23 March 2006

French legislative initiative on online music distribution stifles innovation

French Parliament currently debates a new digital copyright law that could have major implications for the online music distribution industry, most notably the most innovative company in this industry, Apple.

Not only is the new law confusing, it signals a dangerous development in Europe that once a company is successful in the market, be it Microsoft with its OS and add-ons like Media Player or Office software, or Apple with its very successful on line music retail formula, it gets punishment rather than applause.

There is an alarming tendency in Europe to denounce those who are successful, and thus stifling rather than promoting innovation. This should be of great concern to all who want Europe to be a innovative economic climate (even if Europe already gave up to be "the most competitive economy, also know as the “Lisbon” strategy.

The proposed bill would force change in the business model that sparked the revolution in legal digital music downloads. It seeks, in part, to require Apple's Computer's iPod digital music player to be able to play songs purchased from competing online services, not just from Apple's own iTunes Music Store. French Antitrust agency already cleared Apple from an alleged dominant position in November 2004. Yet, the French Parliament seems to know better what is good for competition.

One should be wary of politicians trying to tell the folks what is good for competition and what not. However, one could think that this is an isolated case, some French politicians who are ill informed, have no clue what sparks innovation (or simply do not care). This would be a dangerously underestimate the potential effects of this type of legislation. It should be of wide concern, as fear is justified that other European legislators will follow suit. This is more likely than ever, taken the current anti IP atmosphere in Europe these days. It is “bon ton” to denounce alleged “market dominators”.

Those voices always seem to stem from parties that are much less successful in the market.
Interoperability issues between portable music players such as the iPod and music download sites have arisen, and Apple has found itself accused of using anti-competitive tactics. Real Networks is a proponent of such allegations to anyone more successful than they are. Is it coincidence that this same company complained against Microsoft and is now taking on Apple as well? Real Networks sponsors a website that campaigns against “the status quo in digital music, which limits healthy, open competition”.

Real Networks obviously means to say they can’t compete and a cry for help seems to get a willing ear from the EU regulator (Competition authorities) and now again, from politicians, most notably French legislators.

It is about time we start thinking how we can enhance our lagging innovation in Europe. Time after time statistics show that Europe is dramatically lagging behind the US and China (Asia I would say). It is now time to act to stimulate not stifle innovation in Europe. The European Commission should warn France that the proposed legislation harms innovation, is contrary to free movement of goods (music), is against consumer interests and harms industry.

17 March 2006

Patents sold at Public Auction

On April 5, Chicago-based patent consulting firm Ocean Tomo LLC plans to hold a semi-annual patent auction at the Ritz Cartlon in San Francisco. The firm will offer for sale approx 400 patents pertaining to semiconductors, RFID, wireless communications, automotive technology, food, energy and the Internet. The patents will be grouped in 68 blocks ranging in estimated value from $100,000 to more than $5 million.The patents will be grouped into lots when they relate to a common area. Some lots will include additional material such as prototypes of products, inventor notebooks, and, in one case, 80 hours with the inventor to aid in transferring expertise. At the end of each auction, Ocean Tomo will get 25% of the sale price.

The offerings include patents for Motorola bar code technologies and biochip technology, patents for a Clorox bleach activator and a Ford four-wheel steering system. Also included will be patents from Kimberly-Clark on a new shrink-wrap that the company has decided not to commercialize, as well as 20 patents issued to BellSouth in areas that are no longer part of its core business, such as search-engine technology.

The complete list (310 pages) of patents may be purchased from Ocean Tomo here. Of course, in one of Ocean Tomo's previous auctions, the infamous 39 patents from CommerceOne were sold for $15.5 million. These patents were perceived to be so broad that they had a potential to cause major havoc in the Internet industry if they fell into the "wrong hands" (read: a patent holding company). Eventually it was learned that Novell purchased the patents under the pseudonym "JGR Acquisitions" to prevent such companies from getting their hands on the patents.While no such patents have been identified (yet) among the patents to be auctioned, concerns are growing whether a similar scenario can play out. A number of high profile holding companies are expected to attend the upcoming auction, and it is anyone's guess who will be buying what.Regardless of what you may think about some of the bidders, Ocean Tomo is staking out some revolutionary territory in the areas of patent valuation and patent commerce. Instead of relying on labor-intensive licensing and litigation tactics, the bidding system created by Ocean Tomo will likely create an active trading market (the company even referred it to being the "EBay of IP") for moving IP assets into the stream of commerce).

See also: CNet News

(source: Peter Zura’s patent blog, http://271patent.blogspot.com/)

04 March 2006

EPC 2000 will come into force on 13 December 2007

On 13 December 2005, Greece became the fifteenth Contracting State of the European Patent Convention to deposit its instrument of ratification or accession for EPC 2000. Fifteen was the magic number required to start the clock ticking and EPC 2000 comes into force, at the latest, two years from that date.

Should all Contracting States deposit their instruments of ratification or accession before September 2007, EPC would come into force on an earlier date - the first day of the third month following the last Contracting State's deposit. According to Article 172(4) EPC, a Contracting State that has not ratified or acceded to the EPC 2000 at the time of its entry into force shall cease to be party to the EPC as from that time.

The EPO website has a good section on the EPC 2000, including

  • the full text of EPC 2000
  • results of and papers from the November 2000 conference
  • traveaux preparatoires from 1997 leading up to the conference
  • transitional provisions
  • implementing regulations
  • schedule of Contracting States accession and ratification
What changes does EPC 2000 introduce?

The provision of EPC 200 include:

  • Methods of treatment or diagnosis. In particular A second medical use can be patented using a straightforward claim. Using a "Swiss-type" claim is still allowable.
  • Changes to the rules on post-grant amendment and the introduction of the concept of central limitiation at the EPO
  • The extent of protection conferred by European patents is strengthened by expressly including so-called "equivalents".
  • There are various amendments to simplify and streamline the EPO's patent grant procedure. For example, it will be possible to file patent applications in any language, since a translation into one of the official languages of the EPO will not be required until a later date. During the procedure itself, applicants will benefit from improved protection against inadvertent legal consequences arising from the non-observance of time limits.
  • All EPC states will be deemed to be designated at the date of filing, although any designation may be withdrawn up until grant of the European patent

(source: Peter Hill, Simmons & Simmons, London)