24.03 - ipprotheinternet.com letter published through social media, accusing the SAIC of making the...

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Jury tells Blurred Lines artists to give it up readmore p2 readmore p2 readmore p2 2013, following public accusations of copying and in response to a request for a ruling of non-infringement from Thicke and Williams. The musicians contended that they were attempting to “evoke an era” with Blurred Lines, and that the Gaye family was “claiming ownership of an entire genre, as opposed to a specific work”. But the Los Angeles jury found that Blurred Lines and Got To Give It Up shared signature phrases, hooks, bass lines, keyboard chords, harmonic structures and vocal melodies. Blurred Lines earned $16 million in profit, $11 million of which was split between Thicke and Williams, while $705,000 went to rapper T.I, who also collaborated on the song. Record label UMG took the rest, according to court documents. Musicians Pharrell Williams and Robin Thicke plan to appeal against the verdict that found the pair guilty of copying Marvin Gaye’s Got to Give it Up and ordered them to pay $7.4 million in damages. Jurors sitting in the US District Court for the Central District of California found that Thicke and William’s hit song Blurred Lines was too similar to Gaye’s 1977 song. The lawyer for Thicke and Williams, Howard King, said that incorrect expert testimony swayed the jury towards a ruling that Blurred Lines copied elements of Got to Give it Up. King promised to use every post-trial remedy available to have the verdict squashed. Gaye’s children, who inherited the rights to his music when he died, originally filed their case in No copyright levy for Belgian ISPs Belgian ISPs do not need to pay a copyright levy to compensate rights owners for piracy committed by their subscribers, a first instance court has ruled. The decision, delivered on 13 March at the Court of First Instance of Brussels, is a blow for the Belgian association of authors, composers and publishers, Sabam, which filed lawsuits against Brussel’s largest ISPs, Belgacom, Telenet and Voo, over unpaid copyright fees in 2011. Sabam sought 3.4 percent of internet subscriber fees as compensation for piracy committed by the ISPs’ customers. Beauty company nails abusive registration Californian beauty company Creative Nail Design has successfully secured the ownership of a .co.uk domain name that was being used to sell fake nail polish. The domain, cnd-shellac.co.uk, was transferred to Creative Nail Design after an independent expert of Nominet’s Dispute Resolution Service (DRS) ruled on 9 March that it was an abusive registration. Creative Nail Design filed the DRS complaint against Arunas Bruzas of London, who owned the domain, in January. The company owns an extensive trademark portfolio, which includes the word mark ‘Creative Nail Design Shellac’ that it secured to protect its Shellac nail polish range. ipprotheinternet.com ISSUE062 24.03.2015 TUESDAY

Transcript of 24.03 - ipprotheinternet.com letter published through social media, accusing the SAIC of making the...

Jury tells Blurred Lines artists to give it up

readmore p2

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2013, following public accusations of copying and in response to a request for a ruling of non-infringement from Thicke and Williams.

The musicians contended that they were attempting to “evoke an era” with Blurred Lines, and that the Gaye family was “claiming ownership of an entire genre, as opposed to a specific work”.

But the Los Angeles jury found that Blurred Lines and Got To Give It Up shared signature phrases, hooks, bass lines, keyboard chords, harmonic structures and vocal melodies.

Blurred Lines earned $16 million in profit, $11 million of which was split between Thicke and Williams, while $705,000 went to rapper T.I, who also collaborated on the song. Record label UMG took the rest, according to court documents.

Musicians Pharrell Williams and Robin Thicke plan to appeal against the verdict that found the pair guilty of copying Marvin Gaye’s Got to Give it Up and ordered them to pay $7.4 million in damages.

Jurors sitting in the US District Court for the Central District of California found that Thicke and William’s hit song Blurred Lines was too similar to Gaye’s 1977 song.

The lawyer for Thicke and Williams, Howard King, said that incorrect expert testimony swayed the jury towards a ruling that Blurred Lines copied elements of Got to Give it Up. King promised to use every post-trial remedy available to have the verdict squashed.

Gaye’s children, who inherited the rights to his music when he died, originally filed their case in

No copyright levy for Belgian ISPsBelgian ISPs do not need to pay a copyright levy to compensate rights owners for piracy committed by their subscribers, a first instance court has ruled.

The decision, delivered on 13 March at the Court of First Instance of Brussels, is a blow for the Belgian association of authors, composers and publishers, Sabam, which filed lawsuits against Brussel’s largest ISPs, Belgacom, Telenet and Voo, over unpaid copyright fees in 2011.

Sabam sought 3.4 percent of internet subscriber fees as compensation for piracy committed by the ISPs’ customers.

Beauty company nails abusive registrationCalifornian beauty company Creative Nail Design has successfully secured the ownership of a .co.uk domain name that was being used to sell fake nail polish.

The domain, cnd-shellac.co.uk, was transferred to Creative Nail Design after an independent expert of Nominet’s Dispute Resolution Service (DRS) ruled on 9 March that it was an abusive registration.

Creative Nail Design filed the DRS complaint against Arunas Bruzas of London, who owned the domain, in January.

The company owns an extensive trademark portfolio, which includes the word mark ‘Creative Nail Design Shellac’ that it secured to protect its Shellac nail polish range.

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Latest newsThe USTR wants domain name registrars to play a greater role in safeguarding intellectual property online p4Latest newsAlmost two thirds of respondents to a survey said they would not pay for content online, according to the Hong Kong IP Department p6Latest newsWalmart complains about a website whose sole purpose is to display a photoshopped picture of a horse standing in front of one of its stores p7Conference reportHundreds of attendees from across the globe descended on Munich for the annual Global IP Exchange p9

Patent reformAnti-patent troll legislation might attract votes, but does it have scientific backing? p10People movesNew appointments at Perkins Coie, Convington and more p15

IPProINBRIEF

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NewsInBriefJury tells Blurred Lines artists to give it upContinued from page 1

The Gaye family originally sought 50 percent of the profit earned from Blurred Lines, compensation for the reduction in the market value of licensing Got to Give it Up, and a share of Thicke’s touring income, amounting to $25 million in damages.

The jury decided that the Gaye family was entitled to $4 million in damages, plus profits from both Thicke and Williams, which was $1.8 and $1.6 million, respectively.

Gaye’s daughter, Nona Gaye, said she felt “free” following the verdict.

Richard Busch, a lawyer for the Gaye family, is seeking an injunction to stop the distribution and sale of Blurred Lines. King claimed that the verdict could have a chilling effect on musicians who want to emulate another artist’s sound.

Commentators have hit out at the ruling, with some saying it could threaten music that uses sampling, as well as remixing.

No copyright levy for Belgian ISPsContinued from page 1

“Internet access providers have never paid copyright levies for this activity. They hide behind their status as an intermediary,” according to the association.

But the court in Brussels ruled that the EU’s Ecommerce Directive classes ISPs as mere conduits that are not liable for the information they transmit.

Christophe Depreter, CEO of Sabam, said the decision is “diametrically opposed” to Court of Justice of the EU (CJEU) rulings in this area.

The CJEU has frequently “stressed that the economic benefit that someone has from relaying works, is often crucial for the decision if this is an act of communication to the public that falls within the exclusive right of the author.”

Sabam intends to appeal against the decision.

Beauty company nai ls abusive registrationContinued from page 1

Creative Nail Design discovered the website in late 2014. An investigation, including test purchases, revealed that Bruzas was using it to sell counterfeit Shellac nail polish products.

Lawyers for Creative Nail Design managed to convince Bruzas to take down the website, but the domain name remained in his possession, forcing the company to file its DRS complaint.

Simon Chapman, the independent expert hearing the dispute, did not take long to agree that the domain name amounted to an abusive registration. Bruzas did not provide a response to the complaint.

“In most circumstances where a respondent has registered a domain name that is identical or similar to a name or mark in which the complainant has rights, the name or mark is well known or distinctive and the complainant and mark were known to the respondent, one would be unlikely to have a great deal of difficulty in concluding, as many experts have previously, that the relevant domain name would be an abusive registration, and indeed that is the case here.”

“On the basis of the evidence that has been submitted by the complainant, I am satisfied that the products being offered for sale via the respondent’s website are counterfeit.”

Nominet senior legal counsel Nick Wenban-Smith said the dispute was a straightforward case for the independent expert to rule on.

He said: “What happened in this case is that Shellac was a fairly new brand created by a long established company in a different country. The domain name owner spotted what has gone on in the US, and then registered a variation of the protected trademark in the .co.uk country-code TLD (and has probably done so in others, too) in anticipation of the product’s launch in the UK.”

“The decision shows this behaviour for what it is—that selling counterfeiting products using a URL that is very similar to the actual product trademark is the most obvious and straightforward case of abusive use.”

China plans to take the fight to fakers

China’s State Administration for Industry and Commerce (SAIC) has promised to increase efforts to crack down on counterfeit goods bought and sold through online marketplaces.

SAIC head Zhang Mao said during a press conference on 9 March that penalties for selling fake goods need to increase if market order is going to be restored. He suggested that traders need to be made to go out of business, according to reports.

Mao also reportedly said that a credit scoring system for traders in online marketplaces, whose practice would be restricted if they failed to prevent the sale of fake or poor quality goods, will be introduced.

The comments come as ecommerce giant Alibaba Group and the SAIC continue to publically trade blows over Taobao.

Taobao, known as China’s eBay, was recently accused of selling counterfeit and poor quality goods by a SAIC-commissioned survey.

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NewsInBriefThe survey found that more than 60 percent of goods that were randomly chosen from Taobao failed to meet standards.

A Taobao employee reacted angrily in an open letter published through social media, accusing the SAIC of making the survey public without giving it a chance to appeal.

The letter’s author also challenged the survey’s methods, claiming it wrong to compare the quality of products from individual Taboao traders to those of larger retailers.

Taobao parent Alibaba called out the SAIC in January, when the agency published a whitepaper accusing its platforms of allowing traders to operate without a licence and sell counterfeit goods.

Alibaba executive vice chairman Joe Tsai said that Alibaba was “deeply troubled” by the SAIC’s report and promised to file a complaint.

Taobao is also concerning US officials. In the latest Special 301 Out-of-Cycle Review of Notorious Markets, the US Trade Representative (USTR) said it “is concerned about these developments but does not re-list Taobao at this time”.

“USTR encourages the company to continue working with all stakeholders to address ongoing complaints, will continue to monitor the situation.”

Social media phrase fails to be trademarkThe US Patent and Trademark Office (USPTO) has rejected trademark applications for Eric Garner’s dying words.

The USPTO issued decisions against Chicago-based social media company Ublerb and Catherine Crump’s applications for variations of ‘I can’t breathe’ earlier in March. They filed their applications in December 2014.

The phrase became famous following widespread outrage over the death of Garner, who allegedly

died after being put into a chokehold by a New York police officer. Witnesses have said his last words were “I can’t breathe”.

The phrase became a trending hash tag on Twitter, and has already been printed on t-shirts, with basketball players LeBron James and Kobe Bryant wearing them.

According to her application, Crump did not want to profit from the phrase, but she applied to use the phrase for clothing and claimed she had been using it commercially for one month from 18 August 2014.

Although of no relation to Garner, the USPTO said because of the widespread fame of Garner, “consumers would presume a connection” between him and Crump’s trademark.

In its rejection of Ublerb’s application, the USPTO said that the social media company’s use of a hashtag before the phrase doesn’t make it registrable.

This is not the first time trademark applicants have attempted to capitalise on phrases used on Twitter.

In September 2014, the Amyotrophic Lateral Sclerosis Association attempted to trademark “ice bucket challenge”, but it withdrew its application following public backlash.

VeriSign denies ‘impossible’ .com claimsVeriSign has challenged the registry behind .xyz’s claims that it is impossible to find a domain name in .com, accusing it of false advertising under the Lanham Act.

The .com registry filed a complaint against XYZ.com and CEO Daniel Negari in December 2014 in a Virginia district court, alleging false advertising and misrepresenting the new gTLD’s popularity.

The advert at the heart of VeriSign’s complaint is the first content users view when visiting the registry’s website.

It claims: “With over 120 million .coms registered today, it’s impossible to find the domain name that you want.”

VeriSign called the claim “literally false”, because “millions of customers find the .com domain name they want every quarter”.

The .com registry is also disputing XYZ.com’s claims that it is the number one new gTLD in the marketplace and that it has the most registrations of all new strings, because they are based “on artificial XYZ-generated data, derived from XYZ’s automatically registering users for .xyz domain names without the knowledge or consent of those users”.

XYZ.com and Negari denied all of the allegations in a January filing. VeriSign wants an injunction ordering the removal of the contested advert, damages, and the registry to be required to publish data reflecting automatic registrations.

There were 785,000 domain names registered under .xyz in February, making it the most successful gTLD since the programme’s launch.

USTR calls on domain name registrars to fight fakes

Domain name registrars have a role to play in safeguarding internet users from fake drugs, claims the US Trade Representative (USTR) in its Notorious Markets 2014 out-of-cycle review.

The USTR released its 2014 Special 301 Out-of-Cycle Review of Notorious Markets on 5 March.

In its review, the USTR said that some domain name registrars are reportedly “playing a role in supporting counterfeiting and piracy online”.

Noting that enforcement systems can break down, it said that some registrars can “disobey” court orders when notified of illicit activity occurring on their website over a domain name they’ve registered.

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Stillwaters Law FirmADDRESS & CONTACT DETAILS2nd Floor 11, Awolowo Road, Ikoyi

P. O. Box 56161, Ikoyi 101008, Lagos, NigeriaTel: +234 (0) 1 454 7179, +234 (0) 1 460 5471

Mobile: +234 (0) 803 324 8860Fax: +234 (0) 1 460 5470

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STILLWATERS is an award winning law firm in Nigeria that specializes in intellectual property law,corporate and commercial, taxation and litigation. The firm operates from the commercial cities ofLagos and Abuja in Nigeria, with associate offices in Accra in Ghana and Douala in Cameroon.

Professionalism, flexibility and innovation are the hallmark of our practice. We value professionalexcellence, outstanding result and realize they both require creativity and hard work. We strive to gainevery legal advantage for our clients while upholding the principles behind the practice of law. Overthe years, we have acquired considerable experience and an enviable reputation for rendering qualitylegal services in our areas of specialization.

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NewsInBriefAccording to the USTR, several registrars refuse requests to lock or suspend domain names hosting websites that sell suspected counterfeit pharmaceuticals to consumers worldwide.

“This presents a public health challenge, and requires a coordinated response by governments and … private sector stakeholders.”

Some 96 percent of online pharmacies targeting US consumers allegedly violate US law and standards, while studies have found that counterfeit anti-cancer, HIV and AIDS drug are ineffective and can contain toxic or deadly ingredients like rat poison, according to the report.

“Illegal online pharmaceutical sellers can generate significant revenues each month, diverting income from legitimate pharmaceutical manufacturers, and depriving governments of tax revenues from legitimate sales.”

The USTR said that domain name registrars can play a “critical” public safety role, as long as they work with rights holders.

One registrar, Canada-based Tucows, was named as a notorious market by the USTR.

“It is reportedly an example of a registrar that fails to take action when notified of its clients’ infringing activity. [The] USTR encourages

the operators of Tucows to work with relevant stakeholders to address complaints.”

Hong Kong public prefer not to pay

Almost two thirds of those surveyed said that they would not pay for content online, according to the Hong Kong Intellectual Property Department.

Its 2014 survey to gauge public awareness of IP protection in Hong Kong found that 60.6 percent would not pay to listen to songs, watch movies online, or download content from authorised websites.

Of those, 23.4 percent said content is too expensive, 19 percent said it is too complicated to purchase online, and 17.8 percent prefer to access content for free through illegitimate channels.

The survey also revealed that respondents below the age of 30 had infringed IP online the most, or did not consider infringement to be morally suspect.

More than one third of respondents did say they would pay for content, because legitimate channels offer better quality.

IP director Ada Leung commented: “We must remain vigilant of the challenges to IP protection brought about by the fast advancement of technology and the popularity of mobile devices.”

“We will keep up our efforts to enhance public awareness of IP rights protection and respect for IP rights, especially among the younger generation, through various educational and promotional programmes and by stepping up promotion on different channels.”

IP Centrum enjoys £10 million value increaseDe Banke Group has increased its majority shareholding in European patent validation company IP Centrum to 95 percent, from 50.1 percent, representing £10 million in company value.

As the parent company of IP Centrum, the buy-out was triggered by de Bank Group’s planned investment in the release of its renewals service and builds on the formerly owned 50.1 percent.

Simon de Banke, founder and CEO of IP Centrum, said: “We’ve enjoyed a positive relationship with our minority shareholders

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NewsInBriefI’m delighted to offer them this exit which allows IP Centrum the opportunity to continue developing.”

The service offers a low-cost solution to formalities teams and patent attorneys internationally, according to de Banke.

“We want to do the same thing for renewals as we’ve done for validation. Our service has been in private early-access to a small number of clients for the last 12 months,” explained de Banke.

“We can’t wait to show the IP world how renewals should be done,” added de Banke.

Walmart turns neigh-sayer over horse domainWalmart is none too happy about a website whose sole purpose is to display a photoshopped picture of a horse standing in front of one of its stores.

Jeph Jacques, who is the owner of the walmart.horse domain, which hosts the website, has published a cease and desist notice that he recently received from the US retailer.

The notice requested that he stop using the domain, because it suggests “sponsorship

or endorsement of [the] website and correspondingly, [his] activities”.

His use of the domain name constitutes trademark infringement, weakens the ability of the Walmart mark and domain to identify a single source, and misleads consumers, according to the US retailer.

Walmart gave Jeph Jacques two weeks to stop using the domain.

Jeph Jacques responded to Walmart’s notice, which he also published on his personal website. He clamed that walmart.horse “is an obvious parody and therefore falls under fair use”.

“Publicly available images of a horse, a Walmart store, and comical music make it clear that the site is meant to be a joke.”

“I would be happy to provide a disclaimer on the website explicitly stating this.”

“If you have any requests for other animals you would like to see added to the image on the website, I would happily comply!”

According to his website, Jacques regularly produces and publishes an online comic strip called Questionable Content.

This isn’t the first time Walmart has had trouble with tricky uses of its trademark in a domain name.

In 2012, Walmart failed to take down a United Food & Commercial Workers International Union website that criticised the retailer for trampling the human rights of workers, discriminating against women, and damaging small businesses and the environment.

A statement from IPProIn Issue 50 of IPPro The Internet, a stock image was reproduced above the article entitled “Not just a videogame”. We have been notified that the image contained unauthorised reproductions of Taito Corporation’s copyright works, namely the characters from the Space Invaders video game. We are happy to acknowledge Taito’s copyright in the characters, which are shown below and, at Taito’s request, we have removed the unauthorised characters from the online version of Issue 50, which you can still access here.

www.spaceinvaders.net © 1978-2015 and ® Taito Corporation

 

 

Intellectual Propertyin an Innovative World

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ConferenceReport

A highlight of the Global Intellectual Property Exchange in Munich was a focus on maintaining the quality of rights.

One panel focused on patent translation at the exchange, with the speaker explaining that patent owners can run into error, not just because of language barriers, but because they do not have the “capacity” to check translations.

Overcoming this is not about increasing head counts, but communicating using the right tools and with the right kind of people. “To mitigate risks, patent owners need to realise that technology is one thing, but people are more important,” explained the speaker.

Patent owners should not panic, though, because translations can be dealt with, and a trusted, effective source can make all the difference.

The speaker explained that patent owners should try to establish a relationship with native speakers, but it’s not always easy. Chinese, Japanese and Korean are traditionally the most difficult languages to translate, due to the range of characters that are often misunderstood by non-natives, especially in Western countries.

Overcoming language issues in relation to patent claims can be essential to success. If something is misunderstood, it heightens the chance of it being found invalid in another jurisdiction and patent examiners arriving at incorrect conclusions.

Ensuring quality control and the importance periodic assessments of portfolios was also a key takeaway from the exchange.

“Some people define an exemplary IP portfolio as a very strong portfolio, in my mind a strong portfolio is one that is effective in enabling your

company to carry out its business strategy,” explained one speaker.

“Therefore, you need to have an IP strategy that is holistically integrated into your business strategy. It should be a cornerstone of your strategy.”

The need for an iron grip on a patent portfolio is important, but so is flexibility. The speaker explained the need to be adaptable and how IP owners should complete periodical assessments because “things change”.

Referencing the US Supreme Court decision in Alice Corp v CLS Bank, the speaker noted how new decisions can affect present and future patents.

Reform such as the America Invents Act introduced procedural improvements including post-grant renewal and inter-parties review. Invalidating a patent has become much easier and cheaper, and consequentially, owners need to be scrupulous when it comes to the quality of their patents and claims.

“Patent owners must establish a process, so they reap control at each step. We need to continuously monitor and optimise our portfolio, so we can ensure supply and demand are balanced.”

Understanding the competition is another factor. “You need to understand other peoples’ products very well because one year or the next a product in a company’s patent portfolio can become obsolete because of new factors. A high value patent can suddenly turn into a zero value patent if there is no way for it to be used again in its 20-year lifetime.”

But the speaker also explained that quantity is still a factor because owners need “critical mass” to “earn” the right to a cross-licensing discussion.

“Once you have reached the threshold you should de-emphasise quantity because quality is the key for success.”

Another panel featured a presentation on the Nagoya Protocol for users of genetic resources. The Nagoya Protocol is a supplementary agreement to the Convention on Biological Diversity. It is intended to create further certainty and legal framework transparency for providers and users of genetic resources.

Users can include universities, private companies and those involved in research and development (R&D). According to the speaker, private industry often uses pathogens for testing, but they to tread carefully around using genetic material, to ensure they are compliant with the protocol.

“It’s a murky area, because member states to the protocol have the sovereign rights to their natural resources, so obtaining a pathogen can be tricky. A company must also acquire mutually informed consent for benefit sharing from users of the pathogen and pass through all the hypothetical red tape,” explained the speaker.

“Researchers need to check national laws and acquire access permits via the authorities, and upload the information into a trace and track system.”

The speaker also advised that trained lawyers must be employed to ensure that researchers do not acquire genes “outside of the compliance system”.

“If there is a concern that someone has breached the compliance requirement, they can be downgraded and as a result, their reputation can be damaged,” the speaker warned. IPPro

A fight for qualityHundreds of attendees from across the globe descended on Munich for the annual Global Intellectual Property ExchangeTAMMY FACEY REPORTS

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PatentReform

Patent assertion entities (PAEs) have been accused of lacking morals and even ripping off inventors. The Federal Trade Commission is clamping down on PAEs that threaten businesses with infringement complaints on an industrial scale in the hope of extracting settlements from those fearful of the cost of litigation. US politicians, too, are heeding the cries of the people they serve, sponsoring bills such as the Innovation Act that could radically overhaul patent law, all in the pursuit of a common enemy: the ‘patent troll’, the pejorative term used to describe PAEs that buy, sell, license and litigate patents, but do not manufacture or otherwise use the inventions that their rights protect.

The anti-patent troll position is backed by a seemingly deep well of research and debate, which often argues that litigious PAEs, when all is said and done, threaten American innovation. This is the argument with which policymakers are pushing through patent reform.

Upon the Innovation Act’s reintroduction into the House of Representatives in February, after the Senate dropped the legislation last year, representative Anna Eshoo, a co-sponsor of the bill, said: “When our patent system is not working in a wholesome and robust way, competition, innovation, and consumerism are threatened.

When businesses aren’t bogged down with abusive patent litigation, they spend on average $211 million more on research and development than firms that have to redirect resources to protect their original ideas in court. The Innovation Act is the solution to the problem of abusive patent litigation.”

A promise or a threat?

Authors Lauren Cohen, Umit Gurun and Scott Kominers, all academics at US research institutions, published a paper in August last year that argued PAE litigation has a negative

real impact on the future innovative activity of targeted firms. In February of this year, UC Berkeley’s Robin Feldman and Stanford’s Mark Lemley released a study that examined the relationship between patent licensing and innovation.

They surveyed people involved in patent licensing to see how often patent licences spur innovation or technology transfer.

“We found that very few patent licences from assertion actually lead to new innovation,” commented Feldman. “Most are simply about paying for the freedom to keep doing what the licensee was already doing.”

“Surprisingly, this is true not only of non-practicing entity (NPE) licences but even of licences from assertion by product-producing companies and universities. Our results cast significant doubt on a common justification for patent activity.”

A threat to innovation: science fact or fiction?Anti-patent troll reform might attract votes, but does it have scientific backing?MARK DUGDALE REPORTS

PatentReform

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PatentReform“The study underscores the need for comprehensive patent reform,” added Feldman. “The problem isn’t confined to NPEs; it is everywhere.”

The research that policymakers are using to back their push for patent reform is not without its doubters. Following the release of the Feldman/Lemley study, Intellectual Ventures co-founder and vice chairman Peter Detkin challenged its findings in a blog post, saying: “We’ve been pointing out for years that sound data supporting the need for further changes to patent enforceability is lacking.” Intellectual Ventures is among the biggest owners of US patents, and is often called the ultimate PAE, a claim that it regularly denies.

Detkin wrote of the Feldman/Lemley study: “Asking a small group of lawyers whether paying for the use of an invention—after it’s already been infringed—results in additional innovation, clouds, rather than clarifies, the issue. The issue becomes especially clouded when the researchers only receive 188 responses from 10,000 queries, and many of the responses come from members of the Internet Association, CCIA and Coalition for Patent Fairness—all of which are zealous advocates for legislation that undermines patent enforceability.”

“It is the promise of the right to exclude that is intended to promote innovation—by the inventor, not by the infringer, and with that system in place the United States has been a technological leader for decades,” he added.

“For instance, a recent paper from Professor Arthur Diamond at the University of Nebraska at Omaha analyses our current system and makes the case that patents not only incent inventors to invent, but also often provide the funds to enable entrepreneurs to turn inventions into innovations.”

“And, a new study from Stanford professor Stephen Haber not only supports some of Professor Diamond’s assertions, but it also directly contradicts professors Lemley and Feldman by showing that patent licensors play ‘a useful intermediary role between individual inventors and large manufacturers’.”

Useful is as useful does

Haber, a political science professor at Stanford University in California, has seen scholarly literature take an anti-PAE turn. He says: “I have started to see more and more research papers about PAEs, many of which have demonised them.”

PAEs are essentially intermediaries that exist to solve a problem in a market, whatever that market may be, says Haber.

“The world is full of intermediaries. Department stores are intermediaries, banks are intermediaries—travel agents used to be but they disappeared after the introduction of the internet.”

“Travel agents are a good example. When a market imperfection is solved, in this case it was solved by the internet bringing hotels and airlines direct to consumers, an intermediary all but disappears. The world is full of intermediaries and that’s why it is odd that so much scholarly literature has demonised this particular intermediary. I thought that was worth investigating.”

Using an asymmetry hypothesis, Haber looked to discover whether there is an asymmetry in financial resources between individual patent holders and manufacturers that prevents individuals from making a credible threat to litigate against infringement, to determine why an inventor might sell a patent to a PAE rather than license it.

“There are differences in resources between big manufacturing companies and individual inventors,” explains Haber. “When an inventor goes to a big manufacturing company to try to enforce a patent or do a licensing deal, they’re told they are not going to get anything. And they don’t have the resources to litigate, because going all the way can cost around $5 million in the US.”

“So the hypothesis was that PAEs have emerged in order to overcome the disparity in resources between individual inventors and big manufacturers. We come up with an experiment involving actual inventors and entrepreneurs to test this.”

Haber, along with Stanford political science graduate student Seth Werfel, used a survey experiment to see how the demand for PAEs changes when financial constraints are relaxed.

The control group was given the option of litigating against a manufacturer themselves or selling to a PAE, while the treatment group was allowed to litigate in ways that approximate some of the characteristics of a PAE, by using contingent fee litigation, which eliminates upfront costs as well as the prospect of net losses.

“We randomly varied whether subjects could hire a lawyer at an hourly rate or on a contingent fee basis,” he explained in his paper. “If our hypothesis is correct, then the presence of contingent fee litigation should reduce the demand for PAEs among individual patent holders [particularly among] individuals who self-identify as inventors rather than entrepreneurs—because the former tend to be more financially constrained than the latter—and individuals who are especially averse to losses.”

Haber says: “When we did that, when we then broke up the groups, we asked them whether they were an inventor or an entrepreneur and we found that inventors, when given the choice, to sell to the PAE or contingency litigation in the treatment group, overwhelmingly chose contingency litigation, whereas entrepreneurs didn’t make that choice because they have greater financial resources to begin with.”

The results were revealing. Haber and Werfel’s paper, entitled Why Do Inventors Sell to Patent Trolls? Experimental Evidence for the Asymmetry Hypothesis, “suggests that inventors might not opt to litigate themselves, because of financial constraints”.

“It also means that they might drop out of the patent system altogether if PAEs didn’t exist. This implies that the head-on attack on PAEs may be misguided.”

“This isn’t to say that some PAEs are not acting like abusive patent trolls, but it is to say that the political push against them is like throwing out the baby with the bath water. By solving what could be a billion-dollar problem, they well may be creating a trillion-dollar problem.”

With new legislation back on the table in Congress, it might not be long before patent reform goes ahead, whether it’s necessary or not. Haber would like to see politicians step back before that happens.

“Scholarly literature surrounding not just PAEs but the patent system in general is still in its infancy. They are very few consensus findings and until such a time that there is a firmer scientific footing, politicians should be more cautious.”

“One of the first rules of good policy making is first do no harm. Without strong scholarly literature, there’s always the chance of doing harm rather than doing good.” IPPro

“ The world is full of intermediaries and that’s why it is odd that so much scholarly literature has demonised this particular intermediary. I thought that was worth investigating

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12th Annual Nordic Intellectual Property Rights Forum

Location: StockholmDate: 24-26 March 2015www.nordicipr.com/IPPro

Now in its 12th year, this forum is firmly established as Scandinavia’s premier intellectual property right event, and is the forum to map your IP strategy in response to Nordic, European and global demands.

Nordic IPR 2015 tackles these out-dated concepts, focusing on 3 days of interactive Nordic IPR transformation and what this looks like for you and your business.

INTA’s 137th Annual Meeting

Location: San DiegoDate: May 2–6 2015www.inta.org

Take the opportunity to familiarise yourself with some of the most important issues at play in the industry today by participating in an interactive forum designed with engagement and open discussion in mind. Don’t miss out on the opportunity to learn and benchmark with your peers, receive an update on recent Supreme Court cases, and discover how best to monetise and protect your intellectual property.

We are pleased to invite you to attend ECTA’s34th Annual Conference in Hamburg, Germany.The ECTA Conference will deal with the latest developments in Trade Mark, Copyright and Design law, and will offer optimal networking opportunities with friends and colleagues.To register please visitwww.ecta.eu

THE GATEWAY TO THE TRADEMARK WORLD

2015HAMBURG

34TH ANNUAL CONFERENCE

10 – 13 JUNE 2015

RZ_19525 ECTA Anz_IP-pro_203x267.indd 1 06.02.15 14:25

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PeopleMoves

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Perkins Coie has added Fabricio Vayra to its intellectual property practice as partner in the Washington DC office.

Vayra was most recently assistant general counsel for IP at Time Warner.

Vayra focuses on trademark, internet policy issues, domain names and enforcement.

He advises corporate clients on trademark programmes, IP enforcement strategies, domain name issues, and internet governance policy strategies and related regulatory advocacy.

Paul Parker, co-chair of Perkins Coie’s IP practice, commented: “He is a great addition to our national IP practice and enhances the high level of counsel and service we provide to our valued clients. I am delighted to welcome Vayra to the partnership.”

Covington has expanded with a new office opening in Los Angeles.

The office will be staffed by current firm lawyers and three new senior lawyers.

It will initially focus on multiple practice areas, including media and content distribution and patent litigation.

Partner Robyn Polashuk will lead the firm’s media and communications team out of Los Angeles. Her practice focuses on the licensing and distribution of video content across a variety of platforms and business models.

The patent litigation group will be led by partner Alan Blankenheimer, who has substantial experience litigating patent cases, other IP matters and anti-trust disputes for the semiconductor, computer hardware and software industries.

Dan Shallman, a new addition to the team, will lead the firm’s white-collar defence practice in Los Angeles.

He has also handled high-stakes civil litigation, including a high-profile copyright infringement trial for Harry Potter author J.K. Rowling.

Merchant & Gould has hired Nancy Lutz as partner in its Washington DC office.

Lutz’s has spent her carer protecting clients’ trademarks, copyright, and domain names, including within new gTLDs, on a global basis.

She has filed and prosecuted trademarks in every jurisdiction in the world. She evaluates and counsels on acquisitions of IP, and supervises investigations of infringers.

Brian Batzli, managing director and CEO of Merchant & Gould, commented: “Lutz is a nationally recognised leader in trademark law

and provides excellent service and value to her clients. She will be a great addition to our Washington, DC area office.”

FisherBroyles has expanded with the addition of Anne Yates to its IP practice in Atlanta.

Yates focuses her practice on trademark and copyright matters, including litigation and licensing issues.

She has experience in representing individuals, non-profits, and small and large companies.

Prior to her new role, she has served in leadership roles with both the International Trademark Association and the state bar of Georgia’s trademark committee.

TJ DoVale, FisherBroyles’ IP managing partner, commented: “We are pleased to welcome Yates to the FisherBroyles team. Our IP bench is deepening continually and the addition of Yates furthers this pursuit.”

K&L Gates has added Arthur Artinian as partner to its IP practice in London.

Artinian joins Freshfields Bruckhaus Deringer in London.

He will lead the firm’s IP practice, advising on UK, European, and multi-jurisdictional matters.

His practice focuses on contentious and non-contentious trademark, design, copyright, e-commerce, digital, and advertising matters.

The firm has has also recruited Grace Fremlin and Joon Yoon as partners in its corporate M&A and IP litigation practices.

Fremlin joins K&L Gates from Steptoe & Johnson, where she was founder and co-chair of the South Korea practice. Yoon arrives from Reitler, Kailas & Rosenblatt, having also served as a professor at the Korea Advanced Institute of Science and Technology. IPPro

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