The issue of royalty rates in the telecoms industry has always been one surrounded in mystery. My attention has been drawn to a contribution on a industry newsletter Light Reading (of which I had never heard). It dates from May 2008 and suggests that Nortel is (was) looking at a royalty rate of 1% per handset for access to its portfolio of patents essential to the LTE standard. This seems about right from my knowledge of the industry. Nortel has not got any handsets to sell and so there seems to be little to be gained from cross-licensing in the industry.
Nortel is, of course, bankrupt and has just sold much of its business to Nokia Siemens Networks, but according to Light Reading not the rights to its patents (see here). Light Reading reports that ChaseMorgan have calculated that the rights to the patents could end up being up to $2.9 billion, although a more reasonable value might be $950 million.
Monday, July 6, 2009
Friday, July 3, 2009
Bloomsbury shows bottle to buy up Tottel
Bloomsbury, the publisher of the hugely successful Harry Potter novels, has paid £9.96 million for Tottel Publishing, the Haywards Heath-based professional and academic specialist. Bloomsbury says it now has a “solid platform” in the professional and academic sector and will continue to expand.Founded in 2004, Tottel has not captured the hearts of the reading public in the manner in which its founders must have hoped. Its historical name sounded to many modern ears like a cross between "totter" and "bottle", and many authors of law works published under the illustrious Butterworths imprint were dismayed to find that their works had been apparently sold en masse when LexisNexis Butterworths looked as though it were conducting a fire-sale. Readers found the original version of Tottel's website quite unnavigable. The company has recently improved its list of law titles but continues to sell some shockers, together with some very out-of-date titles that do not come with a health warning. Some legal authors have also felt that the company has been less than successful in promoting their titles -- though that is a complaint which, rightly or wrongly, is aimed at pretty well all publishers at one time or another.
Presumably Bloomsbury has done its due diligence and knows exactly what it's getting. If it can calm the nerves of the authors whose period with Tottel has been unsettling and keep them within its stable, £9.96 million may be a fair price -- but traditional books aren't selling like hot cakes any more in an electronic environment and Tottel's list of titles doesn't seem to be available for e-book readers.
Thursday, July 2, 2009
Trademarks and the Company Organizational Chart
One of the outcomes of my every-increasing interest with the "MBA" side of IP is the way that IP is handled by the company at the organizational level. By this I mean that the question to be asked is where, in the organizational chart, does responsibility lie? With respect to IP, articles on the topic tend to identify a job category described as "patent counsel" or "IP counsel".
When one drills down further to learn more about this job category, more often than not it turns out that this position has a patent registration/prosecution focus. Sometimes the job category includes a patent strategy function, sometimes that task is either shared with or is the responsibility of another person within the organization. Be that as it may, trade marks trends to get "second chair" (or no chair) status under the patent counsel or IP counsel job category. Thus, while patent counsel interfaces with engineers, product development managers, and the like, in-house trade mark counsel will interface with a quite separate and distinct part of the company, such as marketing, advertising and corporate communication.
This second chair is unoccupied
Two quite different situations result. The first is the phenomenon of the brand manager. Brands are variously defined, but all of the definitions have the common denominator that brands cover a broader swathe of company activity than do trade marks. For a trade mark attorney seeking to get out the second chair status, a promotion to the brand manager position is a relatively natural projection, even if it remains uncertain to what extent trade mark experience per se is the main prerequisite for the position. Because of this, a brand manager need not necessarily come from the IP prosecution world and, indeed, need not be an IP person at all.
This is so because it is the CFO, and not the marketing person, who usually has the last corporate word on the subject vis-à-vis outside counsel. The main driver for the CFO is, not surprisingly, usually the expense dimension of the process. This puts the marketing person in a delicate position. On the one hand, the CFO's preoccupation with the expense side means that the marketing person will have to toe the line on expenses as well. On the other hand, the marketing person will want to carve out her own identify in the process, particularly vis a vis outside counsel. A certain tension follows, particularly if the marketing person is unschooled in the trade mark registation.
But does he know trade marks?
Both in the brand manager situation and the corporate communication/CFO situation, one common denomonitor stands out. Both positions tend to be ignored when discussing how IP is organized and managed within the company (unless, of course, one is talking about a Dior-like company). Why this is true is less clear (perhaps it is a simple as the old adage that "real men do patents"). Whatever, the handling of trade marks within a company poses its own distinct organizational characteristics.
When one drills down further to learn more about this job category, more often than not it turns out that this position has a patent registration/prosecution focus. Sometimes the job category includes a patent strategy function, sometimes that task is either shared with or is the responsibility of another person within the organization. Be that as it may, trade marks trends to get "second chair" (or no chair) status under the patent counsel or IP counsel job category. Thus, while patent counsel interfaces with engineers, product development managers, and the like, in-house trade mark counsel will interface with a quite separate and distinct part of the company, such as marketing, advertising and corporate communication.
This second chair is unoccupiedThis is so because it is the CFO, and not the marketing person, who usually has the last corporate word on the subject vis-à-vis outside counsel. The main driver for the CFO is, not surprisingly, usually the expense dimension of the process. This puts the marketing person in a delicate position. On the one hand, the CFO's preoccupation with the expense side means that the marketing person will have to toe the line on expenses as well. On the other hand, the marketing person will want to carve out her own identify in the process, particularly vis a vis outside counsel. A certain tension follows, particularly if the marketing person is unschooled in the trade mark registation.
But does he know trade marks?Both in the brand manager situation and the corporate communication/CFO situation, one common denomonitor stands out. Both positions tend to be ignored when discussing how IP is organized and managed within the company (unless, of course, one is talking about a Dior-like company). Why this is true is less clear (perhaps it is a simple as the old adage that "real men do patents"). Whatever, the handling of trade marks within a company poses its own distinct organizational characteristics.
Tuesday, June 30, 2009
Patently saleable?
Patents can be bought and sold like any other property. But patents differ from other forms of IP in that they can be expensive and time-consuming to maintain. Therefore it may be more attractive to sell an asset such as a patent in insolvency than maintain it. The flip-side of this is that there may be some good bargains to be had from an insolvent company if you know what you are looking for.
What is the life of the patent?
If an insolvent company owned a patent, the Patent Office should be informed of the winding-up order and asked to note the Official Receiver’s interest in the patent. The Patent Office should also be asked to provide details of the remaining “life” of the patent, as this could materially affect the value and details of any renewal fees outstanding.
The patent is effective from the date of publication of the specification of the invention by the Patent Office, which is approximately 18 months after the filing date.
Maintaining your patent
A patent must be maintained or its registration may lapse and it will then become worthless. The first renewal date is the end of the calendar month of the fourth anniversary of the application filing date and renewal fees are then due every year for the remaining 15 years that the patent remains in force (some pharmaceutical and agrochemical patents can obtain extension through supplementary protection certificates for up for five additional years).
You should pay your renewal fees to the Patent Office. Fees can be paid any time between 3 months before the due date for payment and one month after, without attracting penalty charges for late payment. If the renewal fee is not paid within six months of the due date then the patent will lapse and the invention will not be protected.
What happens if the patent lapses?
If the patent is not renewed in time it is possible to restore the patent rights by application to the Patent Office as long as that application is made within 19 months of the missed renewal payment. It is necessary for the applicant to satisfy the Patent Office that it intended to pay the renewal fee on time. But you must provide evidence such as a witness statement and any other evidence you may have, setting out the circumstances in which the renewal fee was not paid.
It is possible for the Official Receiver to ask the Patent Office to confirm that the time limit for restoration has not expired. However, the Patent Office cannot give any indication on the likely success of such an application. If the Official Receiver is considering making an application to restore a patent in order to sell it, the costs of the application should be taken into account in the negotiations relating to the sale and should not exceed the potential sale proceeds.
What might prevent the sale of a patent?
Enquiries should be made to establish whether there are any licensees or mortgagees of the patent in order that they can be informed of the making of the Insolvency Order and asked to note the Official Receiver’s interest.
By virtue of s.30(2)&(3) Patents Act 1977 (“PA 1977”) patents, like real property, can be subject to a secured loan by way of a mortgage and will vest by operation of law in the same way as any other personal property; thus a patent owned by a company subject to a winding-up order would belong to the liquidation estate. Bu, instead of contacting the Land Registry, the Official Receiver should verify ownership of a patent by contacting the Patent Office. Information can also be found in the insolvent company’s accounting records and/or by searching at the Patent Office.
Where a patent vests in the liquidation estate, the patent may be sold with the assignment being signed by the liquidator of the liquidation estate. S.30(6) details that the Patent Office should be informed of any change in ownership.
Licences and royalties
But it is not just the patent itself that can be sold. It may be financially beneficial to grant a licence to use the patent. However, such licences need be maintained; the Official Receiver should consider whether such an obligation can be met before such a licence is granted. As when transferring the patent itself, any assignment of a licence should be in writing and signed by the parties; the Patent Office should be informed of the transfer.
Royalties may be paid by a third party to the owner of a patent in return for the right to exploit that patent. The royalties may be payable under the terms of a licence, with the owner retaining the patent. In circumstances where a winding up order is made against the owner of a patent, the Official Receiver should make contact with the third-party and ask them to pay any royalties due to the trustee.
A liquidated company may be in receipt of royalties as a condition of the sale of a patent. In this case, the royalties cannot be claimed as an asset, because the patent does not vest in the liquidation estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order.
Deciding whether to buy, sell, maintain or licence a patent is a commercial decision. And remember, your patent is worthless if you are unable to defend it against infringement and defending it can be an expensive process in itself. Companies are looking to exploit their patents and other IP rights in the current economic downturn as a way of protecting assets and taking other player out of the market. A report by Freshfields Bruckhaus Deringer found that nearly 40 per cent of the largest corporations "are actively looking to litigate" to protect their rights. In such a climate as this does a liquidated company really have the financial means to protect and maintain patents? If the answer is no, there may be some bargains to be had for the rest.
What is the life of the patent?
If an insolvent company owned a patent, the Patent Office should be informed of the winding-up order and asked to note the Official Receiver’s interest in the patent. The Patent Office should also be asked to provide details of the remaining “life” of the patent, as this could materially affect the value and details of any renewal fees outstanding.
The patent is effective from the date of publication of the specification of the invention by the Patent Office, which is approximately 18 months after the filing date.
Maintaining your patent
A patent must be maintained or its registration may lapse and it will then become worthless. The first renewal date is the end of the calendar month of the fourth anniversary of the application filing date and renewal fees are then due every year for the remaining 15 years that the patent remains in force (some pharmaceutical and agrochemical patents can obtain extension through supplementary protection certificates for up for five additional years).
You should pay your renewal fees to the Patent Office. Fees can be paid any time between 3 months before the due date for payment and one month after, without attracting penalty charges for late payment. If the renewal fee is not paid within six months of the due date then the patent will lapse and the invention will not be protected.
What happens if the patent lapses?
If the patent is not renewed in time it is possible to restore the patent rights by application to the Patent Office as long as that application is made within 19 months of the missed renewal payment. It is necessary for the applicant to satisfy the Patent Office that it intended to pay the renewal fee on time. But you must provide evidence such as a witness statement and any other evidence you may have, setting out the circumstances in which the renewal fee was not paid.
It is possible for the Official Receiver to ask the Patent Office to confirm that the time limit for restoration has not expired. However, the Patent Office cannot give any indication on the likely success of such an application. If the Official Receiver is considering making an application to restore a patent in order to sell it, the costs of the application should be taken into account in the negotiations relating to the sale and should not exceed the potential sale proceeds.
What might prevent the sale of a patent?
Enquiries should be made to establish whether there are any licensees or mortgagees of the patent in order that they can be informed of the making of the Insolvency Order and asked to note the Official Receiver’s interest.
By virtue of s.30(2)&(3) Patents Act 1977 (“PA 1977”) patents, like real property, can be subject to a secured loan by way of a mortgage and will vest by operation of law in the same way as any other personal property; thus a patent owned by a company subject to a winding-up order would belong to the liquidation estate. Bu, instead of contacting the Land Registry, the Official Receiver should verify ownership of a patent by contacting the Patent Office. Information can also be found in the insolvent company’s accounting records and/or by searching at the Patent Office.
Where a patent vests in the liquidation estate, the patent may be sold with the assignment being signed by the liquidator of the liquidation estate. S.30(6) details that the Patent Office should be informed of any change in ownership.
Licences and royalties
But it is not just the patent itself that can be sold. It may be financially beneficial to grant a licence to use the patent. However, such licences need be maintained; the Official Receiver should consider whether such an obligation can be met before such a licence is granted. As when transferring the patent itself, any assignment of a licence should be in writing and signed by the parties; the Patent Office should be informed of the transfer.
Royalties may be paid by a third party to the owner of a patent in return for the right to exploit that patent. The royalties may be payable under the terms of a licence, with the owner retaining the patent. In circumstances where a winding up order is made against the owner of a patent, the Official Receiver should make contact with the third-party and ask them to pay any royalties due to the trustee.
A liquidated company may be in receipt of royalties as a condition of the sale of a patent. In this case, the royalties cannot be claimed as an asset, because the patent does not vest in the liquidation estate. Instead, the royalties should be treated as income and can be claimed under an income payments agreement or an income payments order.
Deciding whether to buy, sell, maintain or licence a patent is a commercial decision. And remember, your patent is worthless if you are unable to defend it against infringement and defending it can be an expensive process in itself. Companies are looking to exploit their patents and other IP rights in the current economic downturn as a way of protecting assets and taking other player out of the market. A report by Freshfields Bruckhaus Deringer found that nearly 40 per cent of the largest corporations "are actively looking to litigate" to protect their rights. In such a climate as this does a liquidated company really have the financial means to protect and maintain patents? If the answer is no, there may be some bargains to be had for the rest.
What do you get for 60m kronor?
Having just read on the IPKat about the sale of The Pirate Bay to Global Gaming Company for 60m kronor (£4.7m), I find myself wondering what sort of intellectual assets the purchaser is obtaining and how valuable they will prove to be.A couple of weeks ago I looked to see if The Pirate Bay had any trade marks. It didn't seem to have any registered and, if I recall correctly, its website indicated that consumers were free to do interesting and imaginative things to its logo and then send a sample back in order to show what they'd done. As for the software, my impression is that it was licensed in and was basically off-the-peg stuff. Its user database probably wouldn't be worth much, seeing as it consists primarily of people who are used to paying nothing for what they want.
If anyone has any thoughts on the subject or, better still, hard facts, do please let me know.
Sunday, June 28, 2009
How much is really lost through downloading? A question of credibility
Via David Holland comes this link to "Home taping didn’t kill music" by Ben Goldacre, who writes the Bad Science column for The Guardian. It was published much earlier this month but I lost sight of it and have only just rediscovered it. The article reads, in relevant part: "... “Downloading costs billions” said the Sun. “MORE than seven million Brits use illegal downloading sites that cost the economy billions of pounds, Government advisors said today. Researchers found more than a million people using a download site in ONE day and estimated that in a year they would use £120bn worth of material.”
That’s about a tenth of our GDP. No wonder the Daily Mail were worried too: “The network had 1.3 million users sharing files online at midday on a weekday. If each of those downloaded just one file per day, this would amount to 4.73 billion items being consumed for free every year.”
Now I am always suspicious of this industry .... I also doubt that every download is lost revenue since, for example, people who download more also buy more music. I’d like more details.This piece was picked up by Techdirt, the Adam Smith Institute and Slashdot, but doesn't seem to have gone any further. The CIBER report can be downloaded from the SABIP website here, with a 16-page executive summary here.
So where do these notions of so many billions in lost revenue come from? I found the original report. It was written by some academics you can hire in a unit at UCL called CIBER, the Centre for Information Behaviour and the Evaluation of Research (which “seeks to inform by countering idle speculation and uninformed opinion with the facts”). The report was commissioned by a government body called SABIP, the Strategic Advisory Board for Intellectual Property Policy.On the billions lost it says: “Estimates as to the overall lost revenues if we include all creative industries whose products can be copied digitally, or counterfeited, reach £10 billion (IP Rights, 2004), conservatively, as our figure is from 2004, and a loss of 4,000 jobs.”
What is the origin of this conservative figure? I hunted down the full CIBER documents, found the references section, and followed the web link, which led to a 2004 press release from a private legal firm called Rouse who specialise in intellectual property law. This press release was not about the £10bn figure. It was, in fact, a one page document, which simply welcomed the government setting up an intellectual property theft strategy. In a short section headed “background”, among five other points, it says: “Rights owners have estimated that last year alone counterfeiting and piracy cost the UK economy £10 billion and 4,000 jobs.” An industry estimate, as an aside, in a press release. Genius.
But what about all these other figures in the media coverage? Lots of it revolved around the figure of 4.73 billion items downloaded each year, worth £120 billion. This means each downloaded item, software, movie, mp3, ebook, is worth about £25. ... this already seems rather high. I am not an economist, ... but to me ... an appropriate comparator for someone who downloads a film to watch it once might be the rental value, not the sale value. ...
In any case, that’s £175 a week or £8,750 a year potentially not being spent by millions of people. Is this really lost revenue for the economy, as reported in the press? Plenty will have been schoolkids, or students, and even if not, that’s still about a third of the average UK wage. Before tax. Oh but the figures were wrong: it was actually 473 million items and £12 billion (so the item value was still £25) but the wrong figures were in the original executive summary, and the press release. They changed them quietly, after the errors were pointed out by a BBC journalist. I can find no public correction.
I asked what steps they took to notify journalists of their error, which exaggerated their findings by a factor of ten and were widely reported in news outlets around the world. SABIP refused to answer my questions in emails, insisted on a phone call (always a warning sign), told me that they had taken steps but wouldn’t say what, explained something about how they couldn’t be held responsible for lazy journalism, then, bizarrely, after ten minutes, tried to tell me retrospectively that the whole call was actually off the record, that I wasn’t allowed to use the information in my piece, but that they had answered my questions, and so they didn’t need to answer on the record, but I wasn’t allowed to use the answers, and I couldn’t say they hadn’t answered, I just couldn’t say what the answers were. Then the PR man from SABIP demanded that I acknowledge, in our phone call, formally, for reasons I still don’t fully understand, that he had been helpful.
I think it’s okay to be confused and disappointed by this. Like I said: as far as I’m concerned, everything from this industry is false, until proven otherwise".
I'm not sure that a workable solution to the problem of unauthorised downloads can be found, whether we have the right data concerning their commercial impact or not -- but I feel strongly that any research that seeks to quantify that impact must be reliable if it is to justify any measures that are taken to counteract the activity in question. SABIP seems to be in a huge hurry to secure commissioned research in its various target areas, putting great pressure on its suppliers of research results to do so speedily and cheaply. One may wish to ask whether this haste is counterproductive.
All tied up
Neil Wilkof's recent licensing post ("So Is It Joint Ownership or a Licence?") has brought a good crop of what Neil has described as "superb responses". Neil is however all tied up in a transaction at the moment, so he has asked me to say that he'll be making his own responses as soon as time permits.
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