Posts in Business

Although some tech companies publishing earnings reports had rockier third quarters than others, performance was very good almost across the board, making now a very good time to be in the consumer or high tech industries. The third quarter of 2015 is the first one for which Google reported its earnings under the name of its new parent holding company, Alphabet Inc. (NASDAQ:GOOG). The early returns are showing that the new structure is a profitable one for Alphabet, which beat analyst estimates for earnings per share (EPS) by almost 15 cents per share. It was a much different story for IBM (NYSE:IBM) of Armonk, NY, when its earnings report missed on the low side of analyst expectations, marking the 14th straight quarter for which the enterprise tech developer has reported falling revenues.

Law firms are coming under growing scrutiny for a lack of effort in addressing hacking concerns or even coming clean with the threats which they have faced. A cybersecurity report released in February of this year by Citigroup Inc. (NYSE:C) lambasted law firms for being at high risk for cyber intrusions while the industry standard for cybersecurity remains much lower than for other industries. Law firms who deal with incredibly valuable intellectual properties should be acutely aware of the risks that they face from hackers, especially those from overseas. Patented technologies have been the target of international hackers in recent months. Just this May, the U.S. Justice Department charged six Chinese nationals with stealing IP related to wireless technologies developed by a couple of American companies.

When you think about the american auto industry it’s becoming clearer every day that the idea of American-made or Japanese-made is not black and white. Increasingly, the innovative technologies going into the vehicles being sold in our country are also coming from overseas. It’s pretty telling that industry data indicates that there are no truly American-made cars being sold anymore. The National Highway Traffic Safety Administration’s 2015 American Automobile Labeling Act (AALA) report shows that the cars constructed with the most American parts still had foreign parts used in at least one-quarter of the vehicle’s construction. Most of the cars that were three-quarters composed of American parts were made by General Motors Company, including the Buick Enclave, the Cadillac CTS and the Chevrolet Corvette.

Google recently announced that it would be undergoing a major corporate restructuring, folding itself into a new corporation called Alphabet Inc. The move has been marketed as a means by which Google can remain more innovative insofar as it allows Larry Page and Sergey Brin to continue to make technological bets that have long odds while affecting search engine revenues less. Aside from the Internet division, there are as many as 80 other divisions where it is hoped that R&D development will continue while they grow into services with the billion+ level of users claimed by Google’s Internet services. This article takes a look at some of those divisions and how they stand to gain.

The big winner among social media e-businesses in the 2015 consumer index is Pinterest, the personal web cataloguing service headquartered in San Francisco, CA. Its consumer satisfaction index score rose by about 3 percent since last year to a score of 78, tied for the best 2015 index score of any e-business. Most people think of Pinterest as a fun website for getting party ideas or tips on how to style a home, but there have been some interesting aspects of Pinterest’s business developing. Recently, the Bank of America Corp. (NYSE:BAC) announced that Pinterest, which manages about 1.3 billion pins related to money management, is driving about 30 percent of the company’s social media traffic. A police department in Dover, DE, recently became one of a small but growing contingent of departments who have launched Pinterest accounts to advertise a public lost & found service. Pinterest users who have ever found themselves frustrated at an inability to purchase imaginative items they find on the site may be happy to note that the site is rolling out buyable pins.

One service available to help IoT device developers more easily create the real-time operating system (RTOS) necessary to run applications on a smart device is SynthOS. Developed by Zeidman Technologies of Cupertino, CA, SynthOS is an automated generator of RTOS code which uses patented algorithms which lets users input functionality at an abstract level. SynthOS enables a user to develop a customized RTOS which is compatible with ANSI C language standards. After a SynthOS user inputs generalized, abstracted functionality, the service can then automatically generate OS code, including mutexes, mailboxes and semaphores and any other mechanisms for communication or synchronization. Soon, Zeidman Technologies will be announcing an agreement reached with a major Silicon Valley semiconductor company regarding the SynthOS technology.

In what can only be characterized as a bizarre, rambling, and intellectually dishonest article, ‘The Economist’ has inexplicably taken the position that patents are not necessary for innovation. The complexity of innovation today and the required investment necessary to innovate, as well as the highly speculative nature of innovation, seems lost on the author. It is surprising, and disappointing, that a publication like The Economist would turn a blind-eye to the underlying financial realities of innovation. Truthfully, The Economist owes its readers a sincere apology for this entire article. Some could, and probably should, call into question the motivations for building an anti-patent argument upon such a rotten foundation.

While some companies continue to wait and see, we saw a dramatic shift in late 2014. The most sophisticated companies on IP matters used the uncertainty to their advantage. They hypothesized the market couldn’t get much worse, and since they would eventually need to engage in licensing discussions, they used the negotiation leverage they had during a slow market to get the best deal. Similar to a “buyer’s market” in real estate, the IP market was (and continues to be for some) a licensee’s market as many companies sit back and wait to see how the uncertainty will shake out.

In response to all of these body blows to McDonald’s, CEO Steve Easterbrook announced a number of changes that he hopes will set the corporation on a much more successful course. Easterbrook promised investors after the earnings report was published Wednesday that the company would be making meaningful changes to its menu within the month. Easterbrook has also proposed a major restructuring to the corporation’s global operations that would split the company into four segments: one focused on lead markets like Britain and Australia, a high growth division including Russia and China, a U.S. domestic division and one focused on McDonald’s activities in the 100 other countries where the fast food restaurant operates.

There’s a commonly held notion that economic success and the professional pursuit of live performance are mutually exclusive. Although stagework might never be a stable job, the upcoming sale of Cirque du Soleil from founder Guy Laliberté to a group led by TPG Capital of Forth Worth, TX, for $1.5 billion should put to rest the idea that there’s no money in theater.

Patents provide a competitive advantage, and those sophisticated in business know enough to look for and exploit whatever competitive advantage exists. Patents are the 800 pound gorilla of competitive advantage, but realize if you are going to want and need significant sums of money from investors rarely does a single invention or patent command attention. No one wants to invest significant funds into a company that has a one-and-done approach to innovation. That is why the most valuable inventions will have applicability in a variety of fields, and will have a variety of different implementations, alternatives and variations.

It’s great that John Oliver brought the subject of patent trolls, about which IPWatchdog has already produced some considerable coverage, to an audience that topped 1.4 million viewers. But there are a significant number of stakeholders in the ongoing patent debate who are not in favor of the Innovation Act and they’re not, as John Oliver would have you believe, simply lobbyists for trial lawyers. For example, the Innovation Alliance, which is made up of innovator companies, does not support the Innovation Act. Neither do independent inventor groups, independent inventors, innovative startup companies, biotechnology companies or universities. If John Oliver is for helping small business victims of patent trolls while preserving patent rights he should actually be promoting the STRONG Patents Act and not the Innovation Act.

The vast majority of the assets developed and owned by technology companies are intangible assets, i.e. they reside in their internal information and employees’ brain (Intellectual Capital or “IC”) and the output thereof (Intellectual Property or “IP”). It is estimated that in excess of 85% of the valuation of the NASDAQ Index companies (and of the new global wealth being created) lies in intangible assets. With smaller technology companies, this percentage is sometimes close to 100%. Nowadays, most technology based companies eventually fail or succeed in large part because of the way they handle their intellectual capital assets and convert those into strategic intellectual property assets.

These rules of the game for operating within the Chinese market are especially troubling given the lack of respect paid to American patent rights by Chinese firms. Foreign companies operating in China are forced to operate as 50-50 joint ventures with domestic companies and technology transfer has been a part of the price of entering the Chinese market going back to the early 1980s. Nominally, this practice runs afoul of tech transfer regulations that the Chinese government must respect as a member of the World Trade Organization, which it joined in 2001. However, as the economic policy paper points out, the regulations are difficult to enforce, private firms are dissuaded from speaking out publicly about negotiations while entering the Chinese market and the Chinese government stands to gain by letting the system continue as it has.

This year the pharmaceutical world has already seen some incredible mergers and acquisitions. This rapid pace of activity represents the highest level of pharmaceutical and biotech takeovers since 2009, according to Bloomberg Business. The week of March 30th started with the announcement of four major pharma or biotech mergers which totaled greater than $17 billion in costs, including the $3.5 billion Teva acquisition of Auspex. One particular deal, the purchase of benefits management company Catamaran Corp. by health insurer UnitedHealth Group Inc., will exceed $12 billion on its own.