Monday, 2 March 2015

Patent ownership survey: please participate if you can

"Patents are generally regarded as the world’s most valuable intellectual property rights. It is, however, accepted that information available from public registers (maintained by over 100 patent offices around the world) is inaccurate". This statement heads a Patent Ownership Data Survey being run by this blogger's friends at Aistemos, whose CEO Nigel Swycher explains:

There is wide-ranging support for the view that patents are valuable assets, and that there should be greater levels of engagement from the banks, insurers and the financial markets more generally. The starting point in the evolution of all asset classes is however the need for markets to be establish who owns what. You would think that this is a no-brainer for patents -- a registered right with professionally managed registries, tasked with the responsibility for maintaining records of patent owners. 
Patent records can be
so frustrating ...
The actual position is very different. The information on patent registers is inaccurate. There are many reasons for this, ranging from data quality issues (there are 28 patents recorded in the name of _!) to the fact that it is not mandatory to record assignments, and many companies do not. In between, there is legal ambiguity ('CSR' is recorded on many patents in the world, and it is for the searcher to decide whether this is a Bluetooth company in Cambridge, a railway company in China or a mining company in Australia). Plans are underway to improve this position and Aistemos is conducting a survey to test awareness of the issue and the appetite for a solution. Please take five minutes to complete the survey and to circulate it to your network. The aggregated and anonymised responses will be published a part of a report next month.
Do participate in this survey and/or forward it to others if you can -- ideally by 14 March 2015. IP Finance looks forward to seeing conclusions drawn from the responses and will bring them to you.

To access the survey, click here.

Friday, 27 February 2015

Amazon, Kindle and book pricing in France


IP Finance is pleased to welcome the following guest post from Catherine Pocock (Research Assistant, Queen Mary University of London and Assistant Editor, Queen Mary Journal of Intellectual Property) on the repercussions in France of the launch last year of Kindle Unlimited, particularly with regard to its Loi sur le prix unique -- 'law of one price'):
Amazon’s ‘Kindle Unlimited’ found incompatible with French Law 
Following the launch of Amazon’s ‘Kindle Unlimited’ service in the summer of 2014, Fleur Pellerin, the French Minister for Culture commissioned a Report on the compatibility of subscription services which allow unlimited access to books with the Loi sur le prix unique.  The mandate for the Report was to determine the status of subscription services by answering two key questions:
  • Does the 2011 Law of one price apply to subscription services?
  • If yes, are subscriptions offering unlimited access to books compatible with the Law?
The expert Report by Laurence Engel was handed to the Minister on 9 February 2015 and published here on 19 February 2015. It found that such services were indeed within the remit of the 2011 Law, and that they were incompatible with its requirements.
In her press release (here) and in an exclusive (and extensive) interview to Le Figaro (here), Ms Pellerin called for Amazon and similar service providers to ensure the compliance of their services with the Law.

The Law; What Law? 
Law n. 81-766 of 10 August 1981 concerning the price of books was extended in 2011 by Law n. 2011-590 of 26 May 2011 concerning the price of digital books and its implementing Decree n. 2011-1499 of 10 November 2011 (see here for more details).
This Law was designed to enhance market diversity and growth by maintaining a stable economic environment. Article 2 of the 2011 Law gives the publisher control over the price of digital books within his repertoire. 
The appearance of subscription services allowing unlimited access to books has raised concerns over the publisher’s enshrined ability to determine the price of books, and its consequences over the remuneration of authors and valuation of books. 
Subscription Services 
In her Report to the Minister, Ms Engel heard evidence from over 30 organizations (all listed in Annexe 2 of the Report) and compared subscription services available in France to those available internationally. Annexe 3 sets out an interesting overview of these subscriptions worldwide, including those in the Germany, the UK and the USA.
As mentioned above, the Report concludes that service providers such as Amazon, Youboox, Izneo, Youscribe are not compliant with the 2011 Law. Further, the Report points out that subscriptions neither provide for digital market growth, nor do they fight piracy as they do not enhance cultural diversity, and completely ignore the question of fair and equitable remuneration of authors. 
Having said that, the Report notes that in principle streaming and subscriptions services are not incompatible with the Law. Indeed it highlights three types of subscription which would be legal provided the publisher can determine the price:
  • A collection from a single publisher’s repertoire: this would be a subscription where a single publisher offers a subscription for works from his own repertoire, and where he would determine the price of the subscription and consequently the price of books; e.g.: subscription by genre from a single repertoire.
  •  A credit system: a monthly subscription where the credit would entitle the user to a certain number of books. The publisher would be in control of quantifying the credit to book ratio and consequently the price of books.
  •  The bundle system where the user would select one of a number of bundles. The publisher would determine the grouping of books for each bundle (e.g.: by theme) and again remain in control of the price.
Next Steps 
Ms Engel, now Mediator, will set up a mediation group within the next month where government experts will consult with the service providers to assist them in the remodelling of their services in view of achieving legal compliance. Following this mediation, service providers (including Amazon) will have a maximum of three months to comply with their legal obligations (see here). 
The Bigger Picture 
In its conclusions, the Report praises the strong market regulation which prevails in the French publishing industry and is intended to preserve – not stifle – innovation. Indeed France is so far the only European country to have taken any formal steps with regards to such subscriptions. Significantly, Le Monde sets such statements in the European context where Brussels has already issued warnings to France regarding its overly protective market rules (see here).
So as well as asking WWAD (What Will Amazon Do), I wonder: WWBD (What Will Brussels Do)?

Thursday, 26 February 2015

Living next door to Alice patents

There’s been a lot of discussion about the US Supreme Court’s ruling in Alice Corp v. CLS Bank which apparently put into place limitations on software patents. IAM Magazine reported some research back in Spetmebr 2014 that indicate that a number of companies would lose valuable patent portfolios and some applicants (see Infosys here) appear to be re-thinking their patenting strategies. However, six months on, it is interesting to look and understand how the case will actually affect software patents and their value.

Dennis Crouch over on the PatentlyO blog has done a valuable service by looking at the fate of a number of applications that had actually been allowed by the USPTO, but were later withdrawn based on the Supreme Court’s decision. These were patents that had been found to ne novel and not obvious, but were then rejected on the basis that they were directed to an abstract idea, and thus ineligigble for patent protection.

Dennis has found that 93% of the patents are still pending. Most are on a so-called second round final which presumably means that the applicants have had the opportunitiy to express their views and are awaiting a final decision from the USPTO. Most interestingly 7% of the patents have actually been granted and only 1% rejected. It’s clearly too early to say how many of the 93% will actually be granted in the end. However, the ratio of grants to rejections is looking fairly healthy. And seems to suggest that the fear that many patents would be held invalid and lose their value may not be entirely justified.

Luxury goods: where price matters more than ever

How does one know if a product is a luxury brand? In the old days, the test was easy--
Customer: "How much is that"?

Clerk: "Why do you ask?"

Customer: "So I can determine whether or not I can afford it."

Clerk: "If you have to ask, then you can't ...."
In point of fact, the sale of luxury brands is a lot more nuanced than that. The Economist captured well the tension around modern luxury brands in a piece published last December entitled "Exclusivity for everybody." The truth today is that the question "how much is that?" is now part and parcel of the dynamics of luxury goods. Price matters. As such, factors that can systemically affect prices bear close attention, especially when they becomes intertwined with exchange rates and changes of central bank policy. One need only consider the recent events that have taken place in rich, expensive Switzerland.

Many readers probably noticed the January 15 announcement that the Swiss National Bank (SNB) would no longer maintain a fixed cap between the Swiss franc and the euro. This cap, which had been in operation for several years, had the effect of keeping the Swiss franc artificially low versus the euro, but maintaining required intervention by the SNB, so when euro began declining in value, the cost of intervention became impracticable. Without warning (indeed, contrary to pronouncements by the SNB a few days before), the cap was removed; almost immediately thereafter, the Swiss franc appreciated nearly 30% versus the euro. For this bloggers' friends working for various international agencies in Geneva, but who lived just across the border in France, the result was they suddenly had 30% more euros to spend for each Swiss franc that they received in wages.

How did all of this impact on the luxury goods business in Switzerland? As described in an article in the January 24 issue of The Economist, entitled "Switzerland's economy: Shaken, not stirred" and with a byline from Geneva, the answer depends upon what kind of goods we are talking about. Let's focus on perhaps Switzerland's leading consumer export product--watches. The chief executive of Swatch, characterized as the "world's biggest watchmaker", lamented that the impact was simply to make their exported products much more expensive. Unlike the customer in the iconic dialogue above, price is important for Swatch products and the appreciation of the Swiss franc might significantly affect sales abroad of Swatch watches, leaving the company with two unpalatable choices. Reduce the price to customers, hoping to increase sales volume at the expense of per unit profit, or maintain the price and hope that enough units are still sold to maintain profitability.

But it can be argued that a Swatch watch is not exactly a luxury brand. What about those Swiss watches that regularly appear on full-page glossy advertisements and constitute more of an aspirational good? For the denizens of Geneva, the appreciation of the euro should not make much difference, since the local price remains denominated in Swiss francs. "If you have to ask, then you can't"-- applies in equal measure, both before and after appreciation. But as anyone who has strolled the streets of Geneva will know, the retail watch trade depends to an significant degree on the tourist purchaser. Woe to him, especially if he comes armed with depreciated euros to buy a luxury Swiss watch denominated in Swiss francs. Sales to tourists may well plummet unless some repricing takes place. Indeed, something like this seems to be happening, where it is reported that "expensive watch brands are offering hefty discounts."

How about the luxury product that originates from a euro zone country and is then sold into Switzerland? After all, each Swiss franc should go a lot further in buying such a luxury product that is euro denominated. It comes as no surprise, therefore, that it is reported that Mercedes-Benz Switzerland has announced a discount of 18% on the price of all models. The upshot is that in a world where sharp currency fluctuations can significantly impact on the prices of products, luxury goods are not spared. "Exclusivity for everybody" now runs up against "how much is that?", and the answer to that question may well then determine whether a purchase will be made.

Wednesday, 25 February 2015

That IP Finance webinar: the deliverables ...

A little while back, IP Finance posted this item on the IP Finance webinar organised by Oxfirst, for which the presenter was UK Intellectual Property Office Chief Economist Tony Clayton. To refresh readers' memories, the webinar addressed the following issues:

So why is it that the banking sector is unable to connect with the main value creating – and fastest growing – form of business investment in developed economies – Intellectual Property? And what can we do about it?

Is it true that that patents cannot be valued for sale in transparent markets?

Do they have intrinsic features to prevent the establishment of secondary markets for innovation? Or is it that investors are rather ignorant about patents, brands, software and are not well informed on their risk and reward structures?

Technology entrepreneurs seeking to commercialize their patents often may not have necessary skill sets to communicate the value of IP. Current accounting standards that only partially reflect the value of intangible assets do not make things easier. This leads to market failure, where valuable technology either can’t be exploited, or can’t be scaled up to create competitive global enterprises, while investors miss out on attractive financial opportunities.

Against this background, this talk discusses how we can develop financial markets which support 21st century knowledge businesses.
Tony has kindly agreed to make both his PowerPoint presentation and his speaking notes available, for which we are all truly grateful. Thanks, Tony!