Posts Tagged: "patent license"

Even at ground level, where American courts in San Diego and San Jose are now being called on to apply the law laid out in prior court decisions to the particular facts of the smartphone chip market, the multipronged attack on Qualcomm’s patent licensing practices offers an unusually rich platter of meaty issues to feast upon for those who advise patent licensors and licensees. Leaving aside the implications for the smartphone industry and the market for cellular baseband processors that Qualcomm now dominates, the new precedents that will be set in court—if the parties don’t settle or a Republican-controlled FTC doesn’t withdraw its case—will have broad and deep implications for patent owners and users—much as the US v. Microsoft case has had since it was decided almost two decades ago.

Today (TTOs) are increasingly being run by professionals who are experienced in startups, licensing, monetizing and have tremendous depth of technical knowledge in a variety of fields. But they are all waging a losing battle in an industry where 73% of the offices are losing money and an additional 16% just breakeven. It is not because of the efficiency of these offices, it is because of the underlying business model… But the impact of technology transfer on the US economy has been enormous. Since 1980 more than 5,000 startups have been created. From 1996-2013 technology transfer has contributed $518 billion on the US gross domestic product, and $1.1 trillion on the US gross industrial output.

The art of preventive negotiation in a license agreement is not practiced solely by means of pen and paper (or word processor); but instead, starts much earlier. The care and attention devoted to the earliest stages of a deal are highly worthwhile. A friend and fellow LES member is fond of saying: “No deal without a meal.” This is emblematic of the fact that a license agreement is no more than an attempt to put in writing what the parties have agreed they are desirous of achieving, and how they propose allocating rights and responsibilities to achieve those ends. Trust is an essential component, and this is built up over time… The term sheet should be focused only on the major terms of consequence. It should not descend to tactics and operations or else it runs the risk of invading the rightful province of detailed negotiation and drafting of the agreement itself, and a needless redundancy. Tactical details are for later, when the investment is clearly justified. Likewise, premature focus on the tactical raises the risk that negotiation of the ultimate agreement becomes a rehash of the term sheet, which risks not only duplication of effort, but inconsistency, misunderstanding, and deviation from the strategic objectives underlying the alliance.

An exclusive right is more than a mere right of remuneration – it is the right to control the use and disposition of one’s property, and to deny others access to it. Without the fundamental attribute of exclusivity, we lurch toward a system of compulsory licensing, or a private right of individuals to take another’s property on the promise of mere monetary compensation. Under our Constitution, and particularly the Fifth Amendment, or the Takings Clause, even the government does not possess that right except that it be for some demonstrable public – rather than private — use. Thus, to be true to the express language of our Constitution, and respectful of the limits imposed on the Fifth Amendment, the rights inherent in intellectual property necessarily must include a right to exclude others from the enjoyment of that property.

Though aimed at certain pharmaceutical products, Sens. Angus King’s and Bernie Sanders’ potential amendments would throw the key to the Bayh-Dole Act’s success —certainty and exclusivity of the intellectual property associated with technology transfer in order to agree to attempt commercialization in the first place — into disarray beyond a single product or sector, the signatories contend.

“The key ingredient needed for the prisoner’s dilemma to work its destructive magic is a lack of transparency between the parties involved,” Siino writes. The article goes on to discuss how the lack of transparency in patent licensing transactions is disrupting the the patent marketplace, and threatens “to break licensing’s virtuous circle of innovation leading to commercialisation, which in turn funds more innovation.”

Sen. Bernie Sanders (I-VT) introduced legislation requiring every agency and non-profit entity to include a “reasonable pricing” provision based on King’s formula for any life science invention made with government support. Apparently the colossal failure of a similar requirement forced on the National Institutes of Health (NIH) in the 1990’s which led to the collapse of industry partnerships without any reduction in drug prices is either unknown, or made no impression on Sen. Sanders. Or perhaps like his trust in socialism, he thinks that what failed in the past will somehow work by some weird magic if trotted out again.

Why does U.S. policy with respect to patent owners and patent licensing seem to be in direct opposition to U.S. antitrust policy relating to vertical mergers? If vertical mergers are anticompetitive and particularly bad when dealing with a monopolist then why are patent owners, who we are told over and over again are in possession of a limited monopoly, encouraged (if not demanded) to vertically integrate in order to escape characterization as a patent troll?

A $1 trillion a year industry not wanting to pay innovators less than a 1% royalty on the innovations they appropriate (i.e., steal) for their own profits seems like a terrible price to pay given the national security and economic consequences of forfeiting our world leadership to the Europeans and Chinese… Google and Uber are locked in a patent battle over self-driving automobiles, so does that make Google or Uber a patent troll? What about General Electric, Apple, Samsung, Microsoft, Cisco, Oracle, Whirlpool, Kraft Foods, Caterpillar, Seiko Epson, Amgen, Bayer, Genzyme, Sanofi-Aventis, and Honeywell, to name just a few?

The true agenda of those who support further reform of the U.S. patent system is as follows: to discriminate against entities which license technologies instead of manufacture; to increase the costs of asserting patent rights to the detriment of individuals and startups; and to stilt the conversations surrounding tech licensing in favor of the infringer bringing a product to market. “If you trip over our patent, you’re a thief. If we trip over your patent, you’re a troll,” Giancarlo said… “Let’s call patent reform for what it is: a blatant economic and power grab by tech firms to infringe on technology created by others,” Giancarlo said. In his opinion, the true trolls are the entities trolling Congress to get a competitive advantage over smaller entities.

On March 3rd, Swedish telecommunications company Ericsson publicly announced its fair, reasonable and non-discriminatory (FRAND) terms and conditions for the licensing of standard essential patents (SEPs) for 5th Generation New Radio (5G/NR) as standardized by the 3rd Generation Partnership Project (3GPP). The decision to announce these terms publicly may be an indication that Ericsson is looking to avoid the fate of other mobile wireless chip makers, which have come under fire in recent months for their own licensing practices.

Given the complexity of many technologies, the rapidly changing nature of global markets, and the legal complexities in establishing worldwide licensing programs, it should come as no surprise that IP licensing offers benefits. When this work succeeds, everyone benefits – from innovators and IP owners to the general population as companies around the world gain greater access to new and improved technologies. To avoid missing out on the tremendous rewards and benefits of innovation, we must take full advantage of R&D’s potential in the complex and fast-paced markets of today that offer up opportunities to aggregate and license technologies in new sectors, geographical areas and markets.

The springing license does offer at least some protection in the future against patent aggregators looking to monetize IP assets, but it wouldn’t stop any party, including an actual patent troll, from sending a demand letter asserting rights to a patent outside of the Azure IP Advantage portfolio. But, how those in the program can be use one of Microsoft’s patents to defend against a patent troll seems rather questionable. By definition a patent gives the owner the right to do nothing other than exclude. So even if you have lawfully acquired rights through the owner you’ve acquired no affirmative rights, just a promise from the owner that they won’t exclude you from what it is that you are doing. Therefore, you cannot defend a patent litigation against a patent troll or any patent owner by pointing to a patent you have rights to use because that isn’t how a patent works.

Activist Supreme Court decisions in the last decade have been principally responsible for these changes, stimulated by aggressive technology company incumbent lobbying. The combination of these decisions has had a far greater effect on the patent system and the economy than the Court originally intended. The U.S. is now in a compulsory licensing regime in which large technology incumbents that control at least 80% of collective market share employ an “efficient infringement” model of ignoring patents and forcing patent holders to enforce patent rights in the courts.

The fine on Qualcomm is for allegedly refusing to license standard essential patents to competing companies on fair and reasonable terms. According to the Korean authorities, Qualcomm’s actions amounted to coercion for the purpose of strengthening its monopolistic power in the patent license market and chipset market… Not surprisingly, Qualcomm vehemently disagrees with the assertions made in the press release, has pointed out that a final written decision is not generally expected after an announcement like this for another 4 to 6 months, and promises to aggressively appeal… Rosenberg explained that Qualcomm was repeatedly denied access to documents and the right question witnesses, rights that are guaranteed to U.S. companies under the Korea-U.S. Free Trade Agreement.