Tag Archives: technology

Knowledge of IP Law Crucial to Tech Industry Success

ss“The law has always been slow to catch up with new technology, and nowhere is this more evident than on the web.  Technology is a copyright-intensive industry and disregarding the importance of IP law is extremely dangerous for any technology company,” says Shireen Smith, leading IP lawyer and founder of IP specialist law firm Azrights.

Software solutions can make it possible to create substantial businesses from simple ideas, for example Uber and Airbnb. However, unless technological systems are protected by a suitable legal framework, businesses can lose the commercial advantages that their innovation has given them.  Shireen Smith believes that IP is the foundation of any business and companies should ensure that it is protected as early as possible.

Shireen said, “Because of the competitive and fast-moving nature of the technology industry, it is vital that tech startups consult an IP specialist as early as possible.  That’s because IP law can sometimes lead to surprising results. For example, you might find that the person with ownership rights is not necessarily the one you expect.

“If there is something to patent, then invariably filing for patent protection is necessary before even sourcing the funding for new software or technology.

“In their haste to rush to market quickly, many entrepreneurs are making a classic mistake: failing to protect their IP before revealing their ideas.  Patents are only granted if an invention is novel and has not been disclosed to third parties.  Therefore, startups which raise investment through crowdfunding sites before securing a patent lose the possibility of patenting the concept later on.

“Many entrepreneurs fail to seek legal advice before trying to raise funds through crowdfunding sites. They naively assume these sites must have thought through the legal aspects on their behalf.

“However, in practice they need to find the funds to file an initial patent pending application before speaking to angel investors or seeking crowdfunding because few investors agree to sign non-disclosure agreements (NDAs) before listening to an opening pitch.  It bolsters a business’s credibility enormously if it has taken steps to protect its IP beforehand.

Shireen continued, “Another danger associated with using crowdfunding without appropriate IP
protection is that well-resourced competitors are scouring these sites and are free to exploit the technology or concept you just shared with the world.  Innovators often sabotage their own ideas by alerting businesses to it who are well placed to copy it.”

“Another issue is technology startups unwittingly infringing on the rights of others. Formlabs, a team of PhD students, managed to raise just under $3m (£2m) to commercialise an accessible 3D printer. But the virtual high fives soon turned sour as an established company, 3D Systems, sued them for patent infringement.

“IP has a potentially transformative effect on a business.  If a fledgling technology company can claim sole rights to its software or systems, it can compete with the larger firms.”

On the evening of October 13 at the Institute of Directors, Shireen Smith launches a new book called ‘Intellectual Property Revolution’, which is all about how to successfully manage IP assets, protect brands and add value to your business in the digital economy.  It is written in plain English and is helpful for business owners and ‘brand guardians’.

A video explaining more about how the digital economy is changing IP can be found here

Useful links:

Azrights website

Azrights on YouTube

Azrights on Twitter

 

Startups – Where Will The Next Tech City Be Located?

Which tech city will you start your start-up

Now that the Conservatives have gained another term in government it is likely that they will press ahead with many of their pledges. Of particular interest are the proposals set out in George Osborne’s recent Budget Plan for 2015.

The Chancellor of the Exchequer has offered a series of measures to support the technology sector, including:

  • £11m in tech hubs in Manchester, Leeds and Sheffield
  • £60m in energy research to develop energy technologies of the future
  • Funding to develop a financial technology incubator in Leeds

He has also offered greater incentives such as tax breaks for video games makers, £100m for automotive groups working on driverless car technology and a £40m in investment into research into the “internet of things”.

In summary, the 2015 budget offers a substantial investment for the technology sector and a real opportunity for entrepreneurs and enterprises to gain a foothold in our increasingly profitable technology sector.

Where is the next tech city?

When it comes to commercialising your concepts there are a lot of factors that play into the overall success of an enterprise. One of them is being in the right place at the right time. So, a few things to look out for when assessing the market landscape are:

Location of Growth Opportunities:

A survey of the digital economy by Tech City UK has found that 74 per cent of companies and 85 per cent of workers are now located outside the capital. With rent prices increasing in London, the surge in competition and tight venture capital practices, the North sets to be a go-to destination for those who wish to keep costs low and take advantage of government investment. For those entrepreneurs in the FinTech sectors this is notable. With the industry growing from $4Bn in 2013 to $12Bn to 2014, you may want to consider nestling up in Leeds where a new FinTech incubator is on the cards as it may well become the hotbed for investors in the near future. For those who like the sea, consider Bournemouth and Liverpool which have already outstripped London in terms of growth while the Midlands is set to be home to new energy technology research hubs.

Increased Revenue:

So far Greater Manchester, Belfast, Sheffield, inner London and South Wales are home to tech clusters. However, about 90% of all digital companies in the UK, which are mostly small and medium-sized, expect revenue growth this year. For would be investors and those looking to set up shop it is important that opportunities outside of London’s silicon roundabout should also be considered. .

Consolidating Market Position:

Depending on your business, operating from London might limit your opportunities as there will be increased competition or limited regional capacity. Branching out may help you consolidate your market position but could also help in minimising your competition in the long run.

Fortifying your domestic position by taking advantage of this significant investment may also have a positive effect on international opportunities. Currently, the Euro is very weak and given competitive prices and the rate of growth, this may attract a lot of foreign investment, which everyone should keep an eye out for.

Financial Institutions Run Competition For Startups To Foster Technological Innovation

Financial institutions run competition for startups to foster technological innovationFinancial institutions run competitions for startups to foster technological innovation.

Recently, prominent financial institutions have begun looking to alternative sources for innovative technologies. Three major players in the financial game have sponsored competitions to find and foster digital innovations that could prove integral to their business.

The Royal Bank of Scotland, Lloyds and American Express have all donated money to competitions aimed at helping to discover technological innovations in the areas of authenticating systems, “imporv[ing] financial literacy and skills among consumers” and helping small businesses and retailers improve digital payments. This is a major shift from the usual models employed by major financial institutions which tend to look in house for their tailored technological solutions.

The winners will also each have the chance to test their product with the financial institutions. Entries are due by 21 April 2015. For more information about the competitions, please visit the City A.M. website.

Patent Troll Problems – The Good, The Bad, And The Ugly

Patent TrollsA recent case, Smartflash LLC v. Apple Inc, which Apple described as a prime example of why the US patent system is flawed, saw the company ordered to pay over $532.9 million in damages.

Smartflash LLC, a Texas-based entity, sued Apple in May 2013 on the grounds that Apple had infringed 3 of its patents in their iTunes software. According to The New York Times, Smartflash alleged that Apple’s software infringed on Smartflash’s “patents related to access and storage of downloaded songs, videos and games.” The U.S. District Court for the District of Texas (Tyler) found Apple to have used Smartflash’s patents, and done so wilfully.

According to Bloomberg Apple issued a statement that the plaintiff does not create products, provide jobs and has a limited U.S. presence.  So, Apple effectively sees Smartflash as a patent troll.

What is a patent troll?

Trolls are entities that do not make or sell anything but exist solely so as to exploit rights in patents that they often obtain from another company. They are disliked because they control essential facilities and make demands of those who use them.

The dividing line between being a patent troll, which has an expressly negative connotation, and an entity that enforces its patents as a legitimate business model, is that trolls do not manufacture products where the patent is used. So, the patent is not related to something inside its core competency.

The IPKat notes that this can be a difficult distinction to make as it is common within certain industries for companies to hold patents that are not directly related to a product that they produce.

Also, one way in which patent trolls arguably have a socially useful function is outlined by Steven Rubin, a New York Intellectual Property lawyer. He argues that cases initiated by patent trolls are part of a business model that results in creating an environment favourable to innovation. By licensing their patents to trolls, inventors are able to enlist the help of these entities to fight the bigger players like Microsoft in order to defend their patents.

According to Rubin, “most inventors barely have enough money to file for a patent application. Even if the inventor can afford to get the patent to grant, patent litigation is exorbitantly costly, frequently requiring millions of dollars to fund. Individual inventors, and even small or medium-sized companies, cannot afford such fees without another company to finance the litigation or at least to license or buy the patent…The inventor may never realise any benefit from his toils.”

Lodsys

On the other hand, an example of the negative impact a patent troll can have is illustrated by the activities of Lodsys who obtained a portfolio of patents from Intellectual Ventures, and began targeting small App developers a few years ago about patent infringement.

In 2011, Electronic Frontier Foundation reported on Lodsys’s claims against App developers. Even though the developers were often using technology which Apple or Google required them to use to develop Apps on the Apple or Android platforms, small developers were being targeted by Lodsys rather than Apple or Google. The Lodsys litigation was not ultimately successful for the patent troll. Nevertheless, it had a significant impact on the industry, and caused a lot of anxiety within the developer community.

Need for reform

A related problem that creates an unsatisfactory situation is the high damages awarded in patent cases. It means that patent litigation has a dampening effect on innovation, and this has led to demands in the USA to reform the patent system.

The challenges facing innovators under the current patent regime, and the broken nature of the patent system is discussed in the “Defend Innovation” whitepaper. This advocates measures for policymakers to fix the system.

Patent trolling while it exists in Europe, is far less prevalent than in the United States, possibly because in the UK there is a real disincentive to litigation as the losing party has to pay the costs of the other side

So as The National Law Review, points out it is not necessarily that the forum is more accepting of such cases in the United States, but that there are few ramifications for patent trolls who file a lawsuit and then are not successful in litigation. The general rule in the United States is that each party pays for their own litigation costs.

Approach to patenting

All this raises the question of what people’s purpose is in filing patents. Generally, people file patents for both offensive and defensive purposes.

Patents used offensively may result in licensing revenue and, sometimes, in damages awards from litigation, such as happens for “patent trolls”.

Most patents are used defensively or for portfolio padding.

Patents used defensively are aimed at making it less attractive for a competitor to sue. For example, if you infringe a competitor’s patents and they also infringe yours, litigation may be pointless as both sides would have to spend a large amount on legal fees and would achieve only a small sum, if anything by way of monetary damages

Patent padding is used for marketing purposes so a company can claim that it is more innovative than its competitors in a given market.

Conclusion

Reuters reports that despite the moves to reform this area over the past year, patent litigation is on the rise, and Apple failed in its attempt to have the case dismissed earlier in the year. It did its utmost to avoid litigation altogether by arguing that the plaintiff’s inventions were both too basic to be patented and that other patents, previously filed, exist and cover the same technology.

Smartflash had originally sought $852 million. Apple conceded that the damages calculation was flawed and that at best, $4.5 million should be paid, yet the jury decided that the appropriate damages award should be $532.9 million.