6 Jun
2016

IV spins-out invention fund, Yahoo! patent sale, Brexit bypass & much more from IPBC Global 2016 Day One

The first full day of plenary sessions and breakouts at IPBC Global 2016 has now come to an end, and delegates are currently enjoying a cocktail reception in the grounds of conference venue the Hotel Arts. Throughout the day, IAM’s team of journalists has been following events and talking to contacts (new and established). Following are the reportable (!) highlights from editor Joff Wild (JW), Asia editor Jacob Schindler (JS), North America editor Richard Lloyd (RL) and senior reporter Sara Jayne Clover (SJC) …

A big IV spin-out - As well as building and monetising one of the largest patent portfolios in the business, another part of the Intellectual Ventures story has been its focus on incubating and spinning out successful start-ups. The number of new companies that IV has helped to launch is now approaching 10 thanks to its latest spin-out – its Invention Development Fund. IV has kept the news fairly low key to this point, although it did disclose some details in a blog post last month. Luckily for IPBC delegates, Paul Levins of IDF was on hand on the last panel of the day called ‘Adapt or die’ to give a little more insight into what the newly independent business does. “We were the third fund of IV,” he told the audience. “In the course of the last three weeks we’ve spun out from IV. What we’d describe ourselves as doing is about new invention creation, invention services and product development. It’s a specific class of invention creation targeted at companies interested in doing new things in the marketplace, but who may have previously found appeal in the open innovation space. Many times you quickly discover there’s a lot of pieces missing with open innovation. Companies who work with us have a partner who’s willing to sit beside them and place bets on future technologies. We do that by creating brand new inventions that’ve been outsourced from a very well-curated inventor network. You get open innovation but you still have the benefit of getting IP protection and product development.” The general message seems to be watch this space. We understand a full rebranding of IDF is currently in the works. There should be more details by the end of the summer. (RL and JS)

Time for action – Yesterday a select group of 28 people met for a lunch in a venue 41 floors up in the Hotel Arts, with a view that looked out onto the deep blue Mediterranean sea. They were there to honour this year’s inductees into the IP Hall of Fame (Margot Froehlinger, Lulin Gao and James Pooley), all of who were present, and to discuss what the future should hold for this esteemed body. Over the past decade, the IP Hall of Fame Academy has inducted individuals who have played a key role in crafting the IP system into what it is today, but for some time now there has been momentum building behind the idea that the Hall of Fame could be so much more. Comprising experts from a variety of disciplines, areas of law, business, academia, policy – as well as from all parts of the globe – there is an opportunity to enable these great minds to continue to collectively shape the IP landscape.  While discussions about how to move forward are still at an early stage, there seemed to be much enthusiasm to develop the IP Hall of Fame’s remit and to move it into areas such as advocacy, education and thought-leadership; so be sure to watch this space. (SJC)

Beating Brexit – So it turns out a few senior IP people have noticed the opinion polls in the UK indicating that the Leave side in the country’s referendum on EU membership is now ahead of the Remain side. The conventional wisdom is that if the UK does vote to quit the EU, then the Unified Patent Court agreement will remain unratified and the new regime will not come into force until, at the earliest, the UK formally departs. But, wait a minute, some people are now saying. The UPC is not an EU Treaty, it is an inter-governmental one. Were the UK to ratify after a vote to Brexit it would not necessarily be going against the spirit of the referendum result and, in any case, the country will remain a member state for a fair while even if the result is for Leave on 23rd June. Of course, this depends on how the UK government sees things. The country’s IP minister is, like the Prime Minister David Cameron, a Remainer. The justice minister, Michael Gove, on the other hand, is a prominent Leaver. But if the UK government can be persuaded to sign up despite a vote to depart, then – the thinking seems to be – a way will be found in the period that exists between that vote and departure to ensure that whatever happens the UK remains within the unitary patent system. It’s hard to believe that British industry would not want that - the country’s patent profession certainly does - and it’s not as if patents are high-profile. Essentially, no-one would actually notice. It makes sense, I guess; but whether it would actually be the right thing to do once the will of the people has been expressed is very much open to question. (JW)

Building delays - At Sunday’s IP Hall of Fame lunch, 2011 inductee Béatrix de Russé mused that the proposed Unified Patent Court regime is not unlike that other great unfinished project – Antoni Gaudí’s Basílica de la Sagrada Familia. The construction of the Barcelona landmark began in 1882 and is not expected to be finished before 2026. With the looming Brexit referendum threatening to delay by years or even derail the UPC, it is suddenly in question which will be completed first. Gaudí famously quipped “my client is not in a hurry”; the question is whether European patent owners feel the same way. (JS)

Making patents great again - As anyone who has attended IPBC Global in recent years would know, there has been much despondency around the state of the US patent market - thanks to what is largely seen to have been an erosion of patent rights there. At the opening drinks reception, John Veschi formerly of Rockstar and now head of Marquis Technologies, was doing his best to bolster spirits with a baseball cap that had “Make patents great again” emblazoned on it. Veschi, of course, had tweaked Donald Trump’s well known campaign slogan, “Making America great again”, for the IP market. While there might be some dispute over Trump’s chances in the upcoming November election, there aren’t many in Barcelona who would disagree with Veschi’s choice of headware. (RL)

Teach and preach - Chinese companies have undergone a lot of development in recent years when it comes to intellectual property. What we do not see a lot of yet, though, are executives who fit the mould of a chief IP officer. One of the scenarios discussed during today’s “Meeting the CIPO challenge”, moderated by Philips’ Brian Hinman, illustrates just how tough a task some Chinese heads of IP face. Asked what they would do coming into a role at a large operating company with an immature IP culture and no track record of fling large numbers of patents, panellists including Ericsson’s Gustav Brismark and Harman International’s Alyssa Harvey Dawson first wondered what would have compelled them to accept the hypothetical job in the first place. But it’s the reality for IP professionals in some fast-growing Chinese companies. The general advice was to make education a large part of the role. Executives who come from a technology background will generally be willing to buy into having a patent strategy, Nokia’s Ilkka Rahnasto noted. And with top brass, Harvey-Dawson added, it’s important to frame patents not as a legal concept they need to be educated about, but in the language of business markets and competitive advantage. CIPOs at companies like those represented on stage probably don’t have to spend much time educating, but it is a major dimension of the job in developing markets like China. (JS)

Yahoo! yarns - One of the undoubted attractions of IPBC Global is that with so many representatives from major patent owning businesses and the cream of the intermediary community under one roof, it is the perfect venue for patent deals to be discussed. This year is no different and the portfolio on many people’s minds is the 1,700 grant and 500 application one that Yahoo! has put up for sale. That process is understood to be completely separate from the wider disposal that the company is currently considering. It’s fair to say that the sale, which is being handled by Blackstone IP, is being closely watched for what it might say about the patent deals market in the US. Just two years on from the Supreme Court’s Alice decision you probably can’t be faulted for wondering just how much of the portfolio is “Alice proof”, although the Court of Appeals for the Federal Circuit’s recent decision in Enfish might have helped assuage some concerns. What we understand is that a low number may be potentially exposed – perhaps 5% to 10% - and that there are also relatively few encumbrances. The assets are said to be largely focused on technologies encompassing the Cloud and the Internet of Things (IoT), and with both of those hot areas some level of interest in the portfolio is certain. But with rumours suggesting that Yahoo! is hoping for over $1 billion, turning that interest into a transaction might prove a challenge, even if you’re hammering out the details beside the sun-kissed Med. (RL)

Tough love - Nokia’s head of patent licensing Eeva Hakoranta revealed today that while the company’s licensing programme is going strong, Asia remains a particularly difficult area. She said the number of licensing deals her group has concluded over the past year or so is approaching 100, but “the striking fact is that there are not so many Asian companies among those licensees”. Every jurisdiction is different, but Hakoranta said she’s hopeful that the issue will begin resolving itself as Chinese firms in particular start to enforce their own patents. Veteran Asia hand Ben Beune, chief licensing officer at Sisvel, agreed that Asia is not yet a level playing field. Although the theme of the session both were participating in was “Peace, not war”, he said patent owners need to get tough when necessary, lest “those not paying spoil the whole market”. Even if local enforcement isn’t practical, Beune said he has had success educating (and going after, if need be) infringers’ overseas retailers and by having shipments of infringing goods seized at European borders. (JS)

Education, education, education - I have been fortunate enough today to interview two of this year’s IP Hall of Fame inductees, Margot Froehlinger and James Pooley, for the upcoming issue of IAM. During candid interviews, I learnt much about Froehlinger’s hopes and expectations for the UPC and unitary patent (Brexit or not), as well as the hurdles that had to be overcome to reach the agreement as it stands. While, for his part, Pooley gave some great insights into the challenges and opportunities of working for an organisation with the scope and broad mandate of WIPO, and discussed his role in shaping trade secret law. These two individuals have very different backgrounds in the IP space, but interestingly they both share the opinion that one of the biggest challenges facing the IP world today is public perception and the lack of education about IP’s value – financial, social and cultural. Both insisted that all those in the field should be doing more to encourage a respect and understanding of the rights awarded to society’s innovators, rather than shroud it in legal jargon. Tomorrow I will have the opportunity to interview our third inductee into IP Hall of Fame, Lulin Gao, one of the founding fathers of the modern Chinese IP system.  I’ll be asking whether he shares these same concerns. What is certain, however, is that all three interviews will make for an interesting read in issue 79 of IAM. (SJC)

Secrets of success - The first panel of the day – Welcome to the New Normal - touched on many topics that readers of this blog would be familiar with. For any delegates looking for tips on how to thrive in the rapidly changing patent market, panellists offered advice borne out of deep experience. Google’s Allen Lo hit on three points that he said would help determine an IP player’s future success. Firstly, he insisted that there needs to be a realignment of expectations in terms of the kind of return patent owners are looking for from their IP. Too many, he claimed, still hark back to the multi-billion dollar auction of Nortel’s portfolio in 2011. “That deal was a blip, an anomaly, but it’s still referred to today in terms of what patents are worth,” Lo stated. As one of the bidders for the Nortel assets, of course, pre-Lo Google helped push the price higher as it competed with the likes of Apple, Microsoft and Ericsson for a portfolio of assets that was seen as a valuable weapon in the smartphone wars. Most would probably agree that Nortel was a one-off, but if you speak to people in the market they would argue that even if expectations haven’t dropped since 2011, prices have. Stats on patent deals certainly suggest that while the number of transactions has been healthy, values are still very depressed. The argument could be made that the market has moved on from the Nortel, although Lo still might like values to fall further. The second key that he mentioned was that businesses that rely on patent uncertainty are going to be less successful. Instead, he asserted, “entities that are successful will build their model around certainty”. That’s hard to argue against, but when that level of certainty is dictated by, for example, decisions in the courts - as has been the case for software businesses following the Alice decision - then companies may have few options to control their own destinies. Lo’s final point was one that would probably resonate with all operating companies that develop their own patented technology, but also spend a lot of their time implementing the inventions of others. “Don’t kill the host,” Lo stressed, as he warned of the impact of loading too many royalty payments onto a product. That will of course eat into a product’s profitability and then force the company to fight back. Given the ongoing dispute around FRAND licensing terms and how much companies should expect to pay for an SEP licence, Lo’s comments have a particular significance. (RL)

Europe, we love you - Putting the UPC to one side, what has already become clear at this IPBC Global is that Europe is now winning over a lot of patent owners – from operating companies and NPEs. It’s not just that the EPO is thought to issue the highest quality patents or that courts in key jurisdictions are generally quick, cheaper than the US and have high levels of expertise, but also that across the system there is what Boris Teksler – CEO of Unwired Planet – referred to in the opening plenary of the day as a balanced outlook. He attributed this to the fact that Europe has never really seen widespread patent abuse – either by patent owners looking to shakedown companies for licensing cash or by infringers looking to weaken patent rights to further their business aims. That has meant there have never been the wild corrections that the US has had to endure, or the resulting lack of certainty. In short, it’s much harder to game the system in Europe and always has been. You see the effects of that in decisions such as Huawei v ZTE handed down by the ECJ last year and acknowledging, said Ericsson’s Monica Magnusson, that FRAND negotiations are a two way street. Teksler lamented the US’s lack of an even keel and concluded: “Quite frankly, I see Europe as the model at the moment.” Talking to American delegates on the fringes of the event, he is not the only one. (JW)

Frank on pharma - Many attending one of the first sessions of the afternoon - Inside the inter partes review regime - might have been expecting proceedings to get lively. After all, the panel featured Paul Fehlner, head of IP at Novartis, and Erich Spangenberg who, along with Kyle Bass, has been busy filing a series of IPRs against what they deem to be weak pharmaceutical patents. The fact that things didn’t become heated is in large part thanks to the very reasonable positions that Fehlner articulated. For one, he said that he was in favour of some form of review proceedings. “It’s very helpful in any system to be able to get ratification of patents at the administrative level,” he commented. He also said that he opposed changes to the IPR system that favoured pharmaceutical companies, as some patent reform proposals in the US Congress have suggested. He also met head on the assertion that the pharma community has been filing poor patents to extend protection on their products. “It’s true there are some poor patents around pharma products in an effort to extend their lifetime because the pipeline sucks,” he admitted. But he added that there was some genuine innovation in the sector deserving of protection. “It’s not untrue but it’s not the only truth,” he commented. (RL)

That’s dedication - There’s a 20 metre swimming pool at IPBC Global conference venue the Hotel Arts and the beach is not one hundred yards away. The sun has been shining all day, a light breeze has been blowing in off the sea. In short, Barcelona has provided yet another outdoor kind of day; so, it’s a tribute to the dedication and professionalism of the 500+ delegates at this year’s event that the final two sessions – the Alice effect and Adapt or die – were played out to packed rooms. Or maybe it was the drawing power of the participants in both breakouts that did the trick! Either way, it was a great way to round proceedings off. We’ll be back again tomorrow with further highlights and insights. See you then. (JW)

Twitter – you can follow events at IPBC Global live via the Twitter hashtag #IPBCGlobal

Joff Wild

Author | Editor-in-chief

jwild@GlobeBMG.com

Joff Wild