Request for help: Royalty Rate Assistance

This blogger has been asked by an author of a book who wants to sell the copyright in his book in exchange for an ongoing royalty on the income (if any) generated by the publication/sale/exploitation of the book/copyright. He has enquired whether there is a database for such royalty rates or any guidelines to determine a market related royalty rate as compensation for such an assignment of copyright. Is there a reader who is able to point this person in the right direction?

Comments appreciated.

More on Microsoft's IP licensing strategy

As we commented here last week, Microsoft has been making a series of important announcements recently concerning the licensing of its patent portfolio and asserted its ambitions on the smartphone market. But since all the eyes are presently turned toward Steve Jobs' soon to come biography and its now famous "I'm willing to go thermonuclear war on this" quote, Microsoft recent actions and statements went a little unnoticed. But Microsoft has its anti-android strategy all planned out and technology website dailytech revealed it all yesterday in a very detailed article entitled "Of Lawsuits and Licensing: The Full Microsoft v. Android Story". Contending that "Microsoft is essentially a failure in today's market from a pure unit sales perspective", Jason Mick explains that "Microsoft has turned from primarily being a producer of smartphones to primarily being an R&D-based litigator on the smartphone market", since it makes more money through licensing agreements than from selling devices running his own Windows Phone OS.

This article gives us the list of all the companies that Microsoft is licensing to and suing and highlights the interesting fact the company led by CEO Steve Ballmer is "double dipping" - that is "seeking licensing fees both from the "original equipment manufacturer" (OEM) who mostly designs the device (e.g. Samsung) and from the "original device manufacturer" (ODM) who primarily handles manufacturing the device (e.g. Foxconn)" - with a certain success since 55 percent of the Android ODMs and 53 percent of Android OEMs entered into licensing agreements. The following paragraph, which a quick outline of the 9 main patents that Android is said to infringe, is also definitely worth a read.

Finally Jason Mick argues that the validity of Microsoft patents will be much harder to call into question, since they appear to reach a high threshold of novelty and non-obviousness (contrary to Apple) and finishes with an interesting comment "(...)one crucial thing to remember is that these patents will expire. Many are expiring within two years, and almost all will be expired within a decade. As a result, within a decade Microsoft's license agreements with Android OEMs and ODMs will almost certainly be drastically restructured. (...) Microsoft can revel in its licensing successes for now, but if it doesn't continue to push ahead in the mobile realm, its gains will be short-lived." It seems that Microsoft understood that fact very well, since the company received more than 3000 patents in 2010...

Private and Social Costs of Patent Trolls

Patent Troll T-shirts are
available here

Thanks go to Chris Torrero for spotting, via beSpacific, "The Private and Social Costs of Patent Trolls", a research paper by James E. Bessen, Michael J. Meurer and Jennifer Laurissa Ford (September 19, 2011). Boston University School of Law, Law and Economics Research Paper No. 11-45.  According to the abstract:

"In the past, non-practicing entities (NPEs) - firms that license patents without producing goods - have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives".

This 33-page paper can be accessed via SSRN here.

The paper appears well-researched and is quite persuasive -- but this blogger is not economically gifted and he wonders how it appears to other economists.  Also, he wonders why all the debate, and apparently all the numbers-based research, seems to be related to the United States. How does the troll model which is used here fare when measured against, for example, European patent litigation patterns? Can anyone help? This blog is happy to host reviews and comments on this paper.

A new IP dawn for Microsoft?

Whereas being most definitely one of USA's patent champions with 3,094 patents awarded in 2010 (in 3rd position behind IBM and Samsung), Microsoft is not making the IP headlines as much as its US counterparts such as Google - in the midst of acquiring Motorola Mobility which is now being sued by Intellectual Ventures, or Apple - embarked in an all-out and global patent war against all its competitors on the smarphone market with Samsung as primary target. However two interesting item of news are revealing that this situation might be about to change.

On September 29th Microsoft announced in a press statement a landmark agreement with Samsung 'to cross-license the patent portfolios of both companies, providing broad coverage for each company’s products'. Given the current difficulties encountered by South-Korea's top smartphone seller to launch its products quickly (if at all) on various markets all around the world notably in Germany, the Netherlands and in Australia, such an agreement will certainly provide Samsung with the necessary patent ammunition against its newfound archenemy Apple, while bringing a large amount of money in the bank accounts of the Redmond-based corporation. Well-informed Joff Wild of IAM Magazine speaks of a royalty-based deal ranging from 10$ to 15$ per android device sold. Moreover the announcement also reports the cooperation of Samsung in the development and marketing of Windows Phone, whose latest OS version called Mango received very encouraging critics.

More interesting is another piece of news published on IAM Magazine's blog which reveals that Microsoft hired Florian Mueller to conduct a research on standard-essential/FRAND-related patents. The unorthodox choice of well-known anti-software patents activist Florian Mueller to perform such a research certainly demonstrates Microsoft's keen awareness that negotiating in fair and reasonable terms with all its competitors will help the company exploiting its heavy patent porfolio at its full potential, instead of using it primarily as defensive leverage.

Microsoft active patent licensing strategy could be another sign showing that 'IP really starts taking centre stage in corporate thinking' as many IP licensing specialists start believing after the groundbreaking Nortel patent auction...

Brüstle: counting the cost of an ethical ruling

The ruling of the Court of Justice yesterday in Case C-34/10 Brüstle v Greenpeace (reported here; see IPKat comment here) has already attracted a good deal of media attention on account of its ethical content. However, readers of IP Finance will doubtless be thinking about the other side of the coin (almost literally): the impact of the ruling on R&D investment.

In this context Dr Philip Webber (a biotech patent attorney with Dehns) has observed as follows:

"The irony of the situation is that the original intention of the Biotech Directive was to protect biotech inventions and to promote investment in this area in Europe, whereas the application of the Biotech Directive by the Court of Justice in this case could well lead to the destruction of a significant part of the European stem cell industry. 

The Court has gone much further than the European Patent Office (EPO) in applying the "uses of human embryos" exclusion. While the EPO shut their eyes to the history of the invention, the Court has said that you cannot ignore the invention's history and that, if the invention is built on immoral foundations, then the whole patent will fall.

The big question that is left unanswered is this: what distance must there be between an immoral act and the possibility of patenting a downstream product or process? The decision refers to a "stage long before the implementation of the invention". So are any inventions ever going to be patentable if - at some point in their (potentially long) past - they required the destruction of a human embryo?"

It's certainly true that the absence of patent protection will be a disincentive to commit funding to research and to what in many cases what will be the perfectly lawful commercialisation of its results. And what we have is only a partial absence: some jurisdictions tolerate stem cell patents while others don't.  We may see the transatlantic flight of a good deal of R&D funding in the near future.

Life's good for BMW and Audi in Korea?

As recently reported e.g. in the Guardian, Korean electronics company LG has sued German car companies BMW and Audi for importation into Korea of cars incorporating LED lights that allegedly infringe LG's patents.

The LED lights in question are made by Osram, which itself is reported to have sued LG and Samsung in the Korean courts for infringement of patents relating to the technology used to make white LEDs.

It would be interesting to know the commercial logic behind LG’s move: although BMW is the most popular imported car brand in Korea, the Guardian article notes that imported cars account for less than 10 percent of the Korean market. Moreover, the 16,579 BMW cars reported as being sold in Korea in the first eight months of this year are a small fraction of the 1,021,927 sales reported on the BMW website for a similar period.

Balancing this is the significantly lower cost to LG of litigating on their home turf. The Korean litigation would also appear to have generated publicity that has reached far beyond Korea’s borders. Is this publicity a signal of LG's willingness to litigate in more significant markets if a settlement is not reached?

FRAND licensing for standards-essential IP: a seminar

If anyone has a good idea for
a better illustration of FRAND
licences, just tell us!

The IP Finance weblog has organised a seminar, “Facts and figures on FRAND licensing for standards-essential IP”, which will be held on Tuesday 22 November 2011, 5.00pm to 6.30pm, in the agreeably comfortably setting of Olswang LLP's London office at 90 High Holborn.

The speaker is Keith Mallinson (WiseHarbor), who is a regular guest contributor to this weblog on FRAND-related issues. His presentation will be thrown open to comments from a panel of commentators (whose identities will soon be confirmed) -- but there will still be plenty of time for (i) questions and comments from the floor and (ii) refreshments. If you want to know a bit more about Keith, you can follow him on Twitter @WiseHarbor.

If you'd like to attend, please email Jeremy here and let him know.