Lex Machina Trademark Litigation Report: Trademark Litigation Alive and Well in the U.S.
Lex Machina, the IP data analytics firm, recently released its "teaser" Trademark Litigation Report (Report). The Report reviews and gleans insight from U.S. District Court trademark cases pending between 2009 to March 31, 2015. The Press Release for the Report notes several eye-catching statistics:
[Over] 6,900 . . . cases where permanent injunctions were granted, and . . . over $9 billion in cumulative damages awarded in trademark cases since 2009. More than 24,000 trademark cases have been filed since 2009, with over 4,000 new cases filed in 2014 alone.
Unsurprisingly, trademark litigation is ubiquitous given the value of brands and the nature of the law itself, which encourages litigation to protect and expand the legal protection of a trademark. However, the sheer number of suits is always impressive to see. The Report dives into several case studies concerning specific brand owners. Interestingly, Deckers ($3.4 billion) and Chanel (and almost $1 billion) account for almost half of the damages awarded. Moreover, the vast majority of the damages awarded come after a default judgment—most of the rest result from consent judgments. It would be interesting to know how much is actually collected.
Some of the other interesting information in the Report concerns the amount of time it takes to obtain various types of injunctions, top districts for trademark and related filings, and data concerning types of judgments and findings by the courts reviewed. For example, the Report notes that permanent injunctions are issued faster in cases only involving trademark claims as opposed to cases involving trademark and patent or copyright claims. Moreover, preliminary injunctions in cybersquatting cases alone are issued faster than trademark claims alone. The top five districts for trademark filings include two California districts: the Central District (coming in first by far) and the Northern District.
The Report utilizes, in part, the following methodology in collecting data:
This report draws on data from Lex Machina's proprietary intellectual property litigation database. Although some of our data is derived from litigation information publicly available from PACER (the federal court system's document website), Lex Machina applies additional layers of intelligence to bring consistency to, and ensure the completeness of, the data. Beyond the automation, key areas of Lex Machina's data are either human-reviewed or hand-coded by a dedicated team of attorneys to ensure accuracy.
You can obtain a copy of the Report by registering with Lex Machina here. It is a quick and interesting read. Has there been a similar study on trademark litigation in other parts of the world?
Posted by Mike Mireles at 18:55:00 No comments:
Labels: ip analytics, lex machina, trademark litigation
Transparency in Patent Ownership: now you can see the movie
Now for the sequel...
Intellectual Asset Management magazine (IAM) has put together a short (4 minute 27 second) and well-presented video, "Transparency in Patent Ownership". Prepared at this year's IPBC 2015 conference in San Francisco, it succinctly summarises the virtues of signing up for the ORoPO Open Register of Patent Ownership (for example, you can more easily check who owns a patent and therefore whether you've already been paid the right business for a licence to use it; it can also lead to the making of major savings).
The hesitancy felt by at least one major patent owner -- Philips -- about making its verified patent ownership data available is also expressed (good idea in principle but, on the "pool's a bit cold so let's all jump in together" basis, the decision is easier if one's competitors are doing the same thing at the same time).
You can view the video by clicking here.
Labels: ORoPO, transparency in patent ownership
Under-reporting of IP licence royalties: is it a problem worth tackling?
IP Finance has received word from InvotexIP of the findings of its 14th Royalty Compliance Report in which, it reports, licensors who fail to audit their intellectual property income may be losing significant revenue. The study shows that a staggering 87% of audited licensees underpay royalties. The errors are substantial:
57% of licensees under-report sales
31% misinterpret the licensing agreement
27% under-report due to disallowed deductions
The report also offers data on the frequency rate of common under-reporting errors, findings by error type and under-reported royalties as a percent of reported royalties.
This blogger is not surprised. Noting that 57, 31 and 27 add up to rather more than 100%, he has no doubt that some licensees under-report in more than one way -- and he is sure that there are other bases upon which under-reporting is made. Rigorous auditing by licensors is often resented both by licensees who find it invasive and embarrassing and by licensors who find it expensive and inconvenient. However,the cost of taking measures to ensure accurate reporting of sales volumes, income and so on should be measured against the cost of not taking them.
Labels: royalties, under-reporting
Huawei ruling: bad news for SEPs?
From our friend Colm Ahern (Elzaburu, Madrid) comes the following hot-off-the-press comment on today's decision of the Court of Justice of the European Union in Case C-170/13 Huawei v ZTE [noted on the IPKat here].
Standard Essential Patents Lose Ground
The judgment in in Huawei v ZTE (C‑170/13) which was published today largely confirms the Advocate General's Opinion. It amounts to a significant departure from the very strict conditions laid down by the German Bundesgerichtshof (BGH) in the Orange Book case regarding standard essential patents (SEPs) and antitrust law. It also vindicates the Commission's position, which has been openly critical of Orange Book.
The Court effectively rejects the rules established by the BGH in the Orange Book case whereby the seeking of a cessation injunction by a patent holder with a dominant position, would only constitute abuse of that position if the alleged infringer had made an unconditional and binding licence offer which could not be limited to cases where patent infringement had been proven. By contrast the Court places the burden on the patent holder to first send a notice letter setting out not only the alleged infringement. Failure to do so before seeking a cessation injunction and removal of infringing products would constitute abuse of dominant position. If the alleged infringer expresses willingness to negotiate, then the patent holder must offer licence terms offer under FRAND conditions specifying, in particular, the amount of the royalty and the way in which that royalty is to be calculated. The alleged infringer could then respond with a counter-offer setting out alternative terms. If this offer is rejected the alleged infringer could provide a bank guarantee or place the amounts necessary on deposit. The patent holder could only avoid the charge of abuse if the counter-offer were held not to be serious and to constitute a mere delaying tactic. The alleged infringer could also reserve the right to later challenge both patent validity and the existence of infringement.
The rights held by owners of SEP patents under the "Orange Book Standard" have been significantly curtailed as a result of this judgment.
Thanks, Colm!
Labels: CJEU ruling, Orange Book, patent infringement, standard essential patents
What was Jared Fogle worth as the Subway Guy?
IP valuation tends to operate in the area bounded primarily by patents and secondarily by trade marks and copyright. The ways of IP evaluation are several, which sometimes leads skeptics to question how accurate any such valuation can ever be. One need only recall the 4.5 billion dollar valuation given to the Kodak patent portfolio in 2011, only to see that when all of the dust settled in the face of the company's business meltdown, the portfolio fetched only slightly more than 500 million dollars. When trade marks and copyright are involved, the valuation that can be ascribed to a portfolio of trade marks and even to a back library of rights in films is even more murky.
The challenges of carrying out IP valuation occurred to this blogger as he read the account of the rise and apparent fall of Jared Fogle, the iconic (at least in the US) pitchman for Subway, the franchise restaurant operation. Fogle is the once-anonymous obese college student from Indiana, who reportedly once weighed nearly 450 pounds, but who then proceeded to lose 245 pounds in a single year, centring on his claimed healthy use of Subway food offerings, thereby giving meaning to the notion of the "Subway diet". An ad agency in Chicago leveraged Fogle's story as the basis for advertisements on behalf of Subway. One thing led to another, and Fogle found himself as the chief pitchman for the company,becoming known as the Subway Guy, travelling all around the world on behalf of the company in support of maintaining a healthy life style based on Subway food offerings. In 2004, he established the Jared Foundation in support of efforts to combat child obesity. Fogle had become a renowned media figure in his own right.
All of that seems to have come tumbled down upon him this week, at least with respect to Subway. A couple of months ago, the executive director at the Jared Foundation became involved in a scandal relating to child pornography. Fogle was not implicated. However, this week it was reported that officials and agents, led by Indiana's Internet Crimes Against Children Task Force, carried out a raid on Fogle's home in suburban Indianapolis, during which they seized computers, various media storage devices and documents. It does not appear that Fogle has been charged with a crime and he is reported to be cooperating with the authorities. Nevertheless, the next day, Subway and Fogle parted ways, the upshot being that Fogle is no longer connected with the company.
Let's be clear about the human side of this saga—this blogger wishes Fogle no ill and we draw no conclusions in this regard. The story did, however, give rise to the question: how much were Fogle's efforts worth to Subway, at least until this week? The Wikipedia entry on Fogle states that, between one-third and a half of the growth in sales of the overall franchise operations since 2000 (the company is reported to have grown three-fold during that period) is attributed to Fogle's promotional efforts. While no official company figures were given, an article on Bloomberg.com pointed to one estimate that, in the US alone for 2014, sales reached nearly 12 billion dollars. Against this, Fogle is reported in Wikipedia as being worth 15 million dollars.
And so the question: how does one place a value on Fogle's efforts in connection with Subway, prior to Tuesday of the week? Start with the estimate, as reported above, that his efforts were responsible for perhaps up to one-half of the growth in sales of the company since 2000. How does one go about creating a metric to establish this conclusion? In his younger days, this blogger engaged actively in social science research, where multivariate analysis was central in trying to disentangle the extent to which each of the variables independently contributed to the dependent variable under scrutiny. Is something like this being used to reach the conclusion about Fogle's contribution to the sales growth of the company; if not, what was used to reach this result?
Moreover, assuming that Fogle's contribution to the growth of the company can be quantified, how should this contribution be valued, and how should Fogle then be compensated? This blogger does not have any ready answers. Valuing patents is challenging enough, but valuing the worth of a media pitchman behalf of a company and then compensating him or her accordingly seems an even more daunting task.
Posted by Neil Wilkof at 15:06:00 No comments:
Labels: Jared Fogle, Subway, valuation of pitchman
Licences under wraps: how much can we deduce?
The attention of this blogger was directed to a post on Aistemos's LinkedIn Group yesterday, which picked up on the news that Microsoft and Kyocera had struck a cross-licensing deal that reportedly settled Microsoft's Android US patent infringement claims against the Japanese company.
The LinkedIn piece added that, while -- as is a fairly common practice -- the details of the cross-licence arrangement have not been made public, if you know the respective patent holdings of the two sides, their current market involvement, the degree to which their IP portfolios cut across or complement each other's and how far the antitrust authorities will let them go, it should be possible to get a reasonable idea the licence terms even if they're not made public.
This blogger rather liked this notion. The idea of deducing the terms of an undisclosed set of cross-licence terms does depend on the assumption that both parties display rational behaviour. In the case of Microsoft and Kyocera this is almost certainly the case. Another variable unknown factor is the cost-effectiveness on the part of each business in unbundling and individually examining large numbers of its own and the other's patents in order to evaluate their relevance to the licence settlement and their individual value; but here, given that the number of patents would probably be high and the process of examining them frustratingly labour-intensive, one might be entitled to assume that they would be licensed in bulk rather as single items. Would any money change hands? The answer to this might be referable to the cost to Kyocera of making and selling Android-enabled devices in a crowded, highly competitive market.
For as long as the cross-licence arrangement remains under wraps, the visible dimension of the commercial activities of its parties may emit further clues as to its terms. With which other businesses are the parties partnering, or refusing to partner? In which new markets are they concentrating their efforts, and in which existing markets have they gone quiet? Where and for what products and processes are they filing patents, industrial designs, utility models and the like? What opportunities are offered on their 'positions vacant' web pages? All this data, available to all, enables the licence-term deduction enthusiast to fill in some of the gaps.
Ultimately, while technology has long been discoverable by a process of reverse engineering -- which may or may not be lawful, depending on national IP laws and the terms of any relevant contracts -- the idea of reverse engineering licence terms has not been given much serious consideration. Maybe, with the increased commoditisation of intellectual property rights and a heightened realisation that we need to know more about how they behave in the hands of owners and investors, the time for reverse enginering of licensing arrangements has arrived. The value of IP is a creature of the marketplace and, while rarely are two pieces of intellectual property completely exchangeable, the terms on which they are bought, sold, licensed or securitised give a clue as to how the value of other rights, or portfolios of rights, might equally be assessed.
Labels: licence terms, reverse engineering of contract terms, settlement agreement
UK Summer Budget
Summer Budget 2015 – summary of the IP angles
The Summer Budget took a few sideswipes at IP tax in passing - the biggest issue being likely to be the removal of amortisation for acquired goodwill (and so any unregistered IP included therein, probably) and customer-related intangible assets. There were some good points as well, although those were mostly in the realm of general improvements in the corporate tax field.
General points - for all companies
Firstly, the government focus on reducing corporation tax continues – so that tax cost (not just for IP-focussed companies) will lower from the current 20% to 19% in April 2017 and 18% in April 2020 (ie: just in time for the next election …)
The Annual Investment Allowance – the amount of annual capital expenditure on plant & machinery that can be deducted from taxable profits in full immediately, rather than drip-deducted over 20-30 years – will be set permanently at £200,000. It's been ping-ponging from £25,000 to £500,000 and various points in between over the last few years, so settling it down is useful. This will benefit companies spending money on computers and other such equipment (and those spending more than £200,000 a year shouldn't forget the R&D capital allowance as well).
Companies acquiring goodwill and customer-related intangible assets (undefined) will no longer be able to deduct amortisation for tax purposes – this is taking things back to the position before April 2002, for acquisitions on or after today (8th July 2015), unless there was a binding obligation to purchase entered into before 8th July 2015. The information note suggests that the government has suddenly noticed that this creates an incentive for companies to acquire the trade & assets of another company, rather than the shares in that company, and seems to think that this is somewhat unreasonable.
That line of thinking overlooks the fact that it can often be more expensive in tax terms for the vendor to sell the trade & assets of a company rather than the shares, particularly where the goodwill is actually worth something … and amortisation of goodwill was hardly accidental in the 2002 intangibles rules, as those rules specifically allow for a deduction even where the accounts don't include amortisation for goodwill.
What exactly is meant by "customer-related intangibles" hasn't been fully defined – could be anything from customer lists to trademarks (and the Budget papers refer to "assets linked to the business' reputation and customer relationship", so probably will include trademarks).
RDEC – correcting unintended consequences
The R&D expenditure credit for large companies is to be modified to make it clear that universities and charities are not supposed to be claiming it – they apparently have been, presumably in pursuit of the repayment available for loss-making companies. The large company super-deduction relief was not available to universities or charities, either, so this is at least consistent, and follows the focus on trying to ensure that the reliefs are targeted at industrial R&D.
Note: this does *not* affect university spin-outs – it's addressed to the independent research of universities and any subcontract work that they might try and claim for as well. Spin-outs are separate entities and unaffected by the change.
Venture capital investments – refocussing The venture capital reliefs (such as EIS, SEIS, VCT) are to be reshaped to make it harder for businesses to claim the relief without certain types of activity and function, and also making it harder for existing shareholders to get EIS/SEIS on additional investments in the same company. The business-focussed restrictions seem to be largely sparing knowledge-intensive businesses, giving higher qualifying thresholds.
Non-tax – what might be coming along
The main measures in the Summer Budget were tax related, but there was also the announcement of a "productivity plan", which will be published with measures to "encourage long-term investment in economic capital, including infrastructure, skills and knowledge" - presumably including from IP-related matters in there somewhere.
There was also an indication of investment "in 6 Next Generation Digital Economy Centres over 6 sites (London, Swansea, Newcastle, Nottingham, York and Bath)" and the "government will invite universities, LEPs, businesses and cities to work with central government to map strengths and identify potential areas of strategic focus for different regions through a series of science and innovation audits" (no indication of any new money for that …).
Posted by Anne Fairpo at 16:34:00 No comments:
Labels: budget 2015, United Kingdom
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