Tag:  “IP”  | (17) posts

BEPS from an IP perspective

Part 1 – Introduction to BEPS for IP professionals

The focus on IP related issues is becoming increasingly more relevant as our economy is changing to become more digital and knowledge based. More are realising the potential of their intangibles and what commercial gains can be won if managed properly. The possible threats and costly consequences if ignored are also becoming evident in both large and small companies. A contributing factor to the latter is how IP is becoming a main character in the world of TAX through Base Erosion and Profit Shifting (BEPS).

BEPS is a practice enabled by, among other things, discrepancies in tax laws combined with aggressive tax planning by MNEs. The result is double non-taxation and reduced tax rates. The Practice is affecting development rates as it reduces tax revenues for certain countries.

The BEPS project is an effort to keep up with the dynamic market and knowledge base economy by the Organisation for Economic Co-operation and Development (OECD) countries. The result is a set of guiding action plans with different ways to tackle the problem of BEPS. Out of the 15 actions, action 8-10 of the report deal with Transfer Pricing (TP) and intangibles. More information about the different actions can be found here http://www.oecd.org/ctp/beps-actions.htm

Transfer Pricing is how goods and services are priced when they occur within an MNE group. An intra group transaction should be treated according to the arm’s length principle. The problem of adopting this principle when it comes to intangibles is the difficulty to define intangibles and how and when they are transferred. The previous guidelines have put an emphasis on legal ownership of intangible assets and this has resulted in the possibility to artificially shift profits through contractual arrangements like remuneration schemes and royalties.

In the new guidelines a mere legal ownership will not, on its own, justify any returns. The profits rendered from intangibles should rather be allocated based on what value contribution functions a group member and what risk they take in relation to the intangible asset and the transaction. The definition of intangibles is also broadened and a guide of how to deal with Hard to Value Intangibles (HTVI) has also been included.

The guidelines aim to improve the understanding on intangible assets and how they should be considered for the purpose of determining the correct pricing method and under what conditions the transaction occurs. For any large MNE the work in untangling these relationships will be vast and from an IP perspective several questions arise:

  • What are the main difficulties MNEs will experience as they start to unravel their IP ownership structures?
  • What resources and systems must be implemented in order to cope with the demand of clearly articulating their IP, rights to IP and how it is transferred?
  • The identification of risk assumption in relation to IP will be different in regard to what value contributing functions are undertaken, how is this practically operable when the understanding of IP is limited in the group?

Although there is a large risk of making errors when transfer pricing and aligning business and operations to the new BEPS regulations, there is also a lot to be gained in improving one’s understanding and controlling of IP.

AWA Strategy will release a series of blog posts addressing these issues, commencing with action 8-10 as the work to implement changes in alignment with the new guidelines is only just beginning.

Annelie Viksten, IP Strategy Associate, AWA Strategy

South America: New PPH agreements launched

The ever expanding Patent Prosecution Highway (PPH) network keeps getting new additions, and as usual, the Awapatent IP Blog sums up the new expansions and arising possibilities.

The PPH is a system of bilateral agreements allowing the request of accelerated examination at a participating office. The system is based on the search results and a set of claims accepted for grant, in an analogous application, at the other participating office.

Most recently, new possibilities of speeding up and simplifying the examination of patent applications have emerged on the South American continent. Namely, the IP offices of the PROSUR countries have signed mutual PPH agreements. The participating PROSUR countries are Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Uruguay. The IP office in the last PROSUR country, Suriname, does not participate.

A request for prosecution under the PPH in a PROSUR country may be based on a national work product from the IP office in any other PROSUR country or a PCT work product from one of the IP offices in Brazil and Chile, both acting as PCT authorities.

For Brazil and Ecuador, however, the final entry into force awaits the approval of the respective relevant ministries.

Finally, it is worth mentioning that the Argentinian, Paraguayan and Uruguayan IP offices are the first IP offices in countries not being contracting states of the PCT system to enter in the PPH network.

Troels Peter Rørdam, European Patent Attorney & Certified Danish Patent Agent

The President-elect and Intellectual Property

As election night in the US evolved, the Democratic community slowly started to realise the probability, and later the certainty, that there would be a shift of political parties in the White House.

Trying to assess how this transition of power will affect the world of IP is not an easy task. Policy documents that President-elect Donald Trump released before the election offer little assistance to the person holding the crystal ball. Yet, although it may be difficult to predict what type of IP policies the president-elect will advocate for; like many of his policies it may be easier to predict what he will oppose. In that regard there are two areas where the president-elect’s electioneering rhetoric may offer some insights into his plan for evolving U.S. IP policy during his administration; namely his staunch opposition to legislation supported by his predecessor, President Obama, and his advocacy against foreign nations that he deems to be “ripping off” the American people.

In regard to the first point, there is some evidence to the effect that President-elect Trump could put an end to a renewed push for further patent reform legislations that was supported by his predecessor and the giants of Silicon Valley, and specifically spearheaded by Google. To continue this reasoning we therefore find it necessary to provide a brief background.

The Obama administration set a goal to “increase the quality” of issued patents, which has been eagerly supported by the tech giants. In the eyes of those who supported President Obama’s efforts, by the time he assumed office in January 2009, the U.S. patent system was awash in too many low-quality (i.e., invalid) patents that were being exploited by the so-called “patent trolls” in order to exact ransom-like royalties from companies that rightly feared the costs and uncertainty of U.S. patent litigation. In part an effort to curb such abuses the Leahy-Smith America Invents Act (AIA) was signed into law on September 16, 2011.

Among other things, the AIA made it much easier to challenge the validity of pending and issued patents. For example, the AIA offered additional avenues for third-parties to interfere in prosecution and challenging the validity of issued patents. The AIA specified an extended period for filing third-party submissions, and created new post-grant and inter partes review proceedings to challenge issued patents, without having to file suit in federal court. Further, the amendments to the novelty requirements (35 USC §102) also created more prior art, as it added foreign priority documents as well as public use and public sale outside of the U.S.

From a European practitioners perspective the initial reactions to the changes brought forth by the AIA were almost exclusively positive. The AIA makes the novelty statute much easier to understand, and the changes concerning third party submissions and post grant review further harmonises the US system with the European equivalent.

Much less discussed in Europe was the fact that the combination of the increased ways in which validity can be challenged and this past decade’s bar-raising case law have weakened the position of the patent holder. This of course also affects the value of US patents and thus the benefits of having a US patent.

In addition, President Obama’s selection of Michelle Lee as Director of the USPTO in 2014 – who was a former Deputy General Counsel for Google – did much to further the agenda favoured by the tech giants of Silicon Valley. Ms. Lee put her agenda into effect through both influencing the federal rules being set to implement the provisions of the AIA to make challenging the validity of patents easier and by pushing the USPTO on a path to increase the rigour of the examination process.

Given Mr. Trump’s railings against the recent cosiness between big business and the U.S. federal government and his general distrust of efforts pursued by his predecessor, this could signal that the idea that “increasing patent quality” as the main driver of U.S. patent policy could be coming to an end. Although large scale changes to the U.S. Patent Law are probably not in the near future, there are bills that would have taken Obama-era reforms even further that are likely dead in the water. Most notable are the Innovation Act and the PATENT Act which aimed to increase the requirements on the plaintiff in patent litigation and also shifts the fees to the losing party. The Innovation Act has the support of President Obama and would most probably have been supported by Secretary Clinton.

With Mr. Trump in the White House there is considerable probability that there will be at least a temporary halt in patent reform. Trump will most probably have a different view from that of Obama and Clinton (he is definitely a fan of court proceedings), and also, patent reform is probably very low on his list of priorities.  The main backers of further legislative changes were almost lockstep opposition to Mr. Trump’s candidacy.  Further, one could of course speculate that President-elect Trump’s advocacy for strong property rights in general could translate to strong support for intellectual property rights as well, meaning he would probably oppose further efforts to weaken the value of U.S. IP rights.

Secondly, strong IP protection could be considered one piece in his platform to increase the competitiveness of the US industry.  One of the hallmarks of Mr. Trump’s campaign was his focus on calling out countries, such as China, for what he alleged were unfair practices against the United States. Although not mentioning patents specifically, his campaign website did complain about China’s alleged misappropriation of U.S. trade secrets, stating that he intends to “[u]se every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets.”  His campaign website also extolled a recent U.S. International Trade Commission study that included “that improved protection of America’s intellectual property in China would produce more than 2 million more jobs right here in the United States.”

If Mr. Trump does intend to make it more difficult for countries that have a lower threshold of protection for IP rights to make their goods available in the U.S. market, increased support for strong patent rights could be one means for doing so. This is further evidence of his likely opposition of any further changes that would make patent rights harder to enforce and easier to challenge, and may even signal a shift away from the driving focus of patent quality during examination proceedings at the USPTO.

To summarise the speculations above, our best guess is that President-elect Trump’s entry into the White House may create a status quo in patent legislation and may signal a shift away from “patent quality” being the driver of USPTO policy. If that is good or bad probably comes down to which side of the table you are on.

Joe Klinicki, Patent Attorney, Condo Roccia Koptiw &
Joacim Lydén, European Patent Attorney & US Patent Agent, Awapatent

The value of design patents

It is a perfectly clear, crisp morning as I make my way from Washington DC’s Union Station, through a clean and perfectly trimmed Senate Park, to the white neoclassical palace that houses the United States Supreme Court. The wide pavement and massive stairs leading to the building’s entrance is filled with journalists, photographers and television crews gearing up alongside hundreds of gathered spectators. Inside, the Supreme Court is in session, hearing its first design patent case in 120 years.

What sparks such an unusual interest in the hearing of an IP case is the fact that this is one of the final chapters in the ultimate “super heavyweight” patent rumble, between the largest corporation in the US, Apple and the by far largest South Korean corporation, Samsung. This lengthy dispute has all the components necessary to attract the public’s eye: it concerns a category of products that basically everyone of us is using (on average 40 times per day), the design patents concerned are understandable and the patents cover the iconic design of the game changing iPhone.

The question that the Supreme Court agreed to hear is not that of infringement, which has already been settled in a final decision by the Court of Appeal for the Federal Circuit (CAFC). Instead, the court is reviewing the size of the damages, and in further detail, the relevance of a century old piece of legislation stating that the infringer in a design patent “shall be liable to the owner to the extent of his total profit”. This in practice means all profit generated by the infringing Samsung Smartphones (article of manufacture), and it is this wording that made the CAFC affirm the $400 million in damages awarded to Apple.

Samsung, as well as several academics, argue that a statement made by the US congress in 1887 that “it is the design that sells the article” (forming the basis for the above wording in the legislation), does not apply to complex products such as the iPhone. On the other side, Apple’s Chief Litigation Officer Noreen Krall, who by the way hired me to my first job in the IP industry, argues the opposite and stated that Apple’s “designers and engineers are distinguished by their originality” and that Apple “firmly believe that strong design patent protection spurs creativity and innovation”.

Knowing how dedicated Apple fans can be, and how much value the Apple customer places in the look and feel of the products, I am inclined to agree with Noreen and Apple. In many instances, I believe that originality and design are features that actually may trump the function of Apples products.

The Supreme Court’s decision is expected in early 2017. Whatever the outcome will be, i.e. if the Supreme Court confirms the principle of the “total profit” or chooses to interpret the law as meaning “total profit” attributed to the specific parts of the “article of manufacture” covered by the patent, the ruling will have a considerable impact on how the IP world views and values design patents.

Joacim Lydén, Awapatent Partner and temporary US Correspondent

Games – A house of IP?

For the second consecutive year Awapatent attended the Nordic Game Conference (NGC). The conference was held at Slagthuset in Malmö, during May 18-20 2016. NGC is one of the largest video game industry exhibitions in Europe with a heavy focus on business and networking.

The video game industry is growing rapidly. Nowadays gaming is casual and almost everyone is a gamer, primarily thanks to smart phones. A game can vary in form, from a charming simplistic puzzle game on a phone to a bombastic cinematic first person shooter on a monster PC. A game can be made by a single developer but also by a thousand-person team. When the game culture transfers from a small sub-culture to something as self-explanatory as movies and literature there will be opportunities.

Games challenge the traditional ways to solve IP problems. Games are interactive, and differ from traditional narrative entertainment. Games are a high-tech product, created from cutting-edge digital technology, but ending up as an entertaining experience to the end user. A game represents thousand of person-hours invested in the development, and these person-hours represent innovation in even minute details.

Games are houses of IP, and by this I mean that IP constitutes the bricks and logs of games. To protect an investment worth thousands of person-hours, IP may be a fundamental key to commercialization and in the end, profiting on a game development project.

Game content as a whole is primarily protected by copyright. A game is built on programming code and is therefore by all means a computer program. But both the purpose and the user interface of a game differ from a traditional computer program. Different important copyright rules may be applicable on computer programs, which may not be applicable on other categories of works, and vice versa. An example of the latter is the InfoSoc directive (directive 2001/29/EC), the directive regulating copyright in the information society, which expressly is not applicable on computer programs. The applicability of article 6 (the right to technological measures) on video games was the main issue in the ECJ case C-355/12 Nintendo. The court stated that the video game in question could not be solely reduced to a bearing programming code but has unique creative value and therefore the InfoSoc directive was applicable in lieu of the Computer program protection directive (directive 2009/24/EC).

According to my own opinion, every game has to be individually assessed, and this shows the complexity of games and copyright. We all agree on that video games are copyrighted works, but the interesting question is rather how video games are copyrighted works.

Viktor Johansson, Associate

IP Law – How hard can it be?

My trainee colleagues and I are now in the final stage of our first 5-week theory period. So many new impressions, new colleagues and new information have opened up for us, revealing an exciting new world of IP law.

When I first applied for the Trainee program, I had very little knowledge of the many facets of IP law and of how many different competencies I would need. Not only do you need to have technical ingenuity, but also an eye for the small details and the bigger picture, quick thinking and excellent people skills.

Even though we have been here only for a short while, all of these sides have already been put to the test, and to answer my own question: Yes, IP law is hard!

It involves a whole new way of thinking where the questions, unlike in many of my university courses, do not have any clear answers. Where each word have to be given careful consideration and every choice have longtime consequences. But it is also a great mystery that only my skills and I can solve. Together we embark on this great new adventure, in which I already feel a bit like a detective. Whether it is finding the perfect word for a specific sentence (who knew that consists of and comprises could mean so different things?), defining the essential feature of a new invention or discovering the specific detail that will make my office action response irrefutable.

I am positive that IP law and all of us trainees have a great future ahead of us. And dear IP law, you did not have me at hello, but you had me at Michael Jacksons Method and means for creating anti-gravity illusions patent.

Bianca Bothmann, Associate

It’s not the end …

Close to nine months ago twelve eager trainees started an exciting journey. Looking back, they had no idea what they were getting themselves into. I do believe all of them had some idea but none had the same idea and perhaps more importantly no one had the right idea. Bit by bit however, the puzzle became clearer, only to be blurred again by more information, new words, new laws and new guidelines. Strangely, most of these new Associates stayed with the company, and they grew, nurturing from the vast collective information source that Awapatent is.

One interesting aspect of the Trainee programme seems to be to realize that the more I learn – that is, the more I know – the more I realize that I don’t know. Now this can either render a person sad, or as it seems in this case, it may open up for new possibilities, development and opportunities. Because no matter how hard anyone tries there is no end to the growing, learning and continuous education of you, within the area of IP.

We are now closing in on the end of the nine-month long Trainee programme. The irony of it all is that although these twelve Associates realize how much we don’t know, we are now more than willing (we are all eager and anxious) to happily take on the new challenges that the world of IP has to offer us. So in a sense, now is not the end, it’s just the beginning. 

Sandra Lindvall, Associate

Starting to get the hang of this …

A couple of months into the Specialist programme, most of the things I’ve been taught about IP have started to settle. I’m starting to know my way around and even the language of patent applications comes quite naturally by now.

During these months we’ve had quite a few senior colleagues teaching us how to write patent applications. I was surprised at first, that people were giving such different advice. Everyone seemed to have their own way of writing and I remember thinking that surely someone ought to know best. As time has passed it has become quite clear that there is no universal best way of writing. There are too many things to consider when writing, depending on the type of invention involved and the purpose of the application. You just have to figure out your own way of writing, picking up advice as you go.

The end of 2011 has been very busy at my home office in Stockholm. I pushed myself quite hard to finish writing a patent application in time for Christmas – and yes, discussing my first draft with a senior colleague revealed “a few” things I need to improve. Now, after a week of vacation, I’m back at it again.

David Färm, Associate

Focus on China

The fact that China is growing in importance is well known. To Awapatent, this growth is visible in our day-to-day work, both from the questions we get about IP in China from our European clients, and from the growing demand for our services as a European firm for Chinese clients. Naturally, we make it a priority to increase our focus on China.

As part of our efforts to get to know this immense country better, we have just spent a week in Beijing, conducting meetings, giving lectures and learning more about this different and challenging place. One of the highlights of this trip was a lecture on ”IP in Europe”, given by Niklas Mattsson at one of the institutes of the Chinese Academy of Sciences.

Needless to say, we have also had a lot of exciting food, met with a lot of interesting people, and travelled in a few of the city’s 70 000 taxis!

Niklas Mattsson, European Patent Attorney
Ted Hagman, Attorney at Law

Personal branding – reflections after inspiring seminars with the famous adventurer Renata Chlumska

Awapatent is co-operating with the famous adventurer Renata Chlumska who is well known for several accomplishments, such as being the first Swedish woman to climb Mount Everest, and she also went around the US (the lower 48 states) by exclusively using a kayak and a bicycle in a challenge called “Around America Adventure” – quite impressive! Her next goal is to become the first Swedish woman in space, which at the earliest will take place during the fall of 2012.  

In a series of seminars for our customers in a number of our different offices, we have had the opportunity to listen to Renata’s adventures and thoughts concerning herself as a brand. Renata is aware of the value in herself as a brand, and also in matters of control in terms of protecting her own name as a trademark, as well as co-operation agreements with her sponsors.

Personal branding is of particular importance for people who provide services, goods and market themselves under their own personal brand. The person behind the brand is also the most essential intellectual asset for this kind of company. However, keep in mind that you are also the leader of your own personal brand and you decide the values of yourself as a company.

Nowadays, companies tend to move in the direction of providing more services than goods (or services connected to physical and intellectual goods) where the people who are providing the services are at the core of the product. In this context it is crucial to strategically and carefully consider how to create incentives for the people who are a part of the brand, and to control their knowledge. This is mutually of essence for the personal brand of the company, and the people who are promoting and exploiting the company. Control and incentives can be created differently depending on the business model, and strategy of the company. Naturally, a strategic use of the personal brand in relation to the business model is also closely linked to the revenues of the company.

Below are some starting points to reflect upon and discuss in terms of personal brand in your company and your own personal brand:

1. Ownership of knowledge and IP. First of all, have you discussed the ownership of knowledge, inventions, IP and know-how, which are created by employees or partners, in your employment and co-operation agreements and whether these assets are transferred to the company, or if it belongs to you as an employee, employer or partner?

2. Relationships and agreements. Secondly, in all relationships, internally and externally, it is crucial to decide upon a legal and business strategy on how to act in relationships with customers, clients, partners and employees, and where the focus of the co-operation, or service shall be. Are you pleased with the co-operation of your relationships today, or do you need to consider up-dating or revising your relationships and agreements?

3. Incentive model. Do you have an existing incentive model for the people who are contributing to the personal brand of your company today, or have you considered to make an evaluation of the incentive model for your company lately? 

The personal brand of people in service companies is, and will become increasingly essential. It becomes easier and faster to post what we like and don’t like on Facebook, to post on Twitter what we are currently up to and so forth. Remember that you are in charge as a leader of your own personal brand. Furthermore, you may be an employee of a company where the personal brands are of importance and where issues connected therewith should be addressed to the board as a key issue on the agenda.

Helena Ribbefors, Attorney at Law, Awapatent.