The Dolcera Blog

Can we patent the business methods? The federal court is divided on this.

Though the machine or transformation test from “In re Bilski” brought some clarity, this very issue has just not stopped short of capturing the limelight. We in 2009 did some observation from the US PAIR information to understand the potential impact resulting out of the In re bilski decision.

We conducted an analysis of hundreds of USPTO examination reports for method patents in three areas:

a. Software,

b. Medical device and diagnostic, and

c. Pharmaceutical.

As of 2009, we could establish that

• Rejection rates for software method patents are significantly higher since the Bilski decision in October 2008
• Medical diagnostic method patents are also affected
• Pharmaceutical method patents have been impacted, but to a much lesser degree

Click here to read the blog post.

In fact, we co-presented the same with Medtronic in the PIUG Annual Conference 2009. Think this would be an interesting read at this point of time when once again the federal court is divided on the business method patentability.

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Universal Display Corporation announced its financial results for the third quarter of 2011 in the past week. This is the first release of financial information that Universal Display Corporation has made since it signed a new agreement with Samsung Mobile Display. Dolcera presents an analysis of the announcement and the events surrounding it.

Universal Display Corporation reports its revenues in two segments: commercial revenue and developmental revenue. Commercial revenue relates to the incorporation of the company’s OLED technologies and materials into its customers’ commercial products, and includes commercial chemical revenue, royalty and license revenues, and commercialization assistance revenue. Developmental revenue related to OLED technology and material development and evaluation activities for which the company is paid, and includes contract research revenue, development chemicalrevenue and technology development revenue. Here, we mainly look at the commercial revenue of Universal Display Corporation.

Commercial revenue is reported in three parts: commercial chemical revenue, royalty revenue and license fees. In the results of third quarter of 2011, the revenue from royalty and license fees have been reported together. Unfortunately, since the past two years, Universal Display Corporation has been reporting only the change in revenues in each of these categories instead of the actual revenue figures. Some financial results announcements in the past have failed to provide quarterly information at all, instead providing information for the past 9 months or the past year as a whole.

Using historical financial results, we have reconstructed the commercial revenue earned by Universal Display Corporation in the three categories. The following table shows the quarterly commercial revenue by category in the past 5 years:

Source: Company filings

As expected, the revenues have shown a huge jump in the last quarter. Much of this can be attributed to the new agreement between Universal Display Corporation and Samsung Mobile Display. This agreement runs till 2017.  For the first time, Universal Display Corporation has explicitly mentioned the exact revenue it has received from Samsung Mobile Display from license fees. The company has received $3,246,315 from Samsung Mobile Display under its license agreement so far.

Apart from licensing fees, the agreement also increases the commercial chemical sales of Universal Display Corporation. Under the 2005 agreement, the company was the supplier of red PHOLED materials to Samsung Display Corporation. With the August 2011 agreement, Universal Display Corporation now supplies both red and green PHOLED materials to Samsung Display Corporation. Prior to August, Samsung Display Corporation sourced green PHOLED materials from Duksan, a Korea based company. There are no competing manufacturers of red and green PHOLED materials. The new agreement effectively doubles the per unit chemical sales of Universal Display Corporation.

In the following section we calculate the revenue that Universal Display Corporation receives from each display unit sold. All calculations have been performed using publically available data.

In the third quarter of 2010, 413.20 million mobile phone display units were shipped amounting to total revenue of $ 3,380 million. AMOLED display panels had a revenue share of 10.7% of the mobile display market. This results in the AMOLED mobile display panel revenue to be $ 361.66 million. The volume of AMOLED displays was 13.5 million units. In the AMOLED display market, Samsung Mobile Display had a market share of 98.3%. Thus, Samsung Mobile Display sold 13.27 million AMOLED display units and revenue from AMOLED displays units was $ 355.51 million. (Source: DisplaySearch)

Universal Display Corporation announces in all its filings that Samsung Mobile Display is the chief source for all of its commercial revenue. We consider that Samsung Mobile Display is solely responsible for all of Universal Display Corporation’s commercial revenue. The assumption is reasonable given that the period under study is the third quarter of 2010 when Samsung Mobile Display was the only major customer of Universal Display Corporation.

Universal Display Corporation’s royalty revenue for the fourth quarter of 2010 was $ 1,503,647 million. The royalty revenue is considered from the fourth quarter as royalty is paid by Samsung Mobile Display for goods sold in the previous quarter. As calculated earlier, Samsung Mobile Display’s third quarter 2010 revenue from sale of AMOLED display panels was $ 361.66 million. The royalty rate for the agreement between Universal Display Corporation and Samsung Mobile Display thus works out to be 0.423%.

The total number of AMOLED display units sold by Samsung Mobile Display in the third quarter of 2010 was 13.27 million. The royalty received by Universal Display Corporation for these units was $ 1,503,647 million. Thus, the royalty revenue per unit is $0.1133. The chemical sales revenue of Universal Display Corporation for the third quarter of 2010 was $1,642,600. Thus, the chemical sales revenue per unit is $0.1238. The key assumption in this case that the PHOLED material inventory levels of Samsung Mobile Display did not significantly change during the period.

The total revenue that Universal Display Corporation received from sale of each mobile display unit is $0.2371. It is to be noted that the period considered in this analysis is the third quarter of 2010 which is prior to the signing of the new agreement between Universal Display Corporation and Samsung Mobile Display. The August 2011 agreement doubles the chemical sales revenue per unit of AMOLED display panel sold for Universal Display Corporation. Thus, Universal Display Corporation receives $0.3609 for each AMOLED mobile display sold.

The above scrutiny only covers a part of an exhaustive industry analysis. For a detailed analysis of the subject matter, write to us at: info@dolcera.com

Written by: Kunal Krishna

Kunal is a Senior Business Research Analyst at Dolcera with expertise in cleantech and emerging technologies

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The Tech world is buzzing in 2011. Apple, Android, and Patents seems to the most recurring themes conversations converge too. Apple is a great success story, and literally becoming the apple of everyone’s eye by becoming one of the most valuable companies in the world, consistently innovating and generating higher and higher revenues. They recently posted one of their best quarters ever.

Many see Apple’s rise as a challenger to the Open Innovation theories, and positing that in technology a closed system offers you much more strength and sustainable innovation coming up with products which have completely re-shaped markets.

Of course Apple had a visionary in the form of Steve Jobs, but technologies don’t just develop “magically” and systems don’t just fall into “amazing” perfect tandem on their own. So, we at Dolcera decided to look into what exactly are the sources of Apple’s innovation.

Apple being a very secretive company, it was hard to find a lot of inside information. But one of the best sources of “innovation” data is the legal document which one gets for innovating - a patents. We decided to look at the patents of Apple and get an idea of the true sources of Apple’s innovation.

In our opinion, the key sources of Apple’s innovation are :
1. Expenditure on research,
2. Acquisitions, and
3. Patent Deals
Apple definitely has a strong in-house research. But every time Steve Jobs wished to make one of his “visions” a reality, it often required Apple to go out and spot “sources” which can be acquired, or taken the technology from. Some prime examples are acquisition of Fingerworks which developed the Multi-Touch for iPhone, and technology licensing from LiquidMetal which gave Apple products their great aesthetics among many others.

We have tried to provide a basic story flow in the visual below.

We are also conducting web seminars to detail on the findings of our research, and how you too can do the same. For details contact us at - info@dolcera.com

 Author: Pramath Malik

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Google Inc., the Internet giant, has signed a $12.5 billion agreement to acquire Motorola Mobility, the legendary mobile phone and set-top box manufacturer. As per the agreement, Google will pay $40 per share in cash, which was a 63% premium to the closing price of Motorola Mobility shares on August 12, 2011.

But what is impressive about the deal is the purpose behind it. After all, Google generates its revenue from searches i.e. it auctions off search words to clients that want to advertise alongside the responses. On the other hand, Motorola Mobility manufactures handsets and set-top boxes that carry TV channels to homes. Interestingly, Motorola Mobility is the No.2 provider of set-top boxes after Cisco.

So why an Internet mogul be interested in acquiring a hardware company?

The key to the story is Android, Google’s OS for mobile devices. At present, Android has surpassed Apple and Nokia smart phones and already has signed deals with 39 handset manufacturers such as Samsung, HTC, LG Electronics, Sony Ericsson, etc. As we can see from this, Google is not just an Internet-based company but is part of the mobile business in full swing. Although Google offers the Android OS for free to handset manufacturers, it is a cynosure when it comes to patent infringement lawsuits. Companies from the likes of Microsoft, Oracle, and Apple have filed multiple lawsuits against Android.

As a result, in a bid to strengthen its patent portfolio, Google has acquired Motorola’s 17,000 patents (Click here for information on Motorola Mobility’s patent portfolio). The acquisition not only eliminates Motorola from being a potential threat in terms of filing a lawsuit but also arms Google so that it can defend itself in lawsuits as well as launch suits of its own.

In a latest turn of events, just last week HTC, the Chinese handset manufacturer, filed a patent infringement lawsuit against Apple. As per the appeal, HTC stated that Apple was infringing nine US patents related to wireless communications and mobile phone displays. The interesting bit is that Google had assigned those patents to HTC and some of those patents it had acquired from Motorola Mobility.

The ownership pathway for the nine patents is shown below.

The first five patents were used to strengthen HTC’s Delaware suit against Apply while the other four have been used for a new lawsuit against apple.

Clearly, Google is out to avenge the lawsuits against its adopted child Android and defend itself in any way.

In addition, the other side of the story is the set-top box business, the acquisition of which will facilitate Google becoming a significant supplier of Internet-borne TV content on Android-equipped mobile devices and also generate revenues from TV advertising, which is worth $70 billion.

In all, Google’s deal with Motorola Mobility is not just a defensive action against infringement lawsuits but also a smart move in terms of boosting its ad revenues from Internet-borne TV content.

Author: Charanjeet Singh

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Samsung had been a long term supplier for Apple Inc for the products -LCD screens, flash memory & processors for mobile devices. In January 2011, Apple Inc placed an order on Samsung for mobile processors, forcing Samsung to quadruple their capacity from 5,000 sheets of chips a month to20, 000 sheets of chips a month. In Feb 2011, Apple Inc and Samsung signed a deal worth $7.8B for supplying various components. In Apr 2011, Apple Inc filed a law suit against Samsung, alleging that Samsung copied the design of its mobile devices and developed Galaxy series of mobiles. The Taiwan Semiconductor Manufacturing Company (TSMC) may hamper the chances of Intel introducing world’s first 3D chips into the market, bringing the chip to the market towards the end of 2011 before Intel. Industry sources suggest that Apple Inc is going to place orders on TSMC for A6 processors towards mid 2012 shunning Samsung which is the present supplier of A4 & A5 processors for mobile devices.

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Microsoft was sued in 2007 by i4i, a company from Canada, or infringing on its patent for an editing tool it co-opted for MS Word. The technology gave Word 2003 and Word 2007 users an improved way to edit XML. In the initial hearings the lower courts ruled Microsoft willfully infringed on the Canadian company i4i’s patent.

Microsoft was ordered to pay i4i damages of $290 million. Also through an injunction it was prevented selling versions of Word containing i4i’s technology.

The case in point is the standard of proof that must be met by the company that challenges the validity of a patent in court. According to the law, the patents which are issued by the Patent Office solely on the basis of supporting information submitted by the patent applicant should be presumed valid. Since the 1980s, however, the Federal Circuit Court of Appeals, which oversees patent appeals, has required a challenge to a patent’s validity be proved by a heightened standard of “clear and convincing evidence,” which was an argument used by i4i and as opposed to the lower “preponderance of evidence” standard routinely applied in civil lawsuits which was used by Microsoft. The issue is far more than a technicality, as it can have far-ranging effects on innovation and technology businesses.

In the court, Microsoft argued that the patent held by i4i is invalid because the invention covered by the patent was already on sale by i4i more than a year before the patent application was even filed. Under the current patent law, a patent cannot be issued in such a situation.

However, in the case of i4i, the USPTO never considered the evidence of this sale in the first place. In this case, i4i itself discarded the evidence and hence itwasn’t available. The lawyers of i4i argued to the jury that since such evidence wasn’t available, Microsoft could not prove its invalidity case under the heightened “clear and convincing” standard. The jury agreed to this argument and an appeal was affirmed by the Federal Circuit.

Microsoft which was backed in this case by many giants like Apple, Facebook, Cisco etc. argues that creativity and innovation should be promoted and that simply patent laws should not govern such cases. They also argued for a change in the law which is being followed by the congress.

Smaller tech companies and venture capital firms, meantime, were rooting for i41. Lawyers for i4i and the Obama administration argued, however, that there’s little point in granting patents to inventors if corporations can simply infringe upon them with impunity.

Loudon Owen, i4i’s chairman said, “The bottom line is whether there’s a robust patent system, and whether or not if you get a patent, it means something. If the law goes the way Microsoft wants it to, it will mean it will be very easy to invalidate patents, which will make it hard to justify why one seeks a patent in the first place.”

In this tussle between a small firm and a giant of the IT industry, the ruling has been in the favor of i4i. Read the supreme court ruling here. This will not only impact Microsoft, but also smart-phone manufacturers and technology developers. With very few patent cases coming through to the supreme court, this ruling would also act as a reference for such legal cases. The decision of the jury increases the confidence of small firms in defining their progressions based on innovation and intellectual property assets.

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The US India IP conclave on Information technology organized at Taj Krishna, Hyderabad started on a low note with the news of death of YS Rajasekhara Reddy, Chief Minister Andhra Pradesh in helicopter crash on 3rd September 2009.
The two days event organized by CII (confederation of Indian Industry) in association with USPTO Global Intellectual Property academy soon started to blaze as reputed panelist, both Indian bureaucrats and members of US embassy started addressing the audience. Welcome address was given by Shakti Sagar, Vice Chairman CII_AP & MD ADP Inida Pvt LTd. Theme address was given by Dominic Keating, IPR Attaché where he applauded Indian IT industries for their contributions to Indian economy. He mentioned that IT business has grown from 150 million US $ in 1991 to 50 billion US$ in 2007 and is further expected to rise to 900 billion US $ by 2020. Hyderabad alone exports IT worth 163 billion US $ and has shown a growth of 323% from year 2002.

GS Ragahavender, Registrar of copyrights, Copyright office, Government of India in his key note address discussed about legislation, management and enforcement as three pillars to assure working of IP laws. Cornelis M Keur, Consul General, US Consulate admired Andhra Pradesh as third state after Maharashtra and Gujarat in terms of growth in Economy. Concluding remarks of the inaugural session was given by Dr. S Chakravarthy, IAS(R), Advisor-APTDC.

Soon after a short coffee break the conference resumed on special plenary: The digital dilemma: Intellectual property in the information age. Dr. A Garg, Director-IPR department of Information technology, Govt of India emphasized that SMEs (small and medium enterprises) has to play a leading role in innovation. Incubation parks, multiplier grand scheme, SIP-EIT (support international patent protection in electronics and IT) have been started by government to support innovation. Under SIP-EIT, a financial support of upto 50% of total patent processing cost including Attorney’s fees, patent office filling fees, examination fees, patent search cost and additional cost for entering national phase up to grant/issue will be given. The support will be in the form of reimbursement of expenses in actual to the applicant. Support will however be limited to Rs. 15 lakhs or 50% if the total incurred on filling each invention, whichever is less.

Prof M Sridhar Acharyulu, MHRD IP chair professior, NALSAR, Jennie Ness, Regional Inteleecual propery Attaché for South east Asia US embassy Bangkok and Madhukar Sinha, Prof-IPR, center for WTO studies, IIFT shared their knowledge on various dilemmas to be confront in the rapidly growing age of IT.

Third session on strategies for protection of incremental innovation and patentability of software: challenges for IT/software industry started after high-lunch. The session was mainly headed by corporate professionals enlightening on Indian, US and European laws on software patenting and copyrights. BLV Rao, VP- corporate affairs, Infotech enterprise Ltd initiated the session with a focus on incremental innovations. Dawn Jos, Pat Engg-Asia, Texas instrument was next speaker in the session. Himanshu Goswami, IP attorney, Microsoft India and Santanu Mukherjee, lead-IPR attorney, Qualcomm India discussed intrinsic details on IT and Indian patent article 3 (k), European article 52 (2), 52 (3) and US laws on software patenting.

Dominic Keating unfolded the legalities of patenting software and business methods in US. Anil Sharma, Knowledge scientist Dolcera took the stage and discussed one of the most talked about cases in US, “In re Bilski & its implications on software patents.” The presentation kindled interest amongst the audience from the word go. The talk showcased the research work that Dolcera had undertaken in collaboration with Medtronic in Bilski case and its impact on software, medical devices and pharma method patents.

The last session of the day was on open source software: who needs IP, was chaired by Venkatesh Hariharan, Director, corporate affairs, Redhat Asia-Pacific, Prof. KS Rajan, IIIT-Hyderabad and Pavan Duggal, leading advocate in the Supreme Court of India. The panelists presented their views on pros and cons of free software versus paid software in context of IP and public interest.

The conclave was a major success and big boost to the city of Hyderabad. The city being an IT hub and IPR industries and law firms already budding, conferences like such will enhance awareness amongst the professionals. Overall, the conclave was a great experience and CII - USPTO effort to increase IP awareness in India is definitely commendable.

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Summary: Use of both wikis and iPhones is growing within enterprises. Using wikis from iPhones is not very easy yet, though there are some promising applications/approaches in the works. A notable application is Mini Confluence for the iPhone.

Wiki usage is growing rapidly in enterprises, and the success of Wikipedia has encouraged information technology (IT) and business units to try and set up something similar to a Wikipedia within their organizations as well.

A concurrent trend is the growth of smartphone use by business users. The Blackberry devices, currently the favorites of enterprise users, have always had top-notch email capabilities, but have not focused on the web browsing experience, though that’s changing rapidly.

The Apple iPhone is the real game-changer when it comes to mobility. Now comes the news that it is making big strides in enterprise adoption. Via GigaOm, we have the following quote from the Apple COO, Tim Cook:

The phone is particularly doing well with small business and with large organizations that allow people to purchase the phones for individual use, and this is both in corporate and government settings. Specifically, to give you some numbers, almost 20% of the Fortune 100 have purchased at least 10,000 units or more and there’s now multiple corporations and government agencies who have purchased in excess of 25,000 each.

Business users will soon want to access their wikis from their iPhones. In most cases, they will want read-only access and for that, a variety of options are already available. For example, there is an iPhone app out for the the popular Confluence wiki. The app’s called Mini Confluence

and it allows for browsing, searching and commenting. Editing does not seem to be supported.

Other wikis are taking a different approach. SocialText made an announcement in 2006 for something called the Miki, which, for all practical purposes, seems like a ’skin’ or a stylesheet that makes the wiki content readable on a mobile device. Many other wikis (including Twiki) follow the same model.

Yet a third approach is that of dumping the entire wiki on to the phone, since these phones have plenty of memory. Wikipedia-iPhone, for example, lets you take the whole encyclopedia with you on your device.

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The Google Chrome OS announcement was greeted with plenty of interest by bloggers and mainstream media alike. The opinions vary, of course. The New York Times has a summary of the technology opinionators’ thoughts here.

The most interesting opinion — from all I’ve read so far — is that of John Gruber at Daring Fireball.He says that the Chrome OS sounds more like Palm’s new Web OS — a collection of HTML, CSS and Javascript with lots of APIs to access native applications.

From a software development perspective, this won’t be a very appetizing option, given that using AJAX etc. is painful enough already.

PS: Cringely has an excellent summary in the New York Times. About Google v Microsoft, he says -

…these companies will posture, spend a little money on research and development, and keep each other in check, while reporters and publications pretend that it matters.

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The Dolcera Sequence Dashboard video demo is available on YouTube now. Here is the link.