Tag Archives: Verizon

An AT&T-Time Warner deal may affect the value of more than premium content & copyrights

The $85.4 billion buyout of Time Warner Corporation (TWC) by AT&T, if it goes through, is a good omen for the value of content providers, like HBO and CNN.

It is unclear, however, how the ambitious acquisition will affect less well-branded copyright holders like independent film productions, TV studios and recording artists dependent on digital distribution.

If content is now truly king, the tide may rise broadly, and rather rapidly.

If nothing else, the proposed acquisition conveys a heightened respect for content – and willingness to pay premium for it – that Google, its YouTube subsidiary and others have heretofore been reluctant to acknowledge.

“The deal is probably neutral for copyrights, but it has the potential to be positive,” one purveyor of music and the content told me from Los Angeles. “The combined entities will still be about half the size of Google, and will be saddled with $120 billion in debt. With those numbers, AT&T’s 5.1% dividend may longer be a given.”

Time Warner is the world’s largest diversified media company.

AT&T’s $107.50 per share offer is 35% premium over its market value. You have to wonder what the transaction might do to secondary content brands like indie labels and movie producers. It’s not just about having a great lineup, but about the particular content that Internet provides believe audiences will crave, which is currently in flux.

AT&T is betting that premium content will matter deeply. Other streaming services are not so certain.

The Future of TV & Broadband

If all of this sounds a bit speculative,” reported The New York Times, “that’s because it is. What this deal actually symbolizes is that the future of television is increasingly going to be built on lots of bold, possibly speculative, experiments.”

Recent acquisitions by Verizon included AOL and Yahoo, which some view as content. I tend to believe that content protected under copyright, and premium content (HBO, CNN) will certainly benefit.

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This chart represents TWC prior to the sale of  AOL to Verizon.

 

Bad Business or Goog Timing?

Is the AT&T-TWC deal inherently anti-competitive or merely timely recognition of undervalued assets? After the deal will all content delivery continue to be treated fairly on the AT&T network so far as delivery speeds are concerned?

Will Disney, Comcast – which had acquired NBC-Universal – and Fox move swiftly to shore up their own content?  It’s too soon to tell, but there may be more pressure on Google to become more proprietary with regard to content (and maybe patents) than it has in the past.

It also will be interesting to see if there is a ripple effect on streaming content like music with services like iTunes, Pandora and Spotify.

A list of assets owned by TWC can be found here.

Image source: cnn.com; valuewalk.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)

Mobile & Other Patents will Play a Role in Pantech Bankruptcy Sale

Expect a transaction to yield some clues about which smart phone-related patents are interesting, what they are worth and to whom.

Struggling South Korean handset maker, Pantech, announced this week that it is up for sale. Pantech’s financial troubles could be other technology companies’ gains, especially if they are interested in cracking the lucrative Korean smart phone market.

A Pantech sale for all or parts of the company also will test the volatile market for US cell phone patents many businesses and NPEs still covet.

After filing the equivalent to Chapter 11 bankruptcy  earlier this year patent-rich Pantech, which sells in the US through AT&T, Verizon and others, announced recently that it was for sale.

Envision IP published a report yesterday that provides a snapshot of Pantech’s patent portfolio. While the size of the portfolio is only a fraction of Samsung’s (60,000 total US patents) and LG’s (30,000), the patents it contains, a number covering signal transmission, appear to be similarly valid based on citation analysis.

Pantech currently owns 291 US patents, with 269 utility patents and 22 design patents. Pantech also owns 2,654 foreign patents, with the 2,239 of these being Korean patents, and 211 European patents.

“In terms of reverse and forward citations, the portfolios of all three companies are relatively comparable,” said Maulin Shah of Envision IP. “The citation analysis indicates that Pantech’s patents, on average, are technically as strong as Samsung’s patents from a validity standpoint, based strictly on the reverse citation count.  With regards to how

EnvisionIP-Pantech-US-Patent-Portfolio-e1412174293852

innovative Pantech’s patents are to the mobile device sector, the patents appear slightly less fundamental than both LG and Samsung’s patents, based strictly on the forward citation count.”

Korean network carrier SK Telecom has been considered the front-runner for the bid. Other Korean conglomerates such as Samsung, LG and Hyundai Motor Group have also been mentioned as potential buyers. (In 2013 Samsung acquired a 10% stake in the struggling company.)

No US or European buyers have been named.

“The possibility of a foreign company nabbing Pantech is also very real,” reports CNET. “Earlier in April, an Indian consumer electronics giant, Micromax, had considered buying a sizeable stake in Pantech. Chinese handset makers Huawei, Lenovo and Xiaomi could all benefit from acquiring Pantech, forging entry into the nigh-impenetrable Korean handset market.”

Image source: pantechusa.com; envisionip.com


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