Month: March 2020

Effects of COVID-19 on Patents – Twice The Number of Abandonments

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As companies hunker down for the effects of the COVID-19 virus, they are abandoning their IP protection at TWICE the normal rate.

And it is likely to go up much further. AND this has never happened before.

BlueIron’s study looked at recent USPTO abandonments to see what, if any, effects were from COVID-19. The results were enlightening.

Patent Abandonment Rate has DOUBLED in the Last Month

For both Small Entities (under 500 employees) and Large Entities, the normal rate of abandonment is about 12.5% and 7.5% (respectively). In March 2020, the abandonment rate has nearly doubled to 23% and 12%. (For example, small entities received 5747 office actions in September, and 1326 were abandoned – a 23% fall off rate.) The data from April 2020 is expected to be even higher.

Patent protection is a very long term play – the assets last 20 years. In some respects, patents reflect the company’s optimism and commitment to the future. Why would a company get a patent? Because they plan on being in business to use that asset during its 20 year life span.

Companies abandon patent applications for many reasons. Sometimes, the examiner finds prior art that kills the patent dead in its tracks, but most often it is a cost issue. Companies will continue fighting with the examiner and investing money into their patent because they see value, even if they have to amend their claims.

The patent value equation changed dramatically in the last couple months.

Companies are twice as likely to tell their patent counsel to abandon their patent applications lately, compared to historical averages.

For most companies, in my opinion, this reflects possibly two factors: the need to conserve cash and, more worrisome, possibly more pessimism about the future. A third option is that entrepreneurs are happy to have an excuse to cut a pointless expense.

Cash Conservation

Abandoning a patent application certainly conserves cash in the short run. The US average cost to pay an attorney to file a response to an examiner’s rejection is $4000. The raw data are available here from AIPLA (membership required). In a typical cadence, each patent application will require two to three responses filed per year, so keeping a patent application alive saves $8-12K/year in direct cash outlays.

I do not believe this is cash conservation. This is something different – and much more dangerous.

This reaction did not happen in 2008, during our last stock market crash and reset. Throughout all of that period, abandonments went up and down, but hovered at 12% for small entities and 6-7% for large. This is the same rate for most of 2019.

Then something changed – and it changed in a way we have never seen before.

I believe this change is a severe pessimism on all fronts.

Pessimism About The Future

Patents are inherently forward-looking. They are bets that a company’s technologies will be valuable in the future, and, for all practical purposes, patents are call options on technology.

Patents are inherently optimistic. The investment reflects the inventor’s belief that they will be successful in bringing their product to market, and competitors will pop up. Patents are the Big Stick that will protect the entrepreneur’s investment in their business.

Abandoning patents can signal that business owners are not as optimistic as they once were about their ideas. This signal could indicate that even the entrepreneur does not believe in their own ideas, and might be a leading indicator that the entrepreneur will pivot or even close down the enterprise.

Dry Powder

Previous economic downcycles have dumped lots of IP on the open market. In fact, the “industrialization” of IP occurred right after the dot-com era. Intellectual Ventures was formed out of the dust of the dot-com bubble. The term “patent trolls” was born from people trying to generate value from IP left over from the failed startups of that time.

If patents were valuable before the Corona virus, they will be even more valuable after. With companies abandoning their IP, this means that those that keep their IP alive will have an even better competitive advantage when the inevitable recovery happens. Quite simply, they will have IP protection when their competitors do not.

What does this mean for USPTO applicants? It means better, faster examination for those who keep their applications pending.

What does it mean for patent attorneys? The gravy train of patent prosecution is likely to dry up, and it will take years for the pipeline to be refilled with new applications. I don’t think there will be many tears shed for the fate of the patent attorneys.

About the graph:

The graph shows the abandon rate for small entities (less than 500 employees) and large entities. Universities, non-profits, and independent inventors are removed from this dataset.

USPTO rejections allow 6 months to respond. The labels reflect the last date available for response. In other words, the data labeled March 2020 reflect final and non-final rejections issued by the USPTO during September 2019. Note that March 2020 contains data for the first three weeks of March only.

The patent abandonment data are a lagging indicator. We do not see the effects of a decision to abandon a patent application until after the six month window to respond has ended. By all indicators, the data for April 2020 will be much worse than March 2020.

The raw data were compiled from AcclaimIP.

About the Author :

Russ Krajec is an accomplished author, inventor, and engineer. Russ is the author of “Investing In Patents” and the forth-coming book “Startup IP Strategy,” as well as countless blogs and articles. He is a registered patent attorney, having drafted nearly 1000 patent applications since passing the patent bar exam in 2000. Russ is a Certified Patent Valuation Analyst.

He is the CEO of BlueIron, which finances patents for startup companies. BlueIron finances pre-revenue startup companies with $50-100K investments to build out their patent portfolios.  For post-revenue companies, can do loans of $2-5M, using only your patents as collateral.

Russ holds a BS and MS in Mechanical Engineering from Rensselaer Polytechnic Institute and a JD from Denver University.

If you wish to speak to him for short call or analysis of your Patent related query, you can schedule an online meeting by clicking here. Alternatively, you can send an email on russ.krajec@blueironip.com with copy to Info@risikollp.com.

CORONA VIRUS VS DUTCH CONTRACTS

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Now that the world and The Netherlands are suffering under the Corona virus and the counter measures, problems occur with obligations originating from contracts.
When these obligations are not fulfilled (not entirely or only partly or too late), the creditor can ask the debtor to perform and or sue for damages.

If a debtor cannot perform because of the impact of the Corona virus measures, an appeal to force majeure will be invoked.

If an agreement contains a Force Majeure clause (Dutch: “overmacht”), the question is whether the Corona virus fits the definition of force majeure therein. Also, it can be that the parties on entering into the agreement referred to standard terms which usually contain a force majeure clause. 

Article 6:75 of the Dutch Civil Code defines force majeure. To successfully invoke force majeure, the shortcoming in the fulfillment is not due to the debtor’s fault or at his risk. Although Dutch law does not stipulate as a condition that performance has become impossible, an appeal to force majeure will only be permitted in exceptional cases in the event performance is still possible and or the impossibility was foreseeable at the time of contract conclusion.

The specific clauses and standard terms describing in which situation force majeure can occur, need to be taken into account too.

However, article 6:2 of the Dutch Civil Code provides that the creditor and the debtor should behave towards each other in conformity with the demands of ”reasonableness and fairness”(Dutch: “redelijkheid en billijkheid”). A rule in force between them by law, custom or legal act shall not apply, to the extent that it would be unacceptable under the circumstances based on standards of reasonableness and fairness as determined by the courts. 

Reasonableness and fairness standards were defined by the Dutch Supreme Court (HR 13 maart 1981, NJ 1981/635): “The question as to how the relationship of the parties is regulated in a written contract and whether this contract leaves a gap that needs to be filled, cannot be answered on the basis of a purely linguistic interpretation of the provisions of that contract. After all, the answer to that question is based on the meaning which parties could reasonably grant to these provisions in the given circumstances and what they could reasonably expect from each other in this respect. It may also be important to which social circles the parties belong and what legal knowledge can be expected from such parties.” (translated). This rule also applies to oral contracts.

Article 6: 258 of the Dutch Civil Code provides that at the request of one of the parties, the Court may even amend the consequences of an agreement, dissolve it in whole or in part, on the basis of unforeseen circumstances of such a nature that the other party cannot expect unaltered maintenance of the contract in accordance with standards of reasonableness and fairness. The amendment or dissolution can even be given retroactive effect. 

With these tools it may be possible to combat ugly consequences of the Corona virus measures for parties who chose Dutch law in their contracts, or to whom Dutch law is applicable. Since the Dutch Courts were only open for urgent measures until 7 March 2020, case law with regard to the Corona virus measures is not available yet.

The above tools should however be invoked out of Court first, preferably in a lawyers’s letter, before starting legal proceedings.

If you are worried about Dutch law or other contract(s) and need to send out a legal letter, please contact our Dutch Partner Office :

Mr. Arnold Hoegen Dijkhof 
Email – ac@hd-dutchlawyers.com
Tel – +31 20 462 40 70
Website – www.hd-dutchlawyers.com

Stay healthy!

With kind regards, yours sincerely, 

Mr. Arnold C. Hoegen Dijkhof, LL.M., Advocaat (Author)

Government of India looking for items related to COVID-19 from MSME sector

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MSME Department, Government of India is looking for MSME manufacturers or suppliers of items in the enclosed list related to use against COVID-19. 

Please refer to the below list of Medical Supplies (39 Items) and Auxiliary Supplies (61 Items) and send details of products you manufacture or supply or know any entity doing it, along with contact details to:

MSME- Development Institute, Ministry of MSME, Govt. of India
Kurla Andheri Road, Sakinaka,
Mumbai-400072
Tel.: +91-22-28576090/3091/7166
Fax.: +91-22-28578092
email : dcdi-mumbai@dcmsme.gov.in

Items List

  • A. MEDICAL SUPPLIES (39 ITEMS).
  • Ventilators
  • Alcohol based hand-rub
  • Face shield (eye, nose & mouth protection)
  • N95 Masks
  • Latex single use gloves (clinical)
  • Reusable vinyl / rubber gloves (cleaning)
  • Eye protection (visor / goggles)
  • Protective Gowns / Aprons
  • Disposable thermometers
  • UV tube light for sterilization
  • Medical masks (surgical / procedure)
  • Detergent / Disinfectant
  • Single use towels
  • Biohazard bags
  • Wheel Chair
  • Glucometer with strips
  • Medicine
  • IV Fluid – DNS
  • IV Fluid – Dextrose
  • Hard-frozen Gel Packs
  • Sample Collection Kit
  • Thermocool box / Ice-box
  • Stretcher
  • Thermal scanners
  • Batteries for thermal scanners
  • BP apparatus
  • IV Sets
  • IV Cannula
  • IV Stand
  • Ambulance
  • First aid
  • Medical Waste Incinerator
  • ICU Beds
  • Cardiac monitors
  • Syringe pumps
  • Portable x ray machines
  • Endotracheal tube
  • Suction tube
  • Oxygen cylinders

  • B. AUXILLARY SUPPLIES (62 ITEMS)
  • Soap
  • Rubb Hall Tents
  • Chairs/Benches
  • Tables/Desks
  • Printer
  • Computer
  • Extension Boards
  • Matches
  • Candles
  • ID for Patients
  • ID for volunteers
  • Flyer – information booklet
  • White board + markers
  • Rooms for Volunteers
  • Garbage bags, bins
  • Drinking Water+ Dispenser (4)
  • Cleaning items (Brooms)
  • Cleaning items (Mop)
  • Fire extinguisher
  • E Toilet
  • Genset / Back up
  • Whistle
  • Tool set – basic
  • Registration details – sticker/printer
  • Mattresses
  • Foldable Cots / Beds
  • Bed sheets
  • Pillows
  • Pillow Covers
  • Towels
  • Rubber Sheets
  • Blankets
  • Emergency Lamp
  • Food
  • Food Waste
  • Other Waste
  • Laundry (Detergents)
  • Refrigerator – smallest
  • Electrician / Plumber
  • Entertainment for inmates
  • Internet access
  • Tokens with number
  • Mosquito Repellent
  • Sanitary Pads
  • Diapers – kids
  • Steel Plates
  • Steel Glasses
  • Spoons
  • Jugs
  • Stove – Big
  • Large vessels
  • Buckets
  • Mugs
  • Tissue paper
  • Smaller bins
  • Paper
  • Pen
  • Stapler
  • Stapler Pins
  • Box file
  • Official Seal

Nation – Call for Proposal – Fighting COVID – 19

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Technology Development Board (website – http://tdb.gov.in/) a statutory body of Department of Science and Technology, Government of India, invites proposals applications from Indian companies and enterprises to address protection and home-based respiratory intervention for COVID – 19 patients. 

The proposal may include technologically innovative solution towards:

-Low cost masks which can capture virus from air and absorb respiratory droplets

-Cost effective Thermal Scanning

-Large area sanitization and sterilization (including electrostatic spray and Ultra Violet treatment for various available surfaces like glass, ceramic, wood, textile etc)

-Bioinformatics and Surveillance

-Rapid and Accurate Diagnosis kit (paper based and other point of care devices)

-AI and IOT based solution for contact-less entry

-Oxygenators and ventilators (Low cost and portable) Or

-any other related technology

The Board provides financial assistance by means of soft loans (up to 50% of project cost @ 5% simple interest per annum), Equity participation (up to a maximum of 25% of the project cost) or grant in exceptional cases, for the purpose of:- i) Encouraging the commercial application of indigenously developed technology; and ii) For adapting imported technology to wider domestic application. The proposal may indicate the desired mode of funding.

SUBMIT YOUR PROPOSAL HERE: http://www.e-techcom.tdb.gov.in/

CASE STUDY – PHARMACEUTICAL, NUTRACEUTICAL, HEALTHCARE & LIFE SCIENCE INDUSTRY

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In a world of competition and rapidly evolving environment, Pharmaceutical , Nutraceuticals & Healthcare companies must find ways to enhance shareholder value, increase efficiency, improve internal controls, contain costs and manage risk.

The rapid changes in the industry demands for unique approach to risk management to successfully achieve “Corporate Governance as well as Corporate Performance.”

Based on our industry experienced professionals and a tailored risk assessment. Our Risk Advisory Services & Strategic Advisory often play a key role in risk management process of a company. We believe that it is important that we understand the objectives of our clients and then help them create value for the company. We do this by helping clients understand the key drivers of value chain and then providing Strategic & financial customised advisory services.

PHARMA & RiSiKo – Our Understanding of key issues

Pharma Sector is regulated on account of its social & economic significance. The government plays a major role by way of licensing laws, patent laws,  price regulations & plant approvals. Opening up of the new emerging market, change in economy and the advent of foreign players has changed the dynamics of this segment. Some of the key issues and challenges faced by the sector as enumerated below: Surviving Competition faced by Domestic bulk drugs industry due to cheap imports.

– Managing working capital to improve cash flow, particularly relevant in times of “liquidity concerns”.

– Price wars between regional and local Pharma companies are driving down prices, exerting pressure on margins.

– Lowering costs through a continuing review of the cost base and development of lean manufacturing techniques.

– Working within the global framework to gain advantage from lower cost production and generate sales from these powerful markets.

– Developing a strategy that enables continued growth within a defined strategic plan and a clear understanding of exit options.

– Continuing to develop Intellectual Property to maintain a competitive advantage based on our knowledge economy and to protect created IP.

– Optimising the tax position through appropriate use of tax planning arrangements and incentives such as R&D tax credits.

– Managing pensions and benefits to enhance the employment proposition at the most appropriate cost.

– Developing the governance procedures that are right for the business, its risks and locations.

– Developing the Internal Control & Anti Fraud Control to monitor the performance of Overseas Companies & Distribution Channels

– Managing balance between “Corporate Governance & Corporate Performance” Integration of Culture , Ethics & Controls in Takeover or acquisition transactions

Our involvement in manufacturing & Pharma stems from a first class client base that enables us to keep a regular contact with the issues in the industry. We then build on this platform by meeting other manufacturing companies and discussing their issues and working with key players in the industry. Our sectoral experience accompanied by international risk advisory practices, enables us to work around solutions that add value to the clients.

We use this knowledge to support our core services and consider new and innovative ways we can help our clients achieve their objectives.We strongly believe that all that we do should be designed to add value to our clients.

PHARMA & RiSiKo– Our Strategic Solution to Industry

RiSiKo Consulting LLP is a business consulting and advisory firm, specializing in risk management, turnaround strategies and scaling-up family managed businesses. The company caters to clients across industries and business environments within India, Dubai and USA.

Our team of professionals offer experience & deep industry expertise in areas of Strategic & Risk Advisory Services. We offers following Customized Advisory solutions to Pharmaceutical, Healthcare & Life Science industry: –

HOW WE CAN HELP YOU ?
If you would like further information about this publication or our wide range of services please visit our website or contact RiSiKo office to speak to Pharma Industry Expert: Phone : +91-22-22816486 , Email : enquiry@risikollp.com  or info@risikollp.com