• Guest Post: Intellectual Property, Finance and Corporate Governance
    in: Corporate Governance, denoncourt, Disclosure, Elizabeth holmes, Finance, fraud, Intellectual Property, misrepresentation, Patently-O, sec, Theranos, transparency, valuation  | 

    Guest Post: Intellectual Property, Finance and Corporate Governance

    We are pleased to publish this guest post by former IP Finance contributor and Senior Lecturer in Law, Dr. Janice Denoncourt, at the Nottingham Law School at the Nottingham Trent University. 

    The emergence of IP rich companies is the new corporate governance challenge. This is because IP is largely invisible, not only in the financial accounts, but also more generally in corporate law theory and the legal framework.  The research in my new bookIntellectual Property, Finance and Corporate Governancedemonstrates why companies need to communicate more about how they manage corporate intellectual property (IP) rights portfolios and their strategy for delivering shareholder value. Depending on their business model and corporate objectives, companies add value via their corporate IP assets in different ways to achieve their goals.   In the modern era, all companies, large and small, have intellectual property (IP) rights, sometimes across multiple jurisdictions.  They are corporate IP owners.  At the same time, the shift to intangibles and IP assets as the major driver of value in business is clear and unstoppable.  Since the Global Financial Crisis ten years ago there has been a renewed interest in our current understanding of capitalism.  As a result, shareholders, business people, stakeholders and the public, seek more relevant, accurate information about IP-dependent business models and their impact on commercial value.    

    Dr. Janice Denoncourt
    In the aftermath of the Theranos ‘misleading investors’ scandal, this is an increasingly important modern corporate governance issue.  Theranos, Inc. is an American consumer healthcare technology company based in Palo Alto, California founded in 2003 by inventor and Managing Director Elizabeth Holmes. In 2018 Holmes was subject to civil charges by the United States Securities and Exchange Commission (SEC) for massive fraud in excess of $700 million USD for having repeatedly yet inaccurately assured shareholders and regulators that the company’s patented blood testing technology was revolutionary (see https://www.sec.gov/litigation/complaints/2018/comp-pr2018-41-theranos-holmes.pdf).  Theranos’ 200 plus US patent portfolio is public information via the United States Patent and Trademark Office (USPTO) portal and a significant corporate investment in IP. Holmes co-invented more than 270 of the company’s patented innovations. While patents do not equate to innovation or commercial success, they do act as business indicators of inventive activity as well as a commitment to protect the results of innovation.  Holmes, of all people, was well placed (if not best placed) to understand the capability of the blood testing technology. The alleged misconduct, namely misleading investors and government officials, has generated a new global regulatory discourse about what companies need to tell us about their IP.  Arguing that it needed ‘to protect its IP’ to excuse material omissions and misleading disclosures is not acceptable according to the SEC.  In the SEC’s press release on 14 March this year, Steven Peikin, Co-Director of the SEC’s Enforcement Division stated:
                Investors are entitled to nothing less than complete truth and candor from companies and their executives… The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.

    Stephanie Avakian, Co-Director of the SEC’s Enforcement Division further confirmed:
                As a result of Holmes’ alleged fraudulent conduct, she is being stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years…This package of remedies exemplifies our efforts to impose tailored and meaningful sanctions that directly address the unlawful behaviour charged and best remedies the harm done to shareholders.

    Key corporate governance principles of transparency and disclosure are being more rigorously applied to corporate ownership of monopolistic IP rights that protect innovation and creativity.  In the US, SEC disclosure law Regulation S-K requires disclosure of the importance, duration and effect of all patents, trademarks, licences, franchises and concessions that a company holds.  The standard for ‘material’ corporate IP asset disclosures will continue to evolve in the US and other IP-rich jurisdictions.  The civil legal action brought by the SEC against Holmes is the catalyst highlighting a void in corporate practice.   IP-rich companies like Theranos will continue seeking corporate finance which falls under the corporate governance regulatory umbrella.   IP rich companies need to ensure they reflect on disclosure and transparency rules and take into account the growing magnitude of their corporate intangibles, IP assets and IP business models that potentially generate future wealth for their shareholders and potential investors.  

    Closer to home, in 2017 the UK implemented the EU Non-Financial Disclosure Directive which requires large and listed companies to include additional disclosures of non-financial information in their annual reports, similar to the disclosure requirements in the Strategic Report.  The Non-Financial Reporting Regulations insert sections 414CA and 414CB into the Companies Act 2006, supplementing the existing strategic report requirements as set out in section 414C.  These new company law equirements potentially increase the reporting of non-financial information, better business and IP strategy reporting through the mandatory requirement to report the company’s business model.  This EU-wide reform highlights the growing importance of disclosure of non-financial information.

    IP rights have evolved from being “a little pool to a big ocean” of corporate value and that corporate governance needs to respond to society’s rising expectations of directors and boards.  The astonishing lack of quantitative and qualitative public information about the growing magnitude of corporate IP assets makes it difficult to assess strategic value (“the IP value story”) and directors’ stewardship of those assets.  More relevant, accurate and ‘joined up’ corporate IP information (mostly known to internal management) is needed to triangulate intangibles financial data through cross verification with narrative disclosures and actual events.  The SEC stated that Theranos engaged in “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business and financial performance.”  This is a new frontier in corporate governance thinking and practice. 

    My research evaluates how corporate boards can ensure an appropriate level of transparency and make voluntary and mandatory ‘true and fair’ disclosures about a company’s corporate IP assets such as patents and trade secrets in traditional formats such as the accounts and the annual report.   The philosophies and principles that underpin debates on disclosure and transparency suggest that more ‘open’ disclosures about innovation, whilst preserving competitive advantage, are necessary so we have something to read, evaluate, react to and question. Countries including the US and the United Kingdom have mandatory obligations to report on gender balance, climate change and more, but not expressly corporate IP.  Patents, mini-case studies and an original business triage-style model for assessing corporate IP information, strategy and disclosures illustrate the gaps corporate governance theory needs to address.  Companies need to tell us how their corporate investment in R&D and IP rights contributes to the bottom line and regulators need to ensure boards of directors are accountable for IP management and strategy decisions, an important underside of the intangible economy.  


    Intellectual Property, Finance and Corporate Governance contributes to the legal and economic literature for readers interested in what lies behind the headlines.  The foreword is written by Professor Nicolas Binctin, Universite of Poitiers. As for the future of the Silicon Valley biotech company Theranos, Inc., the company has since made hundreds of staff redundant to avert becoming insolvent.

    Dr J Denoncourt, Nottingham Law School

  • USPTO Issues Guidance on Effects of Supreme Court’s Decision in SAS Institute on PTAB Trials
    in: Administrative Patent Judge, America Invents Act, David Ruschke, inter partes review, IP News, IPR Petitions, IPWatchdog Articles, IPWatchdog.com Articles, Leahy-Smith AIA, patent claims, patent trial and appeal board, patents, PTAB Trials, SAS Institute, US Supreme Court, USPTO, webinar  | 

    USPTO Issues Guidance on Effects of Supreme Court’s Decision in SAS Institute on PTAB Trials

    On Thursday, April 26th, the U.S. Patent and Trademark Office issued new guidance regarding the effects of the U.S. Supreme Court’s judgment in SAS Institute Inc. on America Invents Act (AIA) trial proceedings held before the Patent Trial and Appeal Board (PTAB). Along with the new guidance, the USPTO also announced a webinar with PTAB […]

    The post USPTO Issues Guidance on Effects of Supreme Court’s Decision in SAS Institute on PTAB Trials appeared first on IPWatchdog.com | Patents…

  • USPTO Guidance for Dealing with SAS Decision
    in: Patently-O  | 

    USPTO Guidance for Dealing with SAS Decision

    by Dennis Crouch

    The US Supreme Court recently decided SAS Institute Inc. v. Iancu (U.S. Apr. 24, 2018), holding that USPTO has been improperly issuing “partial-institution” and holding AIA trials on only a subset of challenged claims. The USPTO has now issued a one-page introductory guidance memorandum for procedure moving forward.  According to the Memo:

    1. The PTAB will institute as to all claims or none. Thus going forward, “if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.”
    2. For pending trials associated with a partial-institution decision, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition. . . . [and] may take further action to manage the trial proceeding” to take into account the shift. “For example, if the panel has instituted a trial and the case is near the end of the time allotted for filing the Patent Owner Response, the panel may extend the due date for the Patent Owner Response to enable the Patent Owner to address any additional challenges added to the proceeding.”
    3. “It is expected that the parties will work cooperatively … to resolve disputes and propose reasonable modifications to the schedule.”
    4. Questions: Trials@uspto.gov or “Chat with the Chief” webinar on Monday, April 30, 2018, from noon to 1 pm ET to discuss the SAS decision.

    Continue reading USPTO Guidance for Dealing with SAS Decision at Patently-O.

  • Patentlyo Bits and Bytes by Anthony McCain

    Gene Quinn: USPTO Experiences Catastrophic Failure Of Electronic Patent And Trademark Systems Jacob Gershman: Bluebook Critics Incite Copyright Clash Bill Reid: The Ghost Of Christmas Patents Eriq Gardner: Grumpy Cat Brings Grumpy Lawsuit Over Infringement Of Intellectual Property Apple Signs Peace Deal With Ericsson Steve Brachmann: The Top 10 Patents Issued In 2015 Get a […]

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  • Additional Discovery Regarding Real-Party-In-Interest Denied IPR2015-01046

    Takeaway: Merely alleging that funds from a hedge fund are being used in a proceeding, without more, is insufficient to constitute more than a mere possibility that something useful will be discovered as evidence of a real-party-in-interest. In its Decision, … Continue reading

    The post Additional Discovery Regarding Real-Party-In-Interest Denied IPR2015-01046 appeared first on PTAB Trial Blog.

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  • Authorized To Cross-Examine After Declaration Was Filed Regardless Of Service Date IPR2015-00014

    Takeaway: A party is not required to cross-examine a declarant at the time when the opposing party is first served with the declaration; rather, cross-examination can take place after supplemental evidence relating to the direct testimony has been filed. In … Continue reading

    The post Authorized To Cross-Examine After Declaration Was Filed Regardless Of Service Date IPR2015-00014 appeared first on PTAB Trial Blog.

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  • Deja vu all over again in the "patent grant rate" saga?

    Within a post at Techrights, one finds the text:


    This new blog post titled “Another depressing year for patent law?” says a lot about how practitioners in the US view the USPTO. Watch how this US patent lawyer, Lawrence B. Ebert, quoting Larry Downes as saying: “On just one day in November, for example, over 200 new patent lawsuits were filed, as plaintiffs rushed to beat a change in federal procedure that could require more specific claims. Most were from companies that buy up patents of dubious quality and use them to extract nuisance settlements from actual innovators.”

    Is this what Europe is hoping to achieve? We wrote thousands of articles about the USPTO and we have great (and growing) fear that those same disasters (and patent predators) will reach Europe. Some already do

    Aside from the observation that the text beginning “Watch how…” is not a complete sentence, one notes that the filings on November 30 were in anticipation of different pleading requirements after Form 18 was removed from the appendix of the Federal Rules. Going forward, pleading complaints in US patent cases needs to more specific.
    Of humor, even an episode of “The Good Wife” [KSR] referenced this matter. [As one bit of trivia, Larry Downes and LBE are both University of Chicago Law, ’93]

    **Other text in the article was of interest:


    The last point suggests to us that the Team Battistelli-led EPO is gradually emulating the notorious USPTO (very deeply involved in and dominated by large corporations, with terrible grant rates).

    The “terrible grant rates” link is –http://www.vox.com/2014/5/5/5682926/getting-patents-is-preposterously-easy-under-obama — which in turn leads one to
    – http://arstechnica.com/tech-policy/2013/04/study-suggests-patent-office-lowered-standards-to-cope-with-backlog/ –, an article by Timothy B. Lee on Apr 7, 2013 6:45pm EDT, which begins:


    When David Kappos announced his resignation as head of the United States Patent and Trademark Office (USPTO) late last year, one of his most touted accomplishments was a significant reduction in the backlog of pending patent applications. Kappos’ fans have attributed this to the hiring of hundreds of additional patent examiners.

    But a new study suggests another explanation for the declining backlog: the patent office may have lowered its standards, approving many patents that would have been (and in some cases, had been) rejected under the administration of George W. Bush. The authors—Chris Cotropia and Cecil Quillen of the University of Richmond and independent researcher Ogden Webster—used Freedom of Information Act requests to obtain detailed data about the fate of patent applications considered by the USPTO since 1996.

    They found that the “allowance rate,” the fraction of applications approved by the patent office, declined steadily from 2001 and 2009. But in the last four years there’s been a sharp reversal, with a 2012 allowance rate about 20 percent higher than it was in 2009.

    Presumably, this “new study” refers to Patent Applications and the Performance of the U.S. Patent and Trademark Office, 23 Fed. Cir. Bar J. 179 (2013) (with Cecil D. Quillen, Jr. and Ogden H. Webster).

    The link for this article on the Cotropia website is to an article by Cotropia:
    Patent Applications and the Performance of the U.S.
    Patent and Trademark Office
    Christopher A. Cotropia
    University of Richmond, ccotropi@richmond.edu, with the recommended citation:

    Christoper A. Cotropia, Cecil D. Quillen, Jr. & Ogden H. Webster, Patent Applications and the Performance of the U.S. Patent and
    Trademark Office, 23 Fed. Cir. B.J. 179 (2013).

    A footnote mentions previous publications by Quillen and Webster in this area:


    See Cecil D. Quillen, Jr. & Ogden H. Webster, Continuing Patent Applications and
    Performance of the US. Patent and Trademark Office, 11 Fed. Cir. B.). 1 (2001) [hereinafter
    Quillen I]; Cecil D. Quillen, Jr. et al., Continuing Patent Applications and Performance of the
    U.S. Patent and Trademark Office-Extended, 12 Fed. Cir. B.). 35 (2002) [hereinafter Quillen
    II]; Cecil D. Quillen, Jr. &Ogden H. Webster, ContinuingPatentApplicationsandPerformance
    ofthe U.S. Patent and Trademark Office-Updated, 15 Fed. Cir. B.J. 635 (2006) [hereinafter
    Quillen III]; Cecil D. Quillen, Jr. & Ogden H. Webster, Continuing Patent Applications and
    Performance of the US. Patent and Trademark Office-One More Time, 18 Fed. Cir. B.J. 3 79
    (2009) [hereinafter Quillen IV]. See Quillen IV, at 380-83 and accompanying notes, for an
    overview of these previous Articles.

    The 2013 article makes no reference whatsoever to published criticisms of the Quillen/Webster methodology.

    IPBiz referred to the third Quillen/Webster paper [ Continuing Patent Applications and Performance of the U.S. Patent and Trademark Office–One More Time, 18 FED. CIR. B.J. 379 (2009). ] in a 2014 post Patent “Quality”, again and included a reference to a paper showing the errors of the Quillen/Webster approach:

    LBE, Comment on “Patent Grant Rates at the United States Patent and Trademark Office” , 4 Chi.-Kent J. Intell. Prop. 186 (2005), with text


    we suggest that Quillen and Webster’s elevated grant rates arise from a flawed numerical approach.

    **Separately, Lemley and Sampat wrote in the “rubber stamp” paper: We find that the PTO rejects a surprisingly high percentage of patents. While more than
    two-thirds of all applications result in at least one patent, a significant number of applications are
    rejected and then finally abandoned by the applicant.

    which includes a footnote:
    We thank Lawrence Ebert for raising this concern. Lawrence Ebert, More on Patent Grant Rate; the USPTO Is NOT a Rubber
    Stamp, IPBIZ, Aug. 2, 2007, http://ipbiz.blogspot.com/2007/08/more-on-patent-grant-rate-uspto-is-not.html.

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  • Napa Valley Vintners first wine group in US to receive certification mark registration

    Earlier this month, Napa Valley Vintners (NVV), the nonprofit trade association that works to “promote, protect and enhance the Napa Valley appellation,” became the first wine group in the U.S. to be granted a certification mark registration. So-called certification marks are a unique species within the trademark law, functioning to “certify” the nature or origin of goods or services, rather than merely convey the producer of those goods or services.

    The post Napa Valley Vintners first wine…

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