IPWatchdog.com is in the process of transitioning to a newer version of our website. Please be patient with us while we work out all the kinks.

Posts Tagged: "sec"

IP Lessons Learned from WeWork: A Unicorn in Pursuit of Technology

In an article we published on this blog in November 2015, we documented the findings of a study of Unicorns (startups with valuations of over $1 billion) and their patent holdings. In that study, we discovered that over 60% of Unicorns held immaterial patent portfolios (10 assets or less). We have subsequently concluded that these Unicorns are likely to fill the gap in their patent holdings through organic filing and patent acquisitions, as they approach an exit event or as they enter a major new market. Fast forward to October 2019, and WeWork, a member of our Unicorn “Class of 2015”, has been in the news under very unpleasant circumstances. The WeWork planned IPO was called off in October 2019, after questions emerged related to, among other things, the viability of the company’s business model following financial and operating disclosures included in its S-1 filing with the SEC. This led to a series of events where, eventually, SoftBank acquired a controlling interest in the company at a valuation of $8 billion, a fraction of its most recent valuation of $47 billion, while in the process removing Adam Neumann, the company’s co-founder and CEO, and buying out his shares.

Federal Circuit Rules Momenta Has No Standing after Ceasing Development of a Biosimilar

Earlier this month, the Federal Circuit dismissed an appeal from the Patent Trial and Appeal Board (Board) where the Board upheld the patentability of a biologics patent. After Momenta Pharmaceuticals petitioned the Board for an inter partes review (IPR) of the patentability of Orencia® (abatacept), the Board sustained patentability and Momenta appealed. During the course of the appeal, Momenta ceased development of an abatacept biosimilar. The Federal Circuit held that the cessation of potential infringement mooted the injury and removed Momenta’s standing to maintain the appeal. Momenta Pharm., Inc. v. Bristol-Myers Squibb Co., No. 2017-1694, 2019 U.S. App. LEXIS 3786 (Fed. Cir. Feb. 7, 2019) (Before Newman, Dyk, and Chen, Circuit Judges) (Opinion for the Court, Newman, Circuit Judge).

Amazon’s Counterfeit Problem is a Big One—for Shareholders, Brand Owners and Consumers Alike

On February 1, Amazon.com, Inc. filed a Form 10-K annual report with the U.S. Securities and Exchange Commission. Along with reporting its year-end earnings for the 2018 fiscal year, this particular SEC filing was notable because Amazon officially acknowledged to shareholders that the company’s online sales platforms face the risk of being found liable for fraudulent or unlawful activities of sellers on those platforms. This includes the company’s first-ever concession that Amazon may be unable to prevent sellers trafficking counterfeit and pirated goods. “The law relating to the liability of online service providers is currently unsettled,” Amazon’s Form 10-K filing reads. Along with the specter of counterfeit sales, Amazon noted that its seller programs may render the company unable to stop sellers from collecting payments when buyers never receive products they ordered or when products received by buyers are materially different than the sellers’ description of those products at the point of purchase. While information regarding a corporation’s potential risk of liability is a regular feature of SEC filings, news reports indicate that this is the first time that Amazon used the word “counterfeit” in an annual report.

Cisco’s IoT Blockchain Merely Scratches the Surface of Distributed Ledger Technologies

The invention improves authentication of devices operating on the Internet of Things, while also detecting anomalies in device sensors. This IoT blockchain innovation merely scratches the surface of distributed ledger technologies… However, cryptocurrencies are but one application for blockchain as is highlighted by the recent Cisco activities in IoT blockchain development. Although the distributed nature of blockchain makes it a great fit with IoT platforms, where many devices have to interact with each other in secure ways, it’s just one of many sectors which could be greatly impacted by further blockchain development according to Raina Haque, founder of Erdos Intellectual Property Law + Startup Legal.

Turning Your Patent into a Business: A Practical Guide to Equity Crowdfunding

Once your patent has been awarded you may still need additional capital to turn that patent into a business. Fortunately it is not as difficult to find investors as you may think. Equity crowdfunding is on the path to surpass venture capital as the preferred way for start-ups and small businesses to raise capital. In a nutshell, equity crowdfunding is the sale of equity (or debt) in your business directly to investors using an online platform instead of a stock brokerage firm.  It is also less expensive than hiring one. Although direct to investor funding over the internet has been around since the late 1990s, it came of age with the JOBS Act in 2012.   

How blockchain is critical to the securitization of IP

Liquidity in markets for cryptocurrencies like bitcoin is opening a new door for musicians and athletes to issue digital tokens in exchange for money. The tokens are validated by blockchain, a public ledger used for the authentication of digital currency transactions, and backed by copyright, trademark or other IP assets… According to Naraghi, blockchain specifically is critical to the securitization of IP because it guarantees the validity of a transaction by recording the transaction on a main centralized register as well as a connected publicly distributed system of registers. The fact that data is embedded within a public network and updated with each transaction promotes transparency and prevents modification or corruption.

The SEC Defines Blockchain, But Did They Get it Right?

The SEC has landed on a definition which includes both permissioned distributed ledgers and permissionless distributed ledgers in the term “blockchain.” This is not surprising, nor is it necessarily the result of a misinformed view. There are lots of market opportunities and reasons for enterprise permissioned distributed ledgers, as there was always market appetite for permissioned systems in general. These ventures use the term “permissioned blockchain” intentionally and purposefully. After all, the transactions are batched in blocks that are linked to each other. So, there is a chain of blocks, and some kind of consensus protocol. But is that sufficient for a blockchain, really? And what ‘blockchain’ is the SEC referring to when it references “the blockchain”?

Is HTIA’s general counsel John Thorne a patent troll?

John Thorne was VP and deputy general counsel for Verizon during its legal battle against former American cable television company Cablevision where Verizon asserted a series of patents it owned… A closer look into the patents renders some interesting information about the patents Verizon asserted and the company’s legal strategy in the case. Two of the eight patents asserted by Verizon in the District of Delaware weren’t originally invented by Verizon, Bell Atlantic or other any other of Verizon’s predecessor companies; they were acquired from outside entities… And haven’t we been told by the likes of Unified Patents that all patent owners who enforce their patents are patent trolls? One would have to assume if Unified is being logically consistent they would have extraordinary problems with Verizon’s activities particularly here where the patents used to sue Cablevision were acquired and not the subject of in-house innovation.

Real estate tech firm Redfin has successful IPO under shadow of potential patent suit

Seattle, WA-based real estate tech firm Redfin went public after an initial public offering that exceeded expectations, reaching $15 per share and a total valuation of $138.5 million. The company offers a tech platform for real estate transactions available through its website and mobile app and relies on salaried employees instead of commission-based real estate agents. Between 2015 and 2016, revenues have surged by 43 percent from $187.3 million up to $267.2 million in 2016.

Infringe at Will Culture Takes Hold as America’s Patent System Erodes

Perhaps when the Senate Banking Committee convenes to consider the nomination of Wall Street attorney Jay Clayton as the new head of the Securities and Exchange Commission they should ask about efficient infringement and the infringe at will culture. What is your position, Mr. Clayton, on the legal obligation of a public company to shareholders? Should publicly traded companies inform shareholders that patent assets are worthless, or at least worth less, given the legal and regulatory climate in America? Should publicly traded companies systematically infringe and ignore all patent rights? Should publicly traded companies be using billions in shareholder monies to aggressively collect patent assets while they are simultaneously using millions to lobby against the viability of patents? What exactly do shareholders have a right to know?

Financial CHOICE Act could presage Congressional action on administrative abuses at PTAB

One of the effects of this bill, were it enacted by Congress as currently written, would be to modify the enforcement activities of the U.S. Securities and Exchange Commission (SEC). Recent coverage of the bill by Bloomberg BNA notes that the proposed legislation would allow parties involved in a legal action to move the action out of SEC tribunal and into U.S. district court… As Bloomberg BNA’s coverage notes, SEC’s in-house tribunals have been criticized in recent months… While the Financial CHOICE Act itself doesn’t pose any direct impact to the U.S. patent system, it does highlight a similar issue playing out at the USPTO in recent years.

Loan fraud charges filed by SEC target notable patent troll Jay Mac Rust

The patent trolling by MPHJ and owner, Texas lawyer Jay Mac Rust, are well known. But now the SEC is going after Jay Mac Rust in federal court for fraud. The SEC’s complaint maintains that Atlantic had “no ability or intention to obtain these loans.” Rather, of the money the two collected, the SEC alleges that Rust took $662,000 from client funds for personal pay and risky securities investments; Brenner himself took $595,000, and both made investments claiming that the money was personally theirs and not from the client funds. Investigations at a brokerage firm where these trades were taking place led the SEC to discover the fraudulent activities.

GoDaddy IPO could bring a nearly $3 billion valuation thanks to IP holdings

Publicly traded shares of stock in the company will initially be priced in a range from $17 to $19 each. If each of the 22 million shares which the company plans on offering are sold at the high end of that range, it could net the company $418 million. This will be aided by a small but meaningful patent portfolio made up of nearly 150 U.S. patents, which cover core innovations relating to domain name valuation, domain name hijacking prevention and methods for creating an Internet business.

Patents are Important: Bursting the Twitter Patent Mythology

Twitter is a perfect case study to demonstrate just how important patents, particularly software patents, are to a start-up company that has aspirations of going public… In repeated filings with the Securities and Exchange Commission since October 2013, Twitter has explained over and over again just how important their patented technology is to the company. They have also repeatedly explained that unlike other companies and competitors, even with nearly 1,000 patents, their own patent portfolio is extremely small by comparison. This poses real concerns for Twitter, which is why they warn the SEC and investors of the ramifications of such a small patent portfolio with every new filing.

The Impact of the Alice Decision on Corporate Patent Assets

While impairment analysis exists for reported intangible, there is no process whatsoever for writing off non-reported intangibles, which include all internally created patents as previously discussed. Since these assets are not on the balance sheet, there is nothing to write off in the first place and no basis against which to conduct an impairment test. From a pure accounting perspective – there is no place to record the loss, and no way to calculate the size of the loss. This does not mean that the markets will not factor that into the stock price, even without specific disclosure by the company. It may very well be that if companies start writing off acquired intangibles, stock analysts and investors could estimate the degree at which a similar write-off could be applied to non-reported patents, and adjust stock price expectations accordingly.