High price for IP ephemera?

BrandRepublic reports that News Corp has taken total control of mobile media company Jamba! (a.k.a. Jamster) by buying internet outfit VeriSign's 49% stake for about US$200m (£115m). News Corp previously acquired a controlling 51% stake in Jamba! from VeriSign back in 2007, when it paid a reported $188m (£108m).

Jamba! creates electronic media content such as wallpaper, ringtones and games for mobile phones, as well as short, made-for-mobile episodes of certain Fox television shows.

What is remarkable is the very high price that can be commanded for a business that licenses some of the most ephemeral and transient species of intellectual property on the market.

FreePatentsOnline: a remarkable symmetry

I have recently been browsing the FreePatentsOnline website following receipt of a press release concerning the launch of FPO's "Patent Plaque Program". The gist of this programme is that

"inventors and/or companies can create a Patent Plaque™ with a mouseclick, to promote their Intellectual Property on blogs, websites, personal pages on social network sites, corporate directories, etc".

This programme is apparently sponsored by the recently released (in the US, at any rate) Universal movie Flash of Genius, which tells the tale of an inventor whose fight to receive recognition for his ingenuity would come at a heavy price:

"Determined engineer Robert Kearns (played by Greg Kinnear, right) refused to be silenced as he took on the auto industry in a battle that nobody thought he could win".

My curiosity concerning FPO has now been stimulated and I wonder whether any readers of this blog can tell me anything about it. The notion of securing sponsorship funding from a copyright-driven movie, agreeing to plug its trade mark-protected name in order to facilitate the promotion of patented inventions has a sort of equilateral symmetry about it.

"Reverse corporate veil piercing" not allowed after all

The business format franchise is a very special form of trade mark licence which has enabled a party which develops a successful business format to license not only the brand that underpins it but also the associated know-how, retaining a large degree of control at the same time. However, problems can emerge when the flow of funds to the licensing franchisor dries up. Via Lexology comes this link to an article by DLA Piper's Elana Sbarro and Will Woods ("California Appeals Court Rejects Outside Reverse Piercing of the Corporate Veil") which discusses Postal Instant Press, Inc. v Kaswa Corporation, 2008 Cal. App. LEXIS 753 (20 May 2008), a ruling in which the California Court of Appeals reversed a lower court’s decision to allow a judgment creditor franchisor, Postal Instant Press, Inc. to reach corporate assets that would satisfy claims of personal liability against the franchisee corporation’s former shareholder—that is, to 'reverse pierce' the corporate veil. The article, which is fairly detailed, will not be repeated here, but the authors' conclusion is worth reproducing:

"The most significant lesson in this matter: franchisors must adequately protect their interests by requiring collateral or a guaranty from a franchisee, whether that franchisee is an individual or business entity. As this case shows, piercing the corporate veil or reverse piercing of the corporate veil may not be a successful option for the franchisor to reach the party with the deep pockets".

Cutting the cost of IP acqusitions

Duncan Bucknell's IP Think Tank Blog carries a feature this morning entitled "3 ways to cut IP acquisition costs". The prolific and ever-provocative Duncan writes:

"The burgeoning economic downturn continues to put pressure on all departments of companies to reduce costs. The intellectual property acquisition function is clearly no exception. So here's 5 suggestions, what would you add?

1 - review your portfolio to identify pending or registered IP rights of lower value now and in the future, prioritise them, and lapse them (saves on annuities and prosecution costs of any pending applications);

2 - consider filing divisionals or continuations to extend prosecution rather than expend money in the short term on attorneys (of course, the act of filing these applications carries a cost of its own);

3 - consider whether applications for IP protection can sensibly be delayed;

4 - use lower cost filing methods, so for example: hire a patent attorney to carry more of the drafting, filing and prosecution costs internally, use PCT or Madrid for international applications, PCTFiler for National Phase entry, etc;

5 - consider blending your current attorneys with a lower cost firm for more routine work".

In global terms, I wonder whether the sort of savings which these suggestions are likely to achieve are likely to be relatively trivial in relation to the sort of business that is big enough to have the option of making them. Might greater savings, or greater income-generation, be made through cross-licensing of existing technologies, the adoption of more cost-effective marketing techniques such as co-branding, the responsible use of alternative dispute resolution rather than court-driven infringement ligitation; where IP rights are deemed superfluous, there is plenty of scope for developing online auction and licensing sites too. Finally, the delaying of applications in the pipeline looks like a recipe for chaos in the future if all the businesses within any given sector decide to press on with their previously-delayed applications at the same time.

If you have any thoughts on this topic, please let Duncan know directly and/or post your comments below.

Will the Long Tail do away with IP Rights?

I may be a bit late getting to the party, but I have just finished reading Chris Anderson's best seller of 2006, The Long Tail (late to the party, but still allowed in, since the 2008 version has one completely new chapter.) Anderson, editor in chief of Wired magazine, is a leading spokesperson for the view that the world of marketing, sale and distribution has been completely changed by the Internet. Anderson terms this tectonic shift (if a term of geological provenance can be used regarding the Internet) "the Long Tail".

In short, in a world where physical limitations on storage, display and performance are largely eliminated, the focus of business on generating a limited number of "hits" (i.e., "the Short Tail") gives way to the vast terrain inhabited by so-called commercial misses, such as the movie or album that does not quite make it in the bricks-and-mortar world, or the speciality retailer who cannot generate enough in-store custom to successfully purvey her fare of Far Eastern buttons.

In the Internet world, such products are not "misses, but "the endlessly long tail of niche products in the demand curve". Some will succeed, others will ultimately fail, but the sheer variety expanding options to the consuming public by virtue of the Long Tail will, in Anderson's words, fundamentally alter the nature of products, sales, and ultimately the fabric of culture itself.

The Long Tail, from top to bottom

From the IP perspective, what is notable in Anderson's book is the absence of any significant concern about IP rights. No wonder, perhaps: from the business vantage, IP protection can be seen as going hand-in-hand with the truncated world of hits at the head of the Short Tail. Once one leaves the head of the Short Tail, the vast number of misses that populate the endless path down the Long Tail carry with them the potential to clog the system because of rights clearance and the threat of IP hold-up. Where the aggregator is central (on the very last page of the book, Anderson identifies "the aggregator" as one of the three central participants in the Long Tail market), IP rights are largely hindrance and seldom an opportunity.

Be that as it may, Anderson represents an important intellectual force whose well-crafted rhetoric contains a tacit but potentially powerful challenge to the current IP regime. Perhaps he can be encouraged to add a chapter in the next edition of the book on the role of IP along the road of the Long Tail.

Will the Aggregator of the Long Tail become the IP Terminator?

Copyright still viable, at least for top authors

Announcements of the death of copyright may be premature, if the figures cited in an article in today's Daily Telegraph are any indication. In "Harry Potter author JK Rowling earns £3m a week", the paper reports that Harry Potter's creator, Scottish author JK Rowling, earned £3 million (US$5.3 million) a week over the past year.

Right: the one that got away -- Warner failed to stop India's Hari Puttar being screened, though the decision is believed to be under appeal.

The vast bulk of this sum would have been generated by royalty income from the sale of books, DVDs and Potter memorabilia. While Rowling's earnings are not typical in the sector (her weekly income is six times greater than that of the next highest-paid author in the world), they do demonstrate two things: (i) even in the digital age, paper-based products can still generate prodigious income and (ii) the expectation on the part of many young consumers that works should be both free and available on demand does not mean that they are not prepared to pay for works which they desire.

The article cites figures from Forbes magazine this week that list the top ten authors and their annual earnings between 1 June 2007, and 1 June 2008. They are as follows:

(1) JK Rowling £160 million
(2) James Patterson £26.7m
(3) Stephen King £24m
(4) Tom Clancy £18.7m
(5) Danielle Steel £16m
(6) John Grisham £13m
(6) Dean Koontz £13m
(8) Ken Follett £10.6m
(9) Janet Evanovich £9m
(10) Nicholas Sparks £8.5m

The article does not disclose how much was earned by publishers, film production companies and manufacturers of merchandise from the rights licensed to them but it is fair to say that, assuming these authors are on percentages, someone out there is doing very well.

South Africa: Anne Pratt - latest decision on exchange control

The initial Anne Pratt case (Anne Pratt v First Rand Bank Limited [2004] 4 All SA 306 (T)) caused quite a stir amongst IP professionals in RSA dealing with the transfer and licensing of RSA IP assets with foreign based companies. The decision appeared to support an earlier decision in Couve (Couve and Another v Reddot International (Pty) Ltd and others 2004 (6) SA 425 (W)) that the transfer of assets (including IP assets - albeit that the subject matter of the Anne Pratt case was not IP) to a non-resident without the approval by the Exchange Control Department of the Reserve Bank was void. The Couve decision appeared to conflict with a 1981 decision (Barclays National Bank v Brownlee 1981 (3) SA 579 (D)) which concluded that a contravention would not result in a nullity. In the initial Anne Pratt case though the court held that exchange control had been granted. Anne appealed and, on 12 September, failed.

The decision goes into some depth on exchange control rulings and the practices relating to them in respect of the sale of securities. Of relevance to this blog appears to be the observation on "onus" which the court felt rests on the plaintiff ie to adduce and prove that exchange control approval was not obtained. Proving a negative is never easy and this may provide some comfort to those involved in IP transactions (perhaps even a simple trade mark assignment) where exchange control was not been obtained and who may fear the transaction void. Nonetheless, there now seems to be a SCA (Supreme Court of Appeal) decision in RSA which does not disapprove of the earlier Pratt cases (endorsing Couve) even though the SCA was not specifically asked, it appears, to adjudicate on the ramification of a failure to obtain exchange control approval.