Tag Archives: Wall Street
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Licensing deal with IP rights group ends YouTube blackout in Germany – “no more red faces”

Tens of thousands of recording artists and musicians in Germany will be receiving payment for their content under the terms of agreement struck last week between YouTube and GEMA, Germany’s leading royalty collection group.

The deal will end a seven-year YouTube ban in Germany, which had previously blocked access to the streaming site over non-payment of performance royalties. It is unclear if the pact is a harbinger of things to come in the ongoing battle between streaming sites, search engines and content providers, such as musicians, or if it includes published works, like books and photographs.

Resolution of the dispute, reports The New York Times, comes “with European officials revamping the region’s copyright rules to give more power to music labels, publishers and other content producers over the likes of Google, which owns YouTube, and Facebook.”

“We remained true to our position that authors should also get a fair remuneration in the digital age, despite the resistance we met,” Harald Heker, GEMA’s chief executive, said in a statement. He added that the agreement covered future royalties, as well as those accrued over the last seven years.

Blocking alert that German YouTube users will no longer see

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“This is a win for music artists around the world, enabling them to reach new and existing fans in Germany, while also earning money from the advertising on their videos,” YouTube’s Christophe Muller told TorrentFreak, a publication dedicated to bringing the latest news about copyright, privacy, and everything related to filesharing.

TorrentFreak also reports that “Increasingly, music groups are criticizing YouTube for ‘profiting’ from the hard work of artists without paying proper compensations, so it’s not unlikely that similar deals will follow in other countries.”

A prominent L.A.-based producer told IP CloseUp that the deal (which deal? The deals in other countries? “that such deals in other countries”) “appears to be progress,” but Google (which owns YouTube) is too big for the little record companies to fight. “Whenever they try collective action, Google runs to the anti trust authorities.”

Agreement that the Internet has been bad for the music business is not universal. Factors that influence “free” distribution depend on a label’s size, the popularity of its artists and their point-of-view about how best to generate income. Sony has said that impeding YouTube costs the music industry millions of dollars.

One of the people who embraces this positive view of streaming is Edgar Berger, Sony Music’s CEO of international business. In a recent interview he stressed the importance of the Internet, while noting that the increase in Internet sales almost makes up for the decline in physical sales. See a summary of the interview, here.

“There is absolutely nothing to complain about. The Internet is a great stroke of luck for the music industry, or better: the Internet is a blessing for us,” Berger said.

No More Red Faces

“The [GEMA] deal means YouTube will unblock thousands of clips in Germany for the first time in seven years,” wrote Bloomberg News. “When German music fans in the past tried to watch videos of their favorite songs they only got an youtube-sad-face-300x159error message showing a red YouTube sad face with a line saying the content was banned from the portal for copyright reasons.”

The parties did not disclose financial details of the agreement. YouTube has, in the past, struck similar deals with dozens of groups around the world, including one in 2009 with the U.K.’s PRS for Music.

The groups also did not say if YouTube’s familiar sad red face would be replaced with a happy green one.

Image source: theheureka.com

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Patent quality puzzle is dissected in new WIP0 magazine article

A good patent is becoming increasingly harder to find.

In the current issue of WIPO Magazine my article, “The puzzle that is patent quality,” looks at how the importance, market value and reliability of a patent can vary with perspective, as well as its right to exist.

Patent quality may start with validity but it does not end there.

“[With patents] the discussion is typically about validity, not the quality of an invention or its market value,” I write. “When someone speaks of a ‘good’ patent they could be referring to one or more characteristics: the patent’s likelihood of being upheld if enforced (litigated), the importance of coverthe invention it excludes others from practicing; or its relative value (in terms of protecting profit margins or generating direct licensing revenue) to a particular holder at a given time.”

Defining a patent that is worthy of scrutiny, and provides a degree of certainty, is no easy feat.

More work is needed on the legal and market implications of patent quality, as is a better system for determining patent quality and value earlier and more efficiently for a broader range of technologies. The uncertainty associated with patents costs companies billions and dissuades innovation and investment.

The August issue of WIPO Magazine is available here. My piece begins on p. 16.

For the slightly shorter web version go here.

Image source: iplawleaders.com; wipo.int.

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Liquidation Value of Alcatel IP Rights is said to be $3.9B to $5.9B

Bernstein Research and WSJ say that the company’s patent value is up to three times greater than its current market cap

A credible news source is reporting that the liquidation value of the patent portfolio and other IP rights of beleaguered telecommunication equipment company, Alcatel-Lucent (NYSE: ALU), is worth as much as $6B.

Alcatel-Lucent, which current is trading at $1.12 per share at the close on Friday, has about 28,000 patents, many the best of which according to IP CloseUp sources have already been licensed. Back in February it also tried to license patents through defensive patent aggregator RPX (NASDAQ: RPXC).

alcatel-lucentAccording to a chart that appeared in the Wall Street Journal on December 7 attributed to FactSet and Bernstein Research , the intellectual property liquidation value of Paris-based Alcatel-Lucent is 3B to 4.5B euros or, at $.131 USD per euro, about $3.9B to $5.9B USD. It is not clear if this figure includes equity associated with the Alcatel-Lucent brand or trade secrets.

Alcatel-Lucent still hold some patents based on research conducted at famed AT&T Bell Labs. Lucent was established in 1996 and sold to Alcatel in 2006.

According to patent valuation experts the estimated value of the ALU IP rights could be even further afield than the $2.4B-$2.6B estimate for bankrupt Kodak’s patents. (It was announced last week that the Kodak portfolio is about to be sold for $500M to a “consortium of bidders” as part of a refinancing deal by a group led by JP Morgan Chase and UBS.) The heavily encumbered and much shopped Kodak portfolio could not generate auction bids of much higher than $150M.

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Inflated values for patents of public companies in search of a higher stock price help no one.

Do analysts and the media really believe they can throw around valuation numbers without consequence or support? The sale of Nortel’s uniquely overpriced portfolio for $4.5B in 2011 to a group led by Apple, Microsoft, Ericsson, Sony and RIM was an anomoly. It has skewed expectations about the real world value of patents.

For analysts to suggest that patent may be worth several or more times than they can reasonably generate is arguably irresponsible and a disservice to shareholders and innovators alike.

It could hurt more than help these companies and their investors in the long run, as attempts are made to establish more accurate prices and efficient markets for intangible assets worldwide.

Illustration source: mobile-web.me

Disclosure: Neither Brody Berman Associates nor Bruce Berman owns shares of Alcatel-Lucent or holds a position, long or short.

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IBM’s Huge Lead in Patents: Under the Microscope

Big Blue may be caught in its image as the perennial patents-received leader, for better or worse.

Obtaining large numbers of patents is often more effective for large companies than securing a handful of really good ones.

U.S. patent count leader IBM, which has boldly dominated patents-received for two decades, has made something of an art in the science of securing IP rights. It has obtained 46,000 U.S. patents since 2000, and more than 6,000 in 2011 alone. Of those, it has allowed about two-thirds to lapse.

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Until recently, companies like Google and Apple had chosen not to compete in this costly and somewhat cynical numbers game. Winning the patent count race means more to large IT businesses than others. However, the patents a business receives should not be confused with those it holds or is able capitalize on because of the inventions they read on.

Does IBM know something about IP management that other companies do not? Or are cash-rich Google and Apple simply prepared to make bold purchases or settlements when necessary for defensive purposes? Some think that IBM is caught in its own IP image, believing to appear innovative more patents are inevitably better.

When Narcissus fell in love with his reflection in a pool of water, he got soaked. If I recall my Greek Mythology correctly it was Nemesis that attracted Narcissus to the pool in the first place.

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The value of IBM’s volume strategy, which is generally more meaningful to large consumer products companies, such as smart phone makers, may be less readily cost-justified than it once was. Many companies like H-P and AT&T are filing about the same number of patents or even fewer than in the past, concentrating on balancing patent counts, quality and current needs.

IBM vs Key Competitors

In the January IAM magazine (number 57), which will be published next week, the Intangible Investor is devoted to IBM’s out-sized lead in obtaining patents. (They allow most to lapse within about 24 months, suggesting that for some holders it is as important to keep patents out of the hands of the wrong parties as it is to maintain them.) Emphasizing their patent-securing prowess has until now has worked for Big Blue, an IP licensing powerhouse that is seldom sued for infringement.

With its business model now focused on services, and the public smarter about IP rights, IBM is not in need of more patents, but better ones. Of course it depends on how they intend to use them and on how they choose to measure performance.

In “The need to lead: IBM under the microscope,” out next week in IAM, Brody Berman Associates compiled “aggregate totals” for US patents granted to leading IT companies from 2000 to 2011. Over this period IBM (46,292) was granted, 2.5 to four times as many patents as Microsoft (18,120), HP (17,699) and Intel (17,484).”

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IBM is unabashedly proud of its out-sized dominance in  patent counts, besting some innovative competitors by 20-fold. (See the graphic from IFI Claims, above.)

Is Big Blue’s volume approach — which it shares with Intellectual Ventures and several defensive-mined Japanese companies like NEC, Hitachi, Sony and Canon — a relic of patent wars past?

Patent portfolios are a means to support innovation and and facilitate performance, not an end to qualify them.

Illustration sources: Brody Berman Associates; IBM Annual Report

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Digital Downloading Embodies a Growing Culture of IP Piracy

Attitude Toward Content Theft Fuels Free-Riding on Others’ Inventions & Counterfeits of Branded Products

The ease of downloading copyrighted content on a computer or smart phone is at the core of an explosion of IP abuse that also impacts branded goods and patented inventions.

Record labels, film studios and publishing houses are among those most directly affected by copyright infringement on the Internet. But musicians, authors, luxury brands and inventors, and thousands of industry jobs and businesses, also are among those feeling the impact of a rapidly growing culture of free-riders. More than 50 pirate political parties and groups in the U.S. and Europe are a symptom of a much greater disease.

Theft of IP rights has not only become acceptable in some circles, it has become fashionable. It feeds off of the ease of digital file sharing and knock-offs, and affects struggling artists and inventors, as well as businesses of all sizes.

The Court of Public Opinion

In the court of public opinion copyrights and brands have fared poorly. Theft of digitally rendered content and counterfeits is easily achieved and difficult to stop. Patents have not done much better. A cultural disdain for IP rights has emerged, facilitated in part by businesses that stand to profit from free content, look-alike goods and others’ inventions, and end users who don’t give a damn.

“He’s No Robin Hood,” my Intangible Investor column appearing in the current (November) IAM, looks at the broader implications of the acceptance of file sharing. Some excerpts from the article:

“File sharing promotes a culture of piracy that makes it more acceptable to steal branded goods and inventions, as well as content. Big daddy Kim Dotcom is sticking it to all IP holders.    

“Exhibit A for the legitimization of IP theft is Kim Dotcom Schmitz. Dotcom has slyly built himself into a modern folk hero, replete with a mellow “gangsta” style and outsider reputation. (He is a champion gamer and car racer.)

“This larger-than-life, medallion-wearing bad boy looks like he is deserving of a modest scolding and a heath club membership, not 20 years behind bars. That’s what he and his supporters would like you to believe. In fact, his illegal businesses has generated more than 66 million illegal subscribers and has helped to make file sharing acceptable and dismantle the recording industry.”

“Megaupload and the twilight of copyright” by Roger Parloff in Fortune is an extremely timely article that helps to put file sharing into criminal perspective. It illustrates how in the space of twenty years we went from a society where copyright served the needs of emerging artists and authors, as well as businesses, to one where IP is perceived to impede technological innovation and freedom of expression.

This article truly is a must read for anyone interested new ideas or IP rights. It also serves as a wake-up call for patent holders who expect their rights to be upheld.  

Illustration source: techwireasia.com; fortune.com 

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Wall Street Discovers Patents

Experts Gather in SF for IP-Finance Forum

Patents, abstract and esoteric, remain largely a mystery to those on Wall Street. At the same time, the financial community’s perspective on IP value, grounded in the capital markets, is not something that patent holders and professionals readily understand.

To bridge the information gap the Licensing Executives Society (LES) San Francisco chapter will host, “Wall Street Discovers Patents: What IP Holders & Investors Need to Know About Each Other.”

The March 28 luncheon gathering, open to the public, will examine “the sharp incline of highly valued patent and IP asset transactions and their appeal to Wall Street financiers.”

The discussion is expected to delve into what drives the valuations and purchases, and the frenzy of competitive bidding that can take place. In addition to analyzing significant IP deals both past and potentially in the future, this meeting will serve as a “how-to” guide for Wall Street in navigating these patent markets.

Moderating “Wall Street Discovers”  is Robert Aronoff, Managing Partner of Pluritas.

The panel will feature IP and financial experts Sandeep Agarwal, VP and Portfolio Developer for Tessera; Erin-Michael Gill, Managing Director and CIPO of MDP Capital; Gaurav Kittur, Senior VP of Jefferies and Company; and Vincent Pluvinage, CEO of Invention Capital Partners.

“Wall Street Discovers” will be held at noon at PricewaterhouseCoopers conference center at 3 Embarcadero Center, 20th Floor. LES members and non-members are welcome. For more information click here

Image source: Hansafx.net


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