Technology Markets, Fact and Fiction

"The Evolution of Technology Markets: Separating Fact from Fiction" is a piece by Intan Hamdan-Livramento -- an Economic Officer, Economics and Statistics Division, WIPO -- that has just been published online in the current issue of the WIPO Magazine. You can read it in full here.

Figure 1: The potential to license out patents is far from exhausted

Share of patents licensed out as a percentage of total patents
owned by companies in selected high-income countries, 2003-2005

Based on the findings of a World Intellectual Property Report, The Changing Face of Innovation, which was published in November 2011, this article seeks to test the proposition that open innovation – where companies rely less on in-house research and development and more on external sources – is often held up as a major change in the innovation landscape. The author concludes:

"In response to these challenges, a range of new intermediaries is emerging to facilitate technology transactions. These include IP clearinghouses, exchanges, auctions and brokerages. Such new commercial entities provide a range of services including IP management support, IP trading platforms, IP portfolio building and licensing and frameworks for patent sharing, sometimes referred to as defensive patent aggregation. 

Limited analysis is available on the size and scope of the actual transactions taking place via these intermediaries. There are indications however, that activity linked to patent auctions is beginning, albeit from low initial levels. Again, more analysis is required to determine the extent to which these new collaborative intermediaries are enabling open innovation".

Personal property securities and IP in Australia: a new article

"The Personal Property Securities Act and IP: a simpler way?" is the title of an article by the Allens Arthur Robinson triumvirate of Tim Golder, Tom Reid and Thomas Middleton. This article has just gone live on the website of the Journal of Intellectual Property Law and Practice (JIPLP), where it may be accessed by subscribers or rented for a limited time by non-subscribers. According to the abstract:

"Australia's new Personal Property Securities Act came into operation on 30 January 2012. It regulates security interests in nearly all kinds of personal property, including IP, and contains rules governing priority between competing security interests. The Act expands the traditional concept of a security interest to include interests such as those arising under retention of title clauses.

The Act has replaced a range of registers of personal property security interests with a new, online Personal Property Securities Register, or PPSR, which will serve as an authoritative record for priority purposes. New security interests must be registered on the PPSR if the secured party is to have priority over holders of security interests in the same property, although there is a 24-month transitional period during which unregistered pre-existing security interests will remain protected.

IP practitioners should be aware of practical issues that may arise when registering or searching for security interests in unregistered IP, such as copyright. Non-Australian practitioners will also need to be mindful of the potential for the Act to apply to transactions involving Australian registered IP, even where the owner of the IP is not Australian".

The IP Finance blog has been monitoring this topic since it was first mooted back in 2008 (see earlier posts here, here and here).

"Boulevard of Broken Dreams": Late But Not Forgotten

A book review is a tricky matter. Being an author myself, I am never quite how sure what my role is as a reviewer. That is particularly so when the book that I am reviewing does not leave me with a favourable impression. To write a lukewarm review and potentially damage a fellow author's likelihood of success, or simply to decline to write a review in such circumstances. I am not sure of the correct answer.

Another circumstance for declining to review a book is the feeling that I am not really the right person for the job. That is the sense that I had when I received the book, Boulevard of Broken Dreams (Princeton University Press, here) by Professor Josh Lerner of the Harvard Business School. Lerner is that rare blend of world-class thinker with hands-on experience who has made major contributions to the way that we think about innovation and entrepreneurship. At the time that I received a copy--18 months ago, I did not think that I could do justice to the book. And so I demurred, as the book lay on my bookshelf, unread and unattended. Over the ensuing 18 months or so, however, I have found myself more and more drawn to the subject of Lerner's book, in practice, writing and teaching. Eventually I read the book itself from cover to cover and later relied on portions of the book in preparing a talk. I suddenly realized that I had been engaged by the book at multiple levels. I am now ready to write a review.

Lerner's book is really two books in one, each about 85 pages in length. The first, entitled "Can Bureaucrats Help Entrepreneurs?" is what Lerner calls the "39,000 foot" look at the public role of entrepreneurship and venture capital. The second part drills down a much more granular and local view of the subject. Three chapter headings are particularly telling: "How Governments Go Wrong, Bad Design" (chapter 6), How Governments Go Wrong, Bad Implementation" (chapter 7) and "The Special Challenges of Sovereign Funds" (chapter 8).

Despite the doom and gloom of these titles, his discussion reveals a much more mixed bag and two countries of particular interest to me--Singapore and Israel-- serve as positive (though not perfect by any means) models of the potential for government involvement in entrepreneurship. It is these latter chapter from which I drew insight and inspiration in preparing my own public talk.

So what do I make of the Lerner book? First and foremost, I could not shake the impression that each of these two parts should have been the subject of a separate book. Short of that, I would have preferred if Lerner had expanded the second part of the book and provide further discussion of developments on the ground. I relished his discussions in this regard and I had only one complaint when I came to the end of chapter 8--it is such a pity that there is not more of it. Indeed, I cannot say that the first part aided much in my understanding of Lerner's elegant and edifying exposition of the granularity of the intersection between government involvement and entrepreneurship.

Perhaps another of saying this is that I remain a skeptic about the extent to which one can draw more generalizable lessons from the examples that Lerner describes. Lerner is no deductionist, and he does not impose a top-down view of the subject, even in the first part of the book. However, even inductive conclusions from these latter chapters should be be treated with caution. It is true that Lerner addresses "Lessons and Pitfalls" in his final chapter, but I am not sure that his descriptions warrant these conclusions. There is nothing surprising here--the subject matter that Lerner addresses is inherently "messy" for any analytical treatment. In that connection, I recall the observation of the March 10, 2012 issue of The Economist in its concluding words of obituary in memory of the great Harvard social scientist James Q. Wilson:

"Problems remained, however. None was more thorny, for him, than the qualifying of evidence. Many of the social problems he pondered seemed to boil down to culture and ways of thinking. for which the data were ungathered and ungatherable. As a scientist, political or social, he needed to count and collate things to find the answers to his questions. But nothing that was really important about human beings, he [James Q. Wilson--njw] once said. could be measured in that fashion." 

Wilson may have been a bit too pessimistic about our ability to reach durable social truths about ourselves, including the world of entrepreneurship and innovation. That said, better for the reader to consider the chapters in part two of the book in depth and to draw his own conclusions, based on the reader's own experiences. This in my view is the special contribution of the Lerner book and why it is worthy of reading, more than once.

Engaging social entrepreneurship in Africa

Making money is essential and can also be fun. However, it is rarely satisfying simply for the sake of it. Making a difference, creating social change for the better is extremely rewarding and fun, but not essential to live - one has to first eat or support a family. One of the best aspects of working in Africa is that there is an abundance of opportunity to do both; make a difference and make money. Indeed firms like Discovery are so good at it as to be revolutionary. This article explains the rise of the social entrepreneur and how and why they are being "leveraged" to do business in Africa.

Structuring IP, specifically its ownership and use, in the types of business relationships envisaged by the article is not only extremely important but also requires creative thought that extends beyond typical licensing models for trade marks, copyright, patents and know-how. From an awareness of how to protect a trade mark from the damaging effects of genericism (so common to new technologies) to using and protecting IP in open source innovation environments, an understanding of IP and how it can help is not only crucial to making the model work, but a vital part of the ensuring that social change is permanent, encouraged and rewarding, in its wider sense, for both stakeholders.

The investor's role in ensuring that a fair deal is reached when "leveraging" the entrepreneur will assist in sustaining the model. Not only that, it will assist in shifting a common perception of IP in Africa as a tool of Western exploitation to a useful means of creating and enhancing value.

The USPTO issued a press release this week on what looks to be an excellent tool for increasing and teaching about IP Awareness. You can read more about it over at the Intellogist blog here.

This post has been adapted from yesterday's post by Darren on Afro-IP.

Forget Mount Everest: Try Overcoming This Patent Cliff

One of the most crucial IP-related stories to be played out over the next few years is the manner in which Pharma deals with the impending patent cliff at the edge of its patent portfolio. Simply put, with a significant number of blockbuster drugs set to come off patent protection over the next few years (if they have not already done so), and the relative paucity of a new generation of patents to support a further generation of patent-protected blockbuster products, the question is how the industry will cope with this looming threat to its current business model.

Against this backdrop, collaboration is all the rage. The most recent example of such coping behaviour, as reported by Reuters, was announced last week, whereby Amgen and AstraZeneca agreed jointly to develop and sell five new biotech products that are in various stages of development at Amgen, here. Under the agreement, Amgen, the world's largest biotech company, will receive an upfront payment of $50 million. The companies will share then share both costs and revenue for drugs in several disease categories--autoimmune, inflammatory and respiratory ailments.

There is almost a textbook-like quality to the rationale offered for the deal as described in the Reuters article.

1. "The collaboration will provide Amgen with additional resources to help advance its product portfolio and give Astra access to new medicines at a time when its own pipeline is relatively barren and it is facing competition from cheap generic versions of its big-selling antipsychotic drug Seroquel". Stated otherwise, while Amgen is hardly a small actor in the biotech space, its strength still resides in its R&D capabilities, while AstraZeneca seems almost prototypical in its need to obtain new products and technology that it can then leverage at the marketing, distribution and sales levels.  

2. " 'We have a lot of things that we want to move forward and there are financial constraints everywhere with how much you can do," Joe Miletich, Amgen's senior vice president for research and development, said in a telephone interview. ... We still have many more things that we're still moving on our own, and this actually will help free some resources so we can continue to innovate in bringing some of the programs in our earlier pipeline along in a way that might not have been possible if we were funding these all on our own,' Miletich said." Stated otherwise, while Amgen may be the proverbial 800 pound gorilla in the biotech space, even 800 pounds is not enough to support the full complement of skills and resources needed both to develop and bring to market new drugs.

So is this as close to a "win-win" collaborative arrangement as one can hope for in the inherently high risk world of drug development, whereby each party to the agreement brings its particular competency to bear? Or is this yet another example of "me-tooism" in an industry desperate to find workable models in the face of the looming patent cliff and the relentless challenge posed by generic companies to the existing product mix?

Seer-like skills are beyond my pay scale, but others seem less daunted. Particularly telling are the words of Geoffrey Porges, a biotech analyst at Sanford Bernstein. Thus Porges makes the following acerbic observations:

1. " 'It's hard to see what AstraZeneca brings to the table other than cash and the ability for Amgen to maintain their share buybacks and dividends,' Porges said, conceding that Astra does provide some global commercial reach that Amgen lacks."  

2. " 'The fact that Amgen has to partner yet another one of their strategic initiatives isn't really going to fill investors with very much confidence,' said Porges". 

 But the problem of investor confidence is not limited to the Amgen side of the equation. The article reports that AstraZeneca has notably failed in developing experimental medicines for depression, ovarian cancer and diabetes. If the collaboration is meant to allay such investor anxiety, then the critical comments from an analyst such as Porges, affiliated with a prominent financial company, augurs poorly in that regard, at least for the short term. The more troubling question is whether, if Porges is right, there is any promising model that offers a reasonable of enabling Pharma to successfully deal with its patent cliff problem. The forthcoming Facebook IPO may be the hottest discussion topic in the high tech world, but something tells me that the resolution, or lack thereof, of Pharma's patent cliff problem will have greater long term consequences for both business and societal well-being. Media -- take note.

Breakthrough IP

A European patent belonging to AIM-listed Ceres Power has been opposed.  According to Espacenet, the patent in question is the earliest of Ceres’ filings, claiming priority from an application initially filed by Imperial College London.

The risk of opposition was indirectly acknowledged in Ceres’ 2011 Annual Report, which stated that “there is always a degree of uncertainty over the ability to register certain IP rights.  IP insurance provides additional protection for agreement, pursuit and defence of IP terms and rights”.

Perhaps surprisingly given Ceres’ focus on developing fuel cell technology for use in small scale combined heat and power products for the residential sector and energy security applications, the opposition comes from the German Centre for Air- and Space-Travel (DLR).  DLR’s website indicates that they are using fuel cell technology to supply an electric motor to drive an aircraft during taxiing.

According to an article entitled "Breakthrough IP" in the UK IPO’s IP Insight newsletter, Ceres has from the start focused on applications for its fuel cell in the home.  The 2011 Annual Report also sets out a strategy of co-development and/or partnership which “enables the Group to maintain control of key intellectual property”.  It follows that the impact of the opposition - should it be successful – on the company’s value may be low.