Posts in Licensing

On September 26, Licensing Executives Society (LES) USA and Canada published the LES High Tech Sector Royalty Rates & Deal Terms Survey Report 2021. In May of this year, the 2021 Global Life Sciences Royalty Rates and Deal Terms Survey results were released. Together, the releases culminated the intense efforts by LES during the COVID-19 pandemic in preparing and launching the Surveys and in analyzing the data, presenting the results and writing the Reports. Not only do LES Royalty Survey Reports provide an update on the licensing market in the past few years, they look into the dynamics of market evolution since the 2000s. The Reports offer benchmark royalty data by various categories, such as technology field and IP type, which serve as invaluable references for licensing professionals. The 2021 High Tech Survey Report is also the only data source in the IP industry that quantifies and publishes royalty rate premiums or discounts such as exclusivity premium and advanced-stage technology premium. Through identifying and quantifying the value contributions of key license parameters such as exclusivity, technology development stage and IP type, among others, the LES team aims to develop a build-up method for royalty determination, analogous to the build-up method in business valuation.

On Friday afternoon, the IEEE Standards Association Board of Governors (IEEE SA BOG) announced they had taken action to update the Patent Policy for IEEE standards development. The updates, which will not go into effect until January 1, 2023, appear at first glance to be minimal, but will likely have an extraordinarily positive impact for patent owners.

On the second day of the IPWatchdog LIVE conference held in Dallas, Texas, earlier this month, a panel of experts who advise startups and are passionate about the licensing business model discussed the challenges and opportunities presented by intellectual property. The panelists opened the discussion by describing their experiences with the biggest mistakes startups make in regard to patents. Ian McClure, Associate VP for Research, Innovation, and Economic Impact at the University of Kentucky as well as the chair of AUTM, identified two mistakes commonly made by the approximately 1,200 startups that are spun out from university research in the United States each year.

Blockchain technology can serve as a shared database ledger that tracks assets and transactions with little to no oversight but, in theory, unlimited users. Its potential applications spanning smart contracts to blockchaining intellectual property, indicate promise for fluid collaborations, efficient remuneration and thorough intellectual property management. However, there are still crucial issues, including privacy, compatibility, liability and jurisdiction that remain undefined. Moreover, because all fields necessitate specialized codes of conduct and ethics, if blockchain technology is expected to make a significant difference in society, then it too, deserves its own field of ethics, like artificial intelligence (AI), nuclear technology, biotechnology, and space exploration. Leading minds across disciplines need to contemplate how this technology can be shaped to have a positive impact, first by examining what this field is capable of doing and its potential consequences.

Technological standards promulgated by standards-setting organizations (SSOs) have greatly advanced the state of consumer technologies in areas like wireless communications. However, when dealing with infringing standards implementers, the remedies that one system of national courts provides can vary widely from another system. Navigating this complex system of global litigation and competing remedies against infringers was the subject of “Worldwide Litigation of SEPs: What the FRAND is Going On?,” a panel taking place on the third and final day of IPWatchdog LIVE 2022.

During day one of IPWatchdog LIVE in Dallas, Texas, a panel of speakers discussing current trends and the prospects of patent monetization going forward noted that the “heyday” of patent monetization was approximately ten years ago, with several large patent awards increasing interest in patent monetization. The panelists noted two major factors which presently act as a “glass ceiling” over patent valuations. First, the inter partes review (IPR) proceedings instituted at the U.S. Patent and Trademark Office (USPTO) in 2012 as part of the America Invents Act (AIA) has made investment in patents a riskier proposition.

V2X, or Vehicle-to-Everything, is on the horizon to revolutionize vehicular technology by enabling interaction between vehicles and their environment. The first communication standard for V2X, IEEE 802.11p: WAVE (Wireless Access in Vehicular Environments), was standardized by IEEE (Institute of Electrical and Electronics Engineers) in 2010 for WLAN-based V2X communication. The terms DSRC (Dedicated Short Range Communication), WAVE, 802.11p, WLAN based V2X have been used by experts interchangeably to refer to this standard. Alternatively, 3GPP (3rd Generation Partnership Project) started standardization of C-V2X (Cellular-V2X) with Release 14, which was related to LTE V2X. This was followed by Release 15 with added compatibility of 5G to V2X, Release 16, adding 5G NR V2X, and Release 17 related to enhancement in 5G NR V2X and beyond.

Are you bullish or bearish on the patent market as we close out 2022 and move into Q1 of 2023? That is the question I recently asked a distinguished panel of intellectual property business leaders and monetization experts. For the most part, those industry insiders who responded are bullish, although several distinguish patents and the licensing of technology and innovation. Indeed, if I were to answer my own question, I would say that given the Supreme Court’s refusal to address the obvious errors of the Federal Circuit relative to patent eligibility it is extremely difficult, if not impossible, to be anything other than bearish on patents as a meaningful asset class — or at least an asset class that will compensate innovators and investors for the full measure of their contributions.

Health and Human Services (HHS) Secretary Xavier Becerra may consider himself a lucky man (which would probably sound ironic to him at the moment). He just received three letters which aptly summarize the fork in the road he faces in deciding which way to turn in a critical policy decision. On June 23, Senator Elizabeth Warren (D-MA) and Rep. Lloyd Doggett (D-TX), joined by 98 of their Democratic Congressional colleagues, sent him the latest in their series of letters urging him to use alleged existing authorities so that copycats can make expensive drugs to lower health care costs. That triggered an immediate rebuttal from six associations representing research universities and hospitals (including the Bayh-Dole Coalition, which I lead) and another from the Licensing Executives Society, USA & Canada, Inc. (LES), representing the licensing profession. It seems appropriate to let the letters speak for themselves, so let’s start with the Congressional letter, urging the Secretary to use tools they allege he already has to cut the Gordian Knot to lower drug costs.

Today’s software is built like a Lego model. Instead of a singularly developed string of code, multiple building blocks of existing code are used to create a codebase. Some of those building blocks are developed in-house by the software vendor. Others are developed by third-party commercial software providers. And a lot of them come from open-source projects. When you’re a company that puts that codebase into your final product, you must take precautions to minimize the risks that each type of code presents to you and to your customers. This is what is meant by protecting your software supply chain. It’s also how you maximize the value of the code for you and your customers. Each type of code has its own set of benefits and risks that need to be understood and managed. This article addresses just one type of those building blocks: open source software (OSS).

Many universities recognize the value of their patent portfolios and the need to protect their intellectual property rights from unlicensed and unfair use. When licensing negotiations break down, universities generally seek to enforce their rights in U.S. district courts, but overlook a potentially more favorable forum: the United States International Trade Commission (ITC). The ITC is a unique patent forum with experienced judges, defined patent rules, and statutory mandates to provide a timely resolution. More importantly, the ITC was designed protect U.S. industries, including the research and development performed at universities. This is not a hypothetical exercise: one university recently utilized the ITC, blazing a path that others can follow. As explained below, more universities should follow suit.

A while back, we set up an email alert to advise us of any legal developments involving fair, reasonable and non-discriminatory (FRAND) licensing. Somewhat to our surprise, the notion of requiring FRAND terms and conditions for obtaining access to the otherwise exclusive property rights of others is not limited to patents essential to industry standards. Rather, FRAND licensing concepts, or minor variations thereof (e.g. “just, reasonable and nondiscriminatory”), appear in government regulation of stockyards (see 7 USC §208), vehicular air pollution information (see California’s Health and Safety Code §43105.5 (7)), and airports (see La. R.S. §1:135.1), to name a few.

Today, many companies make the business decision to infringe patented technology instead of paying a royalty to license it—so called efficient infringement. The calculation is that it will ultimately be less expensive to ignore the patent rights of innovations than to take a license in an arm’s length negotiation. Over the last 15 years, that calculus has largely proven correct, with changes to numerous laws and the introduction of additional administrative processes all conspiring to make it easier to challenge issued patents. This means that litigation is often the only way for an innovator to protect valuable intellectual property and to stop infringement. Unfortunately, lacking leverage and financial resources, many patent owners cannot stop infringement—in some instances, even after a jury trial.

A bipartisan group of senators on Friday sent a letter to Shira Perlmutter, Register of Copyrights and Director of the U.S. Copyright Office, expressing their concern about a letter sent by the Digital Licensee Coordinator (DLC) to the Office requesting that any obligation of DLC member companies to make retroactive royalty payments to copyright owners as a result of an imminent decision be delayed. The letter clearly stated that the senators are opposed to any concessions to DLC companies that would extend the timeline for payments to songwriters.

In a recent surprise decision, the U.S. Department of Justice (DOJ), U.S. Patent and Trademark Office, and the National Institute of Standards and Technology officially withdrew their 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments and declined to advance an alternative policy statement as a replacement. While the withdrawal of the 2019 policy statement was seen as a foregone conclusion (given the far more SEP-restrictive nature of a December 2021 draft policy statement (DPS) circulated by the agencies), moving forward without any guidance was not on anyone’s DOJ policy bingo card for 2022. The slim guidance that this withdrawal announcement does provide, however, paints a murky picture for the ability of SEP holders to obtain injunctive relief.