Tag Archives: patents

97% of Europeans regard IP rights favorably; 41% ages 15-24 believe it is sometimes OK to buy counterfeits

When it comes to intellectual property rights Europeans are highly respectful, except among the young, where buying counterfeits has gown.

That is the primary take-away of an extensive European Community survey of attitudes toward IP rights delivered recently. The findings show that 97% of Europeans believe that IP should be respected, and that inventors, creators, and performing artists need to be paid for their work.

In contrast to the overall positive regard for IP rights, however, 41 per cent of young Europeans, ages 15 to 24, said they believed it was acceptable to buy counterfeits if the original product was too expensive. 15% of those surveyed in that age group said that they had intentionally purchased a counterfeit product in the past 12 months, 9% higher than in a similar 2013 study conducted by the European Union Intellectual Property Office (EUIPO).

“European Citizens and Intellectual Property: Perception, Awareness and Behavior,” a 205-page research report, updates the first EUIPO provides further evidence of how IP rights are regarded by EU citizens at a time when encouraging innovation and creativity is increasingly the focus of economic policy.

“In line with the 2013 results, people do not always act in line with their stated position,” said EUIPO Executive Director, Antonio Campinos, in summarizing the findings. “The key 15-24 age group seems to have become less convinced that fake goods are damaging and is buying more counterfeit goods, mainly for price reasons.”

Significant Sample

“European Citizens and Intellectual Property” surveyed people across all 28 EU Member States about their perceptions of intellectual property survey. It consolidates results of more than 26,000 interviews and confirms the global picture assessed in the EUIPO’s 2013 research.

“Even during a period of economic crisis when household budgets have come under pressure,” the report concluded, “the vast majority of respondents agree that it is important that inventors, creators, and performing artists can protect their rights and be paid for their work.”

Eighty-three percent said they prefer to access digital content through legal or authorized services whenever there is an affordable option available, and 71 percent of those admitting to using illegal sources say they would stop, if they could access affordable alternative options.

Confusion is growing about what constitutes a legal source. In 2016, 24 percent of respondents, five percentage points more than in 2013, wondered if an online source was legal, rising to 41 percent among young people.

Half of the Europeans queried believe that strict protection of IP rights may, in fact, curb innovation, and more than half feel that IP principles are not adapted to the Internet.

Neither the 2017 survey and previous study focused on counterfeits and copyrighted content, or examine attitudes towards patents or trade secrets.

An executive summary for “European Citizens and Intellectual Property” can be found here.

For the full 2017 EUIPO IP perception study, go here.

Image source: euipo.europa.eu

Fixing the patent system/ promoting jobs is focus of Capitol Hill event

An increasing number of experts say the U.S. has lost its edge in the battle to secure and defend meaningful patents that stimulate competition.

It is with making U.S. patents important again that “Promoting Innovation, Investment and Job Growth by Fixing America’s Patent System” is being held on Monday May 8 at the United States Capitol Building, Washington, D.C.

The invitation-only event hosted by the U.S. Chapter of the International IP Commercialization Counsel (IIPCC), will feature an all-star list of presenters from business, government and law.

Speakers Include

Dr. Carl J. Schramm, University Professor, Syracuse University; Former President of the Ewing Marion Kauffman Foundation for Entrepreneurship; Board Member IIPCC; David Kappos, Partner, Cravath, Swaine & Moore LLP; Former Under-Secretary of Commerce and Director of the USPTO; Q. Todd Dickinson, Senior Partner, Polsinelli, PC; Former Under-Secretary of Commerce and Director of the USPTO; Judge Randall Rader, Former Chief Judge of the U.S. Court of Appeals for the Federal Circuit; Board Member IIPCC;  Judge Paul Michel, Former Chief Judge of the U.S. Court of Appeals for the Federal Circuit; Charles Henry Giancarlo, Former CTO and Chief Development Officer Cisco Systems and former Managing Director Silver Lake Partners; Phil Johnson, Former Senior VP, Intellectual Property Strategy & Policy, Johnson & Johnson; Marshall Phelps, Vice-Chairman, Center for IP Understanding; former VP IP for Microsoft, IBM, Bob Pavey, Partner Emeritus, Morgenthaler Ventures; former Chairman of the National Venture Capital Association;

Manny W. Schecter, Chief Patent Counsel, IBM Corporation; Laurie C. Self, VP and Counsel, Governmental Affairs, Qualcomm; Bill Elkington, Chair & President Elect, LES USA and Canada; Senior Director, IP Management, Rockwell Collins; Orin Herskowitz, SVP of IP & Tech Transfer, Columbia University; Executive Director of Columbia Technology Ventures; Teaches ‘IP for Entrepreneurs’ in Columbia’s Engineering School; Professor Adam Mossoff, Director, Center for Protection of Intellectual Property, George Mason; Professor Jeffrey A Lefstin, Associate Academic Dean and Professor of Law, UC Hastings; Robert B. Aronoff,  U.S. Executive Director, International IP Commercialization Council; Managing Partner, Pluritas; Damon Matteo, CEO, Fulcrum Strategy; Robert P. Taylor, President, RPT Legal Strategies; Venture Advisor, New Enterprise Associates, Bruce Berman, Chairman, Center for IP Understanding; Publisher, IP CloseUp; Principal, Brody Berman Associates; Elvir Causevic, Managing Director, Houlihan Lokey Tech+IP Advisory, Art Monk, VP IP Transactions, TechInsights; Rob Sterne, Founding Director at Sterne, Kessler, Goldstein & Fox

Opening Panel

IP CloseUp publisher and editor, and Center for Intellectual Property Understanding Chairman, Bruce Berman, is moderating the opening panel at 2:00 pm: The business impact of IP uncertainty and negative attitudes. Panelists include:

  • Manny W. Schecter (IBM)
  • Phil Johnson (J&J)
  • Marshall Phelps (Center for IP Understanding)
  • Laurie Self (Qualcomm)
  • Bob Pavey (Morgenthaler Ventures)

“Our patent system may no longer be providing the protection and incentives necessary to entice investors and entrepreneurs to assume the enormous risks that inhere in the creation of many new technologies and new companies,” said Rob Aronoff, IIPCC U.S. Chapter Chair.

“In recent years patent reform initiative have resulted in significant unintended consequences, including a decline in the reliability of patents is contributing to a waning of entrepreneurial energy and a decline in the risk tolerance of American investors and entrepreneurs.

Profound Implications

“This shift has profound implications for the long-term U.S. economy, as China, Korea, Germany and other countries expand the role that patents play in their economies with ambitious plans to displace American dominance of technology in the years to come. This program will explore the direct and essential role that strong and enforceable ‘good patents’ play in allowing investors and entrepreneurs to justify the high levels of risk that drive innovation.”

Conference sponsors include Houlihan Lokey, TechInsights, Qualcomm and Pluritas.

Partners include IAM Magazine, the Licensing Executives Society, the Center for IP Understanding, USIJ Alliance for Startups & Inventors for Jobs and IP CloseUp.

For more information, go here.

Those interested in attending can request and invitation, availability permitting, by emailing rob.aronoff@iipcc.org.

Image source: iipcc.org; west-windsor-plainsboro.k12.nj.edu

 

 

PTAB fairness data is misleading, say more patent holders

Not all patent owners agree the Patent Trial and Appeal Board (PTAB) is a fairer forum for vetting patent quality today.

While some believe that the United States Patent and Trademark Office (USPTO) board is no longer the “death squad” that it was described as by the former Chief Judge of the Court of Appeals, most patents subject to multiple inter partes reviews are, with an uncanny frequency, either invalidated or severely weakened. Few, emerge as clear winners.

The USPTO established the PTAB, an administrative law body, as part of the America Invents Act in 2012 to eliminate issued patents that should not have been granted because prior art way overlooked. IPRs are said to be a patent office “second look,” but while patent office re-examinations (an earlier review process superseded by IPRs) eliminated many patents that should not have seen the light of day, they also strengthened some, making them easier to license. To date, IPRs effectively have been a one-way street, eliminating many patents that should not have been issued but ineffective at identifying good ones.

An article that appeared last week, “How IPR Gang Tackling Distorts PTAB Statistics,” takes the recently reported data to task for misleading about the ultimate effect of multiple IPR filings on a single patent.

“If you use the PTAB published statistics, they’ll tell you that the institution rate was 50% – because only 1 of 2 petitions was granted. That’s true, as far as it goes. But from the patent owner’s perspective, they used to have 10 claims, and now they have 0.  That’s a 100% kill rate!”

“Assume 10 petitions and one institution,” wrote Peter Harter in IP Watchdog. “A 10% institution rate seems terribly biased towards [in favor of] the patent owner. But if all 10 claims get killed, that’s still a 100% kill rate – pretty good for challengers. When both sides think the deck is egregiously stacked against them, it’s easy to see why there’s no middle ground for compromise and improvement. And the way the PTAB is reporting statistics is to blame.”

An article that appeared recently in Law 360, “Inter Partes Reviews Becoming Friendlier to Patent Owners,” argues that holders whose patents are subjected to IPRs today have a better chance of survival than in the past.

“The PTAB also now institutes inter partes reviews less frequently,” writes Law 360. “Looking at all institution decisions made by the PTAB, the board decided to institute trials more than 85 percent of the time in the first year after inter partes reviews became available (2013) according to data from the U.S. Patent and Trademark Office, but only 68 percent of the time in its 2016 fiscal year.”

Statistically Valid

The decline in the institution rate may be statistically valid, but some patent holders argue that it does not tell the whole story. The statistics do not explain that some of the worst, most easily invalidated patents came before the PTAB in the first year of its existence, so the institution rate was destined to go down as it became clearer the weakest patents had been terminated.

Results from a November-December 2016 Bloomberg Law and AIPLA research study asserts that “progress has been made in patent owner attitudes towards IPRs.” However, it really depends on which patent owners you ask: those that have large portfolios that they rarely enforce or those with a small number of quality patents that they wish to license.

Brad D. Pendersen, former chair of AIPLA’s IPR Committee and co-author Bloomberg Law-AIPLA’s Patents After the AIA: Evolving Law and Practice (2016) believes that there is an opportunity for patent holders subject to IPRs to strengthen their patents, despite evidence to the contrary.

“Given the potential gold-plated downstream advantages (in litigation and/or settlement) of surviving an IPR (either at the Decision or Institute stage, at the Final Written Decision stage), and given that one-third of patents survive at the Decision to Institute Stage, it is surprising – but not completely unexpected – that some portion of patent owners are starting to look more favorably on the IPR process.”

It is not clear that most patent owners who license would agree with the “gold-plated” reasoning. If it were true, there would be even fewer patent suits and more owners seeking IPRs of good patents. In fact, it is a bit of a mystery what happens to patents that pass PTAB muster. A significant number appears to move on to district court litigation, and there is little data analyzing if they have greater value or fare any better licensing than patents that are less successful running the IPR gauntlet.

Leading IPR Target

Finjan is an example of an IP holder that engages in licensing whose patents are frequently subject to IPRs. The company has fared surprising well in defending itself at the PTAB, but that success does not seem to have translated into significant shareholder success for the cybersecurity company which also frequently out-licenses its patents.

On March 15, 16 and 17, as reported in The Patent Investor, Finjan won three more IPR rulings, involving Palo Alto Networks. Shares of Finjan (FNJN) currently sell at just $1.54. The company has a micro market capitalization of $35M, $18M on 2016 revenues. Its shares are up significantly over 12 months vs. for the S&P 500 Index, but the company, which lost $12.6M in 2015, showed its first profit in 2016, $350K or .02 per share. Finjan has executed a difficult IP strategy. If successful IPRs have gold-plated its patents, the value has yet to shine through.

Finjan was the fourth most IPR’d patent holder in 2016 and the third most in 2015. It is the most successful company in successfully defending against IPR petitions. Of 47 total IPRs against Finjan patents to date, 32 have been denied institution.

With that track record at the PTAB, one would think Finjan would have a field day licensing its patents, but the IPRs continue to come, and it still must win hard-fought victories in district court litigation. In September, a California jury found that cybersecurity firm Sophos infringed all eight patents asserted in a lawsuit brought by Finjan over software that identifies new computer viruses, awarding the company $15 million in damages.

“We have a portfolio of patents that has been proven durable in light of the increasing number of administrative pathways to challenge validity largely due to two factors,” says Finjan CEO, Phil Hartstein.  “First, our patents were developed jointly and alongside product development of technology that was disruptive to a market.  Second, we do not deviate from the intrinsic record of the assets themselves and vigorously defend our patent rights on the merits.”

Coordinated Challenges

Editor and patent attorney Gene Quinn of IP Watchdog believes that Finjan and other businesses that attempt to out-license their patents are frequently subject to repeated, coordinated attacks.

“At least several patent owners, including Finjan, are routinely subject to serial, harassing IPR challenges,” writes Quinn. “The Patent Office doing something about harassing IPR challenges is long overdue. If the Director is not going to exercise the discretion vested in that Office by the America Invents Act (AIA) hopefully more panels of the Board will take it upon themselves to do just that.

“Patent owner harassment needs to stop. Patent owners shouldn’t have to be subjected to many dozens of IPR challenges before someone recognizes there is coordinated harassment – perhaps even collusion – against certain patent owners who have the audacity to want to be paid for blatant, ongoing, willful infringement.”

23 IPRs Filed on a Single Patent

Zond makes plasma generators, the kind used in manufacturing semiconductors. Pulsed DC plasma generators for magnetron discharge were first introduced in the late 1990s to reduce arcing during for the purpose of improving the quality of thin-film materials. A big breakthrough came in September 2002, when Zond applied for what it describes as a “revolutionary” pulsed technology approach.

Zond is a Massachusetts-based company that wholly owns Zpulser LLC, which commercializes its patent technology by making and selling high-power plasma generators. The patent at issue relates to methods for generating magnetically enhanced plasma.

Over the last three years, Zond’s patents have challenged an average of 12.5 times in IPRs and as many as 23 times.  The patent research firm, Patexia, writes that it is difficult for holders of good patents to survive multiple IPR challenges. In the case of Zond, it has made licensing pretty much impossible.

A study last year, reported in Law 360, showed that Zond’s patents have been challenged in AIA reviews more than those of any other patent owner, including largest patent licensing company, Intellectual Ventures, which owns more than 70,000 patents and took second place on the list.

Zond’s large number of infringement suits, reports Law 360, spurred many companies to band together to challenge the patents in AIA reviews. In addition to Fujitsu and Gillette, petitioners have included Toshiba Corp., Advanced Micro Devices Inc. and Taiwan Semiconductor Manufacturing Co. Ltd.

Were potential licensees and defendants in patent suits lining up against Zond’s patents because they were bad and its case without merit, or did they want to destroy some potentially good patents that would have cost them to license?

For IPRs the devil certainly is in the details, as Patexia’s Pedram Sameni points out in a case study, “Can Patents Survive Multiple IPR Challenges?”

“Some have been suggesting that solely relying on the denial rates reported by the patent office is not enough to conclude that patents are surviving the IPR challenge,” writes Sameni. “Many have called PTAB, the patent death squad. Our study shows that in some cases, patents are challenged many times.

“The reality is that it only takes one successful IPR to completely kill all the claims of one patent. Therefore, the case-level status is not the best indication of PTAB performance and patent survival rate. While as IPR’s Final Written Decision usually means that some of the claims were invalidated, it does not necessarily mean that all claims were canceled.”

Not the Full Story

If claims still exist, they could be threats. And potential licensees/defendants will go to lengths to “kill” a patent to avoid paying a license or being dragged into court, including teaming on multiple petitions. Repeat IPRs are an efficient way to make a potential infringement suit or royalty payment disappear for multiple parties.

“The statistics that show that the PTAB is becoming fairer for patent holders do not tell the full story,” a prominent NPE told IP CloseUp. “IPRs are frequently unfair fights between several, well-funded petitioners and a single patent owner who has to run the gauntlet, repeatedly.  Surviving an IPR doesn’t mean anything if subsequent challenges can be filed at any time, especially in coordinated fashion.”

Once a patent is challenged multiple times with different prior arts, it is highly unlikely that any of its claims will survive – no matter how good it is.

“The PTAB may not be a death squad, but challenged patents are put in a kind of headlock that can render them useless. Where are the patents that emerge from IPRs generally intact or whose petitions against them for review are not instituted? They should be eminently licensable, but they are nowhere to be found. The ‘normalization’ statistics that are being cited to show that the PTAB is becoming a fairer forum for patent holders are highly misleading.”

Lack of Uniformity

Another patent licensing business, one whose petitioned patents have survived multiple IPRs, still believes that the lack of uniformity among the many PTAB panels and administrative law judges is a major factor in the continued unfairness that has effectively destroyed patent licensing for many companies and independent inventors.

“It’s difficult to predict how the PTAB will rule,” says the executive, a lawyer. “The first year or two that patents were subjected to IPRs there was a lot of low-hanging – really, rotting –  fruit. Those petitions were almost universally instituted, and many bad patents were appropriately eliminated.”

“But anyone can file and IPR and they can keep filing them. Reliable patents don’t seem to emerge from the process, only ‘bad’ ones, which are eventually neutralized. Few patent holders have the time or money to repeatedly defend themselves in IPRs. This has made otherwise licensable patents pretty much worthless and daily infringement, at least to some, an acceptable way of doing business.”

Image source: patentlyO.com; patentacademyonline.com; 

Three notable IP events coming up in NY, SF and Bangalore

IP event season is upon us and at least three conferences are worth noting. 

The first takes place this week in New York, March 21-22, the 9th annual Corporate IP Counsel Forum. The USPTO Keynote will be given by Mary Boney Denison, Commissioner for Trademarks and Mark Powell, Deputy Commissioner for International Patent Cooperation.

The featured session will be “Reconsidering Patent-Eligibility under Section 101.” Speaker faculty can be found here and the conference agenda here. I understand that there are only a few seats left.

IP CloseUp readers can save $200 by using registration code IPCNYC.

*****

The World IP Forum will take place this year April 26-28 at the Shangri-La Hotel in Bengaluru (Bangalore), India.  The theme for the conference is “Harnessing the Power of Intellectual Property.” The fourth edition of this three-day conference will focus on recent developments in intellectual property and its syncing with business objectives. Past participants have include Judge Randall Rader and former USPTO Commissioner Q. Todd Dickinson.

For more information about the World IP Forum, go here.

*****

On May 18 San Francisco’s Golden Gate Club (at the Presidio) will be the site for IAM’s IP Software Summit.  The Summit is the first event to provide a platform for professionals from the software industry to discuss open innovation, open source and proprietary systems, collaboration, the scope of patent protection, and monetization.

The list of speakers can be found here and the full agenda here.

Speakers include senior IP executives from Cisco, Qualcomm, Mozilla, SAP, Open Invention Network, Google, Uber, LinkedIn, Ericsson and IBM.

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

Trade in counterfeit & pirated goods is $.5 trillion – 2.5% of all imports

“Fakes,” or counterfeit products, are a growing menace that deplete resources, threaten jobs and endanger lives. 

A report compiled by the Organization for Economic Cooperation and Development (OECD) says that imports of counterfeit and pirated goods are worth nearly half a trillion dollars a year, or around 2.5% of global imports. That is about the entire GDP of Austria, or of Ireland and the Czech Republic combined.

The U.S., Italian and French brands have been the hardest hit, and “many of the proceeds going to organised crime.” The 2016 report was co-authored by the EU’s Intellectual Property Office. China also is in the top 12 (see graph below).

Five-percent are Fakes

Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact puts the value of imported fake goods worldwide at $461 billion in 2013, compared with total imports in world trade of $17.9 trillion.

Up to 5% of goods imported into the European Union are fakes, the report stated. Most originate in middle-income or emerging countries, with China the top producer.

“Transit points include economies with very weak governance and having a strong presence of organized crime or even terrorist networks (e.g. Afghanistan or Syria).”

nationshit

“Given the fundamental economic importance of IP, counterfeiting and piracy must be directly targeted as a threat to sustainable IP-based business models,” concludes the OECD report.

China may be making great strides in domestic patent protection (see China is Poised to Overtake the U.S. as the Leading Patent System) with low injunction hurdles and high respect for foreign-held rights, but as of 2013, it was responsible for almost two-thirds of global counterfeits, based on the percent of seizures documented.

Missing: Content and Invention Theft

Ironically, the Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, does not mention content sharing or copying, copyright violations, as a global threat.

It also does not address the economic impact of products being falsely sold as original that are infringing other businesses’ patents.

fakeoriginators

For those interested, the 2017 OECD Global Anti-Corruption and Integrity Forum will be held this year in Paris, March 30-31. For more information go here.

 

Image source: OECD report

‘Innocent’ IP theft is widely accepted and dangerously viral – Why?

So widespread is IP abuse that it no longer is regarded as a crime by many of the people committing it or authorities entrusted to preventing it. 

What has happened to change law-abiding citizens and honest businesses into serial patent, copyright and trademark infringers?

Start with geometric increases in information and speed. Putting enormous computing (and copying) power in the hands of billions of people and tens of thousands of businesses has made access seamless. What’s theirs often feels like mine, even when it is not.

26069006_sA heightened sense of entitlement is another factor. People want their Rolex or Gucci bag, or latest Adele song, and they want it now, for a fraction of the actual cost if not for free. (The same could be said of the latest mobile phone chip.)

Many businesses believe that even if they did not invent a particular product feature, they definitely could have, and why should they pay for it if no one is forcing them to. Besides, someone has to identify infringement and prove it in court. Good luck with that.

Unusual Bond

Consumers and companies have an unusual bond: they know that they can freely infringe without much fear of retribution. And you know what, they think — “everyone seems to be doing it lately.”

A third but not final reason is suspicion of IP rights and owners. Patents, copyrights, trademarks all are government-issued, lawyer-administered and business-owned rights. The average person will never own an IP right and believes that benefiting from them is for the privileged or wealthy. They are only partially right. No one – not the lawmakers, not federal agencies, not the police, the schools or businesses or community leaders – has done a very good job of explaining what’s in IP for them?

Fueling the Rise in IP Abuse

“When theft is no crime” in the March IAM magazine, the Intangible Investor looks at the rise in IP abuse and what is fueling it. IAM subscribers can go here for the full article.

Free riding comes in many shapes and sizes. It is economically a threat and constantly growing. It has become so much a part of American fabric that millions of people, businesses and community leaders are not even aware that it is taking place. IP theft may seem like a victimless crime, but data shows it is not.

The Department of Commerce’s 2016 update, Intellectual Property and the US Economyreports that IP-intensive industries supported 45.5 million jobs and contributed $6.6 trillion in value added, equivalent to free-riding-final-2-768x34638.2% of US gross domestic product. These impressive results for IP holders are far from guaranteed if IP protections can be easily ignored. On the down side counterfeits, patent infringement music file sharing are way up.

Re-writing the Rules

Whether they acknowledge it or not, some companies and individuals are attempting to rewrite the property rule-book, or, at least, ignore it as long as they can. The impact may not be that readily apparent at first, but it will eventually be widely felt: by musicians, authors, inventors, investors, small businesses, consumers and companies selling products from automobile brake parts to pharmaceuticals and luxury goods – along with their employees. 

Lack of awareness plays a role in ignoring IP rights, but there may be something deeper and more insidious going on: distrust of authority and frustration with government and laws. Some of this anger has been orchestrated by anti-patent lobbyists.

Routine acceptance of IP theft also reflects the growing antipathy towards so-called ‘elites’, which led to Brexit and the election of Donald Trump. Why IP holders don’t deserve exclusivity and land owners do is rooted in how the culture views IP rights and holders, as much as the difficulty accepting their value.

People need to be reminded that with IP rights, not every restriction is an obstacle.

________

I will be announcing a non-profit organization in a few weeks dedicated to addressing the lack of IP awareness and increasing hostility to rights. Watch IP CloseUp for more information.

Image source: digitalguardian.com; theCenterforIPUnderstanding

 

Inventor Kearns’ fight with Ford & other auto cos is 2016’s most read IP CloseUp post; 20,000+ visitors

An article summarizing inventor Robert Kearns’ epic battle against the automobile industry is this year’s most read IP CloseUp post with more than 21,000 visits.

The post summarizes the twelve-year patent suit mounted by Kearns, the inventor of the intermittent windshield wiper, against Ford and much of the automobile industry in the 1980s and 1990s, for stealing his invention.

“Kearns’ Son Still Fuming Over Wiper Blade Fight” generated 21,374 visits thus far in 2016, up from 6,928 in 2015. Total visits are over 30,000, which makes it the most read of almost 300 IPCU posts.

What about this story resonates with readers?

It could have something to do with the 2008 movie, Flash of Genius, that memorialized Kearns’ battle and depicted how it contributed to his mental breakdown and loss of his family.

Bittersweet Victory

Flash of Genius, starring Greg Kinnear as Robert Kearns and Alan Alda, as Gregory Lawson, his ambiguous attorney, opened to mixed but generally positive reviews (59% Tomato Meter; 55% Audience Score). It had a $20 million budget but grossed just $4.8 million at the box office. (Alda, of M*A*S*H fame, BTW, is a champion of understanding science 51yeitvgpaland innovation, and founded the Alan Alda Center for Communicating Science at Stony Brook University.)

The movie has many fans. I suspect that when it it is streamed or runs on a movie channel curious viewers run to Google hopeful of learning more about the enigmatic Kearns and his dispute with auto giants. It pitted him as David to their Goliath. (Thanksgiving weekend alone, which is prime movie-watching time, there were more than 1,500 visits to the post on IPCU.)

Even though Kearns eventually won significant awards, $10.2 million from Ford, and a total of $30 million from Chrysler, it is easy to believe that the struggle, which cost him his family and affected his sanity, may not have been worth it.

Apparently, no one thought so except Kearns, a college professor, former cryptographer in WWII and officer at a U.S. agency that was the forerunner of the CIA. (See the link to his obituary on the original IP CloseUp post, above.)

High Search Ranking

The Kearns’ post’s popularity probably also has something to do with its high Google search ranking under Kearns’ iconic name. It’s the second item after a rather tepid Wikipedia entry.

Supporters of the film include Peter Travers, long-time film critic for Rolling Stone. He gave it three out of four stars, saying “Kinnear takes the star spot in Flash of Genius and rides it to glory… Kearns wasn’t a movie hero. His halting courtroom delivery lacked Hollywood histrionics. Kinnear plays him with blunt honesty, sagging under the weight of stress but maintaining a bulldog tenacity that would win the day. Was the battle worth it? Kearns’ conflict is readable in Kinnear’s every word and gesture. His performance is worth cheering”.

Stephen Holden of The New York Times called the film “a meticulously constructed mechanism, one that wants to convey the same mixture of idealism, obsession and paranoia found in whistle-blower movies like Silkwood and The Insider,” thought it “has the tone and texture of a well-made but forgettable television movie”.

Lead actor Greg Kinnear, who in the lead role is more likable than Kearns was, won the Boston Film Festival Best Actor Award for his portrayal.

kearns-familyThe Kearns story strikes a chord deep in everyone. It is a quintessentially American tale of the forward-thinking little guy against diverse array of nay-sayers, his family included. Kearns’ sincerity as an engineer who craved recognition for his work more than his financial security is not lost on audiences, who see Flash of Genius, weaknesses aside, as an emotional and somewhat cautionary tale that is difficult to forget.

____________________

Whether it was ego, anger, greed, or a combination, that ultimately motivated Kearns to go as far as he did for as long, the inventor’s greatest accomplishment may not be the valuable device he created, which no doubt helped save lives, but his perseverance and drive to prove that it was stolen from him.

___________________

Whether or not Kearns was selfish or unbalanced, patent holders have benefited from his trail-blazing determination and refusal to take settlement money when he needed it most.

Stacked Deck

The environment for inventors and innovative small businesses today who wish to license their rights is not much different from when Kearns fought his epic battles. In fact, the obstacles may be worse.

With “efficient” patent infringement the preferred strategy of many the leading technology companies today, and higher validity and patentability hurdles established by the Patent Trial and Appeal board and the courts, the deck continues to be stacked against IP holders – even those with the capital, time and patent quality to succeed.

[Note: A company that employs “efficient” infringement believes that it is highly unlikely it will be caught using an invention it is not entitled to, and if it does, it is unlikely that it will have to pay much. For them, choosing not to take a license unless forced to by the courts is in their view a prudent business decision, ethics aside.]

Flash of Genius is available from Amazon, iTunes and other sources, to stream, rent or buy. Recently, it became available to Netflix subscribers for free. The official movie trailer can be seen here.

For those interested in the topic of Kearns and independent inventing, the long and thoughtful 1993 New Yorker magazine article by John Seabrook on which the movie is based is not to be missed. It is available for free by going here.

To read the original Kearns post on IP CloseUp, go here.

Image source: allesantiago.wordpress.com; amazon.com

 

Gov’t study of economic impact of patent infringement is needed ASAP, experts say

There are abundant statistics on the cost of counterfeit goods, copyright infringement and even the negative impact of patent “trolls,” but nothing on the estimated extent of U.S. patent infringement and the cost in lost jobs, failed businesses and unpaid taxes. 

Global trade in counterfeits or fake goods, such as fashion, automobile parts and pharmaceuticals, has reached $600 billion annually, or about 5%-7% of GDP.  

The U.S. economy alone loses $58 billion each year to copyright infringement (2011 estimate) — crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue.

The Recording Industry Association of America (RIAA) reports that the U.S. economy loses $12.5 billion in total output annually as a consequence of music theft and that sound recording piracy leads to the loss of 71,060 U.S. jobs, as well as losses in tax income.

Statistics on the cost of counterfeits and copyright infringement are conducted fairly regularly. There is even biased research on the cost of non-practicing entities. (Claims of $29 billion in damage from “trolls” are wildly inflammatory, says a former USPTO commissioner, which despite having been debunked are still cited by academics and reporters.)

Surprisingly, there are no estimates of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses, unpaid taxes and other economic impact.

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“There have been no studies that I am aware of devoted to quantifying the amount of patent infringement in the United States,” said Gene Quinn, patent attorney and publisher of IP Watchdog told IP CloseUp.

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“”It would be extremely helpful to get some kind of quantification of the amount of harm that befalls innovators through the concerted and calculated ‘efficient’ infrdataingement business practices of those who use technology and simply refuse to pay for their ongoing, and frequently willful, patent infringement.”

Tip of the Iceberg?

Patent damages paid may be the tip of the infringement iceberg. The real damage may be below the waterline.

To provide some context, 15 leading technology companies paid patent litigation damages of more than $4 billion over as 12-year period from 1996-2008.

That’s just a little over a dozen companies who had to pay damages. The figure presumably does not include settlements, licenses, and all of the times they and thousands of other businesses paid nothing for the inventions that they used.

The Impact of Undetected Infringement 

  • Today, with more issued U.S. patents, and much greater difficulty securing a license or winning a patent law suit, the amount of patent infringement that actually takes place but remains unidentified could exceed a trillion dollars.
  • There is no known government, academic or privately commissioned study of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses and economic loss.

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“It is not enough just to be aware that there is harm caused by undetected patent infringement,” said Paul R. Michel, Chief Judge of the Court of Appeals for the Federal Circuit (ret.). “The government needs to conduct a proper empirical study ASAP to determine its scope and impact.”

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Image source: ltrdigitalgroup.com

 

 

Can small businesses afford weaker U.S. patents?

Can businesses and entrepreneurs compete with weaker U.S. patents in an innovation-driven global economy?

An event featuring a broad range of IP thought-leaders on October 26 in Silicon Valley will attempt to find out.

“Entrepreneurship, Innovation and Patenting in the U.S. – Implications for the future of U.S. Competitiveness” is the topic of a presentation and networking session being held at H-P World Headquarters in Palo Alto on Wednesday October 26 at from 6:00 to 8:imgres30.

The event is open to the public and limited seating is available on a first come basis. There is a $40 charge to cover food and refreshments.

Speakers include Professor Carl J. Schramm, The Hon. Judge Randall Rader (Ret.) David J. Kappos, former USPTO Commissioner and former head of intellectual property at IBM, and Professor Adam Mossoff of George Mason University School of Law where he co-founded the Center for the Protection of Intellectual Property. Robert Aronoff is the organizer. The International IP Commercialization Center is the sponsor.

For the full list of speakers go here. To register go here.

Image source:iipcc.org

Accenture upsets blockchain believers with patent filing

Consulting giant Accenture has rattled the cage of the fintech community by filing a patent for an “editable” blockchain that would allow a central administrator to edit or delete information stored in a permissioned blockchain system.

Business Insider cites a Financial Times report that states a permissioned system is governed by a central administrator using agreed upon rules. This differs from permissionless systems, like those used by blockchain pioneers such as Bitcoin, which have no central authority. A key feature of permissionless systems is that the records they contain cannot be changed.

Accenture unveiled a prototype of the blockchain on Tuesday developed jointly by Accenture and Giuseppe Anteniese, a Stevens Institute of Technology professor.

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Undermining Immutability?

“An editable system goes against one of blockchain technology’s key principals — immutability” reports Business Insider. The move is controversial to many because blockchain was conceived as an immutable, tamper-proof ledger, which eliminated the need for a centralized authority.

Accenture insists that immutability is not necessary in permissioned systems because everything is overseen by a single governing authority, and argues that the need for it in a permissionless system is part of the reason banks have been slow to create viable use cases with blockchain technology.

Business Insider thinks the success of Accenture’s system will depend on “whether or not financial services firms intend to use blockchain for use cases that require flexibility. Should they decide to implement the technology in more straightforward capacities, like managing their customers’ personal details, Accenture’s functionality would not likely be especially useful.”

Patent Application

There is no indication why a mere patent application — not a publication, notice of allowance, grant or successfully adjudicated right —  has reached this level of media coverage. Of late, blockchain-related patent filings, as well as issuances, have received significant coverage, prompting some to question where blockchain is headed.

Image source: businessinsider.com; bitcoinmagazine.com

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)

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