Tag Archives: licensing

Apple conspired to discredit Qualcomm’s inventions even though it believed they were “the best”

Nothing gives a Silicon Valley tech giant, once, known for quality and integrity, a bad name like greed and deception. In pursuit of even greater profit, Apple’s actions cost more than 1,000 people their jobs and almost brought down a $100 billion supplier. 

A long-time licensee of Qualcomm’s high-quality modems, Apple came to dislike the terms of the deal it had signed.

The settlement of the recent high-profile patent dispute between the companies appears have been motivated primarily by two things:

  • potential loss of future 5G revenue once it was revealed that Intel could not provide the modems it needs and
  • fear of public embarrassment and legal retribution for having revealed that Apple lied to break the contract with Qualcomm and cheat it out of licensing royalties.

This is an incredibly sad story for anyone who believes that unfair competition is a threat to free enterprise or that Apple represents the American technology leadership.

A Plan to Discredit

According to the Washington Post and other news sources, Apple entered into a systematic plan to discredit Qualcomm inventions and patents in a bid to reduce the cost of licensing them. This occurred while apple was generating between $40 billion and $160 billion in annual iPhone revenues (see graph).

Apple is among the wealthiest companies. Despite the potential legal risk in launching its shady “royalty reduction plan,” it apparently believed the plan represented little real legal threat to the company. Apple could lie about the patents because it could afford to lose – if it was caught. This is known as “efficient” patent infringement, i.e. it pays for some businesses to forgo a license to inventions it needs because today infringers are rarely caught or sufficiently punished.

Last year Apple became the first company to reach a market capitalization of more than $1 trillion and has $245 billion of cash on hand. It could well-afford to pay Qualcomm what it had agreed to, even thought it was a significant sum. The risks were larger for Qualcomm. The San Diego company’s stock price plummeted and it was forced to lay off 1,500 employees.

With the recent legal settlement, 2020 iPhones will support 5G networks with Qualcomm chips the primary of two 5G modem suppliers for the devices, according to analyst Ming-Chi Kuo. Samsung will be another supplier.

VentureBeat ran an excellent piece summarizing Apple’s dubious behavior. It and the Washington Post piece (linked above) are essential reading for anyone interested in technology, intellectual property or business. Read it here.

Private Memos

It has been reported that Qualcomm stands to generate from the settlement $9 per handset, which is as much as $6 billion in revenues or, $2 per share in earnings from the litigation settlement. It stock has risen some 30%. Apple was able to threaten the very existence of a $100 billion U.S. company, whose products it loved but did not want to pay for.

In private memos and other documents that came out after the settlement was reached it was revealed that Apple colluded to “plot and pressure” Qualcomm, a long-time Apple licensor, to reduce the cost of its licenses. Apple went so far as to put pressure on its suppliers to lie about the Qualcomm modem quality and pricing.

Poor Character

While Apple was paying Qualcomm to license its inventions, iPhone sales were breaking records (see graph above). It could well afford to pay the agreed upon price that for the best modems — it simply did not want to and believed it could force Qualcomm to “renegotiate” by discrediting its quality and lying about what others were paying.

Take five minutes to read the Washington Post and VentureBeat articles. You will not see Apple or its products the same way again.

 

Image source: VentureBeat, Qualcomm

 

 

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

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

 

Inventor who said $17M is the real cost of obtaining his patent, wins $24.5M suit

How much does it cost to obtain and use a U.S. patent? The depends who you ask.

The price to obtain an invention right can range from $6,000 for a very basic one with few claims to $50,000 of more for a more complex application that requires significant back and forth with the Patent Office.

A successful inventor, Josh Malone, creator of Bunch O Balloons, says the true cost of obtaining his patent and using it to defend his invention has been $17 million, thus far, and it could easily grow to $50 million. (For Malone’s reasoning, go here.)

Bunch O Balloons, a consumer product that can fill 100 water balloons in 60 seconds, has had to defend itself against TeleBrands Corp, which has repeatedly infringed it with different businesses over a period of years.

Last week, Bunch of Balloons, originally a crowd-funded company, won a $24.5 million patent suit against TeleBrands Corp.  $4.75 million was added for attorney’s fees.

The patents at issue are U.S. Patent Nos. 9,242,749 and 9,315,282.

Makeover?

Jay Walker, founder of Priceline.com, one of the most prolific US inventors, has called the U.S. Patent System dysfunctional and is in need of a major makeover. Not all patent holders would agree, but for many inventors, the cards are increasingly stacked against them. (Hear the audio file of Walker’s speech about the patent system at the 2018 IP Awareness Summit at Columbia University.)

At the heart of the problem is uncertainty about what can, in fact, be patented and licensed. Patents in new areas of invention or art can be overly ambitious. Some may be too broadly drawn and claim more than the invention covers in hopes of keeping others from doing something similar.

In an over-reaction to that possibility lawmakers and courts have made it difficult to rely on many patents, despite the extensive examination process they go through. As a result, many issued patents are, in effect, still applications.

Uncertainty

There is little agreement on an acceptable level of uncertainty. If virtually any patent issued that is enforced can be routinely challenged, what is the point of issuing it in the first place?

Critics say that an inventor should not be able to claim what can amount to an entire industry, as opposed being granted a patent on a specific invention. The patent office often does not realize it may be granting rights too broadly.

Image source: wgno.com; ipwatchdog.com

 

 

 

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

 

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

 

A responsive patent system requires time and participation: a response to Jay Walker’s IPAS 2018 speech

GUEST COLUMN:

At the IP Awareness Summit held at the Columbia University on November 29 Jay Walker, entrepreneur, prolific inventor, TEDMED curator and founder of Priceline.com, spoke about a “broken” patent system and need for a Constitutional Convention to fix it. In the following response to Walker’s speech, Brenda Pomerance takes a different view. 

 

Improving the Patent System:

Independent Inventors Need Apply

By Brenda Pomerance

At the IP Awareness Summit held by the Center for Intellectual Property Understanding on November 29, 2018 at the Columbia School of Journalism, Jay Walker gave a keynote presentation asserting that the Patent System was irreparably broken for individual inventors lacking “deep pockets.” He based his position on five problems, and called for an entirely redesigned Patent System.

In fact, two of these problems are features, not problems. The existing Patent System can be tweaked to provide individuals with a fairer playing field for the other three problems.

First, clarity: Walker says that patent claims are impossible for him to understand.

Lack of clarity, for laypersons, is due to the need for a claim to only distinguish from the prior art, not to explain how to make an invention and to distinguish that invention from the prior art.  Walker can eliminate his clarity problem by telling his patent attorney to write claims that are essentially a production specification for the invention, but the scope of these claims will be much narrower than is needed. Examiners will love these production specification claims and prosecution will be faster.

Also, the Patent System enables a claim to encompass something that the inventor did not specifically think of when the patent application was filed, if claims are suitably written and there was no discussion of this issue in the prosecution history, but an inventor can relinquish this flexibility via clearer claims that are limited to exactly what the inventor invented.

Second, reliability: Walker says that because so many patents are invalidated, a patent is not a reliable property.

Walker can hugely improve validity by telling his patent attorney to write claims that will survive most litigation challenges (a very high standard), rather than claims that an examiner will allow (a lower standard). But, the inventor will have to (a) do the comprehensive prior art search that litigation defendants do (costing up to $100,000 for the search), then (b) figure out why it would not be obvious-to-try to combine this prior art to arrive at the invention, and finally (c) explain non-obviousness in the disclosure, which requires a detailed in-context understanding of each piece of prior art and vastly more care expended on the background section of a patent application.

An excellent prior art search along with an explanation distinguishing the claims from the prior art will speed up prosecution, but will substantially increase the cost of patent application preparation, possibly making it too costly for shallow pocket individuals.

Third and Fourth, cost and time: Walker says that it is too expensive and takes too long to enforce a patent.

Here are some tweaks to address enforcement cost and time problems:

(A) Require that all prior-art based challenges to a patent be presented in an IPR Request that is filed within nine months (not one year, to reduce gamesmanship of multiple IPR filings) of the lawsuit’s filing, unless plaintiff consents to addressing prior art invalidation in litigation, with a prohibition on staying the lawsuit for the IPR until the IPR Request is granted, and an automatic lawsuit stay after the IPR Request is granted unless the parties agree to concurrent litigation.  During litigation, this would leave mainly inequitable conduct available to invalidate a patent during litigation unless and until defendant negotiates for prior art, perhaps via accelerated discovery or payment.  It requires that the PTAB consider as prior art more than merely printed publications.

(B) If PTAB denies the IPR Request (the current PTAB denial rate is 40%), the patent is presumed valid over prior art against the challenger in all Patent Office and court proceedings.   This will speed up enforcement against defendants who make only small changes but keep infringing to force patent owner to file new lawsuits.

(C) If all claims, asserted in litigation at the time of IPR Request filing, are invalidated in an IPR based on a prior art rejection (references and motivation to combine) that the patent owner was notified of by the patent challenger at least three months prior to the filing of the IPR Request, then the patent owner has to pay the challenger’s attorney fees for preparing and filing (but not prosecuting) the IPR Request.  This encourages defendants to quickly share their most relevant invalidity arguments, and punishes plaintiffs who ignore relevant prior art and waste defendants’ resources in an IPR, but the punishment is limited by not including prosecution costs so as not to be too scary for good faith plaintiffs.

(D) After an IPR Request has been disposed of via denial or an IPR, a deep pocket defendant must begin paying half of the monthly cost of litigation attorney fees for a shallow pocket plaintiff based on redacted attorney invoices.   If the judge or jury finds the defendant is not liable for any infringement damages, then the plaintiff must repay the attorney fee payments.

(E) For a patent that has survived IPR, via IPR Request denial or an IPR, and that a defendant has been shown to infringe, restore the presumption of irreparable damage for patent infringement that was destroyed by eBay v. MercExchange, 547 U.S. 388 (2006), leading to an injunction absent exceptional circumstances, regardless of whether patent owner licenses or practices the patent.

(F) Provide a rebuttable presumption that the patented technology is frequently used by all accused products and services of an infringer, and require that damages be based on how often a technology is actually used to provide a product or service, so that rarely used features have relatively small damages awards, while frequently used features can have large damage awards.   The incentive of rebuttal should encourage defendants to provide discovery, instead of the current gamesmanship of withholding discovery.

(G) For a prevailing shallow pocket individual plaintiff, a deep pocket defendant must pay 200% of the plaintiff’s attorney fees absent exceptional circumstances.  This penalizes deep pocket litigants for litigation gamesmanship.

Fifth, price discovery: Walker says that it is difficult to predict what infringement damages will be.

The pre-litigation part of this difficulty is because parties like to keep confidential the cost of licenses and settlements; but confidentiality should be their right.

The litigation part of this difficulty is because defendants are extraordinarily reluctant to provide discovery on what portion of their business infringes and the revenue associated with doing so; D-G above, especially F, will reduce such reluctance.

Conclusion

I agree with Walker that, at present, the enforcement part of the Patent System is hostile towards under-funded individual inventors.  However, the Patent System is still quite viable and can evolve to be friendlier towards individuals. Independent inventors are a fabulous source of ideas and patents reflect the diligence to make the fruits of their ideas available in commerce, which benefits all of us.

_____________________

The audio file for Jay Walker’s speech can be found at https://www.ipawarenesssummit.com/recorded-speakers

Brenda Pomerance has almost 30 years of experience in prosecution of approximately 2,000 patents, including Appeal, Ex-parte Re-examination, Reissue, Inter Partes Review and Interference. Clients have included Research in Motion (now Blackberry), MIT, AT&T, Lucent, IBM, Sony and Canon. Ms. Pomerance has represented clients in licensing, in several patent infringement lawsuits and in a software copyright infringement lawsuit. She is a solo patent attorney in the Law Office of Brenda Pomerance in New York City. b.pomerance@verizon.net

Image source: canadaipblog.com

To encourage investors the IP system must provide stability and predictability, says USPTO head

IP is the engine that makes economic and cultural developments work and the USPTO keenly focused on facilitating this goal.

That was the message delivered by Undersecretary of Commerce and Director of the United States Patent and Trademark Office, Andrei Iancu, at the Second Annual Intellectual Property Awareness Summit in New York on November 29.

CIPU, CTV, Columbia University

IPAS was held by the Center for Intellectual Property Understanding (CIPU), an independent non-profit, in conjunction with the Columbia Technology Ventures, at the Columbia University’s School of Journalism.

“For the IP system to work as intended,” Director Iancu told the audience of IP owners, creators, executives and educators, “we must make sure future IP laws are predictable, reliable and carefully balanced.”

Director Iancu, who holds degrees in aerospace and mechanical engineering and who has taught at UCLA, said he believes that it is really important for new members of congress coming into office in January, as well as existing ones, be informed about the importance of intellectual property.

“They should be aware why IP is important to the economy and to America’s standing in the world and competitive position.”

“I would urge folks in this room,” he said referring to the IP professionals and educators present, “to talk about these issues with members [of Congress] in ways that relate to their priorities and constituents.”

A Different World

The Director told the audience that the battle for 5G is not likely to be limited to giant American companies but is international and being waged by the smallest and biggest countries; from Singapore, for example, to China.

“We live in a different world,” he concluded. “For the United States to maintain its competitive leadership it is critically important that we have an IP system and innovation and entrepreneurship ecosystem that encourages innovation; that provides stability and predictability, so folks can invest here in the U.S. confidently.”

The audio file of Director Iancu’s remarks and q&a is available at www.ipawarenesssummit.com.

IBM, Priceline, George Mason University

Other featured speakers at IPAS 2018 included Manny Schecter, Chief Patent Counsel of IBM and a member of the board of directors of the Center for Intellectual Property Understanding (CIPU); Jay Walker, inventor, entrepreneur, TEDMED curator and founder of Priceline.com; and Adam Mossoff, Director of the Center for the Protection of Intellectual Property (CPIP) at George Mason University College of Law.

IPAS also included 17 other speakers, four panels and three workshops focused on the IP literacy requirements of IP owners, creators, educators, investors and the public. For the full IPAS 2018 program, presenters and partners go here.

Image source: Russell Cusick Studio 

Et tu, TechCo? Some potential patent licensees should be outed for abusive behavior

What is the appropriate response to a legitimate request for patent licensing?

If you are an information technology company comfortable taking full advantage of confusion in the patent system, and unfettered by business ethics, it may be tossing the offer in the garbage can — just because you can.

Can a business simply ignore a reasonable licensing offer or does it have an obligation, ethical or otherwise, to take seriously a reasonable request to consider a license to an invention it requires or may already be using?

For an executive at one inventor-owned business, Personalized Media Communications, being totally ignored when a legitimate request to discuss a patent license is presented is an abusive practice and a threat to innovation that must be stopped.

The Real Issue

“Too often, this abusive behavior is conflated with ownership models to deflect attention from the real problems,” said Aaric Eisenstein, VP Licensing Strategy. “PR efforts targeting ‘trolls’ have warped stories of threats to mom & pop businesses to cast large companies as the equally helpless victims of these ruthless predators… the real issue is abusive behavior, and that’s what needs to be targeted…

“The responsibility for ending abuse rests not only with the Patent Office and the federal courts but also with the stakeholders in the patent system themselves. The stakeholders cannot simply complain and lobby for one-sided solutions. They must work together to improve the system upon which they all depend.

“The responsibility for ending abuse rests not only with the Patent Office and the federal courts but also with the stakeholders in the patent system themselves.”

“Following these rules eliminates both problems: skimpy-to-ridiculous notice packages and throwing legitimate packages in the trash.  It doesn’t matter whether the companies are large or small or whether they’re direct operating competitors or have completely different ownership models. The critical point is that these standards are targeted to prohibit abusive behavior per se

“The US patent system was the envy of the world for generations.  It can be again if we’re honest about its shortcomings and address them in direct and balanced ways.”

The TROL Act in the House of Representatives reintroduced legislation with apparent bi-partisan support that would give the Federal Trade Commission and the state attorneys general authority to issue civil penalties up to $5 million for sending misleading or bad faith letters demanding patent licenses.

There is no indication that penalties will also be instituted for bad faith on the part of businesses that ignore legitimate offers to license good patents, forcing owners to file suit.

Eisenstein is grateful to USPTO Director Andrei Iancu for having “reminded patent system stakeholders what US inventors have given the world and the right way to enhance the system.”

For the full article, go here.

Image source: seapine.com

Patent “abuse” stories is the subject of a website and forthcoming book

From Michelangelo to Edison and Bell, inventor success stories are well-known.

But patent and inventor abuse stories – such as inventor Robert Kearns’ and his intermittent windshield wiper, famously infringed by almost every auto manufacturer and well-captured in the feature film, “Flash of Genius” – are less well-known.

An organization supported by a GoFundMe campaign is looking to change that. Protect American Innovation has been collecting patent abuse stories since July and has thus far gathered 16 examples of dramatic abuse. Some of the examples cite videos.

Protect American Innovation, which is described on its website as a “coalition of businesses, innovators and inventors, to spread the word about patent abuse and to push for effective change in the U.S. Patent System,” supports the Stronger Patents Act, which hopes to correct the over-reaction and weakening of the patent system caused by the American Invents Act. The Bill is currently in the House Judiciary  Committee.

For PAI patent abuse stories, go here. They help to explode the myth of the abusive “patent troll.” Those interested in the website may also want to know about a book being written by IP consultant David Wanetic about patent and inventor abuse.

Incisive Op-Ed

Also on the PAI website is “The Time to Revive the American Patent System is Now!”, an incisive op-ed written by Chief Judge or the Court of Appeals for the Federal Circuit (ret.), Paul R. Michel. It succinctly restates that the U.S. is losing its innovation edge and how a balanced patent system can help to fix it. Judge Michel’s piece can be read here.

“… to overcome the massive PR campaign of the FANGs, featuring largely fictional or exaggerated tales of patent ‘trolls’ abusing the system with baseless law suits, leaders in Congress need stories to illustrate the harms of the AIA reviews and Supreme Court cases.”

For the Save the Inventor video feed with more than 100 videos, go here.

Image source: savetheinventor.com

IPCU readers can save $200 on IP Dealmakers Forum Nov 6-8 in NY

Patent monetization is alive and improving.

Look no further than the 5th annual IP Dealmakers Forum, which will attract the top players in IP licensing, sales and litigation funding to the Alexandria Center overlooking NYC’s East River, November 6-8.

IP CloseUp readers can save $200 off of registration by using discount code IPDF18_CIPU.

Panels include:

  • IP Market Roundup: Light at the end of the Tunnel
  • In Patents We Trust: Government Updates & Outlook
  • Leveraging Data to Identify Valuable Patents
  • SEP, FRAND & Getting Ready for 5G
  • IP Investors Roundtable: Opportunities In and Around IP
  • What Matters Now: Navigating the New Deal Landscape
  • Corporate Governance & Activist Investing in IP

One-to-one meeting and networking sessions will be held throughout the conference.

A partial list of speakers includes:

  • Erich Andersen, Corporate VP & Chief IP Counsel, Microsoft
  • John Lindgren, CEO, IPVALUE
  • Todd Dickinson, Former Director, USPTO
  • Fred Fabricant, Head of IP Litigation, Brown Rudnick 
  • Paul Michel (ret.), former Chief Judge of CAFC
  • Hans Sauer, Deputy General Counsel for IP, BIO

For the full IPDF agenda, go here.

To register, go here.

CLE credit is available.

Images source: ipdealmakersforum.com

Royalty rates paid musicians decline for some streaming services

When it comes to getting paid, the bigger streaming service is not necessarily better for most musicians and song writers.

While the revenue and market share have grown for the leading streaming services, some significantly, the royalties paid to artists have been declining.

According to a recent article in The Trichordist, a publication dedicated to the protection of artists rights in the digital age, streaming royalties paid to artists declined in 2017.

The blog took snapshots from a major indie portfolio for 2017, 2016 and 2013. It found that “when streaming numbers grow, the per stream rate will drop.”

This data set is isolated to the calendar year 2016 and represents a label with an approximately 150 album catalog generating over 115 million streams, a fairly good sample size. All rates are gross before distribution fees.

Spotify was paying .00521 back in 2014, two years later the aggregate net average per play rate dropped to .00437 in 2016, a reduction of 16%, reports the Trichordist. The current effective per stream rate at Spotify has now dropped to 0.00397, a reduction of 9% since last year. This a cumulative reduction of 24% since 2014, which is an average decrease of 8% a year of the per stream rate.

Business Model Questions

“If the music business could set a per stream rate that allowed revenue growth, proportionate to consumption growth that would be a much better model,” said David Lowery, editor of The Trichordist and leader of the band Cracker and Camper Van Beethoven. Lowery teaches in the Music Business Certificate Program at Terry College of Business, University of Georgia.

A notable change from last year is that Pandora replaces YouTube with the greatest value gap of streams at 21.56% volume with only 7.86% of revenue. YouTube drops to 8.38% of volume with only 1.70% of revenue.

Indie Label Sample: 115 Million Streams

Top Players

Apple appears to be the lone streaming service that is growing both in market share and revenue, and is paying relatively high royalties. It accounts for 22.29% of the revenue on 10.48% of the streams, and pays approximately six-times the per-stream royalty rate of Pandora. (Apple’s iTunes is a direct purchase model, while Pandora offers a more radio-like format, which precludes on demand listener selection.)

More than 95% of the streams and 98% of the revenue were concentrated in the top ten companies. The top three, Spotify, Apple iTunes and Pandora, comprise about 80% of the streams for this representative catalogue and 82% of the total streaming revenue.

For The Trichordist‘s 2017 streaming sample, go here; 2016, here; and 2013 here.

Image source: thetrichordist.com

 

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