge the validity of the patent based on prior art grounds later.

The trend suggests that a business, no matter how solvent, cannot necessarily “buy” valuable patents or generate meaningful innovation by spending more on R&D. A lower yield per R&D dollar spent may mean better quality patents, but, then again, it may not. More research needs to be done on R&D and how best to measure return on it.

Patents remain a “numbers” game, more focused on quantity than quality, but these R&D/delayed grant figures indicate that the trend is far from universal among large technology companies.

*****

“The cost for IP varies per industry sector,” a revered former head of IP business and strategy told me recently, “but also within a sector it depends on whether a company is a technology leader, fast-follower or in catch-up mode.

“Cost is further determined by the patent efficiency (number of patents filed per million dollar investment in R&D), which relates also to patent quality. If you analyze this you will see some significant differences in numbers (and patent quality), and also in patent cost. Some followers or late entrants have a high patent efficiency (high number of patent filings per million investment in R&D) just to create large numbers (quantity over quality).”

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“With technology leaders there is mostly a kind of non-linear relationship between the number of patent filings and R&D budget (decrease in patent efficiency with increasing R&D budget).

“It generally also holds that companies with less than average R&D budgets in their sector of industry (followers, new entrants) will have higher third-party IP costs, whereas companies with higher than average R&D budgets (technology leaders)  will generally have higher benefits from their own IP.”

Image source: Brody Berman Associates, Inc.; Envision IP, LLC

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