In case you missed them ...

Some recent posts on other weblogs may be of interest and/or concern to IP Finance readers. I've listed them here for your comfort and convenience:

* In "Serious Damages", Hugo Cox notes for The 1709 Blog a recent Russian decision on the assessment of damages for copyright infringement which, while it looks appealing for injured parties, is highly questionable from a methodological point of view for those of us who like to believe that infringement damages have some factual connection to the principle of compensating the injured rights owner for the damage he suffers;

* Also on the subject of damages, in "Interest on damages for infringement not a correctable error", PatLit contributor Jeremy reports on a feeble attempt of a patent infringer to wriggle out of interest payments on damages by claiming that an agreed order, stipulating an 8% interest rate, had not been agreed;

* In "The definite Article?", an IPKat post, the same author takes a peek at an unusual business proposition involving the profitable harnessing of a lot of spare research power for the purpose of invalidating granted patents;

* In "In the pipeline: another Google Copyright Story", copyright expert Jaime Espantaleón offers a sneak preview to jiplp blog readers of some of the thoughts that have motivated him to write on some Google Book proposal money-meets-law issues for the Journal of Intellectual Property & Practice (JIPLP).

How Does Design Impact on Car Branding: the Example of Kia

I have always been hesitant about commenting on matters of design. As hard as I try, I still find it difficult to articulate in an open forum the principled distinctions between registered designs, unregistered designs, petty patents, copyright, and three-dimensional marks. I suspect that the list could go on, but enough self-doubt for a single paragraph.

It is against this backdrop that I refer to an article that appeared in the May 31 issue of Bloomberg BusinessWeek. Under the by-line of Seonjin Cha, the article, "Kia Turns to Design in a Bid to Move Upmarket", discusses the policy decision by Kia Motors to improve the design quality of its vehicle mix and thereby to realize a greater price premium for its vehicles. In a word, Kia seeks to remake its image from what the summary tag line of the article describes as "long-known as a maker of low-priced utilitarian vehicles" to cars known no less for their distinctive design.

To accomplish this, Kia in 2006 hired vehicle designer Peter Schreyer, who had made a name for himself in connection with the "iconic" Audi TT sports car. Schreyer viewed Kia at that time as " 'just another Asian carmaker' without much character." Since joining the company, he has led the revamping of the product line, namely "the revamped Sorento sports-utility vehicle, the Seoul crossover, and the Forte compact", all characterized by "the tiger-nose" feature [can someone help me on what this feature is, please?]

But the current crown jewel is the introduction of the new Optima sedan (it also sports the "tiger nose" feature), which is intended to compete head-to-head with the venerable Toyota Camry and the Honda Accord sedans, but with a price that is $1,600 less than the perenially popular Camry. And so the question: what do we make of all this emphasis on vehicle design, especially against the background of Kia's results for the first four months of 2010. According to the article, Kia enjoyed a 44% increase in year-over-year retail sales. Is that impressive sales figure due to the improved design of its cars or are other factors at work? The article itself is ambivalent.

"Yes" suggests Schreyer, who describes the Optima as an "Italian suit", distinguished by its "simplistic elegance". A further "yes" comes from an automotive consultant, Eric Noble, who gushes that Schreyer has "transformed the company into an industry in design."

And yet, as the article observes in closing, other factors may be at equally, or even more, at work. Most notably, a Swedish car retailer opined that the main reason for the increase of sales of Kia cars is the seven-year warranty introduced this year, together with the seductive price. Maybe that view is unique to the Swedish market, maybe not. The article tantalizingly does not pursue the issue in other principal North American and European markets.

Branding Can Sure be Lonely Sometimes

The popular wisdom has seemed to be that the rise of the Korean car industry rests on the uber-branding of price and reliability, antipodal to the perception that negative features that seem to be hounding Toyota. Does rebranding, via an emphasis on design styling, ultimately serve the long-term interests of Kia? Rebranding on the basis of design might increase the feeling of passion for Kia vehicles, but passion has a way of both ascending and descending in rapid trajectory.

And so--maybe the answer is "yes". Spotting a potential vacuum in the more up-scale auto mark, the only way for Kia to go is to occupy that branding position, and the only way to do it is by matching or bettering their competition in styling and design as well.

But maybe the answer is "no". In entering the crowded market for the more up-scale vehicle, will Kia lose its ability to compete in emerging markets such as China, Brazil and India? Maybe the greater margins in the up-scale market will make up for a lesser position in this developing markets. Or maybe Kia will somehow manage to merge up-scale design with developing marketing, and manage to succeed in both markets. If so, that might be a world-beating branding strategy and a landmark contribution for the role of design in achieving this goal.

Low patent count portfolio strategy succeeds against Toyota

Hot on the heels of last week’s post about UK hybrid automotive technology company EVO Electric comes the news that, after six years of litigation, US hybrid automotive technology company Paice LLC has finally reached a settlement with Toyota regarding certain Toyota vehicles found to be equivalent to a Paice US patent.

The litigation has been notable for the refusal of both US district and appeal courts to grant an injunction, prompting Paice to launch proceedings before the US International Trade Commission (ITC), which has the power to bar imports by Toyota. The prehearing conference at the ITC was scheduled for July 15.

“Paice is committed to the ongoing development of hybrid technology and selected research activities,” notes the CEO of Paice in the company’s press release. However, no new patent filings in the name of Paice LLC are indicated on the Espacenet database; rather, all six entries are indicated as having a priority date of 1998. Similarly, the eleven US patents listed on the Paice website all appear to derive from US filings made between 1992 and 1999.

For some views on the ethical rights and wrongs of Paice’s business model, see "Trolling in cleantech-Paice & Toyota settle".

A low patent count portfolio strategy?

At the beginning of 2010, business consulting company Frost & Sullivan awarded their Entrepreneurial Company of the Year award to EVO Electric Ltd, a spin-out from Imperial College London in the field of green automotive technology. As noted here in April, F&S appeared to place more emphasis on innovation in EVO’s business processes than on technical innovation as measured by patent filings.

A similar emphasis on the part of EVO is suggested by a 1 June 2010 press release to investors, which announces:

“the launch of its new generation of Axial Flux motor and generator technology, which promises to dramatically improve the cost, performance and efficiency of hybrid and electric vehicle powertrains. Applications include hybrid, plug-in hybrid and all-electric vehicles, range extenders, auxiliary power units (APU) and integrated starter-generator (ISG) systems. The new generation of Axial Flux products offers the highest power density among electric motors currently available for automotive applications.”

Despite this announcement, no new patent filings in the name of EVO Electric are indicated on the electronic UK IP Office Journal. Rather, the last UK application would appear to have been filed in February 2009.

Valuation: an art, a science or an outcome?

"Brand Value: What is Your Company Really Worth?" is the title of a short article penned by Kelvin King (Senior Director, Valuation Consulting) for ACID (Anti Copying in Design) and published last month. In the course of his article he writes

"Valuation is an art more than a science and is an interdisciplinary study drawing upon law, economics, finance, accounting, and investment. It is rash to attempt any valuation adopting so called industry/sector norms in ignorance of the fundamental theoretical framework of valuation.

Valuation procedure is, essentially, a bringing together of the economic concept of value and the legal concept of property. The presence of an asset is a function of its ability to generate a return and the discount rate applied to that return. The cardinal rule of commercial valuation is; the value of something cannot be stated in the abstract; all that can be stated is the value of a thing in a particular place, at a particular time, in particular circumstances".

This is a useful reminder for businesses that depend on the creation or use of IP rights for their profitability. The literature tends to be written, often for good reason, in general terms, and business decision-makers -- particularly in SMEs -- are constantly reminded that their IP is valuable, that it is worth spending money on obtaining and protecting it, and so on. But when they want to dispose of an IP right, they are sometimes disappointed to discover how little value in monetary terms is placed on their rights in contrast with their own financial and emotional outlay. Expectations are raised, but the reality can be very disappointing -- and the truly valuable IP rights are always in someone else's sector, not one's own.

The value of an IP right can seem very small if there's no-one on hand to buy it, take a licence for it or indeed infringe it. It can also appear to grow in the hands of someone who can "talk it up", enhancing its commercial value by praising its functionality or marketing utility, which in turn emphasises the subjective and variable nature of the value of an IP right. In short, valuation may be neither an art nor a science but an outcome -- the result of interaction between interested parties, be they buyer and seller, licensor and licensee or borrower and lender.

Thinking about open design

This piece, hosted by IP Finance, has been written by IP blogger Nikos Prentoulis. It reads as follows:

“Open” has taken the tech world by storm and Open-“anything” seems to be the synonym to innovation in the” anything “ area. In this context (or trend), an interesting piece about open-design business strategies was published on Bloomberg Businessweek site some while back. Its authors, Roland Harwood and David Simoes-Brown, are enthusiastic proponents of the idea that “organizations that embrace “open” will innovate better, cheaper and faster”. In presenting key issues of open-design, they discuss the implementation of “IP airlocks” to tackle the fact that “too often, IP regimes can be counterproductive, adding time and other costs into the equation and focusing participants on ownership rather than partnership.” The airlock is described as “an open-innovation competition, where companies invite ideas in response to a clearly defined brief. Brokers—whom we call "trusted agents"—represent both the customer (usually a multinational company) and the innovation community. For a specific period of time, innovators respond to the brief, knowing their ideas are safe from being co-opted by the client, with whom ideas are not shared until the end of the process. At this point, developed propositions are presented to the client, which has a fixed time period—typically three months—to decide whether to proceed. If not, innovators are free to take their propositions elsewhere.”

The authors correctly point out the potential business value of the interdependence between organizations and their network of associates and, most notably, clients, stressing the benefits of this relationship for innovation. They also emphasize the social and business advantages in creating and maintaining a spirit of collaboration and community within such networks.

Of course, crowd-sourcing is not without foes. Its drawbacks are said to include added costs, possible failure for lack of monetary motivation, or participation, lack of legal certainty or even difficulties in maintaining “working” relationships. The article leaves am anti-IP aftertaste, based on the (I think erroneous) assumption that the open-“anything” presupposes collaboration while “proprietary-anything” excludes it. Perhaps this debate is somewhat misplaced. I mean that IP airlocks seem to be a useful instrument, but they presuppose IP rights and appear to be (yet another) scheme for protection rather than deviation from the IP regime. Additionally, networking with one’s client’s is self-evidently beneficiary and a crowd-sourcing project may also prove to be a powerful marketing tool, attracting consumers and strengthening business (or even social) ties. But the road from a collaborative project to a business modus operandi appears to be a (very) long one, at least in my mind. The question whether an open or proprietary business strategy is more suited for innovation may be misleading. I would think that it would be the field of the innovation exercise, with its particular bumps and pitfalls, that would point to the appropriate strategy".

Thanks, Nikos!

Pre-release UNCITRAL IP Supplement now out

Last Friday this weblog published this short piece announcing the adoption of the UNCITRAL Legislative Guide on Secured Transactions, Supplement on Security Rights in Intellectual Property. We've now heard from Spiros V. Bazinas (Senior Legal Officer in UNCITRAL's International Trade Law Division) that the pre-release version of the IP Supplement is now available. You can access it on the UNCITRAL website here.