Stick v Carrot

As noted on Wikipedia with reference to Charles R. Neuenschwander, stick licensing "is the practice of licensing a patent … where the patent holder threatens to sue the licensee for patent infringement if the licensee does not take a licence."

At first sight, stick licensing would appear to be a more promising approach than carrot licensing, which requires "luring the target to adopting one's invention and taking a license" (Matthew Y Ma).

But success of the stick licensing approach is not guaranteed: US software company Assia Inc. sued British Telecom for patent infringement when BT did not take a licence to Assia’s broadband patents. The England and Wales Court of Appeal ruled that there was indeed infringement.

However, rather than taking a licence from Assia, British Telecom chose instead to switch off that part of its 'Infinity' broadband system that was deemed to infringe.

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

'Very Profitable'

… is how wind turbine manufacturer Wobben described the alleged use by Siemens and its customer of technology that reduces the impact on the electricity network of wind turbine shut-downs in extreme wind conditions.

Moreover, Wobben’s early recognition of this impact meant that it was able to obtain broad patent protection for the solution, the main patent claim having less than sixty words.

On the down side, the time elapsed between Wobben's recognition and the alleged use by competitors means that there now remain only two years before the patent reaches the end of its twenty year life.

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

Are you being observed?

With a view to ensuring that a patent application is only granted for an invention that is new and non-obvious, a patent office will carry out a search.  Most inventors understand that, if this search identifies relevant public disclosures that pre-date the patent application filing date, patent grant may be denied.

 

Fewer inventors are aware that some patent offices also allow the general public to submit details of relevant earlier public disclosures.  Such third party observations can sometimes be made anonymously.

 

Environmental Defence Systems Ltd (EDS) fell foul of the latter.  In 2008, the European Patent Office carried out a search on EDS' patent application for a flood defence barrage unit and identified two earlier documents of relevance.  EDS subsequently amended its application to focus on those parts of its invention that it believed to be patentable over the two documents.

 

However, in 2010, two years after EDS had started marketing its barrage unit, an anonymous letter was sent to the European Patent Office listing a further eight documents which, the letter argued, showed that the invention was completely known or obvious at the patent application filing date and thus completely unpatentable.

 

Until the European Patent Office decides whether this is indeed the case, the application cannot be granted and cannot be enforced against competitors in the courts.

 

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

 

 

Reality Check

It is always nice to know that the time and effort spent on patent protecting a technology is not wasted, in particular that a technology can be wildly successful and that, in the absence of patent protection, competitors will move in.

Such is the case with Xaar plc, “a decently run company with good products and a strong market position” according to The Times.  As a manufacturer of digital printheads for ceramic tiles, Xaar had “an exceptionally good 2013 on the back of a boom in Chinese construction” with a market share of 75 per cent.

However, The Times notes that this market share “has attracted Japanese competitors and hit pricing” in 2014. This is particularly because some of the competitors are long-standing licensees of Xaar technology against whom Xaar has reduced scope for enforcing its patents to defend its market share.

A more detailed analysis of Xaar’s intellectual property business models is to be found in a Cranfield University working paper available at http://dspace.lib.cranfield.ac.uk/handle/1826/4685.

A two-day course on engineering intellectual property for business advantage is also running at Cranfield University in October.  Further details can be be found at http://www.cranfield.ac.uk/courses/training/engineering-intellectual-property-ip.html.

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

'Infringement' and 'Validity'

Clear communication is as much of a challenge in IP management as in any other field of business.
 
Recent litigation in the UK courts concerns a letter sent by a patent attorney to his client reporting a search carried out for patents in the name of another company, H. The search had shown only one patent in existence relating to company H and the patent attorney’s letter had stated "Therefore I believe the only problem you will have with this problem will be in the United States."

Ten years later and the patent attorney and his client were in dispute over what this statement meant. The patent attorney contended this was advice related to the likely infringement of the scope of the claims of H’s patent by the client. The client contended this was advice related to the likely validity of the client’s own patent application in the light of the disclosure of H’s patent.

"This difference between scope of a claim and disclosure is universal" noted the judge deciding the litigation. "A patent claim may have wider scope than the thing described in the specification. So it is possible to have two patents, one earlier than the other, in which the later one is novel (and inventive) over the earlier one but for which the product described in the later one infringes the earlier one."

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.



 

Pity the poor manager …

… who has to decide where the value lies in an invention and direct the European Patent Attorney to spend time (and money) drafting a patent application to protect that value, knowing that this may change due to circumstances beyond the manager’s control.  Recent patent litigation illustrates this risk.

American company TDY Industries made cutting inserts for machine tools.  Back in October 2003, TDY thought that they were the first inventors of a novel cutting insert profile having convex cutting edges and enabling fast removal of metal.  The specification and claims of TDY's initial patent application were drafted accordingly.

Only some years later did TDY learn that "Hitachi had got there first" and had filed a patent application in May 2001 that had published in November 2002.

TDY then amended the main claim of its European patent application to add the requirement that, at the bottom of the cutting insert, there was to be a substantially straight cutting edge section, the purpose of which was to create a good surface finish.  TDY argued that this was a "beautiful concept" and an idea which had "great technical and commercial significance".

However, the litigation judge observed that "whilst the use of a straight cutting edge to guarantee good surface finish is disclosed in the … patent, it is presented as an option and is not referred to in the objects of the invention or the advantages of the invention. I was also told that this feature was not included in any of the sub-claims of the application as filed. There is no description of the way in which the cutting insert …  needs to be used to achieve high speed cutting and good surface finish".

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

Uber – valued?

‘Uber, the global on-demand taxi service, has achieved one of the highest valuations for a start-up with venture capital backing by fetching a price tag of $18.2 billion in a private fundraising’ noted The Times earlier this week.

‘The price looks absurd’ notes the Business Analysis section of the Guardian, ‘ … the notion that Uber will be allowed to enjoy a virtual monopoly looks questionable.  If taxi drivers are willing to surrender 20% of their fees, there will be competition, because there are plenty of talented software designers in the world.’

To reduce the risk of such competition, Uber Technologies Inc. has:

• filed patent applications to its ‘system and method for arranging transport amongst parties through use of mobile devices’
• registered the design of its computer interfaces and icon
• highlighted the issue of copyright infringement on its website

It has also protected the ‘UBER’ brand name and logo by trade mark registration.  According to The Times, this brand was inadvertently given publicity worth tens of millions of pounds by the recent protest against the Uber mini-cab app organised by London black cab drivers.

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

 

 

LightSail Energy Inc.

According to the Nanalyse investor website, California-based LightSail Energy Inc. aims to produce the world’s cleanest and most economical grid energy storage systems using compressed air.
 
Nanalyse notes that ‘If the process of compressing air sounds simple, LightSail has gone to great lengths to protect their proprietary process having 30 patents and … filing patent applications consistently over time to further improve upon their technology’.
 
Of course, simply protecting IP will not generate money (although it will certainly consume money) – an IP business model is also needed. One possible IP business model comes from Dr. Michael Nakhamkin, who has been granted patents in the US, China and elsewhere relating to compressed air energy storage systems.
 
In 2013, Nakhamkin sold these patents, patent applications, trademarks and other IP to US multinational Dresser-Rand for an undisclosed sum.  He was also retained by Dresser-Rand as a consultant.  According to a press release at the time:
 
The acquired intellectual property complements Dresser-Rand's current SMARTCAES™ compressed air energy storage technology and expands the range of its offerings. Dresser-Rand will now be able to provide the smallest to the largest CAES projects to meet specific grid scale requirements.

This is but one of many ways of using intellectual property in engineering business. You should of course seek professional advice on your own particular circumstances.

The strength and the weakness of secrecy

A recent spat between UK and Chinese companies highlights both the strength and the weakness of secrecy as a mechanism for protecting engineering intellectual property.

The intellectual property in question relates to a secret method of making acrylonitrile, a key ingredient in carbon fibre.  Originally developed in the 1950’s, the method has been developed by UK company Ineos and licensed under secrecy to companies across the globe, including Chinese company Sinopec.

Unlike patent protection, protection by secrecy does not expire (as long as secrecy is maintained).  This has allowed Ineos to continue to earn royalties from its licensees’ use of the method long after the typical twenty-year lifetime of a patent.

However, unlike patent protection, protection by secrecy does not prevent others from using the method if they develop it independently.  This is what Sinopec claims to have done and, as a result, has stopped paying royalties for acrylonitrile manufactured in its new plant.  Ineos is contesting this claim in the courts.

This is but one of many ways of using intellectual property in engineering business.  You should of course seek professional advice on your own particular circumstances.

The Plant Nappy (TM)

Manvers Engineering’s website notes that ‘The Plant Nappy® is a new, light and user friendly method of spill containment; designed to replace existing, traditional drip trays. … Whilst encapsulating any drips or spills of oil the mat freely allows passage of water, such as rainfall, thus eliminating costly emptying of contaminated trays after use. … The Plant Nappy® has successfully achieved grant of patent and is now protected by patent laws.’

Manvers asserted its granted UK patent against Lubetech’s ‘Site Mat’ product.

In the course of proceedings, the UK court noted that ‘There was some limited evidence that a re-seller had observed oil passing through holes in version 3 [of the Lubetech ‘Site Mat’]. Layers with such holes in cannot, in my view, be regarded as "impermeable", which is the question.’  The court concluded that, with certain exceptions, Lubetech’s ‘products did not have the quality of impermeability in their base layers, and so for that reason too do not infringe [Manvers’ UK patent].’

This is a useful reminder that even an apparently lower performance product – in this case a mat where there was some limited evidence that a re-seller had observed oil passing through holes in the mat – can present significant competition.  In this case, the competition was sufficient to persuade Manvers to incur the expense of going to court in an attempt to enforce its patent and exclude the competition from the market.

This is but one of many ways of using intellectual property in engineering business.  You should of course seek professional advice on your own particular circumstances.

Coming second in the patent filing 'race'

Patents are usually granted on a ‘first-to-file’ basis.  An illustration of the implications of this principle comes from a recent Opinion from the UK Intellectual Property Office as to whether the actions of OpenHydro Group Ltd in relation to a sea-bed mounted tidal turbine constitute infringing actions in relation to a patent belonging to Rotech Holdings Limited.

The Opinion notes that OpenHydro also has a patent which illustrates a sea-bed mounted tidal turbine.  However, the 11 April 2007 earliest filing date of that patent is four weeks later than the 14 March 2007 earliest filing date of Rotech’s patent.

Had OpenHydro only filed their patent application five weeks earlier, that application could potentially have invalidated Rotech’s patent and given the patent right to OpenHydro.  In the event, the Opinion concluded that OpenHydro infringed Rotech’s patent.

Earlier research at the Engineering Intellectual Property Research Unit confirms that there is greater risk of coming second in the patent ‘race’ in technical fields - such as green energy - in which there is a high rate of growth in the number of patent applications being filed.

This is but one of many ways of using intellectual property in engineering business.  You should of course seek professional advice on your own particular circumstances.

A picture paints a thousand words …

… however, where a patent application is concerned, a picture may not always paint the words wished for by the inventors.  Hence the need in a patent application for written claims and detailed technical description.

This was the experience of AP Racing when it went to the UK courts to assert its UK patent for a brake caliper ‘in which each of the stiffening bands has a profile that is asymmetric about a lateral axis of the body when viewed in plan.’  AP Racing had previously added this ‘feature 6’ to the main claim of the patent application during the examination process before the UK IP Office.

According to the court, AP Racing ‘accepted that the text of feature 6 is not to be found in the [original] application document’ but noted that ‘AP Racing also relies on the point that it can be seen simply by looking at the figures [of the original application document] that the peripheral stiffening bands are asymmetrical’.
 

However, the court did not agree with this point, concluding that it did ‘not believe anyone reading the [original] application would have derived from the application a concept at the same level of generality as feature 6’ and declaring the claim invalid on the grounds that extra subject-matter had been added to the application in the course of the examination process.
 

More detail on the challenges in protecting optimised designs of brake calipers can be found in Tirović, M. and Hartwell, I.P. (2013) ‘Design optimisation – challenges in protecting intellectual property’, Int. J. Intellectual Property Management, Vol. 6, No. 3, pp.159–177.
 

This is but one of many ways of using intellectual property in engineering business.  You should of course seek professional advice on your own particular circumstances.