Issue #28-1 | September 12, 2013

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Software patents lose another one

Even in the face of strong opposition by Chief Judge Randall Rader, the Court of Appeals for the Federal Circuit (CAFC) has upheld a district court finding that Accenture’s system claims in U.S. Patent 7,013,284, “the ’284 patent,” are patent-ineligible. Accenture had already conceded defeat with respect to its method claim. The company was unable to point to any substantial limitations that separate these claims from the similar, patent-ineligible method claim; in addition, under the two-part test of CLS Bank, the system claim does not, on its own, provide substantial limitations to the claim’s patent-ineligible abstract idea.

Judge Rader didn’t like it, stating, in effect, a court can always peel back a claim far enough to find an abstract idea, but that’s not what patent eligibility should be about.

“Any claim can be stripped down, simplified, generalized, or paraphrased to remove all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed. A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims.” Ultramercial, Inc. v. Hulu, LLC, 2010-1544, 2013 WL 3111303, at *8 (Fed. Cir. June 21, 2013). “In my judgment, the court has done precisely that. Therefore, I respectfully dissent.”

The Patent Prospector takes this to perhaps its logical conclusion: Whereas a claim that poses "any risk of preempting an abstract idea" is unpatentable, it necessarily follows that any task requiring cognition is unpatentable. Because presumably no task is "mindless," this means software that performs a task must be unpatentable.

Can a valuation analyst separate out a ‘brand’ for valuation in a business combination?

Marketing-related intangible assets are those used in the marketing or promotion of products or services and/or in the establishment of a brand. The ktMINE database of licenses and royalty rates lists marketing intangibles such as:

  • Trademarks;
  • Trade names;
  • Trade dress;
  • Copyrights;
  • Service marks; and
  • Logos.

Benchmarking Identifiable Intangibles and Their Useful Lives in Business Combinations reports the terms “brand” and “brand name” often are used as synonyms for trademarks and trade names. The FASB does not preclude an analyst from recognizing a brand as a single marketing-related intangible asset representing a group of complementary intangible assets if the assets that make up that group have similar useful lives.

Catchphrases extend celebrity brands

The Licensing Letter reports sports licensing generates over $1 billion in revenue a year. We are used to athletes trademarking their names and creating vehicles to manage that IP. For example, LeBron James has set up a domestic LLC for his for-profit enterprises and a nonprofit corporation for his charitable work. Tiger Woods, following in the tax-avoiding footsteps of the technology behemoths, created a foreign corporation, Tiger Woods Enterprises S.A., to hold his trademarks. 

But an athlete’s celebrity value doesn’t stop with the name. Canadian entertainment and sports lawyer Len Glickman and others assembled a list of “catchphrases” also being given or considered for trademark status. These catchphrases extend a celebrity’s brand. Here are some examples:

  • “Linsanity,” current Houston Rocket and former New York Knick Jeremy Lin;
  • “Stomp You Out” and “Stomp Them Out,” Michael Strahan;
  • “Lovee,” Venus and Serena Williams;
  • “You Cannot Be Serious,” John McEnroe;
  • “LIVESTRONG,” the Lance Armstrong Foundation; and
  • “Turn 2,” Derek Jeter.

As Glickman explains, the law supporting the extension of publicity rights to catchphrases was established in John W. Carson and Johnny Carson Apparel, Inc. v Here’s Johnny Portable Toilets, Inc. 698 F 2d 831 (6th Cir 1983). “Here’s Johnny” was the popular introduction Ed McMahon used for Johnny Carson each night when Carson hosted “The Tonight Show.” Though Carson didn’t win his case (few would confuse a toilet with a TV show), the publicity rights that attach to catchphrases were established by the appellate court.

Estate of Michael Jackson sues the IRS

Michael Jackson’s estate is suing the IRS over valuation. According to Kelly Philips Erb, writing in Forbes, assets causing the problem include amounts attributable to the singer’s likeness and intellectual property. It will all come down to what subsequent events should have been foreseen and accounted for in a valuation at the date of death.

Erb reports the estate has two valuations, estimated between $80 million and $500 million. Everything over $3.5 million is subject to federal estate taxes. At the time of death, Michael Jackson was heavily in debt, and his earning power could not match his spending. Who knew after death Michael Jackson’s estate would outearn any living artist?

Valuators might find the arguments instructive. The case is Estate of Michael Jackson v. Commissioner of Internal Revenue.

How can a database of IP licenses act as a strategic resource in IP dealmaking?

ktMINE is a database of IP licenses and royalty rates, but it is much more to participants in the IP M&A world. The database readily identifies market players, interested parties, and agreed-upon deal structures and records the value of intellectual property in a particular deal.

As David Jarczyk and others write in IAM Magazine, companies engage in IP dealmaking to generate revenue from licensing out unused or old intellectual property or to increase the likelihood of a competitive advantage by licensing-in intellectual property for their business operations.

In either case, rights holders that use IP deals generally increase the value of their IP portfolio by providing additional sources of profits, and, to manage their licensing program effectively, the most experienced rights holders turn to license agreement filings as a source of information.

License agreements are available for nearly every industry, and the ktMINE database has over 250 market areas represented worldwide.

Microsoft finds a way to use its overseas cash, buys Nokia’s cell phone business

Microsoft and Nokia affirmed late Monday that Microsoft will pay €3.79 billion to buy “substantially all” of Nokia’s cell phone business, which includes its smartphone operations. According to the Wall Street Journal, Microsoft will also pay €1.65 billion to license Nokia’s substantial patents, bringing the deal to €5.44 billion, or $7.18 billion—less than it paid for Skype!

Though unreported for now, we should anticipate increased defense of Nokia’s IP. The company owns over 10,000 patents, many in the critical LTE wireless area, and has over 40 licensing deals already in place. Apple and BlackBerry are already licensees; with Microsoft money behind it, Nokia will undoubtedly be taking a close look at the Android players.

Nike, EA atop apparel, nonapparel collegiate licensee rankings

Collegiate Licensing Co. LLC (CLC), an affiliate of IMG College, announced its annual list of top-selling institutions and manufacturers. These rankings reflect royalty income from officially licensed merchandise reported July 1, 2012, through June 30, 2013, on all collegiate merchandise sold in affiliation with CLC-represented institutions.

  • CLC estimates the retail marketplace for college licensed merchandise in 2012 was $4.62 billion;
  • This marked the eighth consecutive year that the University of Texas at Austin ranked No. 1;
  • The University of Louisville moved from No. 32 to No. 25, largely due to its success in the NCAA basketball tournament;
  • NIKE USA Inc. was the No. 1 collegiate apparel licensee;
  • EA Sports was No.1 among nonapparel licensees;
  • Kentucky Wholesale Inc., an apparel manufacturer, was the top local licensee, producing officially licensed product for the University of Kentucky and the University of Louisville;
  • Top apparel categories for 2012-13 included T-shirts, women’s apparel, fleece, and headwear; and
  • Top nonapparel categories included video games, housewares, domestics, and sports equipment.


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