Tuesday, 31 May 2016

Investing in Patents: a book for startup investors

Weighing in at 144 pages is a new title that should instantly attract the attention of readers of this weblog: Investing in Patents, promisingly subtitled Everything Startup Investors Need to Know About Patents.

This is an unashamedly patent-positive book, written from the perspective of an author who has experienced patents from various standpoints (as an inventor, patent attorney, businessman and investor) and who can attest to their strengths, weaknesses, attractions and detractions.  His manifesto is set out early in the book:
"Patents, when viewed as an investment, have the same risks as startups: technology risk and market risk. When these risks exist, a patent has purely speculative value, and zero inherent value. As the risks are overcome, the patent begins to have actual, inherent business value. The best analogy is stock options, where the only real value comes when they are in-the-money.

Your author has experienced the invention and patent business from all sides: as an inventor with 30+ patents in multiple industries, as a patent agent/ attorney who drafted nearly 1,000 patent applications for companies big and small, as an owner/broker of sizeable patent portfolios, as a co-founder and COO of an angel/venture backed startup that had nearly 100 patents, and as a CEO of BlueIron, an investment firm that invests solely in patents for startup companies.

BlueIron IP invests in patents. Our investment model is to pay all the patent costs for a startup, and let the startup finance those costs over the lifetime of the patent. Essentially, BlueIron allows the startup to take a mortgage on their asset so that the startup can deploy that capital elsewhere.

As a result of this business model, BlueIron must ensure that it holds investment-grade patents.

The strategies and techniques in this book come from BlueIron’s experience in making those investments".
While the book has an obvious function as an advocate for the author's investment company, there's more too it than that.  The text is clear and, probably on the wise assumption that its readership will consist of busy business folk and investors rather than university professors, it is refreshingly free of abstruse vocabulary, elitist jargon and thickets of bibliographic footnotes.  While it reads as a work crafted by an American for the US market, it is of considerable relevance and interest to readers from other places on the planet, both on account of its generalised and widely applicable content and because not everyone who considers investing in patents in the US is necessarily American.

The author's thesis can be summarised by the principle that you only need to do better than average in order to score a positive return on your investments and that, therefore, you should take a sensible probability-based approach, supplementing actual knowledge where necessary with rules of thumb (such as the "25% rule" for royalties). For sure, since every investment lives within its own technological and commercial ecosystem, it's not possible to come up with firm rules that work in every case. This is why some patents will do well, others will be relatively neutral and others again will disappoint -- as the author concedes. 

All in all, this book isn't the next Moby Dick, so if you read it you won't be left all at sea with patent investment.

You can find out more about the book and its author by clicking its website here.

Monday, 30 May 2016

Food for Thought: Trends in “high-tech” food and nutrition

"Food for Thought: Trends in “high-tech” food and nutrition" is the latest Aistemos Cipher Snapshot, posted last week on the Aistemos website here. Do let us know what you think about this way of presenting a profile of intellectual property-backed innovation on a sectoral basis.

A popular proverb says “You are what you eat”. The notion that to live a healthy life people have to adhere to healthy nutrition seems to be a universal truth.

People’s relation with food is constantly changing. Healthy food and nutrition have emerged as major concerns; as a consequence, technology is beginning to play a role in this market. Food supplements like proteins or vitamins have been available for a long time, though more recently companies have taken it one step further by creating food to fight diseases and increase overall health, such as weight loss supplements. Ecological and moral considerations are becoming more important as well. One example is lab-grown meat, which has emerged out of concerns over the carbon footprint and animal cruelty of meat production. Engineered meat and meat substitutes have certainly more media attention but are they also the subject of innovations from major companies?

The so-called functional food market looks promising. According to a recent statistic the functional/wellbeing food has grown by 6 percent between 2011 and 2015. In light of this, this snapshot examines the innovation trends within three categories:
* Engineered meat (including meat substitutes)

* Wellbeing food (e.g. to build muscle, lower glucose levels, stimulate weight loss etc.)

* Disease-treatment foods (food with a specific purpose to treat disease, inflammation etc.).
Figure 1 shows patent portfolio sizes over time split by technologies using a basket of 14 major companies as a proxy. The first thing to note is that these are not new technologies. There were hundreds of active patents in these areas from 15 years ago. Though since 2000, while wellbeing food and engineered meat have been virtually flat, disease-treatment food has taken off and seen a 3x increase. This is perhaps not surprising in light of giants such as Nestle venturing into the market.

To uncover company specific trends Figure 2a is a visualisation of the major companies in these markets and their respective patent “market share” of granted patents as well as their change over time (2011-2016). Nestle and Danone are the leading companies, with the rest having fairly similarly sized portfolios. Other than an apparent clear decline for Abbott and General Mills, it is quite hard to find a discernible macro-level trend; companies appear to have different or changed focus areas over the last 10 years.

In Figure 1 we saw engineered meat and wellbeing foods appearing to show no growth, however Figure 2b breaks this down and we can see that there has been a change of focus, with some companies heavily decreasing in one area but growing in the other (e.g. P&G, Mead Johnson and Unilever). Only Danone seems to grow in both areas. Turning from patent market share of current granted patents to the companies’ pipelines, i.e. pending patents, 
Table 1 shows that Nestle and Danone have more than half of the pending patent families dominating the disease-treatment category. Furthermore, Nestle has the highest number of pending patent families in the engineered meat and meat substitute cluster. Mead Johnson – manufacturer of infant formula – also has a significant pipeline size and interestingly so does Abbott, which has been losing market share of granted patents, the former focusing on wellbeing food and the latter on disease-treatment food.

The food markets are evolving with customers wanting their food to do more than merely nourish them. Large multinationals are driving these changes in a quest to make the food we eat healthier, more ecological and potentially cure diseases. Although companies driving the change is different compared to 10/15 years ago and a clear general trend towards disease-treating foods, innovation within the other categories is still significant. Nevertheless, if the companies succeed these changes can make a big difference in countries with increasing health problems such as diabetes and ageing populations.

Friday, 27 May 2016

The Wasteland: when patent landscapes don't deliver

"More than 50% patent landscape analyses are a waste of money!" This strident title crowns a recent GreyB blogpost by Shikhar Sahni (General Manager, Operations) and Abhishek Bhatia (Team Lead, Concept Hackers) that cries out for attention.

Before we go any further, it must be conceded that, while it has been in use for a few years, the term "patent landscape" is not familiar to all members of the IP community; indeed, a Google search for that term summoned up just 83,000 results, a fairly poor score for an IP buzz-term.  If you are among the uninitiated, you'll find a helpful explanation of the concept on Mike Lloyd's Amberblog, here. At base, it's an overview of patenting activity within a specific field of technology.  If you'd like to see what they look like, the World Intellectual Property Organization's website hosts a number of patent landscape reports -- though none is more recent than 2014, which is pretty much ancient history in patent terms if you consider that the average granted patent will have expired, lapsed or been invalidated before it reaches its 10th birthday.

Unlike "patent landscape", the term "waste of money" is very well understood (a corresponding Google search under that term yields some 40 million results).  However, even in business there is no consensus as to what the term covers.  Some people regard insurance premiums as a waste of money unless they have been able to make a successful claim in order to recover more than the cost of their cover. In the world of innovation, there are those who regard patents as a waste of money since most of the innovative embodiments which they protect are never used in industry and, even if they are, if they're not infringed they may as well not have been patented in the first place.  In this article, though, the waste of money is clearly the cost of commissioning a patent landscape analysis that does not deliver the information necessary for its commissioner to make business decisions.   As indicated in the previous paragraph, age is a factor.  Even a good landscape analysis is a waste of money if it's not acted upon while it is still current -- and that can be a vert short time in fast-moving sectors.  Relying on a landscape analysis that is six months old can be as beneficial as eating a six-month-old sandwich retrieved from the back of the fridge.

The GreyB article makes some useful points.  In particular it emphasises that users of patent landscape analyses each have their own requirements.  A financial investor, a business executive considering a proposed product launch, a governmental competition authority seeking to monitor antitrust activities, a statistic-crunching academic economist and a patent litigator will all look at the same landscape but see different things in it.

This is an important point, since a landscape can be prepared in such a manner as to enable its intended user to extract the information sought as easily as possible.  But if the consumer's need is not borne in mind, the value of the exercise may be diminished or lost. And, if the user is not invited or encouraged to make it plain exactly why the landscape is requested, the chances are that it may be of little or no value.  To give an analogy, both a street map of Manhattan and a plan of the Metro are designed to help visitors to New York to get around but, if you're a pedestrian, the Metro plan is of strictly limited utility.

Say Sahni and Bahtia, on the basis of their own observations:
" ... a majority of analysis are conducted without having the consumer’s goal and the work area in mind. As a result, the end user fails to draw any insights and an analysis dies by its own hand".
This failure is not inevitable and, as the authors explain, the solution is very much in the customers' hands.  But this requires an element of education and understanding on the part of the person commissioning the landscape and, given the sometimes serious lack of general knowledge and detailed understanding which is endemic in the area of IP-driven innovation and investment, it will not be until landscape consumers know what to ask for, and why they are asking for it, that we can expect the utility rating for these exercises to pass the halfway mark.

For more on patent landscape analysis, see our earlier blogpost, "Patent landscape and IP competitive intelligence: should every company have it?", here.

Thursday, 26 May 2016

Competitor behaviour revealed: an exercise in software patent data

So much ink has been spilled in recent times over the demise of patents in the software sector, particularly in the United States after the Supreme Court's Alice ruling, that one might be led to believe that there were scarcely any of them left standing. The truth is however very different.  There are tens of thousands of them, in the US and beyond. Their very large number makes it difficult to gauge their potential impact in the marketplace and their role in shaping the commercial direction taken by their owners. 

In this context, it is instructive to take a look at the case study, below, which Aistemos executed through use of its Cipher tool. This study, which was first posted on the Aistemos website here, gives some idea of the benefits that can be derived through the deployment of IP analytics.


Case Study: Global Patenting Strategy


The IP team wanted to optimise their own international patenting strategy through a better understanding of the patent filing patterns of the most similar companies in this sector.


The volume of data relating to the patent portfolios to be analysed (over [25,000] families in aggregate) meant that the traditional approaches to corporate grouping, clustering and territorial analysis would be too labour- intensive, slow and expensive. It was also stipulated at the outset that portfolio-to-portfolio analysis would be too course and imprecise a measure, meaning that competitive strategy had to be analysed at a technology (patent cluster) level.


Cipher was able to respond to the challenges as follows:


The starting point was the classification supplied to the companies’ own portfolios. In this way, a cluster-to-cluster matrix (a Cipher heatmap) was produced for each company and each technology area.

Figure 1: Company/Technology matrix
For ease of visualisation, the number of patent families in each area are not included.

It was then possible to analyse a strategy for any combination. The illustration below represents the Territory Waterfall for Microsoft in the area of Virtual Machines.

Figure 2: Territory Waterfall
As illustrated above, in relation to this technology, Microsoft seeks generally seeks protection in the US, and when filing internationally starts with China, Japan and Korea. For less than 25% of its portfolio does it seek broad protection in Europe. This analysis provides insight into both patenting and market strategy.


Having clustered all the competitive portfolios, it was possible to analyse spend - the cost incurred in obtaining and maintaining each part of the portfolio. Again using Microsoft as the example:

Figure 3: Microsoft's spend per patent family
While there was a definite correlation between costs and territorial scope (more territories, more costs), this type of analysis uncovers hidden truths. There are families (albeit extended) that cost well over $500k to obtain and maintain.


As a direct result of this analysis:

the patenting budget was increased to optimise their international patenting strategy.

IP analytics were integrated as a factor into the corporate competitive intelligence reports, increasing the relevance and importance of patenting strategy.

the company was able to implement portfolio reviews as a regular, fast and inexpensive way of monitoring the competition and improving their own patenting strategy.

Wednesday, 25 May 2016

Patents for development, disclosures, enablement and access

Patents for Development: Improved Patent Information Disclosure and Access for Incremental Innovation is a new book by  Dr Nefissa Chakroun (Centre for Commercial Law Studies, Queen Mary, University of London and a Senior Public Service Counsellor.  It's the latest in a sequence of increasingly adventurous books from Anglo-American company Edward Elgar Publishing, seeking to explore new angles on intellectual property law, practice and economics.

According to this book's web-blurb:
This book investigates whether it is possible to execute the disclosed technologies just by reading the patent application. Nefissa Chakroun argues that while TRIPS Agreement obliges inventors to disclose full and complete disclosure, patent information users lack the capacity to fully utilise such information for their economic development. 
The book offers a critical analysis of the disclosure requirements of the patent system as well as an in-depth examination of the ways in accessing and retrieving patent information. Chakroun articulates proposals for strengthening the disclosure and methods for enhancing retrieval and exploitation of the technological knowledge, including an integrated policy on how patent information could be better utilised for development.
Whether it is possible to execute the disclosed technologies just by reading the patent application is a question that was firmly answered in the negative getting on for half a century ago in light of Algeria's experience following independence from France.  The emergent former colony found itself in possession of a complete set of French patent records, but was quite unable to put them to industrial use and commercial advantage (see F. A. Sviridov, The Role of Patent Information in the Transfer of Technology, Pergamon 1981).  The difficulties of putting technologies into practice run further than that: Afro-IP reported in 2009 that some 10% of laboratory equipment had never even been assembled, for want of know-how on the ground, according to Algeria's Director General of Scientific Research and Technology Development.

This question is however ripe for a revisit.  Patent disclosure requirements, both in legal terms and in relation to the demands made by increasingly well-trained examiners, have come a long way since Sviridov's time. Further, both the internet and ever-growing levels of general knowledge have done much to supplement the absence of technical information for which no disclosure is required. Finally, the World Intellectual Property Organization and a number of leading regional and national patent-granting authorities have recognised and proactively addressed the need for more and better use to be made of patented information, both during the course of a patent's life and after the patent's entry to the public domain.

The author ends with a 16-page set of conclusions which are by no means as radical as the patent establishment might fear. They include such very sensible proposals as encouraging the adoption of a harmonised set of terminologies relating to patent information, the recognition of a right of access to patent information and the enhancement of skills associated with the exploitation of patent-related information.  While a higher level of enabling disclosure is predictably prescribed, this should be set at the level of whether the intended enablement imposes an undue burden on persons skilled in the art.  'Best mode' disclosure is excluded from the proposed package of reforms.

All in all, this is an interesting, well argued and intelligently argued book, details of which can be accessed here.

Tuesday, 24 May 2016

IP: a cute novelty act in the great Professional Services Circus?

This weblog has just been taking a look at Deloitte's Technology Fast 500, which the multinational professional services firm describes in the following terms:
The Technology Fast 500 is the leading technology awards program. Combining technological innovation, entrepreneurship, and rapid growth, Fast 500 companies—large, small, public, and private—hail from cities far and wide across North America and are disrupting the technology industry. If you are looking for fast-growing companies releasing new, emerging technologies, you have come to the right place! Representing industries from software to biotech, Fast 500 companies play in the SaaS, cloud computing, data analytics, and mobile sectors.
We took a look at the web pages listing the winners, as well as offering the usual handsome infographic. To our disappointment -- though not to our surprise -- we failed to find any mention of patents or intellectual property as indicia of current strength or future prospects. It seems that revenue growth is the name of the game; the source of the revenue, how it is invested and whether it can be expected to continue -- matters that are not unrelated to patent portfolio holdings -- are presumably of secondary importance, or less.

Given that technology investment over the past seven decades or so has been propelled by patent protection and the commercial prospects that are covered by patent licences and the establishment of IP-based technical standards, it would have been reasonable to expect that at least some reference might have been made to these matters.  Until Deloitte and its major competitors regularly express a higher level of interest and attention to IP assets, their value and their role in protecting and developing markets, IP is in danger of remaining little more than a cute novelty act in the great professional services circus.

For the record, you can apply for inclusion in the 2016 Technology Fast 500 by clicking here (the closing date is 24 June). 

Monday, 23 May 2016

IP3 and lawyers' core skills revisited

Good contract drafting:
not a core skill for lawyers?
Last week, in"Would you sell your family?" (here), this weblog commented on the IP3 programme for the rapid evaluation and purchase of qualifying patent families containing at least one US granted patent. Yesterday seasoned IP transactional expert Mark Anderson added some comments of his own on the IP Draughts weblog, in this piece called "Another patent purchase programme: IP3". In short:
" ... IP Draughts revisited the terms of the Google agreement of last year [discussed by Aistemos here and analysed by IP Draughts here]. He discovered that some of the drafting mistakes that he had identified had been corrected, but many others remained.

Comparing the new agreement for IP3 with the older Google agreement, it is clear that some of the text of the older agreement has been copied and pasted into the new one. Other parts of the new agreement are very different. IP Draughts has the impression that the drafter has taken their own, favoured template, and bolted in provisions from the earlier agreement, perhaps in response to specific instructions from their client.
Anderson identifies a number of criticisms of the new document, including sloppy and inconsistent drafting, but concludes:
"Overall, IP Draughts prefers the IP3 agreement, but neither document is well drafted. In some areas, as mentioned above, the Google agreement is better. For example, both agreements refer to the possibility that the assignor may have licensed the patents, but only the Google agreement specifically asks the assignor to deliver the licence agreements (see Exhibit A); section 3.5.2 of the IP3 agreement should have included this item in its list.

IP Draughts is left with the impression that both of these agreements have been drafted by patent attorneys who are focussed on the technical process of transfer of title to patents, and who lack some of the skills required to draft contracts clearly and accurately. Perhaps their clients do not demand such clarity, and instead assume that patents (including patent transactions) are a difficult technical subject that they can’t and don’t need to understand. If so, that is a shame. We are told that a revolution is coming in the way in which law is practised. Lawyers who are inward-looking and focus only on their core skills may find they are less marketable to employers and clients in future".
The final sentence, regarding inward-looking lawyers and the need to expand beyond core skills, touches upon another issue raised on this weblog last week. In "Rating risks in intellectual property: a choice dish on the law firm menu?" (here) we reviewed Donal O'Connell's comments on the possible role of law firms in providing IP risk management. The problems encountered with venturing outside one's core competencies are many and varied, which is why core competencies are so assiduously cultivated. Failure to solve those problems, or to sell a convincing case to clients that a firm can provide services that lie well beyond the norms, is the reason why so many brave new law firm initiatives fall flat.  In this case, however, it is depressing to think that "the skills required to draft contracts clearly and accurately" are considered to lie outside a lawyer's core skills.

Friday, 20 May 2016

Rating risks in intellectual property: a choice dish on the law firm menu?

This weblog has on many occasions in the past year mentioned the need to handle risk.  This is a message for everyone working in the intellectual property sector. Investors risk their cash, innovators their time and knowledge.  Competitors risk infringing. Customers risk purchasing products and services that are rapidly heading for obsolescence.  Regulators risk making the wrong call on public health and environmental issues, and so on.

Risks must be taken, but they need not be taken without first engaging in an exercise of assessing them.  In this assessment, real data can be analysed in gross terms and in individual detail. If the exercise is a predictive one, then some heavy maths and probability theory may come into the equation too.  While many ventures have succeeded on the basis of intuited risk assessments, a larger number have foundered.  

In a piece recently posted to LinkedIn Pulse, here, our occasional contributor Donal O'Connell (Chawton Innovation Services) has written a constructive and broadly-pitched "Guidance for Legal & IP Firms wishing to provide a service offering in the area of IP risk management".  Coming from a corporate background with Nokia, Donal is well equipped to give a client-oriented slant to his advice to private practitioners.  This factor should vest an extra layer of interest and value in his words to legal practices seeking to supply risk analysis services to businesses that do not have their own in-house analytics facility. It also offers the expectation that the time will come when IP practices feature IP risk assessment as a regular dish on their menu of services for their clients.

Donal's bottom line is that the establishment of IP risk management services does not require a heavy investment and, if handled properly, will enable the firm to develop a deeper relationship with the corporate client, establishing a layer of trust that will attract further work.  

Is this assessment correct?  While much IP-related data is freely available and computer-driven IP analytics need not be dear, the real cost lies in training and explaining.  The sort of IP risk-related work that Donal considers is something that lies outside the scope of professional training of the average IP lawyer, as does the sort of management regime that he postulates.  Then there is the cost of communicating the deeper risk assessment message to clients in such a way as to enable them to understand it and share it in turn with their colleagues -- and this may be subject to several iterations as the gestation of a proposed project may embrace a variety of key personnel changes at both ends of the law firm-client relationship.

It is good to see consultants and experts like Donal thinking along the lines articulated in his article -- but it may be a good while before IP firms regularly offer these sort of services to clients on anything other than a loss-leader basis.

Wednesday, 18 May 2016

Would you sell your family?

The IAM Blog is always a good place to find news, views and talking points on intellectual property strategy topics, particularly in the hyperactive area of patents.  We have just been taking a look at a recent post, "Facebook, Google, Apple, Microsoft, IBM and 14 others team up with AST to launch new patent buying initiative" by Richard Lloyd; you can read it in full hereIn short, it runs like this:
"A group of major patent-owning companies - Google, Microsoft, Apple, IBM, Ford, Cisco and Facebook among them - have banded together to form the Industry Patent Purchase Program – or IP3 – providing patent owners with a streamlined way of selling their IP. The new initiative has been developed in conjunction with AST  [Allied Security Trust, which signed up with ORoPO last year] which will play the central role in administering the project. In effect it is the second iteration of Google’s Patent Purchase Promotion  [reviewed on this weblog a year ago here], which the search giant launched last summer and which saw it buy up a number of patents in a price range of $3,000 to $250,000.
The new initiative will buy families of patents that include at least one US grant [it's not clear why this is so but, given the timetable described below, it may be a matter of accelerating the evaluation process rather than anything of a politico-economic nature]. These will then be licensed to those companies participating in IP3 and ultimately resold by AST.  ...
IP3 will launch with 18 participants [though others are not barred from joining in] ... Those taking part will pay a certain amount into a central fund which AST will then use to buy any patents that it deems worthwhile. There are different levels of membership depending on how much a company pays, with the more that is paid in determining how much comes back when AST, which is non-profit, sells the patents.  
As with Google’s original programme, part of the attraction of IP3 is meant to be the speed with which any deals can take place. Patent owners will be able to submit their patents for consideration – along with the price they want - for two weeks starting on 25 May. These will then be evaluated by AST using a number of external, subject-matter experts and some machine learning analysis [this should be reassuring to IP analytics doubters: machine learning analysis is there to facilitate and improve the quality of human assessment -- not to replace it], with all of the sellers notified by the end of July about whether they will move to the next phase of due diligence [it would be good to know whether the results of the evaluation will be made available to sellers who will likely assume that, if the evaluation is a commercially valid one, their patent families will be worth more than whatever price they are offered]. Agreements with the sellers will then be in place by the end of August and payments made by the end of September.
“Selling your patents can sometimes take six months to a year, especially if you have to prepare claim charts and do all sorts of other work before you introduce your portfolios to the market,” [AST CEO] Binns remarked. ‘With this programme none of that is required, you just have to identify your family of patents, we’re going to do all the work.”    
One of the most notable parts of this new initiative is the broad range of companies that are involved ... [the common factors being that they are big, techno-friendly and wealthy].
... As Binns pointed out the supply of assets for sale has been fairly healthy for several years: ... 
“There’s still a pent up demand to sell assets and I think some sellers are struggling with how to do that so I think the timing is right for this programme ...I expect to see thousands of assets submitted and I expect us to have a good choice of patents.”
... What is not clear is whether the right to buy the patents from AST will be restricted to certain types of entity. At least some of those involved in IP3, such as Google and Cisco, have been very vocal about not selling to NPEs, but as they will not ever own the patents AST acquires themselves that may not be so much of an issue. Of course, if you reduce the buying pool, you may also reduce the amounts that you can raise - though as a non-profit, private firm that is not an issue for AST itself [presumably IP3's legal advisers have looked into possible antitrust problems involving purchase pools and cartels to drive down prices and will have given the scheme a clean bill of health].  
... For some small inventors and SMEs who have spent the past decade railing against the [alleged] injustices of the patent system, thanks to reform legislation and decisions from the Supreme Court and the Court of Appeals for the Federal Circuit (CAFC) making it much harder to get accused infringers to take a licence, their response to IP3 may not be printable. The fact is that, whatever the good intentions, the market now has an immensely powerful group of companies acting in harmony with the kind of capital to buy up large numbers of patents and glean huge amounts of information about an even broader range of assets. That is not usually a recipe for driving prices back up [though, if one looks at the very large number of patents that owners have been unable to sell in the past, a recipe for low prices may be regarded as being preferable to a recipe for no prices at all] ... "
The entire community of patent monetisers, strategists, analysts, owners, investors and pundits will be watching closely for word of how this initiative works out. If it succeeds, will we see corresponding models for use in FinTech, food and agriculture, biotech and beyond?   IAM will no doubt be among the first to bring news and comment.    Meanwhile, it is good to speculate on one tantalising hypothetical question.  Knowing that IP3 will indeed have some articulate critics among patent family owners, what sort of scheme would they have created, left to themselves, for the assessment, evaluation and sale of their patent families?

Tuesday, 17 May 2016

Innovation, data-sharing and the RDA

The Research Data Alliance (RDA) sounds like the sort of body that readers of this weblog should want to know about, given their interest in IP analytics, investment and innovation strategy.  Indeed, since it claims a large international membership and covers such an important field of activity and interest, one might have expected the RDA to be familiar to us all.  This is not however so.  A Google search of "Research Data Alliance" this morning attracted just 31,000 results.  In the joined-up world of online data, this classes the RDA as being not much better-known than a well-kept secret.

If you were wondering what it's all about, we can tell you that the RDA was actually founded in 2013 by the European Commission, the United States Government's National Science Foundation and National Institute of Standards and Technology, and the Australian Government’s Department of Innovation. Despite its currently low profile, the RDA is a major recipient of support in the form of grants from all of its constituent members' governments. According to its website it is
" ... an international organization focused on the development of infrastructure and community activities aimed to reduce barriers to data sharing and exchange, and promote the acceleration of data driven innovation worldwide. With close to 4,000 members globally, RDA comprises individuals, organizations and policy makers representing multiple industries and disciplines, who are committed to building the social, organizational and technical infrastructure needed to reduce barriers to data sharing and exchange, and accelerating data driven innovation worldwide".
The general notions of developing the infrastructure and community activities aimed at reducing barriers to data sharing and exchange are quite unobjectionable, as is the promotion of the acceleration of data-driven innovation worldwide. The patent system is itself focused on reducing barriers to data sharing and exchange, by requiring the publication of patent applications, demanding that claims and descriptions of inventions be intelligible to their addressees, by classifying inventions in such a way as to enable them to be speedily identified and accessed, and by adopting technologies that facilitate that process. Computer translation now aids human effort in enabling industrialists, innovators, investors and analysts to gain an understanding of technologies generated by people speaking other languages and using unfamiliar scripts. Further, the World Intellectual Property Organization has an active policy of promoting the value of the public domain, a vast and growing corpus of information that not only has technical application but which can also flag products, processes and research results that need not be unnecessarily repeated. 

In addition to the infrastructure provided by the patent system nationally and globally, many private sector initiatives have sought to encourage the better use, wider sharing and greater understanding of both proprietary and publicly available data.  These include the spread of open innovation practices (mentioned in yesterday's Aistemos blogpost here), the operations of technical standards-setting bodies and the rapid growth of the IP analytics sector, of which Aistemos is part.

Since the patent system already appears to facilitate so much of that the RDA seeks to achieve, it would be good to know how this public sector initiative proposes to accelerate data-driven innovation worldwide.  If it can deliver on its promises, well and good. However, it will have to work hard if it is to make a mark in the fast-evolving data ecosystem in which it operates, and those who fund it should have some metric by which to measure the efficacy and cost-effectiveness of anything that it does deliver.

Monday, 16 May 2016

State of Innovation 2016: patents up, publications down

Amid a not inconsiderable blaze of publicity Thomson Reuters has launched its 2016 State of Innovation Study, using data from the Thomson Reuters Derwent World Patents Index and Web of Science. The accompanying media release, reproduced in part below, gives a flavour of its content:
"The pace of innovation among global corporations, universities, government agencies and research institutions has reached record levels. That’s the finding of the 2016 State of Innovation Report: Disruptive, Game-Changing Innovation study, released today by the Intellectual Property & Science business of Thomson Reuters ...

... [T]he annual study analyzes global intellectual property data, including worldwide patent application activity and scientific literature publications, as a leading indicator of innovation across 12 technology areas. This year’s study finds a double-digit year-over-year surge in innovation growth, led by significant increases in the Medical Devices, Home Appliances, Aerospace and Defense, Information Technology, and the Oil & Gas sectors.

The study also tracks global scientific literature publications as a window into the scientific and scholarly research that typically precedes discovery and the protection of innovation rights. Total scientific literature production, in contrast to overall patent volume, has posted a year-over-year decline, suggesting a potential slowdown in future innovation growth [or perhaps a greater awareness of the risks inherent in publishing potentially valuable and/or patent-relevant information?].

Key findings from the report include:

* Double-Digit Year-Over-Year Innovation Growth: Total, worldwide patent volume grew at an annualized rate of 13.7 percent in 2015, driving the overall growth rate for patents to over 100 percent since the State of Innovation study was launched in 2009. The total volume of new scientific research has declined 19 percent over the last year and 27 percent since 2009 [given that patent volume has risen while new research has declined, it would be good to look at the availability of research and innovation funds in the wake of the 2008 financial crisis, as well as the criteria for deploying them].

* Medical Devices, Home Appliances, Aerospace & Defense Lead Growth: The industries showing the largest growth in year-over-year patent volume were Medical Devices (27 percent); Home Appliances (21 percent); Aerospace and Defense (15 percent); Oil & Gas (14 percent); and Information Technology (13 percent) [these fields are mirrored by Aistemos posts on prosthetics, white goods, drones and cybersecurity, all of which take a close look at the ongoing patent situation and the portfolios of principal players].

* Biotechnology is Only Sector to Slow: The only sector in the study to log a year-over-year decline in patent volume in 2015 was Biotechnology, which saw a -2 percent move [regulatory concerns and the greater attraction of investing in generic bioproducts may be taking a toll here].

* Open Innovation Models Thrive: The phenomenon of “open innovation” whereby corporations, universities, government agencies, and research institutions increasingly partner to bring new technologies to market, is evident in the increased comingling of multinational corporations and prolific scientific research institutions. These include, Procter & Gamble, listed alongside the University of Sao Paulo, the U.S. FDA, and Harvard University among top research institutions in the field of Cosmetics, and Ford, listed alongside the University of Michigan and Polytechnic University of Turin among top researchers in the Automotive sector [cooperation of this nature, as predicted in Henry Chesborough's Open Innovation over a decade ago, has been surprisingly slow to gain momentum, possibly on account of competition from alternative proprietary cooperative models such as FRAND-based technical standards. Open innovation need not however lead to the perils of joint ownership of IP rights, against which a contributor to this blog has warned, here]. ..."
If you want to access the report, you can apply to do so via Thomson Reuters here.

Friday, 13 May 2016

Who is driving autonomous cars? A profile of patenting activity

What's driving the automotive sector these days? It's plain from the popular media that cars are expected to be driving themselves soon, and the prospect of autonomous driving (a.k.a. driverless cars) has inspired comments from economists, business analysts, lawyers and, inevitably, cartoonists.

If you are wondering about the IP profile of this fascinating sector, here's a link to "Automotive: Insights into autonomous driving and dashboards", a presentation recently prepared by Sebastian Mulller-Borges with the aid of Aistemos's Cipher analytics tool. From this presentation you can get a feel for the tremendous growth in patenting activity in a field that looks set to change radically the way we use vehicular travel for domestic and commercial purposes. What, in brief, does this industrial snapshot show us?
Bosch, Honda and Toyota are the patenting powerhouses, with both strong year-on-year growth and large patent portfolios. They do not have the field to themselves, though, since Google, GM, Continental and Ford also show impressive growth. Perhaps curiously, given the perceived advantages which autonomous driving can offer, no companies in the defence or aerospace sectors hold substantial portfolios.
Comparing leaders Bosch and Honda, what do we see? Honda was initially in the lead but has now been overhauled by Bosch. Based in Europe, Bosch has a wider European patent coverage strategy, while Honda has broader global coverage. Bo. sch's applications show a relatively low conversion rate, which may suggest that the high cost of a strong European patenting strategy encourages a higher rate of abandonment
Turning to the challenging group, a comparison of Google, VW and GM shows that,while their patent portfolios are of broadly similar size, they have widely differing geographic profiles and conversion rates. Germany's VW reflects a similar European-oriented, low-conversion strategy to that of fellow countrymen Bosch. At the other end of the scale, Google's conversion rate is remarkably high but almost entirely US-focused.

Addressing dashboard patenting, how do the different types of company fare against each other? In general, tech companies outperform traditional automotive manufacturers in terms of both solid growth and portfolio size. Automotive manufacturers in turn appear to be more active than suppliers. Both Apple and, more recently, Google, have experienced surges in their patenting activity; between them they own most of the families of granted dashboard patents (indeed, as the figure above shows, each of them holds more such families than all the other leading companies put together).

What does the future hold for this sector? Which investors will emerge as the winners? And will there be a healthy supply of available licences and interoperable innovations -- or will consumers be forced to choose between entirely different competing options? At this stage it is too early to predict, but we shall be keeping an eye on developments and look forward to be able to describe and explain them in due course.

Wednesday, 11 May 2016

The Aistemos LinkedIn Discussion Group: have you checked it out?

The Aistemos LinkedIn Group now enjoys the support of 311 members. In recent times this group has offered three further discussion topics, in addition to those hosted earlier and which have been featured in earlier blogposts. Our most recent discussion topics look like this:
* Patent landscape and IP competitive intelligence. Our blogpost at http://tinyurl.com/hjze7nr on an article, "Leveraging Patent Landscape Analysis and IP Competitive Intelligence for Competitive Advantage", has sparked off several readers' comments. This piece, published in Elsevier's World Patent Information, was authored by US patent agent Yateen R. Pargaonkar (Manager, IP Competitive Trends, with Chevron Energy Technology Co.) and it advocated in-house patent landscape analysis and IP intelligence with board-level interaction. Has the time come for this sort of facility, or is it just a fanciful dream? Do let us know your thoughts. 
IP and taxation: is it becoming unmanageably complex? Following our blogpost "The road ahead for IP and taxation: a roundtable round-up", it's reasonable to suppose that a lot of businesses with profit-generating IP will be addressing a wide range of legal and accounting issues in the wake of the OECD's proposals and forthcoming legal changes. Both tax law and IP law are moving targets and it's increasingly hard to predict the consequences of misjudging their point of intersection. Do members of this LinkedIn Group have any insights as to the best approach to getting this right?
The Aistemos LinkedIn Group is a serious and responsibly moderated LinkedIn Group which welcomes discussion and debate. Do join and feel confident to share your thoughts and opinions with us. 

If you like what you see, why not sign up to receive Aistemos blogposts by email? Just enter your address in the facility at the top of our blog's home page sidebar.

Tuesday, 10 May 2016

Patent rulings in the United States: don't forget the Federal Circuit

Last month, on the IAM Blog, Joff Wild posted a short note under the title "Three recent Federal Circuit decisions that will have an impact on US patent monetisation strategies" (here).  The cases -- chosen by the Chicago-based Global IP Law Group -- are individually not particularly exciting; nor are they, taken by themselves or in conjunction with each other -- likely to have a major impact on US patent monetisation strategies.  However, the point they make is an important one.  While US Supreme Court rulings deservedly receive a vast amount of close analysis and attention, they are by no means the only legal indicia that are capable of affecting patent monetisation practice.

Two points should be borne in mind when looking at the impact of US appellate rulings on what businesses plan to do with their patents.

For one thing, there are more Federal Circuit decisions on patents than there are Supreme Court rulings, and they reflect the thinking of judges that are closer to the pulse of intellectual property law and practice than the Supreme Court, which of necessity must be a generalist tribunal.

Secondly, Supreme Court decisions are very much public property in the sense that everyone is looking at them from way before the hearings, provoking a degree of analysis and discussion that either reaches a degree of consensus as to what the law means or which gives a strong indication in advance as to which alternative strategies any patent-intensive business (or its competitors) should be considering in the event of one of two or more predicted outcomes.

Federal Circuit decisions, in contrast, attract less attention and speculation, particularly from businesses and analysts based outside the US. This fact invites the suggestion that those who study them more closely are potentially in a position to benefit from an appreciation of their significance that does not instantly become common knowledge in the same way that Supreme Court rulings do.

For the record, the three cases picked out for consideration (and explained in greater detail on the IAM post) are as follows:
* Lexmark International Inc v Impression Products Inc (2016 WL 559042 (Fed Cir Feb 12, 2016) (En Banc)), which held that a US patent owner can restrict downstream trade in used and resale goods by lawfully and clearly communicating single-use/no-resale restrictions at the time of sale, while the sale or authorisation of sale of a product abroad did not exhaust the US patent rights in the product.

* Nuance Communications Inc v ABBYY USA Software House Inc (2016 WL 692497 (Fed Cir Feb 22, 2016)), holding that a US district court may properly enter final judgment as to patents that were part of the original complaint, but which were removed after a voluntary narrowing of the case where patentee did not expressly reserve its rights with respect to those patents.

* Blue Calypso v Groupon Inc (2016 WL 791107 (Fed Cir March 1, 2016)), which established that the Federal Circuit may review the Patent Trial and Appeal Board’s decision that a patent is an unpatentable covered business method (CBM).
Taken individually, it is difficult to see how any of these rulings will directly affect patent value. However, it is clear that each has the capability to influence two important drivers of patent exploitation strategy: how one formulates one's licensing and sale contracts and how one approaches patent litigation.  The IAM post is therefore a welcome reminder that businesses operate in an ever-changing legal environment and that, both cumulatively and individually, the evolving body of Federal Circuit case law is no less worthy of study than the seismic shifts at Supreme Court level.