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TIPO Electronic Filing System Statistics

Posted on Friday, July 10, 2009

The Taiwan Intellectual Property Office (TIPO) recently released a one-page report providing a brief glimpse into the status of its patent and trademark electronic filing system.



The data show that since the system's launch in August of 2008, the volume of documents filed through the system has slowly increased to the current levels of over 1,200 documents per month. Most documents filed through the system were previously related to trademark applications, however in May patent-related documents overtook the lead. In June, nearly 700 patent-related documents were filed compared to just under 600 trademark-related documents.

The second graph shows the percentage of documents filed that were new patent or trademark applications. That is, of the nearly 400 documents filed in May, approximately 5 percent were for new patent applications.

This suggests that only around 20 new patent applications were submitted through the system—a mere fraction (0.33%) of the 5,950 total patents applications submitted to TIPO May



TIPO also revealed the top three e-filing applicants, who together accounted for over 1/3rd of all documents filed through the system in June.

A further breakdown of statistics, such as the types of patents applied, is currently not available.

Source & References

The TIPO Report

TIPO Monthly Statistics

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The Archetypes of Creativity

Posted on Tuesday, June 30, 2009

by Charl Goussard, NAIP Legal Research

In our previous two articles, we discussed the Rise of the Conceptual Age and with it the need for creativity in business. We have learned that it's fundamental to create an environment that will foster the leading patents of the Conceptual Age and patents for technology that can NOT be easily outsourced, automated or that merely meet the requirements of functionality.

To create such environments we need people: the RIGHT people!

Arguably, having the right mix of employees is probably more significant to the bottom line than an accurate budget forecast. Employees with six types of aptitudes: Design, Storytelling, Symphony, Empathy, Play, and Meaning, have been identified as crucial archetypes for the modern business. Employing the right mix of people with these elements will set your business on the path of creative success.

1. Design

The value of design lies in its ability to capture the emotional connections which consumers have or might have with a certain product or service. Lojacono and Zaccai (2004), state that the word "design", in the context of contemporary corporations, refers to a complete set of actions and skills required to source useful information which is then converted into a new product or service.

Pink (2005) expands on Lojacono and Zaccai's (2004) point of view by adding that apart from having an emotional connection with products and services, designers could also focus on creating aesthetical value or eccentric attributes to products and services. Designing with an emotional connection will be compelling for those who wish to succeed in the Contemporary age. This new understanding of design has lead to the creation of the design-focused enterprise which gives priority to product and service offerings based on intimate customer knowledge. Examples of Companies who are at the forefront of design, are Apple, IDEO and Ikea.

Even though design-focused organizations do not always succeed initially, their focus on and understanding of customer needs as well as their ability to rapidly and effectively communicate these unique needs to all levels of their organisation, secures a safe haven for these organizations to adjust to the ever-changing market needs (Lojacono and Zaccai, 2004). Design-focused organizations are thus best suited to lead in fast-changing markets due to their ability to sense consumer needs and to act immediately(Lojacono and Zaccai, 2004).

Being a complex skill, Pink (2005) concludes that Design is unlikely to be subcontracted or replaced by machines. Moreover, good design will add meaning, enjoyment and beauty to the world we live and work in (Pink, 2005). It is thus vital to incorporate the right amount of Design archetypes into your business to ensure the creation of unique products or services that will address the needs of contemporary customers.

2.Story

Denning (2001) argued that the move away from storytelling, in an effort to compress information into analytical offers, such as what we have seen during the Information Era, has reached its climax in the twentieth century. Despite our acknowledgment of the limitations of analytic thinking, many of us still attempt to reduce knowledge into simplistic forms (Denning, 2001). This reduction of information, according to Denning (2001) contributes to the creation of hierarchies, and highly regulated organizations – systems which inhibit change in an innovative environment such as would exist in the Conceptual Age.

Adamson, Pine, Van Steenhoven, & Kroupa (2006) identified two essential functions of a good story; firstly, it should "capture your imagination" (Adamson et.al, 2006: 37) and secondly, it should "make you feel" (Adamson et.al, 2006: 37). Stories enable people to experience strategy at a personal level, which is why Adamson et.al. (2006) are convinced that storytelling should be an essential strategic tool.

Stephen Denning, warns however, that despite many corporations' acknowledgment of the importance of storytelling in addressing leadership challenges, very few executives possess the ability to use storytelling effectively (Denning, 2006).

Pink (2005:103) summarizes the importance of story as follows: "When facts become so widely available and instantly accessible, each one becomes less valuable. What begins to matter more is the ability to place these facts into 'context' and to deliver them with 'emotional impact'."

Acknowledging the value of storytelling, seeking and employing such abilities, and using them to propel business into the future seem logical. Two great examples of the power to unite through story is that of Nelson Mandela and the ANC, and more recently Susan Boyle on Youtube. Not every company can employ a Susan or Nelson, but by seeking employees with the ability to share through story, holds unlimited potential!

3. Symphony

Pink (2005) argues that the aptitude of symphony, which includes the ability to see patterns, to pierce the veil which covers links, and to cross edges with the use of innovative imagination, will free professionals in the Conceptual Age to do what computers and outsourced workers have difficulty doing.

In more simple terms: symphony is largely about relationships. Realizing the connections between different, distinct fields will enable the conceptual worker to optimize opportunities.

In the world of patenting/innovation, having the ability to connect the right technologies to form better, improved products, has already shown it's value and will in the future continue to do so. The history of the Post-it note, by 3M, is a typical example of symphony at work.

4. Empathy

"Empathy is the ability to imagine yourself in someone else's position and to intuit what that person is feeling. It is the ability to stand in other's shoes, to see with their eyes, and to feel with their hearts." (Pink, 2005: 159).

Moving away from the logic-dominated Information Age, attributes of caring, understanding emotions, and molding bonds with others, will set achievers apart from the rest (Pink, 2005). Pink explains that empathy is not an isolated skill; it strongly relates to design, story and symphony.
Typically, your inventor of the future will be someone who has the skill to observe and listen to others and then continue to have some deep insight regarding their actions, needs, and desires. These insights will then propel the innovator to improved innovations, addressing the needs of its customers, and setting its products apart from those of his competitors.

Anita Roddick, of The Body Shop, is a good example of a business leader who understood the vale of empathy. The success of The Body Shop, a cosmetics empire, was build on good works as much as good scents: pure products which are not tested on animals.... Roddick seemed to have captured the values of her customers and created an emotional connection with her brand name.

5. Play

Pink (2005) stresses the importance of play in the Conceptual age – not only for the benefits it holds for personal well-being, but also for the benefits of business. He notes that play is becoming increasingly important in all facets of life, revealing itself through humor, games and joyfulness.

During the 1990's, Miller (1996) notes that an increasing number of organisations have realised the value of laughter and play to increase productivity. By incorporating play and laughter in an organisation, a joyful environment is created. Such joyful environment, in return increases staff members’ quality of life, which is then transferred to customers and other staff members in the form of good service (Miller, 1996). Miller (1996) furthermore mentions that fun in the workplace improves communication which leads to better relationships. Laughter, in particular, contributes to a decrease in interpersonal- stress (Miller, 1996). Having good interpersonal relationships in a group, improves collaboration within such group (Miller 1996).

In her study on "Fun in the workplace", Rockman (2003) found that fun, especially laughter, contributes to stress relief, positive attitude, and a sense of comfort in the workplace, which in return increases productivity.
For those mathematicians out there, the equation is simple:

Work + Play = Increased Productivity
Increased Productivity = Profit × ∞

The San Francisco Fish Market is an example of business that have realized and capitalized on the value of Play – have a look at their entertaining fish business!

6. Meaning

Pink (2005) explains that the material abundance of the twenty first century has liberated many people from the past fight for survival, allowing us to seek higher levels of satisfaction. It is within these higher levels of need satisfaction that the virtues of meaning embody themselves in the form of purpose, transcendence and spiritual fulfillment (Pink, 2005).

Karlgaard (2004) argues that the quest for better quality products and cost reduction has been conquered; what remains is meaning. The need for "Meaning. Purpose. Deep life experience" is on the rise (Karlgaard, 2004: 35). Selling meaning, according to Karlgaard (2004) is the marketing approach for the Conceptual Age. Gone is the pressing need to survive – welcome to the search for a meaningful life!

As businessmen and innovators, we need to nurture our customers and employees' need for meaning. The strong emergence of Corporate Social Responsibility is but one of the pointers toward the value and need for meaningful business! The Starfish Greathearts Foundation is an example of a meaningful organization. It's mission is to bring life, hope and opportunity to children orphaned and made vulnerable by HIV/AIDS. Since it started in 2001 it has grown tremendously – just another sign that meaning is powerful!


Conclusion

Having had an introduction to the 6 archetypes of creativity, a better understanding of creativity in business, and knowledge of the needs of the Conceptual Age, it is now time to experiment with the dynamics of creativity.

Keep in mind that creativity in the workplace is a result of group work, which is exponentially more complicated than the sum of the individuals in the group!

Challenging, but fun!


References:

Adamson, G., Pine, J., Van Steenhoven, T. & Kroupa, J. (2006), "How storytelling can drive strategic change", Strategy and Leadership, Vol. 34, No. 1, pp. 36-41.

Denning, S. (2001), The Springboard: How Storytelling Ignites Action in Knowledge-era Organizations, Woburn, MA: Butterworth-Heinemann.

Denning, S. (2004), "Telling tales", Harvard Business Review, Vol. 82, No. 5, pp.122-129.

Denning, S. (2006), "Effective storytelling: strategic business narrative techniques", Strategy & Leadership, Vol. 34, No.1, pp. 42-48.

Karlgaard, R. (2004), "The Age of Meaning", Forbes Magazine, April 26, 2004 edition, p. 35.

Lojacono, G. & Zaccai, G. (2004), "The Evolution of Design-Inspired Enterprise", MIT Sloan Management Review, No.3 (Spring 2004), pp.75- 79.

Miller, J. (1996), "Humor – an empowerment tool for the 1990's", Empowerment in Organizations, Vol. 4, No. 2, pp. 16-21.

Pink, D.H. (2005), A whole new mind, New York: Penguin.

Rockman, I.F.( 2003), "Fun in the workplace", Reference Services Review, Vol. 31, No.2, pp. 109-110.

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What Constitutes Creativity in a Business Environment?

Posted on Tuesday, May 26, 2009

http://www.flickr.com/photos/indieman/50552010/by Charl Goussard, NAIP Legal Research

In our previous article, we discussed the effect of overabundance, automation and outsourcing on today's businesses and how these three factors can be regarded as both initiators and obstacles in the forthcoming era in business – the Conceptual Age.

For a business to succeed, much less survive, in the Conceptual Age, its products and services must rise above these hurdles (and furthermore provide customers with a sense of meaning)--clearly not an easy task.

In their search to differentiate their products and services and ensure a place in the marketplaces of the future, businesses have tried new approaches, fresh ideas, sparks, innovation—or in short, CREATIVITY!


Defining Creativity

Businesses large and small assign a high value on the importance of novel and constructive initiatives (most often seen in the form of patents), which ostensibly flow from the "creativity" of their employees.

Now, most people have a vague understanding of "creativity", and they're probably not completely wrong—

But what exactly is this thing called "creativity"?

Turning to the academics for some elucidation, Amabile, in the Harvard Business Review (1998:4) states that creativity in individuals "is a function of three components: expertise, originality and motivation."



"Expertise" is having knowledge, which can be drawn from technical skills, process skills, and intellectual skills. Take a pilot for instance: technically, this person needs to understand the plane and the art of getting the birdie in the air. Procedurally he/she needs to comprehend the sequencing and result of all the actions needed to fly – and of course the Aviation Regulations! Lastly, it is important that the pilot has some basic intellectual capacity, after all – some calculations as to weight, fuel and speed have to be made to ensure a happy landing.

"Originality", on the other hand, relates to the flexibility and the degree of imagination that people employ when dealing with problems. This might not necessarily be a skill highly rated for pilots, but indeed one you’d need if you aspire to be a renowned architect.

"Motivation" refers to internal and external factors which move people to act. Internal factors which motivate individuals, include things such as personal goals, spirituality etc. and are difficult to influence. On the other hand, external factors, such as corporate culture, team work and leadership can more easily be used to motivate individuals and groups.


Fostering Creativity

Building a "creative" business environment in which these three components may effectively function together is a common and easily mishandled challenge for businesses. One of the major issues they face is of the working "atmosphere", and studies have shown that a working atmosphere that contributes to the fostering of creativity, has "risk taking, experimentation, freedom, and originality", as core principles (Jaskyte and Kisieliene, 2006:135).

These principles, as illustrated in the graph below, are interrelated and since all groups function uniquely, different interactions between these principles will certainly be observed in different groups. Our example of the interaction between these principles, in a R&D group tasked with creating new inventions, can be explained as follows:



To start with, freedom to invent seems to be the driving force within the group, allowing members to take more risk, to do more experimentation without fear of failure, and to come up with original ideas regardless of subsequent constraints. Originality, on the other hand, booms once freedom, risk taking and experimentation increases. An increase in experimentation leads to higher risk taking and subsequently more originality.

These interactions however, depend essentially on environmental factors such as leaders' behavior, the appropriate organizational structure, climate, culture, and human resource practices--and that's why it's so difficult.


The Creative Environment

What we've mentioned so far is all of a theoretical nature: implementing these principles into a business environment, however, is far more difficult. Indeed, if it were so easy, every second R&D department should become the next Google, Apple or Sony.

Let's take a look at a simple scenario - your average R&D department in a high-tech business:

Freedom?? Not only is the freedom to innovate usually limited to specific projects, within specific technological fields, but in addition it is limited by time and available budget. As a result, experimentation is limited to a small selection of "viable" options within these constraints. No "wasting" of recourses!!

Furthermore, most companies spend fortunes these days to determine and limit any possible risk, employing highly qualified legal counsel, meticulous auditors and stringent accountants for the job! In addition, R&D is assigned to the exclusive domain of engineers – creating an environment of like-minded individuals--a disastrous recipe for groupthink and creative crunch! But in all of their well meant efforts, it is originality that suffers... which means less quality inventions and weaker patents!


Archetypes of Creativity

Having created the right structures, leadership models, motivational environments etc., we still need to find the right PEOPLE to innovate. Another challenge...

Janis (1972) warned against the danger of "groupthink", which is a phenomenon that stifles group conflict at any cost, and consequently leaves no room for consideration of different options. Kurtzberg and Amabile (2000-2001) in view of that suggest that protecting and ensuring diversity among group members secures fruitful conflict bearing creativity.

Carefully selecting a diversity of creative archetypes may be a step in the right direction.

In this regard, Pink (2005: 2) advises that "Design. Story. Symphony. Empathy. Play. Meaning." are the creative archetypes which will be the pillars on which tomorrow's fortunes will be build. It is also these skills that will play an increasingly dominant role in future innovation and hence the filing of patents to support such innovation.

It is believed that organizations who embrace the right mix of creative archetypes, coupled with organizational structure, leadership and team development, will be able to make quantum leaps as far as product and service development is concerned. For the R&D focused industries, this will inevitably lead to leading patents and market dominance.


Next Month...

A closer look at Design, Story, Symphony, Empathy, Play and Meaning – the 6 creative archetypes mentioned by Daniel Pink


References:

Amabile, T.M. (1998), How to kill creativity, Harvard Business Review on Breakthrough Thinking, pp.1- 28.

Janis, I.L. (1972), Victims of Groupthink: A psychological study of foreign policy decisions and fiascoes, Boston: Houghton Mifflin.

Jaskyte, K. and Kisieliene, A. (2006), Determinants of Employee Creativity: A survey of Lithuanian Non-profit Organizations, Voluntas, Vol. 17, pp. 133-141.

Kurtzberg, T.R., and Amabile, T.M. (2000-2001), From Guilford to Creative Synergy: Opening the Black Box to Team-Level Creativity, Creativity Research Journal,Vol.13, Nos. 3&4, pp. 285-294.

Pink, D.H. (2005), A Whole New Mind, New York: Penguin.

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Celebrate Summer! The Dragon Boat Festival is Here

Posted on Monday, May 25, 2009


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The Future of Patenting - The Rise of the Conceptual Age

Posted on Wednesday, April 29, 2009

http://www.flickr.com/photos/migrainechick/3185150010/by Charl Goussard, NAIP Legal Research
with Jeffrey Chang, NAIP Editorial
"The last few decades have belonged to a certain kind of person with a certain kind of mind – computer programmers who could crank code, lawyers who could craft contracts, MBAs who could crunch numbers. But the keys to the kingdom are changing hands. The future belongs to a very different kind of person with a very different kind of mind – creators and empathizers, pattern recognizers, and meaning makers."

    – (Pink, A Whole New Mind, 2005: 1)

Introduction

The world of patenting is changing. But into what? From the beginnings of the renaissance into the information-driven era of today, the development of patents and the patent industry has taken a long and sinuous path: from humble, quiet beginnings to today's highly-prized and strategically-brandished asset. Tomorrow, undoubtedly it will evolve yet again. And while no one can know exactly what the future holds in store for patents, we can see from history a direction for the future.

The patents and patent industry of tomorrow will be born in the same spirit of creativity and individuality found in inventors like DaVinci, yet nurtured and propagated in the advanced business systems of the world economy. Thus, though inventors and corporations may be swamped with the business of today, they must always be wary that the nature of their work is of tomorrow. They must prepare their people, strategies and operations so that their patents remain, as innovation should always be, on the cusp of the future.


The Story of Patenting

World societies, economies, cultures and so on, have changed significantly in the past hundreds of years, and these changes have influenced patents and the patent industry as well. The purpose of innovation and patents, their function, use, understanding and even definition are shifting even today. What has been their path? We'll look at it briefly below:


    1) The Origin of Innovation: The Agricultural Age
During the renaissance and up to the beginning of the 20th century, the field of patenting was inventor driven; people like Da Vinci and peasant farmers created their own "tools" based on their specific individual needs and creative interests. This more personal and perhaps more humanistic approach to innovation and patents characterized the patent industry in this age.

    2) Standardization of Innovation: The Industrial Age
The increasing number of mechanical and electrical inventions supported the move to industrialization, which led to more standardized, mass produced products. Innovation was now being driven by the needs of the masses – standardization enabled mass production, which in turn resulted in huge cost savings. As a result this sudden ability for an invention to reach the masses started to shift the meaning and purpose of innovation and patenting toward commercialization.

    3) The Business of Patents - The Information Age
Inventors were now increasingly driven by the needs of businesses and in the process of cost saving, individualism had to give way to structure and even more standards. Logical thinking and analytical cause-and-effect models became the new drivers of innovation and patenting soon became the business of MBA’s, Lawyers and Computer programmers. Leading inventions were now directed by industry standards and patent pooling – long lost the days of the individual inventor. The value of patents was determined by their "essentiality" to industry standards. Patenting now became a strategic business tool, used to threaten and persuade competitors.

    4) The Future of Patenting - The Conceptual Age
During the Information Age, patenting was driven by the linear/ logical needs of businesses. However, this process of analytical, logical thinking is being substituted by the very computers we created (and patented) and we now find ourselves at the beginning of a new innovation era.

Some of the characteristics that we can expect to emerge from this new "Conceptual Age" include people-focused service, products that fit individual lifestyles, and an emphasis on human and emotional bonding. The Conceptual Age is grounded on the strengths of human imagination, emotion, a deeper understanding and appreciation for meaning – fundamental human qualities that address the needs of the individual.

Therefore in this future age, we can expect that the new drivers of patenting will combine the creative brilliance of a Da Vinci with the business expertise of a Gates and in addition incorporate a more compassionate approach to problem solving, creating not only practical solutions, but meaningful and customized inventions that will once again address the specific needs of the individual.




Why the Shift to the Conceptual Age?

During the information age, inventors and businesses found many opportunities to capitalize, commercialize and even mass produce innovation in the form of patents. Over time, however, much of the uniqueness commonly attributed to patents and patented products began to disappear.

A prospective buyer in most markets today is met by an overabundance of similar products, at affordable prices. In addition, automation has taken over the place of the traditional craftsmen or inventor; computer software is fast becoming "leading inventors".

Furthermore, the work of knowledgeable employees, such as computer programmers and machine operators, are being outsourced to the cheaper labor markets of Asia's developing countries.

To make thing worse for the manufacturer, educated masses are now demanding even more from the products they buy. Product functionality has now been coupled with a need for meaning and lifestyle enriching experiences.

The main reasons for the shift to the Conceptual Age can thus be summarized in three words: Abundance, Outsourcing and Meaning.


What next?

In the Conceptual Age, industries (who wish to flourish) will have to strategize around the following 3 questions:
  1. Can my service/product be outsourced?
  2. Can my service/product be automated?
  3. Does my service/product serve a need that goes beyond functionality?
If you can answer NO to all of the above questions, then you are most likely in the position to offer a meaningful service/product that will be valued in the new age.

In addition, businesses with active research and development (R&D) should focus on: How to create an environment that will foster the leading patents of the Conceptual Age and patents for technology that can NOT be easily outsourced, automated or that merely meet the requirements of functionality.

In our follow-up article, we will have a closer look at: "What constitutes creativity in a business environment?" and "a discussion (with examples) of the six essential Right Brain Directed abilities according to Pink, namely: design, story, symphony, empathy, play and meaning."

References:
Pink, D.H. (2005), A whole new mind, New York: Penguin.
Did You Know? http://www.youtube.com/watch?v=Mmz5qYbKsvM&feature=fvst

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FRANDly Patent Licensing

Posted on Monday, March 30, 2009

http://www.flickr.com/photos/sklathill/1405010166/
By Charl Goussard – NAIP Legal Research
and Jeffrey Chang – NAIP Editorial

Introduction

Imagine a single product: the myriad technologies involved, the swarm of patent rights holders, and the sea of comparable, alternative technologies. With so many complex and conflicting issues, it seems unlikely that an easy to use, functional product can ever reach the consumer. Yet, cell phones have become everyday objects. Dozens of companies put out hundreds of models that can be used interchangeably (for the most part) with different networks across the globe. This has been the power of FRAND patent licenses.

"FRAND" (Fair, Reasonable and Non-Discriminatory) is an acronym used to describe patent licensing terms. Despite an ambiguous nature, FRAND terms are a legal obligation imposed on IPR holders by certain standard setting organizations (SSOs). In exchange for providing FRAND terms to licensees, the IP is often made or included in an industry standard.

In this light, the FRAND concept has much significance for IPR holders, licensees, entire industries and even society. An IPR holder who successfully has his patent incorporated into a standard effectively guarantees a revenue stream. A licensee, often a manufacturer, is provided with a product roadmap of sorts, as well as a guaranteed market. The industry is able to simplify and consolidate its efforts behind a single technology to speed up adoption, and as a result, speed up the development and advancement of society.

But each advantage is countered by a disadvantage, and the ambiguousness of words like "fair" and "reasonable" too easily leads to dissenting interpretations. Controversy over FRAND has only increased—as evident in famous cases like Broadcom vs. Qualcomm and most recently Nokia vs. IPCom. What are the issues? What is at stake? In this paper we will attempt to address these topics and hopefully, clear up some of the confusion about FRAND.


Understanding FRAND

FRAND is inherently a controversial concept. What are fair, reasonable and non-discriminatory licensing terms? Considering the complexity and subjectivity of IP/patent valuation, FRAND terms may be vastly different for the licensor and licensee. Why even bother with FRAND then? Why not simply allow the forces of the (mostly) free markets to decide? To begin understanding FRAND, let us first look at some of the more tangible elements of its history, purpose and definition.

    Background
FRAND is a concept that first became prominent in the 1970s and 1980s amid the promising developments in networking/telecommunications technologies. Like the standardization of railroad track sizes or measurement systems, world and businesses leaders saw great opportunity for growth and advancement of society in these technologies.

But at the same time, increasing commercialization of patents led them to fear that the business and politics of patents would hinder this growth. SSOs were established as a way evaluate and choose between competing technologies and facilitate their propagation. One of the tools developed to deal with concerns of IPR holders and potential licensors was the concept of FRAND terms.

    Purpose & Function
FRAND's function and purpose varies only slightly in each context, but these differences result in widely differing expectations and definitions for FRAND. For this paper we’ll look primarily at FRAND in context of standard setting.

As an integral part of SSOs' agreements, the general consensus is that FRAND serves to:
    1. Provide contributors incentive to reveal and contribute technologies (through opportunities to maximize and optimize market price and volume).
    2. Allow SSOs to select and implement the best available technologies.
    3. Ensure a competitive outcome in a potentially monopolistic/oligarchic market that might result from the setting of a standard.

From these general principles, FRAND can be seen as a mechanism that attempts to allow an optimal competitive market to develop for the benefit of all the participants and society in general. Although individual parties may claim otherwise, this purpose and function seems to be most in line with the background and "spirit" of FRAND.

    Implementation
The exact origins of the phrase "fair, reasonable and non-discriminatory" have not been documented, but it likely gained prominence due to its inclusion in the IPR policy of the European Standard Setting Organization (ETSI), established in 1988. Today nearly every major standards organization has implemented FRAND obligations in one form or another.

In the ETSI Rules of Procedure, Annex 6: IPR policy, FRAND appears in Clause 6.1:

When an ESSENTIAL IPR relating to a particular STANDARD or TECHNICAL SPECIFICATION is brought to the attention of ETSI, the Director-General of ETSI shall immediately request the owner to give within three months an irrevocable undertaking in writing that it is prepared to grant irrevocable licenses on fair, reasonable and non-discriminatory terms and conditions under such IPR to at least the following extent:

● MANUFACTURE, including the right to make or have made customized components and sub-systems to the licensee's own design for use in MANUFACTURE;
● sell, lease, or otherwise dispose of EQUIPMENT so MANUFACTURED;
● repair, use, or operate EQUIPMENT; and
● use METHODS.

For any IPR to be included in an ETSI-backed standard, the IPR holder must agree to Clause 6.1 in the ETSI IPR Licensing Declaration Form.

    "Defining" FRAND
As is evident from above, FRAND is purposely left ambiguous and defining it is very much a case of circumstances. However, that hasn't stopped people from attempting. In court cases such as Nokia vs. Qualcomm, parties have sought to request judges to narrow down the meanings of FAIR, REASONABLE and NON-DISCRININATORY. But up to now, no judge has had the universal wisdom to put a foolproof meaning to these generic terms.

The fact is FRAND is merely a guideline that should be interpreted within the scope of its technical, cultural, and business environment. Detailing FRAND terms could have the adverse effect of excluding the freedom to negotiate – having exactly the opposite effect on the purpose and function of FRAND. FRAND should not be used to benefit any one party to the disadvantage of another.


What do FRAND terms offer me?

A good understanding of the benefits and disadvantages of FRAND can assist participants and interested parties to an SSO to evaluate their negotiating strength.

IPR Holders
    Advantages
  • By employing FRAND terms, IPR holders are in a position to attract more licensees and to generate more royalties.
  • Standards (ex. Mobile phone industry), which use FRAND licensing terms are used by huge numbers of manufacturers, increasing the potential royalty income for a holder of an essential patent in that standard.
  • By employing FRAND terms, IP holders are in a position to negotiate cross-licenses with licensees, thereby strengthening their own patent portfolios.
    Disadvantages
  • Under anti-trust/anti-competition legislation in various countries and/or regions, IPR holders can be forced to license their exclusive patent rights under FRAND terms.
  • The terms of the licensing agreement are restricted by the FRAND limitations.
  • FRAND creates uncertainty – there is no universal guideline as to what FRAND means – every licensing deal should be dealt with separately.

Licensees
    Advantages
  • FRAND terms provide licensees with the right to demand a license to essential patents – on condition that such patent(s) are essential to the standard.
  • Licensing under FRAND terms has a lower transaction cost than separate licensing.
  • One-stop shopping for licensees – by obtaining licenses to the essential patents of a standard, licensees avoid the time-consuming exercise of searching individual patents which might be infringed by the technology.
  • Decreased risk of infringement.
  • Cross licensing opportunity with IPR holder (if the licensee has essential patents of his own).
    Disadvantages
  • FRAND terms are uncertain/ambiguous – royalty rates are not clear and "fair and reasonable" is usually not defined.
  • Collusion by IPR holders, who are members of a patent pool or standard setting body, may easily appear.
  • IP holders may manipulate the standard setting process: they may wait for a wide adoption of the standard before disclosing their patent and then charging excessive royalty fees to those who employ the standard.
  • FRAND terms can be used to force a licensee to buy a patent that they don't really need.

Markets/Society
    Advantages
  • Standards are open to all who can afford the FRAND terms.
  • Pooling patents and licensing them under FRAND terms can be welfare enhancing.
    Disadvantages
  • FRAND terms may impact fair trade by monopolizing the market and fixing prices.
  • Quantifying FRAND is very hard – the uncertainty of fair and reasonableness leaves the door open to disputes that are difficult to judge.

Conclusion

FRAND terms can act as a helpful measurement of strength in a fair and competitive market. It can guide participants into collaboration on terms and conditions mutually agreed upon, without adversely affecting third parties or society as a whole. A word of warning though: FRAND terms do not guarantee any specific outcome. The ultimate result of any license negotiations depends on the positions of the parties, market forces and the socio-political and economic environment in which the parties operate.

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Public Hearing Report: Taiwan Patent Act - Biomedical Provisions

Posted on Friday, March 27, 2009


by Heidi Yeh - NAIP Legal Research

For both local and global pharmaceutical companies, the forthcoming amendments to the Taiwan Patent Act are of utmost importance as they will include substantial changes that will affect the biomedical industry in Taiwan. The Taiwan Intellectual Property Office (TIPO) has invested significant amounts of time in reviewing the current Patent Act and proposed amendments in an effort to bring Taiwan's patent laws in line with global trends. To hear industry opinions on the amendments, TIPO held a public hearing on February 25th, 2009.

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In the first quarter of 2009 alone, three major pharmaceutical companies announced mergers with other major pharmaceutical or biotech companies. Pfizer announced on January 26th that it will buy Wyeth for $68 billion USD in cash and stock, making this the largest merger in value to have occurred in the past decade. Merck & Co. later announced on March 9th that it agreed to acquire rival Schering-Plough Corp. in a deal worth $41.1 billion USD. Then on March 12th, Roche announced that it is buying up just less than half (44%) of Genentech for $46.8 billion USD. This is the largest merger by value in Switzerland ever. The main reason for these mega-deals? Every one of these companies, including Pfizer, is facing the same predicament: the impending expiration of patents for major drug products.

The nature of biomedical patents is such that they provide extremely strong and complete market protection for IPR holders during the patent term. Only once a patent term expires may generic versions of a product enter the market. However, the duration of a biomedical patent term is not so easily determined. Generally, time-consuming phase I-III clinical trials are required before a drug product is even authorized to enter the market. These trials can easily last several years, significantly reducing the duration of the patent term in which the IPR holder may capitalize on the patent. As a result, regulations compensate by allowing the patent term for human drugs, antibiotics, or human biological products to be extended according to the delayed regulatory review time span.

In Taiwan, regulations on the sale of generic drugs currently exist only in the Pharmaceutical Affairs Act and provide only broad guidelines regarding the issue. Therefore the promulgated revised Taiwan Patent Act will include updated and more detailed regulations on the sale of generic drugs. To help clarify these new regulations in the revised Patent Act, TIPO held a public hearing on February 25th, 2009 to discuss the changes related to biomedical patents. Below is a summary of the highlights of the discussion.

Explanations of the amendments in Taiwan Patent Act Revision Draft (02/16/2009) are as follows:

Highlights of the Revised Draft of the Taiwan Patent Act
  1. To encourage research and investment, amendments have relaxed the requirements for extension of patent term requests. Currently, applying for patent term extension under the current Patent Act requires having had a minimum two-year delay in entering the market due to government approval procedures. In keeping with the concept of using patent term extensions to compensate for lost capitalization opportunities, the minimum two-year threshold will be eliminated.

    2. *Note: other countries such as Japan, Korea, the United States, Germany and the United Kingdom have no minimum delayed time period requirement.

  2. A pharmaceutical product, i.e. a drug or an agricultural product, may often have more than one application. However, to prevent abuse of the system—by continually applying for patent term extensions for different applications—an extension of patent term may now officially only be granted once and valid only for the application specified. For example, when an invention includes two claims, as an antiseptic and as an insecticide, if the patent term of the antiseptic is granted an extension with an agricultural permit, protection for the invention’s application as an insecticide may NOT be extended.


  3. Extension of patent terms may now no longer be accepted for veterinary drugs.


  4. Research on a generic drug does not violate the patent rights of the corresponding brand-name drug's IPR holder. In addition, so-called "listing trials" are not considered a form of research and not required for approval of a market license.


  5. In order to cope with international emergencies, or to make non-profit-seeking use of a patent for enhancement of public welfare for developing countries and least developed developing countries that may not manufacture drugs within their countries, the Patent Authority may, upon an application, grant a right of compulsory licensing to the applicant to put the patented invention into practice; provided that such practicing shall be restricted mainly to the purpose of satisfying the requirements of the specific market with limited quantities.

Of the proposed amendments, one of the most controversial has been the exemption of "research" on generic drugs from the scope of patent protection. Generic drug pharmaceutical companies prefer that their products enter the market as soon as possible; the international pharmaceutical companies, on the other hand, prefer to maximize their rights in all interpretations. The amended Patent Act attempts to compromise between the two parties by permitting research on generic drugs during the patent term, but excluding steps such as listing trials from the scope of "research". Yet listing trials, though not required for a market license, are generally required by hospitals to test the efficacy of the generic drugs. This effectively blocks the generic drug maker from the market until expiration of the patent.

During the public hearing, representatives from both sides expressed their comments and concerns. But due to the aforementioned reasons, the amendments related to biomedical products, and to which extent should the government explain them, still remain under debate.


Conclusion

TIPO has clearly stated that the main purpose of the amendments to the Patent Act are the elimination of the minimum two-year threshold, the clearer interpretation of the restrictions on extension of patent terms, adding compulsory licensing provisions, and introducing the concept of exemption on research for generic drugs. Although the wordings of the amendments were criticized at the hearing and requests for another hearing on the same subject matter have been made, TIPO has not yet announce a decision.

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03/13/2009 IP News & Blog Round-Up

Posted on Friday, March 13, 2009

  • Forget Patent Trolls, we should be worrying about Troll Patents. - The term "patent troll" is now so toxic that even the man who coined the term prefers not to use it. The solution? Shift the definition to the patents. Will it catch on? (from Patently-O)
  • Who's scared of IPR in China? Well, Multinational Companies are. Of over 100 multinationals surveyed, nearly three-fourths cited IPR issues as a major concern. They have also noted "incremental" improvements in this aspect by the Chinese government, but with the economic downturn, whether that trend continues remains to be seen. The survey results can be found here. (from IP Dragon)
  • Here's why these companies are scared. A brief recount of a conversation between an American company and a law firm about how the company's entire million-dollar investment in China just upped and disappeared over night. And thanks to unwise practices, the American company has no legal recourse. Plus other stories about IPR theft in China. (from China Law Blog)
  • Study: free markets superior to patent monopolies. A fascinating study published by Science magazine in which an optimization/maximization experiment was assigned to students with two reward model: one analogous to the patent system, one to the free market. The results were close, but the Free Market model slightly edged the patent model for best results. The paper can be downloaded (account required) here. (from Ars Technica)

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