• 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.

Order Granting Motion to Compel Routine Discovery IPR2015-00015, 16, 19, 25, 26, 34, 100, 108, 128

Takeaway: A party must serve on the other party any documents that are inconsistent with a position advanced by that party during the proceeding as part of routine discovery.  In its Decision, the Board granted Petitioner’s Motion for Routine Discovery.  … Continue reading

The post Order Granting Motion to Compel Routine Discovery IPR2015-00015, 16, 19, 25, 26, 34, 100, 108, 128 appeared first on PTAB Trial Blog.

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  • UK Spending Review & IP

    Crickets – by Billy Hathorn

    The UK Spending Review happened today – also known as the Autumn Statement – basically it’s an update on the economic state of the nation in the UK and a staging post for economic, tax, etc announcements.

    In past years, the Spending Review (or whatever it was known as in that particular year, the name changes) has brought us things like the patent box, R&D relief, and so on.

    This year … crickets, from a tax perspective. Nothing much, really (a small change on entering into the intangibles tax regime for corporate partners).

    There’s some spending announcements though (with the usual caveat that it’s a bit hard to tell what’s new money and what’s been announced before):

    • £5bn in health R&D, including £50m in antimicrobial resistance research; 
    • £150m to launch a Dementia Institute (presumably to do R&D);
    • investing £6.9bn in capital (capital what?) to ensure that the UK remains a world leader in science and research, and protecting the current £4.7bn research funding “in real terms” for the same purpose – but note that £6.9bn includes the £150m for the Dementia Institute;
    • investing £250m in a nuclear R&D programme (looks like it will be mostly for small modular reactor development, and focussed on spending in the North of England);
    • protecting funding for the arts in real cash terms for 5 years;
    • the £1bn Ross Fund investing in R&D in drugs, vaccines, diagnostics and treatments for infectious diseases – patterned with the Bill & Melinda Gates Foundation, so not all of that £1bn is coming out of UK pockets;
    • playing a leading role in international research efforts to reduce the costs of low carbon energy (no £ information indicated, though);
    • a new entity called “Research UK”, based on the Paul Nurse review recommendations. This will work across (not with? maybe just poor wording …) the Research Councils to promote a strategic approach to science funding. Innovate UK will be integrated into Research UK. The Research Excellence Framework will be reviewed.
    [ETA 26/11/15 – the Innovate UK grants are to be replaced by loans, according to a press release from BIS, which doesn’t have more detail on the point]

    The Review also notes that scientific R&D has grown by 21.3% and architecture and engineering activities by 38.8% (possibly since the beginning of 2010, although that’s not entirely clear, and neither is it clear what metric they are measuring – employment numbers? capital expenditure? revenue expenditure?).

    Stats for the curious: “research” is mentioned 46 times, “science” 35 times, and “technology” 30 times in the policy paper (PDF).

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  • FTC cracking down on bogus health products

    The federal regulatory agency in charge of assessing health claims for goods and services sold to American consumers is the Federal Trade Commission (FTC), the U.S. government’s main consumer protection agency. In the past few months alone, the FTC has taken action against a number of bogus health products which may seem obviously suspicious at first blush but have been successful in defrauding well-meaning consumers out of their money.

    The post FTC cracking down on bogus health products…

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  • Follow-Up: Professor Chien’s More Nuanced Arguments

    Following my discussion of Professor Colleen Chien’s WSJ essay on “ignoring patent demand letters, Professor Chien pointed me back to her 2014 article titled Holding Up and Holding Out that served as the basis for the WSJ essay. In the hold-out article, Chien explains that, although patentee hold-ups are a systematic problem, so are hold-outs where infringers refuse to deal. In the […]

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  • At WIPO, Former South Africa Judge Calls For Balance In IP Rights Enforcement

    Alongside this week’s meeting of the World Intellectual Property Organization committee on enforcement, an event featured a former South African Supreme Court judge presenting his views on IP enforcement. There is a need to go for the “big fish,” he said, and to bring balance in sanctions and enforcement procedures. He also described courts as finding that exceptions to copyright are a public right.

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  • USPTO Launches Dossier Access

    By Donald Zuhn –- The U.S. Patent and Trademark Office (USPTO) announced today that it had launched Dossier Access, the first of a set of business services to be developed as part of the Global Dossier Initiative. The Global Dossier Initiative is a collaborative project of the IP5 Offices — the European Patent Office (EPO), Japan Patent Office (JPO), Korean Intellectual Property Office (KIPO), State Intellectual Property Office of the People’s Republic of China (SIPO), and USPTO – which aims to modernize the global patent system by providing a single portal/user interface for stakeholders. Dossier Access allows patent applicants to…

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  • Granting Institution in Part Where Intervening Case Law Was Found Insufficient to Prevent Estoppel as to One Challenged Claim CBM2015-00131

    Takeaway:  A petitioner may be estopped from challenging a claim that was raised or reasonably could have been raised in a previous post-grant review, even in the face of intervening case law. In its Decision granting in part institution of … Continue reading

    The post Granting Institution in Part Where Intervening Case Law Was Found Insufficient to Prevent Estoppel as to One Challenged Claim CBM2015-00131 appeared first on PTAB Trial Blog.

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  • THE MYTH OF THE TRADE SECRET TROLL

    Why We Need a Federal Civil Claim for Trade Secret Misappropriation Guest Post by James Pooley, former Deputy Director General of the World Intellectual Property Organization.  Pooley makes his full argument in a forthcoming George Mason Law Review article available here. Trade secret theft has been a federal crime since 1996, covered by the Economic Espionage Act (“EEA”). […]

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  • A User-Focused Commentary On The TPP ISP Safe Harbors

    Annemarie Bridy writes: Section J of the Trans-Pacific Partnership’s IP chapter, on ISP safe harbors, looks a lot like Section 512 of the DMCA [US Digital Millennium Copyright Act], but the two frameworks differ in some important respects that could negatively impact the global environment for user speech online. This post offers a comparison of Section J and Section 512 with a focus on the rights of users and the status of user expression in the TPP’s intermediary safe harbor provisions.

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  • "Software" Claims Reciting No Structural Components and Having Questionable Novelty Struck Down under 35 U.S.C. § 101

    By Joseph Herndon — Two recent District Court decisions show examples of “weak” claims, which in the past would likely be found invalid as lacking novelty or being obvious, but today are struck down as being unpatentable under § 101. The cases illustrate the need for software or computer-implemented claims to explicitly recite novel structural components or specific details for how functions are performed. Listingbook, LLC v. Market Leader, Inc. On November 13, 2015, the U.S. District Court for the Middle District of North Carolina issued an opinion in the case Listingbook, LLC v. Market Leader, Inc. that held claims…

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  • Notes from the PPAC Meetings

    Global Dossier has now been released (November 2015). USPTO Collected over $3 billion in user fees in FY2015. That figure was below budget. Spending limit is around $3.5 billion, but is limited by revenue.  As a benchmark, in FY2010 USPTO collected $2.1 billion in revenue. USPTO is proposing increase in fees Ex parte prosecution: filing fee up $120 […]

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  • CAFC in Straight Path IP Group addresses the meaning of the word "is"

    The CAFC wrote of the Straight Path PTAB decision:

    Straight Path IP Group, Inc. owns U.S. Patent No.
    6,108,704, entitled “Point-to-Point Internet Protocol,”
    which describes certain protocols for establishing communication
    links through a network. On a petition for inter
    partes review filed by Sipnet EU S.R.O., the Patent Trial
    and Appeal Board cancelled claims 1–7 and 32–42 of the
    ’704 patent based on determinations of anticipation and
    obviousness. Sipnet EU S.R.O. v. Straight Path IP Group,
    Inc., IPR 2013-246, 2014 WL 5144564 (PTAB Oct. 9,
    2014). We now reject a claim construction on which the
    Board relied for its decision. We reverse the Board decision,
    and we remand for further proceedings under the
    correct construction.

    B

    As to the meaning of the word “is” –>


    The Board said nothing that either recognizes or disputes
    the plain present-tense meaning of the claim language
    on its face.
    Indeed, the Board’s construction—
    “active and on-line at registration,” Sipnet, 2014 WL
    5144564, at *4 (emphasis added)—implicitly recognizes
    that being online is a status that can change over time:
    having the status “at registration” is having it at a particular
    time. The query required by the claim language asks
    if the callee “is” online, which is a question about the
    status at the time of the query.
    But the Board did not
    address the facially clear meaning, instead turning immediately
    to the specification.

    Sipnet does much the same thing. Sipnet repeatedly
    recognizes and stresses the difference between “past
    online status” and “current online status,” the latter being
    “opposed to the past status at registration.” Sipnet Br. at
    21 (emphases in original); see id. at 8–9. Yet Sipnet offers
    no argument that, as a matter of plain meaning, the claim
    language “is” calls for anything but present-status information.
    Nor does it point to anything in other claim
    language that contradicts that plain meaning. Like the
    Board, Sipnet relies entirely on the specification.
    When claim language has as plain a meaning on an
    issue as the language does here, leaving no genuine
    uncertainties on interpretive questions relevant to the
    case, it is particularly difficult to conclude that the specification
    reasonably supports a different meaning. The
    specification plays a more limited role than in the common
    situation where claim terms are uncertain in meaning
    in relevant respects. T

    A claim:


    Claim 1 of the ’704 patent is representative of the asserted
    claims:
    1. A computer program product for use with a
    computer system, the computer system executing
    a first process and operatively connectable to a
    second process and a server over a computer network,
    the computer program product comprising:
    a computer usable medium having program
    code embodied in the medium, the program
    code comprising:
    program code for transmitting to the server a
    network protocol address received by the
    first process following connection to the
    computer network;
    program code for transmitting, to the server,
    a query as to whether the second process is
    connected to computer network;
    program code for receiving a network protocol
    address of the second process from the server,
    when the second process is connected to
    the computer network; and
    program code, responsive to the network protocol
    address of the second process, for establishing
    a point-to-point communication
    link between the first process and the second
    process over the computer network.

    Not “computer implemented” but a computer program product!

    link to case: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1212.Opinion.11-23-2015.1.PDF

    Note also:


    One final point about this claim-construction issue:
    Sipnet suggests in various ways that the specification
    does not adequately describe or enable the systems or
    processes involving a query about current connection
    status under Straight Path’s claim construction. But
    written-description and enablement challenges were not,
    and could not have been, part of the inter partes review
    that is now before us. See 35 U.S.C. § 311(b) (limiting
    challenges to prior-art challenges). Such challenges
    involve bottom-line or subsidiary factual issues that have
    not been litigated or adjudicated.

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  • Fair Use in the Digital Age: Reflections on the Fair Use Doctrine in Copyright Law

    Judge Leval found fair use and ruled in favor of the defendants. However, this was quickly reversed and remanded by the Second Circuit Court of Appeals under the logic that that previously unpublished works were immune from fair use due to a right of privacy. Leval now thinks his opinion deserved to be reversed, but the Court of Appeal’s opinion was even more problematic. He opined that the “[i]nability to quote from unpublished documents would seriously impair history, political commentary,…

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  • 101 issue for diagnostic method in Cleveland Clinic

    From Holman’s biotech blog:

    Tuesday, November 24, 2015

    The Cleveland Clinic Foundation v. True Health Diagnostics: Judge Denies Preliminary Injunction Based on Likelihood That Diagnostic Testing Method Is Patent Ineligible

    On December 18, 2015, in The Cleveland Clinic Foundation v. True Health Diagnostics, LLC, a district court judge in Ohio issued an order denying the Cleveland Clinic Foundation’s (“CCF’s”) Motion for Temporary Restraining Order and Preliminary Injunction after concluding that CCF had failed to establish a likelihood of success on the merits. In particular, the court found that CCF had “fail[ed] to make a clear showing that the patents-in-suit” are directed towards patent eligible subject matter. This is yet another example of the challenges facing the developers of diagnostic tests in the wake of Mayo v. Prometheus.

    The patents at issue in the case, U.S. Patent No. 7,223,552 (“the ’552 patent”); U.S. Patent No. 7,459,286 (“the ’286 patent”); and U.S. Patent No. 8,349,581 (“the ’581 patent”), relate to methods of analyzing Myeloperoxidase (“MPO”) biomarkers in a patient’s blood sample to predict a patient’s potential for heart disease, by comparing the level of MPO found in the patient’s blood sample with levels of MPO in control subjects to see if the patient has elevated levels of MPO. MPO is an enzyme released by white blood cells when an artery wall is damaged or becomes inflamed, and its presence is thus an early symptom of many types of cardiovascular disease (“CVD”).

    link: http://holmansbiotechipblog.blogspot.com/2015/11/the-cleveland-clinic-foundation-v-true.html

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  • TPP Article 14.17 & Free Software: No Harm, No Foul

    [Software Freedom Law Center, Link (CC-BY-SA)] The first official public release of the text of the Trans-Pacific Partnership Trade Agreement (known universally as the TPP) on November 5, 2015 generated much heated speculation. The ideal of “open agreements, openly arrived at” remains regrettably unattainable in international affairs. “Fast track” trade negotiating authority in the US means that parties excluded from the negotiating process have a short time in which to mobilize for or against the treaty as a whole in light of their specific concerns. The premium on speed of response to a very lengthy and complex legal document—and the presence of intense public attention—guarantees that hasty judgment and occasional self-promotion will always outrun professional analysis; this is one of the inherent defects of secret legislation.

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  • Institution Denied Where Customer Indemnification Insufficient to Establish Standing as Real Party in Interest CBM2015-00134

    Takeaway:  Indemnifying customer for alleged patent infringement, without sufficient substantiation, does not make an entity a real party in interest for a transitional proceeding with respect to a covered business method patent. In its Decision, the Board denied institution of … Continue reading

    The post Institution Denied Where Customer Indemnification Insufficient to Establish Standing as Real Party in Interest CBM2015-00134 appeared first on PTAB Trial Blog.

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  • Obviousness Versus Obviousness-Type Double Patenting

    In Prometheus Laboratories, Inc. v. Roxane Laboratories, Inc., the Federal Circuit affirmed the district court’s finding that Prometheus’ claims were invalid as obvious, but in so doing it cited its own precedent regarding obviousness-type double patenting. Is the court blurring the line between these doctrines?  The Product At Issue The product at issue was Roxane’s generic … Continue reading this entry

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  • Vote on FRAND?

    World Intellectual Property Review is running a survey about FRAND and the formation of the Fair Standards Alliance reported on this blog here.WIPR is asking whether you agree that the definition of FRAND must have a clearer meaning to allow standards …

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