Tag Archives: innovation

Trade Secrets: “What People Need to Know” — Sen. Coons, IP experts, scheduled to speak May 29

Trade secrets, or know-how, frequently in the news, are simultaneously among intellectual property’s most valuable and misunderstood rights.

A luncheon briefing designed to put these essential rights into clearer perspective will be held at United States Chamber of Commerce headquarters in Washington on May 29 – “Understanding the Secret to Trade Secrets: What People Need to Know Today.”

The briefing is being hosted by the Center for Intellectual Property Understanding (CIPU) in conjunction with the Global Innovation Policy Center (GIPC).

The event will clarify (1) what trade secrets are, (2) why they are more important now, (3) how they are used and (4) their impact on innovation, competition and trade.

Panel coverage includes:

  • Trade secrets’ role in promoting commerce and security
  • The hidden value of “negative” know-how
  • How trade secrets compliment patents and trademarks; their drawbacks
  • U.S., China and trade secrets today

In additional to Senator Chris Coons (D-DE), Vice-Chairman, Select Committee on Ethics and proponent of IP rights, speakers will include

  • F. Scott Kieff (U.S. International Trade Commission chief, 2013-2017)
  • James Pooley (Deputy Director General of the World Intellectual Property Organization, 2009-2014)
  • Brian Hinman (Aon IP Solutions; former Chief IP Executive, Philips and Verizon, and head of licensing at IBM)

“Trade secrets, or know-how, frequently comprise the most valuable part of a businesses’ IP portfolio,” says Marshall Phelps, former Vice President of IP Business and Strategy at Microsoft and IBM, and a member CIPU’s board of directors.

“Trade secrets can be as important as patents or trademarks. Despite the news coverage regarding IP and China, little known about how know-how works in practice.”

The Defend Trade Secrets Act of 2016 (DTSA) brought trade secret misappropriation under federal jurisdiction.

For the briefing agenda, go here.

To request an invitation, write registration@understandingip.org. Registration is free, but space is limited.

Image source: CIPU; foodsafetynews.com; GIPC

“IP impacts everyone” – Two-minute video explains “why?”

What is intellectual property? Why should I care?

These questions are frequently considered – if not asked – by a range of people of all ages, incomes and education levels.

Products of the mind (inventions, creative works, etc.) and the rights that protect them can be complex. But the answer to “why IP?” is simpler than many people would think – jobs, competition, prosperity, as well as culture and quality of life. IP helped to make American and other nations great and will continue to, if we permit it.

The Center for Intellectual Property Understanding (CIPU) recently produced a white board video that explains in a few words and images why and to whom IP is relevant. The video (below) is suitable for a wide range of audiences.

“Intellectual property is the foundation for the future,” said Bruce Berman, founder and chairman of CIPU, an independent non-profit focused on increasing awareness of IP rights and their impact on people’s’ lives. “IP rights are a bridge that enables freedom, as opposed to a legal requirement that inhibits it. Lack of understanding make it difficult for people to see it that way. Early awareness and education help. It is never too late, or early, for anyone to learn why IP maters.”

There are many animations available that explain IP’s importance to children, but employees, investors, teens, law enforcement professionals, parents and educators, too, need help understanding IP’s role and history.

 


IP is for Everyone

There are many animations available that explain IP’s importance to children, but employees, investors, teens, law enforcement professionals, parents and educators, too, need help understanding IP’s role and history. “What is intellectual property? Why should I care?” endeavors to help.

To learn more about IP or identify materials and activities right for different audiences, please contact CIPU at administration@understandingip.org

For a link to the the IP CloseUp YouTube Channel that can be shared, go here: https://www.youtube.com/channel/UCZk165UL2V8fNiJjVcQtnmQ

 

 

Image source: understandingip.org; the Center for IP Understanding 

INTA Annual Mtg set for mid-May; $300/€300 discounts for ‘Auto IP US’ and Europe, also in May

May is a busy month for IP events. The 141st International Trademark Association Meeting (INTA) will take place in Boston, and Auto IP conferences will be held in Munich and Detroit.

More than 10,000 trademark practitioners, brand owners, and intellectual property professionals from 150 countries will be in Boston, Massachusetts May 18–22 for the  141st Annual Meeting of the International Trademark Association, the largest  industry gathering of its type.

With 300+ educational sessions, the meeting will explore topics that reflect advances in innovation and technology, changing consumer perceptions about brands, and the rising tide of counterfeits. In addition, the program goes beyond trademarks to cover other IP rights.

For information about the INTA meeting, including the agenda and registration page, go here.

Auto IP USA and Europe

Building on three years of success in Detroit, IAM’s Auto IP USA on May 8 will bring together the leading IP experts from across the automotive landscape. Through thought leadership, discussion and networking, attendees will gain insight into the IP challenges facing those driving change in the new era of mobility.

Alliances have become a template for the auto industry, encouraging innovation and collaboration in a way that differs from full mergers and limited cooperation deals. However, these partnerships create complex IP issues around the assets that the parties already own as opposed to what new products they may create together.

Returning to Munich on May 16 for its second year, Auto IP Europe will offer IP professionals in the automotive industry the opportunity to hear expert strategies from the complete supply chain – from the OEMs and industry suppliers, to the innovators in high-tech and connectivity.

Auto IP USA background can be found here. IP CloseUp readers who use discount code IPCU300 receive $300 off the registration fee (more than a 30% discount).

Auto IP Europe agenda and speakers are here. IP CloseUp readers who use discount code IPCU300 receive €300 off the registration fee.

Image source: inta.org; iam-events.com; gistmania.com

 

Taking PIPCOs private – rethinking public IP (patent licensing) companies

The shares of most publicly traded companies that rely primarily on patent licensing, litigation settlements or damages awards for revenue have fared poorly compared to key market indexes, like the S&P 500. 

Whether or the not the market is valuing these companies’ shares and their complex assets fairly is less the issue than the viability of patent licensing as a public company business model. Remember, PIPCOs are not synonymous with patent licensing — a PIPCO (public intellectual property company), a term this reporter coined in 2013, can be brand-based, content-focused or not even license its IP rights.

PIPCOs are nothing more than IP-centric companies that trade publicly and that investors need to appreciate for their intangible assets.

PIPCOs, as we know them, are in need of a reboot – call it PICPO 2.0.  In the March-April IAM magazine the Intangible Investor looks at “IP Investing Today – What you need to know.”

IP CloseUp recently updated and expanded the IP CloseUp 30 to the IP CloseUp 50, a more diverse range of IP-centric companies. The best-of-the-best performing patent licensing companies, typically non-practicing entities, are still included, but so are brands like Nike and content providers like News Corporation and tech stalwarts like Apple.

Check out the IP CloseUp 50 here. Bookmark it if you want a real-time snap-shot of these IP players on your phone or computer.

Changing Perspective

When inventors and NPEs were grabbing headlines with damages awards – some in the hundreds of millions of dollars – it was easy for some investors to believe patent infringement would translate into PIPCO performance. It was not so easy.

Settle a dispute or close a deal and the impact could be readily discerned on small company’s balance sheet and in its share price. If a company’s market capitalization was under $100M dollars the results would be magnified. Twists and turns in the course of litigation were trading opportunities, so thought many investors.

Larger PIPCOs Have Fared Better (see 2014 Graph Below)

For large IP-rich businesses – those with patent portfolios like pharmaceutical and tech companies, brands and content providers – it is more difficult to measure the impact of their IP rights and specific IP-related transactions on performance and shareholder value. Their complexity made them less interesting to short-term IP investors until the results were observed over time.

RPX Turnaround

Dan McCurdy, RPX’s current president, told IAM recently about the benefits that de-listing the company’s shares had brought.

“We have done more transactions than in any other six months in the company’s history,” McCurdy said. “We have syndicated more dollars than in any other six-month period; and we have concluded approximately 40 transactions across all eight of our market sectors.” The momentum said the former ThinkFire CEO and AST Chairman, was the result of the increased focus and flexibility that being a private company had allowed.

“There is a level of creativity that has been unleashed thanks to our new status,” he concluded.

Some six years ago, in the patent licensing company heyday, RPX’s share price was over $40, after going public in 2011 at $19 per share, and its market cap was around $1 billion.

Time and Money

Finjan is among the more successful PIPCOs, with products in the cybersecurity. The Silicon Valley company’s President Phil Hartstein said at a conference that it was considering going private.

He explained that “despite our repeated success at the PTAB, several valuable settlements and licenses over the past five years, and the growth of our operating business, our stock price has remained essentially unchanged in what had been a bull market for technology.”

With approximately half of Hartstein’s time consumed with shareholders and public ownership, he says, it may be time to reassess priorities.

Companies like Marathon, CopyTele/ITUS, Inventergy, Sepheris, DSS, Single Touch, CopyTele (ITUS), MGT Capital and Prism Technologies Group have either engaged in reverse-splits, merged or been de-listed. Several, like Tessera (Xperi) and Quarterhill (WiLAN) have changed their name and are hanging tough.

Some of the larger players, such as InterDigital and Universal Display Corporation have performed reasonably well in what until recently had been a bull market. It remains to be seen how they will perform in a less kindly environment, but their size and success can help them surmount obstacles the smaller players cannot.

Image source: gilmartinir.com; lake street capital

Expanded ‘IP CloseUp 30’ stock index features four new categories

Publicly traded patent licensing companies have significantly under-performed market indexes. Only a few of the original listed stocks remain. 

The IP CloseUp 30, a feature of this blog first published in 2013, was designed to provide IP investors a real-time snapshot of public patent licensing company performance and news.

Loss of patent certainty and value have made licensing less interesting to current equity investors. For that reason, the IP CloseUp 30 is evolving. It will be known as the IP CloseUp 50, and include several new categories of publicly traded, IP-focused businesses, including those that engage in brand and content licensing and defensive strategies.

The IP CloseUp 30 index is build on a Yahoo! Finance screen of earnings and other financial information —  stock price and market capitalization, as well as real-time news developments. It gives IP investors a efficient way to track relative performance of selected companies. For those observers more dubious about the sector, but who are interested in keeping tabs on certain patent holders, it provides a method of tracking potential threats.

Evolving Universe

When I coined the acronym, PIPCO, six years ago, it referred to an expanding sector of public companies whose primary source of revenue was patent licensing and, by default, litigation. At the time patent values and damages were much higher and many respectable non-practicing entities (NPEs) held promise. Yet to be felt were the full impact of the America Invents Act, passed in 2012, and the effects of several major court decisions affecting injunctive relief and patent eligibility.

Leading Brands Category

The IP CloseUp 50 is an alternative method for investors to track the influence if not impact of intellectual property. It introduces a larger context for considering IP performance. Patent monetization remains a viable business model for some owners, but perhaps for most businesses, less so as a public one with the pressure to provide investors with quarterly results.

The IPCU 50 is far from definitive and will require that companies be added and removed as market and IP conditions warrant. PIPCOs were never intended to be just about patent licensing. When damages awards for mobile telephony (Motorola, Nortel, et al.) and other technologies commanded hundreds of millions if not billions of dollars, it was only natural for licensing companies to become a source or investor fascination. But even at their most active these PIPCOs rarely generated much daily volume or market capitalization.

Enter PIPCO 2.0

If investors have learned one thing over the past decade about public IP companies it is that they are not synonymous with patent licensing. It is true that performance measures like licensing, settlements and public awards are easier to follow than return on risk mitigation or brand equity. Licensing and litigation are simply more graphic, especially if big tech companies are paying out.

Think of the IPCU 50 as IP CloseUp 2.0. It represents the next iteration of IP investment perspective – companies better equipped to adapt and survive because of their nature of their IP assets and their size. It includes patent, trademark and content-focused operating businesses where licensing may play a role in performance. The index will still consider leading patent licensing companies, but scale back the number. (For now, the index will not consider trade secrets directly.)

To be sure, the IPCU 50 is a work in progress, destined to be refined, but, nonetheless, provocative and worthy of periodic scrutiny.

The new IP CloseUp 50 categories:

  • Patents – Technology
  • Patents – Pharmaceuticals
  • Trademarks – Leading Brands
  • Media & Content Owners (Copyright)
  • Primarily Patent Licensing

Fuller Grasp

Using IP rights to mitigate risk and maintain market share is not new. Nor is brand or content licensing. In principle, using IP rights defensively does not necessarily diminish their significance. It is true that specific tech patents typically mean more to small businesses and individuals than to established players who can rely on other resources like brand equity and their ability to raise capital, and are unlikely to enforce infringed patents. A fuller grasp of what different types of IP mean to various businesses can quickly turn a seller into a buyer (and vice versa).

With some 85% or more of S&P 500 company value tied up in intangibles assets such as IP rights, shareholders need to be better informed about the use of and return on IP (call it, ROIP) and their role in performance. Questions investors should be asking, even if senior management and equity analysts are reluctant to:

  • Which are the most IP-rich businesses?
  • What rights do they own?
  • How are they being used?
  • What is the relationship of their IP to performance and shareholder value?

 

Work in Progress

To be meaningful the IP CloseUp 50 must change to reflect IP value and investor need. The businesses were initially selected by an informal panel of experts. We will do our best to accommodate requests to add or delete companies. The index is designed to render performance of IP-rich companies somewhat more transparent and easier to follow.

The IP CloseUp 50 looks at top public IP holders primarily by:

 

  • Size, type and quality of IP portfolio and assets
  • Enterprise market value (typically >$500M)
  • Innovation reputation

For further explanation of the five sections and criteria for inclusion, visit the IP CloseUp 50 landing page, here. Consider bookmarking it or placing it on your home screen or desktop.

 

Image source: yahoo! finance; ipcloseup.com

Bridging the Gap Between IP Awareness and Understanding – A response to IBM’s Chief Patent Counsel

by Professor Ruth Soetendorp

In a recent article, Manny Schecter, Chief Patent Counsel at IBM and President of the IPO Education Foundation, was right to point out that increased IP awareness does not necessarily reflect people’s genuine IP understanding or their IP literacy[1].  But what does that matter, and to whom?

The ‘general public’ is a complex mix of IP illiterati including people whose IP curiosity will probably never reach beyond a vague awareness of wrongdoing for enjoying illicit downloads or counterfeit designer brands.  For them, the education system is beginning to wake up to the importance of including IP references in school citizenship classes.  They may never be concerned about how IP fuels our innovation economy or facilitates creative thinking, but they need to be protected from the potential criminality to which their lack of IP knowledge could lead.

Different, but no less lacking in IP knowledge, is the segment of the public whose IP awareness, however vague, has resonated with them. They may be entrepreneurs who realize IP’s relevance to their commercial success.  They are the group to whom international and national IP institutions (USPTO, UKIPO, EUIPO, WIPO etc) are keen to make available the short catchy sound bites that may capture attention but fall short on vital information.  These resources will never compensate for a lack of a deeper IP understanding.  They can trigger an expectation that IP problems will have a right answer, that should be easy to reach.

The public doesn’t need more catchy phrases about what IP rights are. Instead, IP institutions should be braver about telling the public that IP is difficult.  They need to encourage a more critical approach by the general public to the IP they encounter, prompting them to think about the relevant questions that could be posed to colleagues, professional advisers or online resources capable of providing relevant information.

Prime Target

College students are a prime target for IP education that will encourage them to respect and question the legal regimes that will shape their careers and enable them to graduate as more enlightened members of society.  For them, patents will be important, alongside trademarks, copyrights and design rights.  For all, the rules relating to confidentiality and trade secrets have a crucial significance.  Faculties are encouraged to allocate time to convey IP education. There is clear evidence that it would be well received.  Research that supports this strategy was undertaken by the Intellectual Property Awareness Network[2] with the UK National Union of Students into student and academic attitudes to IP education[3] and IP policies in Higher Education institutes[4].

A recent approach I have used with participants from the UK’s Arts and Creative industries sector on the Boosting Resilience Arts Council England project[5], involves using an Intellectual Property Management Decision Tree. The Tree is a graphic representation designed to provide a framework to assist discussion by the general public of an IP issue.  Around the roots are listed the intellectual property concepts that may be relevant to the issue.  Using the Tree helps if an educator is familiar with the concepts.  But if they are unfamiliar the trunk holds addresses of online resources that will provide basic explanatory material.  Most important, the branches hold five key questions to be answered when faced with an IP problem.  When used by Boosting Resilience workshop participants (senior managers of UK Arts and Creative industries enterprises) feedback suggested the Tree had proved a useful device to stimulate small group discussion of IP problems.

No Easy Answers

Encouraging questions about IP matters challenges assumptions and establishes that there are no easy and few definitive answers.  This, in turn, builds confidence to seek out the best advice when faced with IP challenges – to draw upon the best resources.  The public may well never fully understand IP rights or how they achieve their intended purpose. That should not deter IP enthusiasts from their responsibility to help the public tackle the big IP questions that are intrinsic to their lives and future.

__________________________________________________________________

Ruth Soetendorp is a pioneer in promoting IP education for non-lawyers, across all disciplines. Professor Soetendorp has published research with EUIPO, UKIPO, IPAN and the National Union of Students, and has worked with WIPO, EPO and the EC to bring IP education to the international community. She is currently Professor Emerita and Associate Director of the Centre for Intellectual Property Policy & Management at Bournemouth University and a Visiting Academic at Cass Business School, City University of London.

[1] https://www.ipwatchdog.com/2019/02/03/closing-gap-intellectual-property-awareness-understanding/id=105866/

[2] wwww.ipaware.org

[3] https://www.nus.org.uk/PageFiles/12238/2012_NUS_IPO_IPAN_Student_Attitudes_to_Intellectectual_Property.pdf

[4] http://ipaware.org/wp-content/uploads/2016/10/IPAN_NUS_University_IP_Policy_16aug16.pdf

[5] https://www.boostingresilience.net/

Image source: epmagazine.com; boostingresilience.net

U.S. patent litigation awards are highest since 2014; two cases accounted for 64% of the total damages; half were under $10M

$1.4 billion dollars was awarded last year in patent damages, the most since 2014.

Two cases were responsible for about two-thirds of that amount or $900 million, according the Lex Machina 2018 Litigation Report, leaving less than $500 million among 16 cases.

The biggest year for patent damages in the past decade was 2012, the heyday of patent value, which saw just under $4 billion awarded.

Sources told IP CloseUp the top 20 awards typically represent only a fraction of the actual infringed value of patents in a given year, and it is not clear how much of which of the awards have been paid.

Reasonable Royalties

Even though 2018 saw around the same quantity of cases awarding damages as in the previous five years, there was a greater total amount of damages awarded. The large increase in damages from the previous years is attributable to large jury awards of reasonable royalty damages.

Particularly, in Virtnex Inc. v. Apple the jury awarded plaintiff over $500 million in damages and in Kaist IP v. Samsung the jury awarded $400 million in damages.

Excluding these two cases, the total amount of damages awarded in 2018 was approximately $498 million. Looking at jury awards, Samsung was involved in three significant jury cases that awarded damages in 2018.

While ANDA cases did not yield jury awards in 2018, several healthcare/pharma/life sciences research companies were involved in significant jury trials, including Boston Scientific and Ariosa Diagnostics, as well as medical device producers such as Hologic and Minerva Surgical.

Half Under $10M

Among the top patent awards under $100 million, six were over $10M and nine or 50% of those reported were under. No data was provided on the number or amount of settlements or the cost to obtain them.

For the full report, go here. 

Image source: Lex Machina

 

FAANGs dominate value and valuation says a new book by an intellectual property expert

Facebook, Amazon, Apple and Google, referred to at the Big Four, plus Netflix, “dominate society, technology and IP value and valuation,” according to a new book by a well-known expert in the field.

In the concluding chapter of his recently published IP Valuation for the Future (ABA Books), Wes Anson suggests that several large tech companies, for better or worse, wield a disproportionate amount of influence over IP rights.

“These numbers tell you about the social impact and control that the Big Four [FAAGs] have over not only the stock market and technology, but over the development of IP, social media, new apps, and new forms of (online and offline) technology, in turn, exerting IP domination and concentration.”

The numbers Anson is referring to include Facebook’s monthly users, 2.1 billion; the 65 million households served by Amazon every month; the five top social media apps owned by Facebook; and the 92% of Internet search controlled by Google.

Anson, who is the author of several books on IP value, says that the size of the FAAGs, plus Netflix, make it virtually impossible to accurately calculate all of their IP as a whole. Moreover, the long shadow cast by these businesses also makes it more difficult to value IP owned by others, as well.

Where IP is Headed

“This is where the ‘smallest unit of value’ comes into play and where, I believe, the valuation exercise for IP, particularly when it is held by [businesses the size of] Apple or Google/Alphabet or Facebook, is being challenged. It’s the concept of SVU.”

Anson concludes with “we find ourselves with an increase in value of almost all IP groups, with the possible exception of patents. We also find ourselves under the Cloud with the Big Four Companies, plus Netflix, increasing their dominance in content, media, connectivity and communications…

“I hope that this book conveys that this is a time of great change in the world of IP and a time in even greater change of IP evaluation and valuation.”

IP Valuation for the Future can be obtained through the American Bar Association.

For the Table of Contents, go here.  

Image source: IP Valuation for the Future (ABA Books)

Convergence is creating new value; IPBC Europe in Paris to explore

The fourth industrial revolution (4IR) presents new challenges and opportunities for European companies.

4IR is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres collectively referred to as cyber-physical systems.

Traditional ways of creating value from intellectual property are becoming unsustainable and a more integrated approach to the management of assets is necessary. A good example is 5G, which is at the forefront of 4IR. (5G performance targets high data rate, reduced latency, energy saving, cost reduction, higher system capacity, and massive device connectivity.)

Golden Opportunity

The Intellectual Property Business Congress Europe, in Paris for 2019, will help IP executives to look beyond patents, trademarks and copyrights to ensure they are factoring trade secrets and proprietary data rights into their strategy.

Europe has a golden opportunity to lead the field in devising new IP strategies for the 4IR age, as well as defining the regulatory and policy environment. IPBC Europe will take place in Paris at the Les Salons Hoche, March 27-28.

Keynotes speakers are EPO Chief Economist Yann Meniere, Ericsson IPR and Licensing VP Mathias Hellman and 2018 Inventor of the Year, Stefano Sorrentino.

For the program, go here.

For the full list of speakers, go here.

IP CloseUp readers use code IPCU200 to receive a 200 Euro discount. 

To register, please visit this link.

Image source: avantex-paris.fr.messefrankfurt.com; events.ipbc.com

 

U.S. patent grants down the most since 2009; China is only nation up

U.S. patent grants were down 3.5% in 2018 over 2017, only the second decline in the past decade, but the largest. 

All nations experienced a decline in grants, except China, which was up 12%.

The reasons for the declines are unclear. They range from

  • Over-patenting in prior years
  • Uncertainty of newly issued patents
  • Lower return on patents
  • Insufficient R&D
  • Growth of businesses in which patents are difficult to secure, e.g. software, algorithms and business methods

According to this year’s report from patent analytics firm IFI Claims:

  • The USPTO issued 308,853 Utility Grant patents in 2018. This represents a 3.5% decline from 2017’s record year.
  • US companies received 46% of these patents. Asian companies received 31% and European companies received 15%.
  • Chinese companies represent only 4% of 2018 US Grants, but their total of 12,589 US patents is an increase of 12% over 2017.

2017 was the 26th year that IBM received the most U.S. patent grants, 9,100.

Google, Samsung and Sony were down 14%, 16% and 21% respectively. Ford Global Technologies and Huawei were both up 14%.

Samsung: Still Largest U.S. Holder

The world’s largest “active” U.S. patent holders and their subsidiaries convey a somewhat different picture. Samsung is first, according the IFI Claims Ultimate Owner ranking, with 61,608 and IBM is third with 34,376. (Canon is second just ahead of IBM.)

The reasons for the significant difference is unclear. They likely have to do with owners’ perceived need to maintain patents they may not use and whether the patents are being used to out-license for revenue or defensively to mitigate risk and maintain market share.

Image source: IFI Claims Patent Service   

USTR warns of increasing attacks by China on US intellectual property, including cyber-attacks

A report released in late November the Office of the United States Trade Representative (USTR) states that China appears to be stepping up its attacks on U.S. intellectual property.

“China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months.”

Raymond Zhong in The New York Times reported that “something is unfolding right now that carries higher stakes than any other tech story on the planet.”

Zhong was referring to China having detained the third Canadian citizen in apparent retaliation for the arrest of Meng Wangzhou, a top executive at Huawei, the world’s leading maker of telecom networking equipment. Since, CFO Wangzho’s arrest, Canadian officials have reported that a total of 13 people have been arrested in China. Eight have been released.

It has been long speculated that Huawei’s products can be used for spying by the Chinese government.

The USTR report, released on November 20th, is called UPDATE CONCERNING CHINA’S ACTS, POLICIES AND PRACTICES RELATED TO TECHNOLOGY TRANSFER, INTELLECTUAL PROPERTY, AND INNOVATION.

“In the USTR report the U.S. accused China of continuing a state-backed campaign of cyber-attacks on American companies that were both intensifying and growing in sophistication,” Bloomberg News reported.

Chinese Claims

In response to questions about the report, a spokesman for China’s foreign ministry on Wednesday said U.S. officials should read a white paper published by the government in September that claims China ‘firmly protects’ intellectual property rights.

On August 18, 2017, the Office of the U.S. Trade Representative (USTR) initiated a Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. 3

On the date of initiation, USTR requested consultations with the Government of China concerning the issues under investigation.4 Instead of accepting the request, China’s Ministry of Commerce expressed “strong dissatisfaction” with the United States and decried the investigation as “irresponsible” and “not objective.”5

The primary four points of the report (IPCU’s boldface):

1. China uses foreign ownership restrictions, such as joint venture (JV) requirements and foreign equity limitations, and various administrative review and licensing processes, to require or pressure technology transfer from U.S. companies.

2. China’s regime of technology regulations forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market based terms that favor Chinese recipients.

3. China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate the transfer of technology to Chinese companies.

4. China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies to access their sensitive commercial information and trade secrets.7

“Further Unreasonable Actions”

The USTR report concluded: “China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months.

“USTR intends to continue its efforts to monitor any new developments and actions in this area.”

The full report can be found here.

Since 2014 Chinese venture capital investment in the U.S. totals $31 billion. The report cites analyst that estimate “Chinese investors participated in 10-16% of all venture deals in the United States between 2015 and 2017.”

Image source: USTR Update

 

Patent litigation is down 41% since 2015; IPRs are lowest since 2014

Patent disputes are significantly lower since they peaked at 5,874 in 2015.

Litigation tumbled 41% to 3,491 cases in 2018, and was down 14% from the prior year.

While litigation is never good, it is not always bad. Not everyone agrees that the drop in patent suits is a positive sign.

Some see it as an indication that the Patent Trial and Appeal Board (PTAB) is doing its job, eliminating patents that should never have been issued.

Others who are patent owners told IP CloseUp that litigation has become “so costly and arduous, that it no longer pays for many infringed holders to bother.” They also point to the inconsistency of PTAB decisions and multiple opportunities for it and the courts to invalidate patents.

The litigation data was reported this week by Patexia. For the full update, go here.

Additionally, Inter Partes Review (IPR) petitions were down 7% from last year and are at the lowest level since 2014.

Delaware is now the preferred venue for litigation, with 697 cases. Eastern District of Texas, once the top dog for patent disputes, was down to 504 cases in 2018.

Image source: Patexia

 

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