Monday, 15 June 2015

ORoPO – One small step for patent owners, one giant leap for IP

Today is the launch of ORoPO, the Open Register of Patent Ownership, at IPBC 2015 in San Francisco. We are delighted to be involved in an initiative that offers a simple solution to significant problems with the accuracy of patent ownership records.

As our research in March suggested, 77 organisations own 25% of the world’s granted patents and 773 own 50% of the world’s patents. This means, with a little cooperation, it should be possible to establish a global and accurate register of patent ownership. And that is just what is happening with support from organisations like IBM, Microsoft, ARM, BAE Systems, Shazam, Patent Properties, Conversant, and Finjan.

Operated by its founder members, and led by CEO Roger Burt, ORoPO is supported by an illustrious advisory board and includes, amongst others, David Kappos (Cravath, Swaine & Moore and former director at the USPTO), Sir Robin Jacob (UCL and former IP judge), Sir Nigel Shadbolt (co-founder of the Open Data Institute), Tony Clayton (formerly Chief Economist of the UK IPO) and Heather Meeker (O’Melveny & Myers).

Not just a movie but a problem
for patent ownership records too
Information about who owns the world’s patents is currently held at 180 patent offices worldwide. However, a combination of data entry and translation errors, a lack of corporate naming harmonisation and the absence of regulation requiring changes in ownership be recorded, means an estimated 25% of this information is inaccurate, incomplete or simply out of date. These inaccuracies have serious consequences for the exploitation of intellectual property assets that now account for up to 70% of enterprise value. ORoPO’s CEO commented that: “Uncertainty around patent ownership inflates transaction costs, discourages the monetisation of patent rights through licensing and innovation and holds back the evolution of intellectual property as a functioning asset class. Without clear line of sight to ownership, the markets simply will not engage.”

Will ORoPO succeed in fixing this substantial problem?

We’re at the very beginning of this journey but with support from the IP luminaries like Manny Schecter, Chief Patent Counsel at IBM and Erich Andersen, vice president and deputy general counsel at Microsoft, the horizon looks bright. As more organisations follow these IP trailblazers, we can expect to see greater innovation in business, the IP market becoming a more transparent place with greater liquidity, less arbitraging and the end of troll-like behaviour. In short ORoPO is a significant step towards patents being a fully functional asset class.

To find out more about ORoPO visit and download Who Owns the World’s Patents? Why patent ownership data accuracy is a problem worth solving, a report sponsored by Aistemos.

Tuesday, 9 June 2015

Patent risk: PwC report highlights a changing landscape

Last month, PwC released the 2015 edition of its annual Patent Litigation Study. Compiled by experts from PwC’s Forensics Services Practice, the report identifies a number of trends from across the patent litigation landscape – based on an assessment of more than 2000 District Court patent decisions issued since 1995.
Clearly, understanding these trends is vital to assessing wider patent risk and, by extension, the overall value of a patent portfolio. With that in mind, our top five observations from PwC’s report are:
  1. Patent litigation rates are falling: Surprisingly, the number of patent lawsuits in 2014 dropped by 13% compared with 2013. By any standard, given the historical upward trend, that is a vertiginous fall – but whether it is a blip, or a genuine reversal with implications for the wider risk landscape, remains to be seen.
  2. Median damage awards are down again: Nothing new here, merely the continuation of a trend stretching back to 2000. Overall, median damage awards have fallen from $7.6 million for the period 2000-2004, to £2.9 million for 2010-2014 – the lowest level for 20 years. That, however, is not the whole story. NPE awards are on the rise again, up from $7.5 million in 2005-2009, to $8.9 million in 2010-2014. Perhaps more interesting, median NPE awards are now around 4.5 times higher than practising entity awards, having been roughly on a par in 1995-1999. The short, and obvious, conclusion is that NPE litigation represents disproportionate financial risk.
  3. Damages awarded by juries remain on the rise. Indeed, the median jury award is now 31 times greater than the median bench award. Small wonder then that 67% of patent litigations go to jury trial.
  4. It takes even longer for patent litigation to get to trial. According to PwC, time to trial now stands at almost 2½ years. For anyone facing legal action, that means a lot of uncertainty and substantial legal costs – another landscape factor that must to be taken into account when assessing risk.
  5. (Some) NPEs are less successful, in court. It’s true that, overall, NPEs have a litigation success rate of 26%, but strip out individuals classified as NPEs and the rate rises to around 40% – that’s higher than the rate for practising entities (35%). What’s more, the median damages for NPEs rises significantly when individuals are excluded – from $9 million to around $14 million (1995-2014). That’s 3.5 times higher than practising entities over the same period. These figures highlight once again the gap between the financial haves and have-nots in the patent world. Individual inventors simply do not have the financial muscle to assert their patent rights – as a result, they win fewer than one in five cases and, even then, damages awards are relatively lower.
The full PwC report is available here (pdf).