Thursday, 27 August 2015

Thinking the unthinkable? Patent troll insurance of the other kind

From time to time one spots items in the news on what is sometimes termed "patent troll insurance". Without prejudice to the appropriateness of the derogatory term "troll", which can cover patent enforcement entities of all sorts from the purest of the pure to the most maliciously parasitic, this blogpost looks at just one small issue: whether insurance companies have missed a business opportunity.

In short, policies are offered which enable manufacturing and trading business to offset part or all of the risk of being sued for patent infringement by a patent proprietor which -- not manufacturing or selling anything itself -- typically has no commercial interest to protect though securing an injunction and is only interested in receiving damages from defendants that have refused to accept the terms of a royalty-bearing patent licence.

Insurers' favourite game?
While the cost of defending a patent infringement suit in such a situation can be unaffordably high even if the targeted non-licensee is successful, the cost of paying the licence fee demanded is much cheaper and, even if obtained by extortion, can be seen as a fixed cost that is not going to break the defendant's business, which is why so many threatened businesses simply pay up.  When "anti-troll" insurance is available, the choice facing a manufacturing business is theoretically simple, in financial terms: if the amount one is asked to pay by way of royalties by a troll is equal to the amount one is asked to pay for one's anti-troll insurance premium, a business can look at the spread of relevant patents in and adjacent to its own activities and then assess the 100% certainty of paying the insurance premium against the likelihood of receiving a demand from a troll, which may be lower or higher (where there are several trolls at play or a large number of potentially threatening patents). The more cost-effective insurance becomes for the policy-holder, the more insurance should drive down the amounts demanded by trolls if they are to tempt target companies to pay up without contesting their infringement claims. However, things are never so simple in reality, and the financially unquantifiable of the stress, the emotional toll and the disruption to a business's operation that are the natural by-products of patent litigation must also be factored in.

What is significant is that, so far as can be seen, there are no insurance policies that have been overtly tailored for and marketed to patent assertion entities. These entities too face litigation costs and risks too, and their business models depend upon the continued validity of the patents they assert.

Why is it that insurance companies are not devising and selling troll-friendly insurance policies so that patent assertion entities can guard against unsuccessful outcomes to their litigation? It surely cannot be that they do not face an insurable risk.  Given that, at least to the interested but non-involved layman, they appear to be fairly profitable -- maybe more so than businesses at large -- it can't be that insurance companies don't think they can afford to pay their premiums.  If however it is because the risk they face is so low that they could never be persuaded to part with any of their money in order to obtain the security that insurance provides, the asymmetry of risk between hunter and hunted is something at which we should take a pretty close and critical look.

Wednesday, 26 August 2015

Patent examination: more private sector involvement, but so far it's just talk ...

This morning the Japanese Ministry of Economy, Trade and Industry tweeted a media release with the somewhat inelegant but descriptively accurate title "JPO Reached an Agreement with IPOS to Start an Examination Capability Enhancement Program in collaboration with the Private Sector". The news is that the Japanese and Singaporean Patent Offices -- which have already piloted a Patent Prosecution Highway programme together -- have taken an even bigger step towards improving the examination of patent applications: the two offices are to work with their own customers, the companies that use their services.


Agreement to start an Examination Capability Enhancement Program in collaboration with the Private Sector was reached by the two offices yesterday, apparently triggered by the fact that IPOS, the Singapore office, will be the first ASEAN IP office to start full operations as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) for international applications under the Patent Cooperation Treaty (PCT) this September.

The reality is not as quite as exciting as the prospect of in-house counsel sitting down with patent examiners and deciding which applications to accept, which claims to reject and so on.  Rather, the two offices plan to enhance their PCT examination capability by jointly conducting "dialogues on international search/international preliminary examination with PCT users including Japanese companies".  Any sign that patent-examining authorities are willing to discuss their work and methodology with business is however welcome and, the better each side appreciates the concerns of the other, the less room there is for misunderstandings and the greater the chance that better patents will be granted.


At present, prospects for users of the patent system to engage more closely with the bodies that administer it are limited and there is little sign that, apart from ad-hoc or institutionalised consultation, user participation will increase.  The integration of third parties at an early stage of the examination process through the imaginative Peer to Patent project* (home page here, Wikipedia entry with references to critiques here) seems to have stalled despite some initially encouraging results and it is not clear why this experiment has not been taken to the next level.


********************************************

* For the unfamiliar, Peer to Patent describes itself as
" ... a historic initiative by the United States Patent and Trademark Office (USPTO) that opens the patent examination process to public participation for the first time. Peer to Patent is an online system that aims to improve the quality of issued patents by enabling the public to supply the USPTO with information relevant to assessing the claims of pending patent applications. This pilot project connects an open network for community input to the legal decision-making process. The community supplies information and research based on its expertise. The patent examiner makes the final determination on the basis of legal standards. This process combines the democracy of open participation with the legitimacy and effectiveness of administrative decision making".
Sponsors of Peer to Patent include ORoPO backers IBM and Microsoft, as well as Red Hat, HP, GE, Article One and the Open Invention Network.

Tuesday, 25 August 2015

When intangibles will no longer be invisible: big data helps sharpen the focus

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content.  Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.  Something interesting is happening" -- Tom Goodwin, SVP, Strategy and Innovation, Havas Media

The world: changing
Tom Goodwin has a point; something interesting is happening.  The world is changing, and those changes have profound implications for investment research.  The former bedrock of corporate value, the tangible solidity of physical property, is being replaced by relative ephemera.  Intangibles now dominate enterprise value, and for businesses and investors operating in knowledge economies, ideas are assets. This is not mere conjecture; the facts speak for themselves: an estimated 70%-plus of enterprise value is attributable to intellectual property (including patents) and intangible assets.  This represents a challenge for investors.  In the Brave New World of ideas and intellectual property, do the trusted investor and financial market indicators tell the whole story?

In truth, equity research and investment analysis have changed little over the years.  While layers of sophistication have been added, along with new models to help make sense of the data and deliver that all important investment edge, investment decisions are still largely based on the same financial indicators they always have been: revenue, profit, dividend and debt.  There are many sensible reasons for this.  First, the data is readily available; secondly, financial data can be a proxy for the current and future health of the company.  Conversely, the position for intellectual property rights (IPRs) is very different.  Companies are not required to include these assets on their balance sheet and most companies do not even disclose what they have. 

However, in a parallel universe, vast quantities of data relating to key IPRs have been accumulated. Until now, however this has not been accessible to the financial markets, for numerous reasons: the available data is complex, incomplete, distributed and only comprehensible to IP specialists such as patent attorneys, licencing executives or litigation lawyers. So, while everyone agrees that intangible assets are valuable, there is no uniform or easy way to value them.  The investment community in turn has resolved this conundrum largely by ignoring intangibles -– which is understandable, given there has been no reliable access to data, and no simple and cost-effective means by which to understand the relative merits and downsides of IPR portfolios.  In short, ideas might be assets but, if their value cannot be understood in the wider context of the market, how can they begin to inform investment decisions?

In this changing world, where a significant part of corporate value is captured and represented by these assets, there is pressure for improvement and change. Smart investors are increasingly recognising that access to meaningful insight around IPR value and risk could provide a vital competitive edge. Perhaps more importantly, it is increasingly true that equity and investor research that does not offer meaningful, credible insight as to corporate intellectual property strategy, risk and value is simply incomplete. For instance:

  1. IP has a material impact on share price:  Investors need to understand the mechanisms that create this impact and develop an ability to forecast them.  That means assessing organisations’ IPR strategies, the value and risk associated with their patent portfolios and how these issues impact on value drivers like innovation and product development, as well as risks like competitive pressures.

  2. IP intelligence offers a new understanding of R&D:  Research and development is the engine room for ideas and IP rights, but it remains difficult to measure.  Combining known financials relating to R&D with IPR analytics promises a fuller understanding of return on R&D expenditure, helping investors to forecast how effectively investment in innovation will translate into revenue and market share in the future.

  3. Understanding IP strategy can shine a light on corporate strategy:  Looking at trends in patenting activity, for instance identifying a recent refocus, can deepen understanding of corporate strategy - and can explain how businesses monetise IP assets that otherwise seem out of step with current strategic focus.

  4. Competitor analysis is incomplete without a view of IP:  A market sector review must now take into account the main players’ sector specific patenting activity.  No view of their relative strengths and weaknesses, and therefore the dynamics of the sector, can be complete without it.

  5. Patent litigation risk is corporate risk: Given how important IP is to corporate value and competitiveness, and the sheer scale of patent litigation today, this is another issue that simply cannot be ignored.  Expensive, uncertain and misunderstood, it can precipitate the award of huge damages and even see crucial patents ruled invalid.
Big data to the rescue

Intellectual property has for a long time been recognised as an indicator and driver of corporate health.  There have been numerous studies that show that investments in companies with a strong IP portfolio are a better bet.  However, until now, there has been a chasm between this rhetoric and the reality because the financial markets have had virtually no information about IPRs as an asset class. 

Big data: big need
for machine learning 
But again, something interesting is happening.  Big data solutions are driving change. As a result, investors have an opportunity to achieve a new level of insight and understanding of the role of innovation as a driver of corporate growth and value -- insight that has that until now been impossible in any practical sense. In this context, “big data” is a shorthand that describes a three stage process: (i) the aggregation of all data relating to intellectual property and related events e.g. litigation and licensing, (ii) the application of data science and machine learning to analyse the data and (iii) the use of analytics to analyse the drivers of risk and value. This big data approach enables tools like Cipher to aggregate, analyse and visualise the world’s data relating to innovation and the drivers of risk and value - data relating to over 30 million patents, 1m+ owners, 100,000 licences and 50,000 litigations.  They provide real time access to insight around who owns which technology, the output of R&D, and corporate technology trends, and the key drivers of IP risk and value - and thereby offer a new lens through which to assess the hidden 70% of corporate value.

This approach is best understood by reference to a simple two-by-two grid:


In this visualisation, the position of two companies T (the focal point of the analysis) and C (a competitor or peer) are compared relative to each other. T has lower IPR value and greater risk than C.  The relative positions are generated from data associated with the size, quality and nature of the IP portfolio (a value driver), whether the companies aggressively assert their IP, or conversely are frequently targeted by others (a risk driver), and known licensing activity of both, as both licensor or licensee (a value driver).

Data aggregation and analytics are not
the only way of shedding light in the darkness,
but they are a lot more efficient.
Behind this simple grid visualisation is a wealth of data –- now aggregated, organised and accessible – and capable of being presented in diagrammatic form.  This data is also useful because it relates to patenting activity, litigation, licensing and targets a business’s position relative to close competitors or the main players in a specific market sector.  It provides investors with a genuine insight into something that was previously in darkness -- the relative IP profiles of T and C. While this may only be an evolution in the way IPRs are analysed and assessed, it is likely to lead to something of a revolution in the financial markets:

  • Lending: The recent UKIPO Banking on IP? study identifies the obstacles to using IP as security for debt.  Access to trusted data is identified as a key obstacle to be overcome.

  • Insurance: IP litigation is a major risk for companies across a broad range of sectors including technology, media, telecoms, pharma, biotech, capital goods and financial services.  The insurance markets will only engage at scale when provided with reliable data relating to events and outcomes.

  • Investment: Over the past five years there have been over 10,000 patent transactions, with only a few making the headlines e.g. Nortel, Motorola Mobility, Kodak.  With increased transparency, there is potential for increased liquidity around IP.
For now, however, investment research remains in relative darkness when it comes to understanding IPRs and intangibles more generally – and that will remain the case until the investment community engages with the big data solutions that can deliver real insight.  Until then, we will continue to observe the effects that flow from a massive asymmetry of information, which sometimes leads to chaos and at other times ruthless arbitrage.

An example of chaos is the 12% fall in GoPro shares after an Apple camera patent was granted.  Aistemos has published data proving that this is one of several thousand similar patents.  Absence of real time analytics is an obstacle to rational pricing. Kyle Bass (Hayman Capital Management) is the most recent example of the novelties of the patent system being used for financial gain. He has organised the filing of multiple court actions against companies including Shire, Biogen, Acorda Therapeutics and Calgene. As the stock markets struggle to assess the implications, Bass is able to short the stock [for the latest news of Kyle Bass's challenges, click here].

The moral of this blogpost is that big data is bringing big change.  Thanks to the increased availability of data, the low cost of cloud computing and smart implementations of data science, intangibles will no longer be invisible and the role of ideas as assets will be sufficiently understood to help shape investment decisions on a massive scale.

This blogpost is based on an article written by Aistemos CEO Nigel Swycher for the CFA Society of the United Kingdom's Summer 2015 Big Data Special Issue of Professional Investor.

Monday, 24 August 2015

Intellectual Property Rights as Foreign Direct Investments: a new book

Intellectual Property Rights as Foreign Direct Investments: From Collision to Collaboration by Lukas Vanhonnaeker (McGill University, Montréal), has just been published by Anglo-American publishing house Edward Elgar in its Elgar International Investment Law series (it's a small series so far, consisting of just three books, of which this is the second of the two so far published).

What is this book about? It's not about whether intellectual property rights are an asset class or about how they can be traded as such internationally, through online or bricks-and-mortar auction houses or in any other way; nor is it about trolls, standard-essential global rights, securitisation or purchasing income streams -- some of the more obvious topics that might be suggested by inhabitants of the intellectual property finance and investment field.  Rather, it looks at the way in which international investment law gets in the way of direct cross-border investment. As the publishers explain:
"What is the level of convergence between the international investment law framework and the international legal regime regulating intellectual property rights? This discerning book examines the interface between intellectual property and foreign direct investments.

Taking a multi-disciplinary approach, the author scrutinizes the circumstances in which, and the extent to which, international investment law’s traditional protective standards apply to intellectual property rights investments. After concluding that the TRIPS agreement has shortcomings in this respect, the author analyses intellectual property rights in the context of international investment law in light of traditional standards of protection including the protection against indirect expropriation, the National Treatment Principle, the Most-Favoured Nation clause, fair and equitable treatment, and the prohibition of performance requirements, while emphasizing the importance of transfers of technology within and to developing countries. These explorations contribute to the debates surrounding the fragmentation of international law arising from its expansion and diversification.
It's quite refreshing to see some body of law other than IP being described as having "traditional protective standards". It's also significant that, while IP law becomes ever-closer through international treaties, regional, bilateral and plurilateral trade agreements and the like, international law is described as undergoing a process of fragmentation.

This is a 320-page hardback which will cost you £80 (online from the publisher £72). The ISBN is 978 1 78471 250 1 or, if you want the e-book option, eISBN: 978 1 78471 251 8. The book's web page is here.

Thursday, 20 August 2015

HERE today, gone tomorrow - but still here: the paradox of Nokia

"HERE yesterday, gone today – but still here: the paradox of Nokia" is the title of an Aistemos Industry Report, published yesterday in IAM's latest Editor's round-up. It opens by asking:
What is Nokia? Investors need to know. The name keeps cropping up in different information and communications technology (ICT) sectors – but what does it represent? In a series of interlocking markets, is Nokia manufacturing or mapping, licensing or litigating?   
These questions are not idle speculation; Nokia has changed greatly in the past year or so following the $7.2 billion sale of its handset business to Microsoft, its recently cleared €15.6 billion all-share deal to acquire French equipment maker Alcatel-Lucent and the even more recent sale of its mapping business HERE for €2.8 billion to an automotive consortium comprising Daimler, BMW and Audi. Nokia products are still on the streets, but is there now a disconnect between the brand message of Nokia’s heritage products and the company’s current activities? 
A fully functional four-dimensional image of Nokia can be constructed using IP analytics:
  • the breadth of its market activity; 
  • the depth of its coverage of key technologies;
  • the potential longevity of intangible assets that can be licensed or enforced; and
  • the direction in which these assets are impelling its business operations. 
Using Cipher – the latest in IP business intelligence and analytics – Nokia can be analysed through this lens. 
You can read how Cipher's analysis pans out by clicking here to read the rest of this Industry Report here. Other reports in the series can be accessed here.
Impact of the Alcatel-Lucent acquisition  ©Aistemos 2015

Taking the Escalator from Innovation to Investment

"Innovation to Investment – How to capitalise on your IP" takes place at the Barclay Escalator's London Innovation Loft (right) on Friday 25 September. It's a good, solid afternoon seminar, starting at 2 pm prompt, with the serious content running till 5 pm and leading on to a two-hour free-drink networking facility.   The name of the venue resonates well with the seminar's title, since the journey from innovation to investment so often requires an escalation of effort and focus as well as funds, if the lofty aspirations of both innovators and investors are to be fulfilled.

First to speak is our own CEO Nigel Swycher, who opens the event by explaining how to implement an IP strategy. Nigel's point is that all the evidence suggests that companies with a strategic approach to the management of their intellectual property (particularly their registered assets) do well. However, success is not automatic: the IP foundations for successful growth and exit must be put in place early -- and they don’t have to cost the earth.

Other speakers then address brand protection for start-ups (including choice of brand name, clearance, costing, enforcement and domain name issues) and life beyond commercialisation (focusing on transferring the value of intangible assets, practical due diligence, exit and the preservation of any key residual rights).

Click here for full information, registration and a map showing where you can find the venue. Registration is free.

Tuesday, 18 August 2015

Apple, Samsung and the power of an invalid design patent

Last week we posted a piece which bore the provocative title "Can the death of a patent be a sign of life for the patent system?" here.  While that article was about lapsed and lapsing patents and abandoned patent applications, it didn't address the position of patents that have been invalidated by the courts or by the office that granted them.


Various blogs, including 9to5Mac and FOSS Patents, have reported on the ruling that one of Apple's original iPhone design patents, filed in 2007, has now been ruled invalid by the United States Patent and Trademark Office's Central Reexamination Division on multiple grounds.  This decision, described as non-final, seemingly affects one of the design patents on which Apple relied in its successful infringement action against Samsung, in which Apple was awarded some $US 547 million.

Whatever the outcome of any further litigation over the validity and/or infringement of this design patent, the point to make here is that even an invalid patent can exercise a colossal influence over the way different players compete in the market: this patent has cast its shadow over a hugely lucrative market for eight years and will likely continue to do so, since the position and strategies of Apple and its competitors now have been shaped by the presence of this grant.

A further point to consider is the fate of money paid over by way of damages for infringing a patent that should never have been granted.  It is only recently that the UK Supreme Court, in Virgin Atlantic Airway Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, had the opportunity to consider the retroactive effect of a decision to invalidate a patent which had already been successfully invoked in infringement proceedings, where Lord Neuberger said at [58]:
The policy of the [UK] Patents Act is that valid patents are enforceable against the world, even if an infringer is honestly and reasonably unaware of the existence of the patent. Equally, if a patent is revoked (or amended), the policy is that the revocation (or amendment) takes effect retrospectively, and that this can be relied on by the world. I find it hard to see why someone who has failed in an attack on the patent should not be entitled, like anyone else, to rely on the points that the patent has been revoked (or amended), and that the revocation (or amendment) is retrospective in its effect, whether in legal proceedings or in another context. 
While this articulation of legal policy means that a patent which has not yet been invalidated is no longer the equal of its truly valid equivalent, it is a statement of national law rather than a universally accepted rule, and other jurisdictions may not accept it: after all, the policy of commercial certainty and the principle of res judicata have their attractions too. 

So what's the takeaway message? Businesses should be mindful of the potential influence of their own and their competitors' invalid and potentially invalid patents, and may want to check out national law before deciding on the jurisdiction in which they want to litigate infringement claims on a patent that may well not be upheld.

Monday, 17 August 2015

Not so typical: advice about advice for SMEs

The space Aistemos occupies in the social media -- in particular Twitter and the blogosphere -- is a territory which it shares with many businesses and individuals whose interest lies in data: where it comes from, how reliable it is and how current, how to interpret it and how to present it in a manner that can be easily understood. We read each other's comments, follow each other's exploits, ponder each other's thoughts and dutifully click each other's links in search of insight and enlightenment.

One theme that many contributors to the innovation-information-investment zone address is the provision of advice to small and medium-sized enterprises -- SMEs. Some of this advice is well-intentioned and of good quality; some is frankly nothing other than blatant marketing material with the letters 'SME' scattered through it in an attempt to drum up interest or establish one's SME-friendly credentials.  Most of it is somewhere between.  


The fact that it's bait doesn't
mean it can't be attractive, but ...
Readers will be familiar with the format of what one might call typical SME bait. There's often a title along the lines of "Five things every SME should know about Big Data", "Three biggest mistakes SMEs make when promoting innovation", "Ten things your SME backer wants to hear from you" and so on.  The text is usually bland, written at a level of generality that ensures that every statement in it is bound to be correct in one context or another, and leads to an invitation -- express or implicit -- to contact the author for further information, advice or assistance.

Things might be better if those of us who choose to go down the path of pumping out "SME advice" think about the following points before they take their next step:
  • The typical SME wants guidance and advice when it feels the need for it or is worried about the lack ot it -- not when people want to offload it on to it.
  • The typical SME does not have any organised system for organising, arranging and consulting the various items of commercial, legal and marketing information that it picks up in the course of its activities.
  • The typical SME does not have the time and the resources to study closely the information it receives and to read it carefully to identify points at which the information it receives either corroborates or contradicts earlier information and advice.
  • The typical SME is not automatically guaranteed to be sensitive to the geographical footprint of the advice on offer: is it global, US-oriented (the default position for some writers), EU-derived or based elsewhere?
  • The typical SME assumes that information received from a reliable source is reliable and may not be immediately sensitive to changes in business practice, technology or legislation which mean that it has passed its use-by date.
  • The typical SME relies in a smaller corps of key staff than the typical large corporation. This means that, when any significant employee or officer leaves, a disproportionate amount of corporate memory and wisdom may depart at the same time.
  • The typical SME does not necessarily appreciate the patronising tone of some of the advice that heads its way. One doesn't often spot articles headed "Five Things Your Multinational Corporation Doesn't Know About Innovation".
  • The typical SME does not depend on Tweets and promotional blogposts in order to make its major decisions any more than you do, and may be just as unimpressed by lavish illustrations and informatics, banks of embedded links, and lofty pronouncements of 140 characters or less as you are.
Most importantly:
  • The typical SME does not actually exist: it's a handy concept that lets us generalise our advice whereas in reality every SME is a special case, with its own facts, its own assets, advantages and problems. 
None of this is to say that we shouldn't be supplying information, marketing services and generally being nice to SMEs (or anyone else for that matter). We should, and we all will. But let's try to be a bit more sensitive to their needs -- and their feelings -- at the same time.

Friday, 14 August 2015

Classification of patents: January 1 launch for next edition of IPC

A recent World Intellectual Property Organization (WIPO) media release reminds the patent information world of the forthcoming launch of the latest version of the International Patent Classification system -- an old favourite that's so old it seems to have been around forever:
The next version of the IPC (IPC 2016.01) will enter into force on January 1, 2016. The early publication, the compilation file and the Revision Concordance List of this version are available for consultation in English and French. The corresponding master files are also available.
In fact the IPC was conceived in 1971 and is now used by more than 100 countries [What about the others? And where's a handy list of countries that don't use it?]. It's administered by patent offices themselves, rather than by patent applicants, which increases its consistency of use and reduces opportunities for error when pigeon-holing patented technology. However, the IPC doesn't have a monopoly: there are other patent classification schemes too. 

Whether looking for specific innovations or examining the distribution of inventions across technology sectors and areas of application, our work -- now augmented by computers to an extent that could scarcely have been imagined 40-odd years ago -- has been made immeasurably easier by the existence of the IPC system. Indeed, the Aistemos Cipher patent analytics product clusters groups of patent families that relate to a similar technology through the use of machine learning algorithms, driven from citations within the patent data and in reliance on a range of other information, including keywords, inventors and the IPC codes themselves. 

Let's hope that the IPC will thrive for many years to come.

Wednesday, 12 August 2015

Data to stimulate tech-sector innovation demands transparency, says Coalition

Via "The Data Transparency Coalition", by Sabrina I. Pacifici, here, comes the following information from the United States:
“The Data Transparency Coalition advocates on behalf of the private sector and the public interest for the publication of government information as standardized, machine-readable data. We believe governments should adopt non-proprietary data standards for the information they generate or collect, and publish such information as machine-readable data, especially with regard to their spending, regulatory, legislative, and judicial activity. The transformation of public information generated and received by governments from disconnected documents into interoperable open data will:
  • Strengthen democratic accountability by making public data more accessible for citizens and watchdogs;
  • Enhance government management by improving data sharing and analytics capabilities;
  • Reduce compliance costs by automating reporting processes.
Data transparency also stimulates tech-sector innovation and creates jobs. The Data Transparency Coalition, on behalf of both the private sector and the public interest:
  • Advocates legislative and regulatory mandates for data standardization and publication;
  • Educates government leaders, private-sector innovators, and the public on the benefits of data transparency; and
  • Convenes stakeholders to collaboratively design policies and build technology solutions that will drive the data transparency transformation.”
While the Data Transparency Coalition's aims and objectives are clearly more focused on the political arena than on business and commerce, the statement that "data transparency also stimulates tech-sector innovation and creates jobs" is one of which this weblog firmly approves.  The patent and IP analytics sector enriches, contextualises and personalises the raw data relating to patents and other publicly-administered rights systems -- but analytics can only be truly effective as a means of interpreting the big picture and bringing it down to a manageable scale if the data itself if accurate, current and relevant. Transparency and consistency in the methodology of data-gathering is therefore of prime importance.

Also important is to know what information is not available because no-one has taken the trouble to obtain it, a point made to us by Nick White (Tangible IP):
"What is astonishing is that much useful information is not gathered at the patent filing stage and cannot easily be sourced elsewhere. Have a look at the freedom of information requests to the UK Intellectual Property Office and the answers, which often include "we do not have that data".
While the patent system has been going since the Middle Ages, the appreciation of the quality and importance of data is still in its relative infancy. Transparency is part of the process of growing up and reaching the degree of maturity which will greatly enhance the utility of patent analytics.

Monday, 10 August 2015

Can the death of a patent be a sign of life for the patent system?

The IAM Blog carries a fascinating feature by Jack Ellis, "The companies that abandon most US and EPO patents – and shoulder much responsibility for raising quality", which introduces an article in IAM's most recent issue. That article, "Assessing patent renewal decisions in the United States and Europe" by Matthew Beers and Maria Lazarova (Ocean Tomo), represents a welcome appraisal of a facet of the patent system that is ignored, misunderstood or underrated by many. But why is this subject so important? Let's explain.

Apart from granted patents, encouraging investment on the basis of the protective shield that covers all or part of a technological innovation, the other obvious by-product is the public domain: inventions that have been published and in respect of which any patent that once existed has now expired.  With the odd exception (second medical uses of products with already-known medical application being the main one), once something is in the public domain it remains there forever and can be freely used without restriction.
  
The public domain is a vast body of largely focused information, much of which can be conveniently searched online and which is organised according to the principles of the Intellectual Patent Classification scheme. In it can be found much information that directly addresses researchers' needs, since it can demonstrate that a specific problem has already been solved. It is however unpopular for two reasons. The first is that much of it is obsolete and relates to devices and processes that are no longer used; the other is that, since everyone can use it without restriction, there is no effective protection to support a commercial decision to invest, where the first business to make and market a public domain-based device incurs expenses that me-too competitors do not face.

Lapsed and lapsing patents and patent applications are arguably an important sub-class of their own. Apart from their technical content, they provide a wealth of information about the business decisions taken by those who have initially filed for them and then let them go.  They also provide a sort of snail-trail that describes the path taken by a technology as its players try out new product lines, new manufacturing techniques and so on.  Taken in bulk, the abandonment figures look large and might be viewed as a problem in terms of wasted effort by competitors in the market and resources consumed in vain by patent-examining offices. 

Is there any need to be despondent about this waste? No.  It exists wherever competition within and between products can be found. Whether there is a good patent system, a bad one or none at all, you will still be likely to find businesses committing resources towards developing the same products or creating processes that achieve the same objectives. One will always be ready first and that fact can render the investment by others theoretically wasteful. Most products do not succeed in the market place, just as most brands do not become successful and most trade marks on the register are of little or no commercial value. 

If lapsed patents can be a sign of health, not malaise, how much more so can patents that have not yet lapsed (and applications that have not yet been abandoned) be said to be a sign of vitality in the patent system? They may have both positive and defensive value and, whether taken individually or in bulk, may complement an existing portfolio, giving it strength and depth,  Market Square IP has already set out its stall as an advocate of lapsing patents and applications being an asset class in their own right, and there may be others out there who are saying the same thing. 

Friday, 7 August 2015

Innovation, Competition And Collaboration: can we handle it?

Innovation, Competition And Collaboration, is a new title from the Anglo-US firm of Edward Elgar Publishing.  Edited by Dana Beldiman (Professor, Bucerius Law School, Hamburg, and Professor-in-Residence, UC Hastings College of the Law, San Francisco), both its title and its pedigree suggest that it should be of interest to Aistemos blog readers.  As the publishers' web-blurb states:
As innovation processes become increasingly collaborative, new relationships among players in the innovation space emerge. These developments demand new legal structures that allow horizontally integrated, open and shared use of IP. 
In this book, expert contributors review fundamental issues surrounding the collaborative use of IP and discuss emerging trends. The topics discussed include: the interpretation of FRAND terms in the context of standard essential patents; secondary liability of technology providers; contractual arrangements in trademark law, and the treatment of IP issues in specific emerging industries.
As it happens, this short volume (214 pages) is both written by and addressed to academics and practitioners. Curiously, when reviewing its introduction and nine substantive chapters, one senses a sort of cross-over in that the academics appear to be making some effort to open their thoughts to practitioners, while the one practitioner appears to make no less of an effort to address a level of principle and policy that will appeal to academics.  

Among the topics included are chapters on FRAND licensing, standardisation and standard-essential patents, open innovation, and a positive role for the public domain. Other rights are discussed, but the predominant flavour of the IP is that of patents. It's good to see text in which IPR still stands for "Intellectual Property Rights" rather than "Inter Partes Review". Contributors are drawn from the US and Europe.  If this reviewer had to pick one chapter that stood out in this excellent collection, he would go for Jacques de Werra's piece, "Managing the risks of intellectual property interdependence in the age of open innovation" with its sobering message that our sophistication in slicing and dicing intangible assets in an era of cooperation and collaboration requires not just better management skills but also dispute resolution mechanisms that are better able to address their users' commercial needs.

You can check out this little book here.

Thursday, 6 August 2015

Fitbit wearable, profits bearable -- patents comparable?

"Fitbit Tops Estimates in First Post-IPO Report; Margins Narrow" is the headline of Peter Burrows' Bloomberg post today. He reports:
"Fitbit Inc. sales and profit topped analysts’ estimates in its first report following an initial public offering, a sign that the company’s fitness trackers are weathering competition in the increasingly crowded wearables market. Second-quarter revenue more than tripled to $400.4 million ... 
The company, which dominates the market for fitness bands that monitor health data such as activity and sleep patterns, said it sold 4.5 million devices in the quarter. ..".
But that's not all. The analysts didn't fare too well, their forecasts averaging out at $319 million, according to data compiled by Bloomberg. Fitbit's gross margin -- one of a number of clues as to profitability and a fairly conspicuous one -- slipped marginally to 47 percent, down from 51 percent in the corresponding quarter of 2014, nudging the share price down too.


Competition and patent data watchers will be looking at other information for their guidance as to Fitbit's prospects. Fitbit still holds 34 per cent of the wearable device market, down from 45 per cent last year, and there's no shortage of rivals for a space on the world's wrists: Xiaomi, based in China, has captured 25 per cent of the same market though its products sell for far less than Fitbit's. Other significant players such as Jawbone, Samsung and Garmin, have seen their share of product sales fall too.

As for the patent scenario, this Cipher Snapshot tells it all: in short,
• The wearables market is growing and Fitbit has one of the largest patent portfolios [patents help stop copying, can be licensed and, if need be, securitised].
• Fitbit’s territorial coverage is comparatively weak [countries not covered by patents, which are national in scope, are countries in which otherwise protected technology can be freely used by competitors].
• Fitbit’s late entry means that others may own foundational technology [this can be a problem, but older patents may have expired or lapsed, may be available to take a licence or cross-licence -- and may also not actually be infringed].
• There is an increasing amount of patent litigation, and Fitbit is now involved [this is significant too: is FitBit on the receiving end or suing others? Infringed patents can produce a healthy income source].
This is only a Snapshot. An analytical exercise like this can only give a partial picture since there are other factors at play: other significant IP factors include the strength of the Fitbit brand, the extent of its trade mark portfolio and the power of consumer loyalty, and possession of technical data and know-how that is held under conditions of trade secrecy.  But aren't these IP-driven criteria a better framework for the prediction of future performance and the second-guessing of future marketing policy than are fluctuations in stock prices or disparities between predicted and actual trading figures?

The last word goes to respected academic Mark Skilton (Professor of Practice, Warwick Business School):
"The Fitbit story is a great example of a company that understands the mix of design form and function in a new category of business technology. If you look at the products' branding 'flex, charge, surge' they are focused specifically on what the wearer wants in lifestyle from casual to sports. Notably the devices display information easily which is a critical difference to Apple Watch and other wearables. This, plus the fact that the functions of mobile phone sync are essentially the same for 40 to 80% less cost, makes a compelling case. 
The potential value that personal data and usage information wearables tells you about that customer and the situation means potential “big bucks” for companies and users to better enable their lifestyle and experience. There are issues of opt-in and out privacy and performance issues but as with all new technologies these trade-offs are part of this journey and in the right circumstances becomes a major opportunity".
Both Fitbit and Cipher deal with the presentation of information in a helpful, user-friendly way. Whether Cipher is the Fitbit of the world of patent analytics is a matter for users to decide.  However, in each case their value is not in the information itself but in the use to which they are put.

Wednesday, 5 August 2015

From data to analytics: why the distinction is important

Earlier this week, the World Intellectual Property Organization (WIPO) issued its Instructions for submission of 2014 Annual Technical Reports. This is a routine administrative matter, almost a non-event, which receives no great blaze of publicity and is easy enough to miss completely amid the welter of missives emanating from WIPO on a regular basis.

The Instructions however mark the beginning of a process that has a great deal of significance for the intellectual property information community: the task of gathering-in of patent, trade mark and industrial design information from the national or regional industrial property offices: this activity includes a trawl of figures for how many applications for registered rights are received and how many are granted; whether the applicants are domestic or foreign and whether they have made use of international filing arrangements.  Eventually they will lead to the publication of the 2015 version of WIPO's World Intellectual Property Indicators (you can check out the 2014 version here, covering 2013). 

Two things can be said about this exercise.  

The first point is that, even with the availability of modern information technology, the gathering up and synthesis of data from WIPO's many member states remains a relatively slow process, so the results once collated have a somewhat historical flavour to them: it's only now, with most of 2015 behind us, that the submission of 2014 data is being solicited.  To economists and government advisers this time-lag will not be a major problem: once they are published the gross figures, even if a year or so behind real time, still reflect general trends -- and the broad sweeps of IP policy are unlikely to be directed by reference to a single year's figures.

The second point is that this exercise reflects the difference between patent and other IP data on the one hand and analytics on the other.  Compilations of data are always interesting: they show which countries are receiving or generating more applications, for example, as well as which areas of technology or commerce are most frequently the subject of protection. However, this data requires refinement if it is to be useful for investors, entrepreneurs and innovators.  Without being framed within a particular context and enriched by some form of commentary or explanation, collated data by itself cannot cast light on a decision whether to invest in a new project, whether to license or sell one's IP or whether to buy into an established technology in the face of a challenge from a disruptive one that is still on the horizon.  The data must first be broken down into its relevant integers and then reconstructed and interpreted -- and that is the function of IP analytics.

Monday, 3 August 2015

Aistemos welcomes careful readers ...

As we reach the first working week of August, we greet new readers to the Aistemos weblog with words of welcome to our new format.

Current readers of the Aistemos blog will spot that it has become more interactive and user-friendly. You can now post comments on our discussions, click through to our Twitter and LinkedIn accounts, browse our most-read blogposts and search our content (there's a little word-search box in the top left-hand corner of the blog's home page. Alternatively, if you visit the sidebar on the right hand side of the page, you can check through our list of earlier posts by title and by subject-matter.


Data is the cards you've been dealt;
intelligence is knowing how to play them
To avoid raising false expectations, there are a couple of disclaimers.  First, this is not a law blog, even though it discusses patents, trade marks and other intellectual property rights. It's a blog that is dedicated to IP intelligence: how you can get data about IP rights and what you can do with that data once you have got it.  Secondly, this is not a news service. There are already plenty of excellent news services around, both online and in traditional print formats. Our blogposts may contain news, and might occasionally make news, but that's not their prime justification. The object of the exercise is to provide a space in which news which has a bearing on IP intelligence issues can be made more meaningful for our readers -- whether this is because we explain it, comment on it or interrogate it in order to open up fresh topics for discussion.

Do please read our posts carefully and, where appropriate, critically, and share your thoughts with us. The field of IP intelligence is not one in which anyone has a monopoly of the wisdom and the same facts can usually be legitimately analysed in a variety of ways. You comments will help to make this weblog a place in which readers will be able to enjoy a more rounded, textured appreciation of the topics we discuss.