Thursday, 28 April 2016

Secret admirers: when crowd-funders hide information

A piece of research that recently caught our eye is "Secret Admirers: An Empirical Examination of Information Hiding and Contribution Dynamics in Online Crowdfunding", authored by US-based scholars Gordon Burtch, Anindya Ghose and Sunil Wattal.  Their work, which you can access via SSRN here, is not directed at intellectual property and innovation-based crowd-funding and none of the usual IP buzzwords jump off the page at you.  However, their work has no little relevance to the use of crowd-funding to launch startups and boost small IP-based businesses that have no alternative (or no easier) access to capital.  According to the abstract of this 45 page piece:
Individuals’ actions in online social contexts are growing increasingly visible and traceable. Many online platforms account for this by providing users with granular control over when and how their identity or actions are made visible to peers. However, little work has sought to understand the effect that a user’s decision to conceal information might have on observing peers, who are likely to refer to that information when deciding on their own actions.  
We leverage a unique impression-level dataset from one of the world's largest online crowdfunding platforms, where contributors are given the option to conceal their username or contribution amount from public display, with each transaction. We demonstrate that when campaign contributors elect to conceal information, it has a negative influence on subsequent visitors’ likelihood of conversion, as well as on their average contributions, conditional on conversion. Moreover, we argue that social norms are an important driver of information concealment, providing evidence of peer influence in the decision to conceal.  
We discuss the implications of our results for the provision of online information hiding mechanisms, as well as the design of crowdfunding platforms and electronic markets more generally.
A previous Aistemos blogpost, "Tops and bottoms are fine, but what about the middle?" (here) made reference to crowd-funding for IP-based ventures, but that was more in relation to their ability to attract cash and publicity rather than with regard to their status as bearers of potentially valuable and commercially sensitive data. 

From Burtch, Ghose and Wattal's piece it seems plausible to suggest that analysis of available data supplied by financial backers might pay dividends.  For example, might the fact that a contributor of funds has its own portfolio of patents lead one to ask whether the decision to fund was based on ulterior motives rather than simply the prospect of making a profit?  Likewise, might the presence on the list of crowd-funders of a large and litigation-friendly investor provide a disincentive to anyone thinking of challenging the validity of the funded business's patents?  

At this stage we can do little more than speculate about the practical utility of investor data, its potential uses and the significance of its absence. There does not yet appear to be a literature on the subject. We will however be keeping watch in the event of any developments and will report them if and when they occur.

Wednesday, 27 April 2016

Algorithms and the generation of nonsense: introducing All Prior Art

Our attention was recently caught by a curious new project, All Prior Art ("Algorithmically generated prior art"), which got a mention on beSpacific earlier this month. According to the All Prior Art website:
All Prior Art is a project attempting to algorithmically create and publicly publish all possible new prior art, thereby making the published concepts not patentable. The concept is to democratize ideas, provide an impetus for change in the patent system, and to pre-empt patent trolls. The system works by pulling text from the entire database of US issued and published (unapproved) patents and creating prior art from the patent language. While most inventions generated will be nonsensical, the cost to computationally create and publish millions of ideas is nearly zero – which allows for a higher probability of possible valid prior art.

Further, a large institution could dedicate many servers to this task, along with developing more advanced techniques such as deep learning, to flood the prior art space. It is not unforeseeable with current technology (along with sufficient cash for fees) to flood the actual patent application process itself with sufficiently advanced patent applications based on this concept.

A sister website All The Claims is attempting the same thing, but with the use of claims and a more verbose alternative.
This project seems totally misguided and, if it had any substance to it, it could be quite harmful to the innovation ecosystem. 

For one thing, the patent system is actually designed to democratize ideas, in that it ensures that all patent applications are published, irrespective of whether they lead to grant; patents that do not sufficiently disclose an invention to enable those skilled in the art to understand and make it can be invalidated; the facility of filing a patent is open to all and many individuals have benefited from its accessibility.  The fact that so many patents today are complex, difficult to understand and incapable of use except in conjunction with other patents is actually a sign that the system has worked extraordinarily well and has enabled teamwork and cooperation to produce advanced technologies that lie beyond the skills set of any individual -- it's a sign that innovators share their ideas and their analyses at an early stage, before a patent application can be formulated.

Another point to raise here is that an attempt to publish algorithmically-constructed prior art would not just work against non-practising entities: it would work against all prospective patent applicants, including small-scale and poorly resourced private inventors, whose intellectual creations would be just as unpatentable as those of trolls.

One might also wonder how any funding would be secured in order to support further research, development, health and safety testing and the other costs incurred by bringing any innovation to market. The existence of a patent is no guarantee that this funding will be protected, but it is at least a comfort and an incentive -- and a way of attracting money that might otherwise head into real estate, the purchase of art works or other less risky forms of investment.

The initiator of All Prior Art concedes that most inventions generated by algorithm would be nonsensical.  The same word can equally well be said to describe this initiative.

Monday, 25 April 2016

Unicorns: their message for the real world

Back in February, in "What can unicorns tell us about the real world?", here, this weblog discussed an article that Aistemos CEO Nigel Swycher and his colleague Sebastian Müller-Borges wrote for IAM.  At that time, this article was lurking behind a paywall from which it has since emerged.  Accordingly, for the convenience of our readers who have not yet seen this piece and studied in full, we now reproduce it here. It reads like this:


Labelling start-ups as ‘unicorns’ suggests that they might have mythical powers. However, from an IP perspective, they are just like any other company
Yes, we know the term “Unicorn” is not perfect – Unicorns apparently do not exist, and these companies do – but we like the term because to us it means something extremely rare, and magical. 
Aileen Lee, “Welcome to the Unicorn Club: Learning from Billion-dollar Start-ups”, TechCrunch, November 2 2013
When Aileen Lee posted to TechCrunch just over two years ago, there were 39 so-called ‘unicorns’ based in the United States, representing 0.07% of venture-backed consumer and enterprise start-ups. Since then, numerous other studies have been undertaken, and both TechCrunch and The Wall Street Journal keep permanent tallies.

More recently, these companies have been studied through the patent lens, first by Aistemos (using Cipher) and more recently by Foresight Valuation Group. What is interesting about IP analytics is how they can shine a light on an asset class that has for too long been hidden from view. This helps companies to build more effective IP strategies and enables investors to deploy capital more wisely.
Here is a simple guide to unicorns:

  • Young – by definition they are pre-exit, typically less than seven years old.
  • US-based – the largest proportion of unicorns are found in the United States, the venture capital market which has nurtured a funding model that creates the necessary valuations.
  • Internet – many unicorns have the Internet at the heart of their business model. Valuations are based more on securing numbers of users than on profit.
  • Valuable – to qualify as a unicorn, a start-up must achieve a valuation of at least $1 billion.
  • Rare – in 2013 unicorns were rare. The fact that there are now between 126 (The Wall Street Journal) and 152 (TechCrunch) today does not change this reality (as of November 17 2015). For this analysis, we primarily refer to the TechCrunch grouping.
Before embarking on further analysis, remember that corporates are not born as unicorns and do not stay unicorns for long. That said, they are still an interesting group to study.

Back to basics

Let us begin by considering what is necessary from an IP perspective to build and grow a successful start-up in today’s technology-centric world.

All companies must have an IP strategy as an integrated and essential element of their business strategy. While patenting will form a key element of this, so will all other intangibles (eg, brand, content and trade secrets).

Benchmarking is another important factor. Investors have literally thousands of opportunities and are hunting for best in class. If a company is an outsider from an IP perspective, questions will be asked.
Risk management can be central. Intellectual property is now a material risk for all emerging companies that rely on technology. This can be too easily ignored at the start (the incentive to sue a new company is small), but the risk can quickly materialise – everyone wants to hunt a unicorn.
When it comes to the IP lifecycle (see Figure 1), investors are aware of the IP conundrum that what can start as a hallmark of innovation (a patent filing) can become successively a near-death experience (patent litigation), a material cost (patent acquisition), a core business lever (offensive litigation, cross-licensing) or a material source of revenue (security, monetisation and exit).
It is against this backdrop that we study unicorns from a patent perspective.

Figure 1. The IP lifecycle



What do unicorns do?

In the breakdown below (Figure 2), we have analysed unicorns by sector, showing which of these companies own patents.

Overall, 56% of unicorns own patents. A different perspective can be derived by studying from where unicorns originate, as seen in Figure 3.

This reveals the reality that patents are more important to unicorns growing up in the United States.

Figure 2. Unicorns by sector


Figure 3. Unicorns by country


Do unicorns like patents?

In the world of IP analytics there is a big difference between counting and what counts. However, a study of both is dramatic. Figure 4 is a representation of both the size of the top 10 patent-owning unicorns and their growth over the last 12 months. The numbers are staggering – especially for the Chinese unicorns, which have double or triple digit growth, although most of their patents are still pending.

While DJI has the largest granted portfolio (219 families), it is Xiaomi that has the most applications (2,605 pending patent families). However, if the focus is changed to territorial coverage, the analysis is very different. Figure 5 examines the geographical patent coverage of the 10 unicorns with the largest granted portfolios.

As can be seen, both DJI and Xiaomi (and Sogou for that matter) mainly own rights in China. To the extent that unicorns have global ambitions (and typically they do), the territorial footprint of the portfolios is important. Only Intarcia Therapeutics and Proteus can be said to have global patent strategies.

Figure 4. Top 10 patent-owning unicorns – size and growth

Figure 5. Top 10 unicorns – geographical patent coverage (granted patents)

Feeding habits of unicorns

Unicorns typically disrupt markets and challenge incumbents. This makes them a target for operating companies. The problem for young unicorns is that, even when they have invested in building a patent portfolio, they have not had the time for their efforts to mature into a sizeable granted portfolio. To alleviate this risk, unicorns often purchase patents: 24 unicorns (28% of those that own patents) have acquired patents.

Table 1 illustrates patent acquisitions made by some unicorns. Figure 6 and Figure 7 demonstrate the fact that many unicorns use acquisition as a strategy, not just a tactic.

Table 1.Illustrative patent acquisitions by unicorns

Buyer (unicorn)
Seller
Number of patents
Year
Intarcia
Alza Corporation
63
2007
Jawbone
Spectros Corporation
42
2015
Uber
Microsoft
9
2015
Domo
IBM
45
2015
Snapchat
Yahoo
11
2015
Actifio
IBM
2
2014



Figure 6. Unicorn patent acquisitions by sector

Figure 7. Unicorns with more than one patent acquisition

This need also underlies some of the M&A activity of unicorns – for example, Jawbone’s acquisition of BodyMedia, which both addressed weaknesses in its own portfolio and provided it with offensive capability (eg, its recent litigation against Fitbit).

Table 2. Decacorns

Unicorn
$ billion
Uber
51
Xiaomi
46
Airbnb
25.5
Palantir
20
Snapchat
16
Didi Kuaidi
16
Flipkart
15
SpaceX
12
Pinterest
11
Dropbox
10
WeWork
10

Figure 8. Unicorn valuations

While studies of this sort tend to focus on the unicorns of today, these habits are not new. Facebook purchased patents from AOL, Fujifilm, IBM and others, while Twitter acquired close to 1,000 patents only months after its initial public offering (IPO). In the same context, Uber was reported to be a bidder for the Nokia HERE portfolio, which was sold to an automobile consortium for $3 billion in August 2015. But not all unicorns are the same. Figure 8 outlines the distribution of valuations, with the vast majority merely obtaining their unicorn status (51% of unicorns are valued at $1.5 billion or less). Table 2 showcases the huge valuation spread among so-called ‘decacorns’ – start-up companies with a valuation of $10 billion or more.

Fund-raising unicorns are vulnerable

Investors are increasingly aware of the importance of patents and sensitive to the costs and disruptive effects of IP litigation. For this reason, it is not uncommon for companies preparing for an IPO to be hit by a lawsuit (the recent claim by Jawbone against Fitbit is a good example). As for decacorns, 64% of these were sued within six months of a major funding round. Only Didi Kuaidi (a taxi-sharing platform active only in China), Flipkart (an e-commerce outfit active only in India), WeWork (a US-based real estate business) and Space X (a US aerospace manufacturer) were not sued.

Figure 9. Top five litigated unicorns

However, all unicorns are vulnerable to lawsuits and a quarter have been sued for patent infringement, by both operating companies and non-practising entities (NPEs). As a group, unicorns are defendants in over 140 actions (40 by operating companies), with 73 currently active. Popular targets are unicorns in the software and consumer internet sectors. Not all the actions are NPE-driven – Jawbone’s litigation profile is a good example of a unicorn being targeted by competitors in a hotly contested market. Figure 9 shows the top five targets.

Figure 10. Top five litigious unicorns

However, it does not take long for the hunted to become the hunter. We have already referred to Jawbone’s action against Fitbit – this is typical of the breed. Docusign, Actifio, Njoy and SimpliVity have all engaged in actions against other operating companies (Figure 10). Good Technology (a 2013 unicorn) was typical in this respect – it sued nine times and commenced 16 actions, against Microsoft among other targets. As an important post-script, BlackBerry acquired Good Technology in September 2015 for $425 million – a stark reminder that not everything that looks like a unicorn is one.

Two recent Financial Times articles (“Technology: Unicorns face end of the ‘steroid era’”, November 10 2015 and “Unicorns beware, markets get it wrong on tech valuations”, November 13 2015) make exactly this point by reference to the forthcoming IPO of Snapchat with a valuation of $6 billion, one-third of its valuation a year ago. The later article analyses three outstanding examples of the breed: Amazon, Netflix and Tesla (combined valuation of $390 billion). It is definitely worth questioning whether unicorns are real after all.

Unicorns – a fable of our times

A study of unicorns teaches a variety of lessons, which have a much broader application.

Investors have a more sophisticated understanding of intangible assets

While not owning many or any patents may be a reasonable position, companies will have to explain their IP strategy – especially if their competitors have strong and global portfolios.

Space X makes a virtue of its no-patent policy. Elon Musk’s view is that he is better served by trade secrets, especially as the Chinese market is growing and with it the risk of copycats.

However, we must always be cautious when studying small or unusual samples. While Figure 3 might suggest that only 36% of European start-ups focus on patents, if you take another sample of start-ups – such as those companies in which IP Group plc has invested – you get a different and perhaps more realistic view.

Figure 11. IP group companies by sector

Figure 11 is a study of 74 companies which IP Group publicly refers to, and over 70% own patent rights. The relevance of patents to these businesses is much greater when you factor in what is licensed to them (many are university spin-outs). A stronger point is that companies with innovation at their core make for a powerful investment strategy. This statement is even true in sectors where patents have no role to play, and especially true in conditions where more real-world valuations apply.

Understanding and managing IP risk is essential to any IP strategy

From the transformation of the entertainment, retail, financial services and automotive sectors to the ubiquitous deployment of cloud-based services, no company is immune from IP risk. Because the lifecycles of unicorns are so condensed, it is easy to see the stages and changes that they undergo. However, all companies need to understand the risks they face and how to mitigate them. If the risk is acquisition, then analytics to monitor the market may be the answer. If insurance, then data relating to claims and prospective claims will be relevant. Similarly, if the best strategy is to litigate, be prepared to justify this. This will involve not only a microscopic analysis of a specific patent claim, but also how this will play out over geographies and the sector more generally.

Opportunities presented by recognition of intellectual property as an asset class

In May 2015 Jawbone announced a $300 million loan from BlackRock. This was secured on Jawbone’s intangibles and specifically its patents. We anticipate many more deals of this type for companies that can establish that they own quality assets. This will require evidence of not only how they relate to the ongoing business, but what value they are likely to have in the event that the loan is not repaid and the security is enforced. While MIPS was in no way a unicorn, its demise tells a similar story – while the operating company was sold to Imagination for $60 million, the patents were sold separately for $350 million (well in excess of the entire company’s then market capitalisation).
What unicorns tell us about the real world is that no two companies, sectors or geographies are the same from an IP perspective. However, understanding these differences matters. The significant advances in the availability and accessibility of IP analytics mean that there is now greater transparency about who is doing what and why. Gone are the days when understanding the importance of patents was confined to IP specialists. While unicorns are rare and magical, patents are the manifestation of real-world innovation.

Action plan

A study of companies with pre-exit valuation of $1 billion or more (so-called ‘unicorns’) helps with an understanding of a number of patenting trends common to both innovative start-ups and established companies which rely on high-tech enabled business models.

  • Data analytics and insight – there is an advantage to understanding the IP strategy of successful companies.
  • IP risk management – high-tech companies need a blend of defensive and offensive strategies.
  • Intellectual property as an asset class – as financial markets develop their understanding of patents, more opportunities, such as IP-enhanced lending and IP insurance, will be available to the innovative companies.
While unicorns are extremely rare and magical, their trials and tribulations have widespread implications.

Nigel Swycher is CEO and Sebastian Müller-Borges is a strategy analyst at Aistemos, London, United Kingdom

Wednesday, 20 April 2016

The Yahoo patent portfolio: what price a reasonable valuation?

"The Yahoo Patent Portfolio: What is the market price today?" This is the question posed by the Richardson Oliver Law Group trio of Kent Richardson, Erik Oliver and Michael Costa, in a piece hosted by IP Watchdog last week. You can read their article here. Richardson, Oliver and Costa take issue with Business Insider's estimate of the likely sale price of up to US$ 3 billion, taking a route which is obvious to anyone with an ounce of common sense but rarely pursued by financial analysts -- the route of adding available IP-related data to such other information as the market might be kind enough to provide. 

Taking this route, the authors push down the estimated street price of Yahoo's patent portfolio from the sky-high US$ 3 billion figure to a far more realistic US$ 772 million (with a best case price of US$ 1.15 billion and a worst case scenario of just US$ 393 million). Before demonstrating how a swift analysis of Yahoo’s portfolio and the patent market casts a shadow of limitation on the patents' street price they comment, in words that echo the endlessly repeated sentiment of Aistemos's weblog, LinkedIn discussion group and Twitter account:
"We often see patent prices stated without any data to back up the analysis. We think this needs to change".
They go on to make some thoroughly sensible points and list a number of relevant factors that only a traditionally blinkered market analyst could ever be surprised at, closing with the following words which readers should cut, paste, and send to as many non-believers as they can identify, demanding confirmation that their message has been received loud and clear:
"We are often frustrated by wild or anecdotal reports of patent prices and sales. Business decision makers seek real data to support informed patent buying, selling and pricing. We think our industry needs more data and more analysis. Board members, CEOs, CFOs are all looking for intellectual asset management guided by both experience and data. Wild projections on patent values hurt us all; data-driven decision making brings business credibility to the industry of intellectual asset management. Our goal in putting this post together was not to show that Yahoo’s portfolio should be a specific price. Our goal was to show that with a few pieces of data, the price can be bounded and the factors impacting that price understood.

...  The important point for investors and potential purchasers is that market data can help you understand how to think about the price of Yahoo’s [or indeed anyone else's] portfolio, what additional questions you might have when evaluating it, and where to look for more information".
IP data analysis is a discipline with a well-accepted set of methodologies, parameters and reliable data sources. It has taken the valuation of patent portfolios well beyond the smoke-and-mirrors approach that appears to characterise some of the competing techniques. While its predictive accuracy cannot be guaranteed, it at least makes use of relevant data in a relevant and objectively verifiable manner. IP analytics is a world away from alchemy, and anyone who ignores or misuses IP data runs the risk of turning gold into dross.

We need only add the somewhat depressing thought that, if your business has nothing going for it except the prospect of selling its patents, the chances are that all is lost. A few companies will get lucky, like Nortel, but the greater likelihood is that the gap between the price expected and that received will leave sellers disappointed, as in the case of Kodak.

Tuesday, 19 April 2016

Competitive intelligence: the backbone to IP strategy

Vital, but only of use if it's
connected at both ends ...
Yesterday, in "IP strategy, start-ups and spin-outs: when divergent interests converge", here, this weblog welcomed the cooperation between the Licensing Executives Society's Britain & Ireland chapter and the UK's Chartered Institute of Patent Attorneys in promoting a joint seminar on that subject. One of the participants in this event is Aistemos CEO Nigel Swycher, who will be speaking on the theme of "Competitive intelligence as the backbone to IP strategy".

If you are planning to attend, or are just curious, Nigel's talk will open by summarising the evolution business practices involving IP [it has been stated since the 1990s that intangible assets represent 70% of corporate value -- but is this still the case?]. Whatever the current figure, it is plain that there have been big changes in patterns of corporate lending, insurance, motivation, and risk evaluation, as articulated in The Trillion Dollar Tipping Point Report, here. This means that IP is now a boardroom issue, whether companies fully appreciate it or not.

In the context of IP, market data and analytics are still developing to meet users' needs. While other markets have analytics to support the making of better decisions (see for example the financial services indices offered by Standard & Poors and the portfolio of global information services from Experian), IP analytics is a relatively new discipline, evolving as more data becomes available, data science provides more means of analysing it and demand increases.

Nigel will then address the difference between IP data and analytics, explaining how an IP analytics solution (such as Cipher) is structured in terms of data aggregation, analysis and visualisation. After offering an overview of how IP analytics can work when engaging in (i) competitive intelligence, (ii) IP risk management, (iii) corporate transactions, (iv) patenting strategy, (v) monetisation and commercialisation and (vi) collaboration and licensing, Nigel's talk will close with a look at what the future holds.

If you'd like to attend this event, which takes place on 28 April, just click here.

Monday, 18 April 2016

IP strategy, start-ups and spin-outs: when divergent interests converge

The world of intellectual property is heavily divided -- and not just as between geographical zones, types of right and sectors of industrial application.  There is even a multiplicity of organisations representing owners, practitioners and others whose interests revolve around IP exploitation.  All of these organisations purport to speak on behalf of the interests of IP and its beneficiaries, even though they may sometimes be working at cross purposes with one another.

It is therefore a pleasure to learn of any event in which two such organisations are seen to be cooperating with one another. One such event, coming up on 28 April, is a joint LES & CIPA afternoon seminar, "IP Portfolio & Strategy Building for Start-Ups & Spin-Outs", the details of which you can access here.  For the uninitiated,  the co-sponsors have quite complementary profiles. LES (the Licensing Executives Society) is a global body, divided into national chapters, which focuses on what people do with IP.  CIPA (the Chartered Institute of Patent Attorneys) is a national body that attracts a large international following; its core membership is defined by professional status rather than by actual roles within IP.

Ostensibly a celebration of World Intellectual Property Day (which strictly speaking falls on 26 April and this year addresses "digital creativity"), this seminar is described as 
" ... a joint seminar on IP portfolio and strategy building for start-ups and spin-outs. Our speakers will cover topics such as aligning an IP strategy with the overall business plan; pitfalls to avoid when creating an IP portfolio and tricks for making optimum use of limited early-stage resources; using IP informatics to shape tactics and positioning; what investors and commercial partners look for in an IP portfolio; special considerations for spin-outs; and how the new Unitary Patent and UPC will impact on licensing and other aspects of IP strategy. We will include panel discussion sessions and opportunities for questions".
Speakers listed for this seminar represent a good cross-section of the interests held within the patent and technology zone of the IP community: they are Catriona Hammer (IP Consultant, formerly Senior IP Counsel at GE Healthcare), Charles Harding (D Young & Co), Alan Johnson (Bristows, solicitors), Carolyn Porter (Deputy Head of Technology Transfer, ISIS Innovation Ltd) and Nigel Swycher (CEO, Aistemos). 

As usual, registration is cheaper for students, LES and CIPA members than for ordinary members of the public, Registration includes a buffet lunch before the seminar, and an informal networking and drinks reception afterwards. If you are here, just click here to register.

Tomorrow this weblog will post some thoughts from Nigel Swycher on competitive intelligence as the backbone to IP strategy.

Thursday, 14 April 2016

A US Patent Box: reflections from "Abroad"

This might be news ...
This weblog has sometimes expressed its acute disappointment that the IP community has paid insufficient attention to taxation of IP-based revenue in the current global trading ecosystem. Having said that, it's only fair to add that not everything is doom and gloom -- even though it's still too early to celebrate the long-awaited acceptance of the proposition that taxation issues are an inseparable part of all IP-based business planning, issues that are too important to be left for after-the-event mopping up by accountants.

Respected US academic and IP Finance blogger Professor Mike Mireles reported yesterday on a conference, “Taxation of Intellectual Property in the Global Economy”, backed by Georgetown University. Mike's blogpost gives some idea of what this event, held on 11 March, was all about.  The title itself is really promising: the words "taxation", "intellectual property" and "global economy" suggested deep thinking about tax strategy across a world in which online trading, increasingly harmonised health and safety considerations and interoperability mean that what works in one country should work in many, if not all.

But titles, like appearances, can be deceptive.  A look at the final programme's agenda reveals that, while "intellectual property" is the theme, only one IP right -- the ubiquitous patent -- gets a name check [one of our readers recently complained with some justification that the terms 'IP' and 'patents' are not synonymous, as anyone who has worked in the entertainment industry can testify].  "Taxation" is of course the target topic, but only one narrow aspect of the topic is in focus, investment incentives through the medium of the patent box.  "Global economy" is the ideal backdrop, but the only country other than the United States to get a mention is somewhere rather vaguely called "Abroad". Oh, and the speakers are all affiliated to US institutions or businesses. Anyone looking for something to do with the OECD, BEPS, general issues regarding the taxation of royalty streams, the appropriate location of IP portfolios and a host of other labels that concern IP tax-payers might well be disappointed.


Georgetown University
But this is not the time for despondency.  In intellectual property circles outside the United States, that jurisdiction is often pilloried for its obsession with the belief that it is the only jurisdiction that counts.  In truth there is some basis for this belief in many markets, where the US and its commercial practices influence and indeed dominate the innovative markets which it effectively creates. However, here is proof positive that the US is looking at foreign tax/incentive models and making an honest effort to evaluate them objectively.  This trend should be encouraged. The US can learn from the IP taxation initiatives of other countries, just as those other countries can learn from this fresh assessment and appraisal of their current fiscal and innovation policies.

You can enjoy the proceedings of this conference here.

Tuesday, 12 April 2016

Rovi's patent position: not so bad after all

Patent portfolios:
management is no picnic
Yesterday's Aistemos blogpost, here, discussed the fall in Rovi's share price in the wake of that company's commencing patent infringement proceedings against target licensee Comcast.  Today, with the aid of Cipher, we take a look at Rovi's patent health right now.

The first table, below, gives some idea of the extent to which Rovi actually litigates its extensive 1,500-family patent portfolio. It shows both that, over the past decade, Rovi has more often been required to defend itself against others than to enforce its own patents, and that there appears to be a trend towards a decline in the number of actions in which Rovi is involved.  Against this, the number of actions each year is small, which suggests that not too much should be read into the fact that litigations are fewer now than they were a couple of years ago.



The second figure reflects the relative patent portfolio sizes of Rovi and Comcast.  The data here is confined to Rovi's patented and pending patent families in 2016.  It demonstrates graphically that Comcast's own patent portfolio, which is by no means trivial, is dwarfed by that of Rovi. As an aside, it is by no means inconceivable that Rovi could aim more of its patents at Comcast than those already invoked, if push came to shove.
The third figure, below, gives a picture of Rovi's offensive patent litigation,  Overall, Rovi rarely loses as plaintiff and has a record of settling the disputes it starts fairly quickly. All of this suggests that the outcome of the dispute with Comcast is likely to be relatively favourable to Rovi and, bearing in mind what we said yesterday about its impact on Rovi's business, there is no outcome that is likely to have seismic consequences for the company.




A brief snapshot of Rovi's position cannot reflect the entirety of the company's commercial health and its future prospects. What is can do, however, is to suggest that its patent position is not so weak as to merit the stock price slippage that followed from nothing more sinister than the need to initiate patent infringement proceedings in the course of patent licence negotiations.