Friday, June 30, 2006

Look what is happening?

Bikram Choudhary, an Indian migrated to land of riches --- America, has become fitness superstar in America. Why? Because he followed the advice of US Justice Department: ‘Welcome to America. When in Rome, do what Romans do. Make your yoga copyrighted, protect your intellectual property.’ Yes, meet Bikram Choudhary who has taken copyright protection for his style of yoga --- Why? Because, according to him, it’s the American way. He teaches yoga to number of Americans which includes Celebrities too. He obtained first U.S. Copyright in 1979 for his book --- Bikram’s Beginning Yoga Class followed by Trademark protection for the name of his company --- Bikram’s Yoga College of India. In 2002, he successfully obtained copyright to his style of yoga – 26 poses and two breathing exercises. In 2003, a group of yoga teachers sued Bikram contending that Bikram’s couldn’t copyright yoga. In April 2005 a federal judge ruled that Bikram’s copyright was legitimate and enforceable. According to Judge Phyllis Hamilton’s ruling, you can get a copyright on a ‘compilation’ of information that’s in the public domain, as long as it’s “assembled in a sufficiently creative fashion.” However, both parties settled out of the court before the case went to trial. Bikram today derives a handsome income from the global yoga empire what he has built and copyrighted and imparts yoga training all across the world. Bikram says his copyright is essential to protecting his business, which he predicts – with his usual flair for the dramatic – to be answer to all of America’s woes: bad health from too much smoking, too much drinking, too much stress.
Visit Bikram Choudhary at

More Action to Protect Traditional Knowledge

India’s initiative to fix traditional knowledge into tangible form/documentation, in order to prevent overseas scientists and multinationals companies to patent it, is moved to next level. Traditional Knowledge Digital Library (TKDL) created by the National Institute of Science Communication and Information Resources (NISCAIR) will be now made accessible to patent examiners all across the world to refer whether invention is based on traditional knowledge already available in the India or not. Union Cabinet on June 29, 2006 has approved a proposal to sign a non-disclosure agreement with patent offices across the world to allow patent examiners to access the TKDL which if signed, patent offices across the world will be obliged to refer to the TKDL to assess whether remedy is new or is based on knowledge already available in the Indian systems of medicines, as and when scientists apply for such patents. According to NISCAIR Director V.K. Gupta data on 65,000 formulations in Ayurveda, 70,000 in Unani and 3,000 in Siddha had already been put in the TKDL. The data relating to only 7,000 formulations each in Unani and Siddha, and 1,500 postures in yoga remained to be included and expected to be included by December 2007. The TKDL data will be available in five international languages – English, German, French, Spanish and Japanese for 24x7 on secured portal as per the terms and conditions of the access agreement. One of the salient features of the agreement will be that the patent offices will use it only for patent search and examination and only disclose it to third party when essential for the purpose of patent search and examination. The latter feature is included to prevent misappropriation and misuse of traditional knowledge at patent offices. TKDL is an online library for documentation of data in the public domain on codified systems of traditional medicines with aim of preventing fraudulent patents. TKDL is created by joint efforts of NISCAIR, Council of Scientific and Industrial Research (CSIR), and department of AYUSH.

Ranbaxy Losses One More Time!

The U.K. Court of Appeal rejected Ranbaxy’s appeal made against the ruling by lower court that its atorvastatin product would infringe the main patent covering lipitor’s active ingredient atorvastatin. The appeal court upheld the lower court’s decision that Pfizer European Patent EP0409281 (the EP ‘281 patent) covering calcium salt of atorvastatin (species) was invalid and Ranbaxy’s proposed product would infringe Pfizer’s European Patent EP0247633 (the EP ‘633 patent) covering atorvastatin (genus). This ruling would delay the Ranbaxy’s move of introducing generic version of Lipitor in UK until November 2011 when the EP ‘633 patent gets expired.

Thursday, June 29, 2006

Patent Terrorism – Terror of the Intangibles

Patent-Bin-Laden No bombs. No hijacks. No recorded messages. And no exclamation marks. This terror will simply strike your share prices. Your product is the hostage and your bottomline is the ransom. Pay up, or read on… Patent terrorism is perpetrated by ‘patent trolls,’ who are also called ‘patent terrorists.’ The term ‘patent troll’ was coined in 2001 by Peter Detkin, assistant general counsel for Intel, when he defended Intel against lawsuits by companies claiming to hold microprocessor patents of ‘critical’ importance. In 1999 alone, the claims were to the tune of $15 billion. Says Detkin on coming up with the new term, “We were sued for libel for the use of the term ‘patent extortionists’ so I came up with ‘patent trolls.’ A patent troll is somebody who tries to make a lot of money off a patent that they are not practicing and have no intention of practicing and in most cases never practiced.” Patent trolls are the individuals/organizations whose business models are based on patent litigation as a threat, and who generate revenue through patent licensing. Patent troll companies acquire crucial patents of other companies and then scout the market to threaten those companies of patent lawsuits, which may be engaged in business activities infringing on the acquired patents. They may demand the infringing companies to pay them royalties or license fees, or both, or may compel those companies to cough up large sums as a one-time settlement in lieu of patent litigation. Patent trolls neither have the intention to develop products based on a patent, nor to sell a product, nor to acquire new customers. They don’t enter into cross-licensing agreements, as they themselves don’t invent or manufacture any product. Whenever they find any company infringing on the acquired patents, they try to extort retroactive licensing fees from them. They don’t bother about building or maintaining good customer relationships, as it goes contrary to their ideology. However, many people in the legal fraternity, across the globe, strongly disapprove of this patent terrorism. Says David Simon, the Chief Patent Counsel of the Business Software Alliance, “Too many of these (patent litigation lawsuits) are filed in search of a quick buck through settlement negotiations, rather than a party legitimately asserting a right, because the infringer is interfering with commercial objectives.” Robert Merges, Professor of law at the Center for Law and Technology at the University of California, Berkeley, feels that patent terrorism is a very tricky issue. Says Merges, “Sometimes people will become pretty good at playing the patent game. They’ll get a patent and not really contribute anything significant in terms of technology, but just be a little ahead of the curve and be pretty clever about working the patent system. It’s kind of a tricky policy issue. How do you slap down and try to stop the illegitimate guys while not wrecking any of the beneficial uses people have found for patents?” Patent terrorism has been very widespread across the globe. One form of patent terrorism tries to anticipate the future of technological innovation in a specialized field and acquires patents in that field. Another form of patent terrorism involves the acquisition of a portfolio of patents of an obsolete technology encompassing another’s innovation. In both these instances, the patent troll tries to siphon off a huge sum from patents that infringe upon the claimed territory. Patent Trolls on a ‘Roll’ There have been many examples of patent trolls, of which the following are notable ones: Intergraph Vs. Intel & Texas Instruments In late 1996, Intergraph filed an infringement lawsuit against Intel for infringing upon its patents on Clipper Processor technology, which dealt with cache memory management. This lawsuit, won by Intergraph, resulted in a series of litigations and judgments that have totalled $675 million hitherto, while the royalties will continue to be paid till 2009. In 2003, a trolling company demanded $8 billion from Intel and threatened it of a permanent injunction after it acquired a patent for $50,000. In September 2003, Texas Instruments had to cough up a one-time payment of $18 million as licensing fee for infringing upon Intergraph’s patent related to Parallel Instruction Computing (PIC) technology. TechSearch Vs. Sears Roebuck & Hyatt Between 1999 and 2001, TechSearch LLC, an Illinois-based private company engaged in buying, owning, licensing, and enforcing of patents, made millions of dollars by acquiring a data transfer patent. About 100 companies, including UAL Corporation, Sears Roebuck, and Hyatt Corporation, have obtained licensing rights from TechSearch than engaging in expensive court litigations. TechSearch now holds nearly 24 patents, after having acquired the rights from inventors or sharing the licensing revenues, which account for about $3 million just for the web patents. RIM’s BlackBerry Vs. NTP The controversy surrounding the patents of BlackBerry involving Research in Motion (RIM) and NTP is a classic case of patent troll. The battle has been going on for six years. In 2000, NTP Inc., a small holding company, based in Arlington, Virginia, first sued RIM, the Canadian-based manufacturer of BlackBerry, for infringing on some of its patents on BlackBerry, the wireless internet device. NTP, with no products and little infrastructure, is considered by many as a patent trolling company, which acquires patent portfolios with the intention of threatening to file lawsuits against potential infringers. NTP was founded by late Thomas J. Campana Jr., and his northern Virginia lawyer, Donald Stout. Campana was an engineer in Chicago, and in 1990, he had created a unique innovative system to send e-mails through wireless devices, which was showcased in the Comdex computer show in Las Vegas. Campana worked for his own company and his main customer was a wireless carrier called ‘Telefind.’ In November 2001, NTP filed a lawsuit against RIM for patent infringement in the federal court in Richmond. A jury concluded that RIM had infringed upon NTP’s patents and ordered RIM to pay 5.7% of BlackBerry’s sales to NTP. NTP – who claim to own the US patents for the software that powers BlackBerry, and which expires on May 20, 2012 – had filed another lawsuit against RIM in 2002 for infringing upon one of the claims of their BlackBerry patent. It is estimated that NTP’s patents have 1920 claims in total. The US District Judge, James R. Spencer, who heard the case, found RIM to have infringed upon NTP’s patents, and invoked an injunction against RIM in 2003, preventing RIM from manufacturing, using, or offering to sell handhelds, services, or software in the US. However, the court stayed the injunction pending an appeal by RIM. Spencer later ordered RIM to deposit 8.55% of its quarterly revenues into an escrow account pending the final judgment. RIM and NTP’s endeavor to settle their dispute amicably – when RIM agreed to pay NTP a sum of $450 million in March 2005 – fell through. RIM finally had to terminate the long-standing patent litigation dispute with NTP by shelling an astronomical amount of $612.5 million as a full-and-final one-time settlement. Prolonging the legal battle would have caused RIM a loss of more than 5.95 million BlackBerry subscribers worldwide. As per their latest agreement, NTP need not refund the amount to RIM even if USPTO ruled in favor of RIM. The intense dispute resulted in RIM’s sales dwindling from the expected range of $590-$620 million to $550-$560 million. The Earnings Per Share (EPS) declined from the company forecast of 76-81 cents to 64-66 cents. PhoneTel Vs. IBM & Sony PhoneTel Communications Inc., a Texas-based IP firm, has more than 1000 filed patents by its prolific inventor, Dr.Kazuo Hashimato. PhoneTel, which was granted about 200 of these patents, filed a patent litigation in August 1998 against 13 of the world’s largest companies, including AT&T, Lucent Technologies, Bell South, Compaq, and Toshiba Information Systems, when they infringed on PhoneTel’s patents on caller ID services, answering machines and other telecom products. PhoneTel collected about $2 million in royalties from AT&T and Lucent Technologies alone. Over the years, PhoneTel has garnered tens of millions of dollars in settlements and by licensing its patents to giants such as AT&T, IBM, Sony, Dell Computers, Southwestern Bell, Lucent Technologies, Northern Telecom, and several other small companies. PhoneTel has also obtained settlements against more than 40 companies, which it has sued over patent infringement. PhoneTel also has pending lawsuits, filed in January 2000, against Apple, Yamaha, Nintendo, Packard Bell, Sega and twelve other companies for infringing on its patents on personal computers, sound cards, digital synthesizers, and console game systems. PhoneTel enforces the patents on answering machine, and owns 50 licenses that generate royalties to the tune of $55.5 million. Eolas Technologies Vs. Microsoft In 2003, Eolas Technologies Inc., and the University of California won a $560 million judgment against Microsoft involving patents covering web browser features. Fougnies & Day Vs Boston Communications Group In September 2005, Messrs. Fougnies and Day, which comprised the founders, Douglas Fougnies and Larry Day, and four other employees, won $128 million in damages from Boston Communications Group (BCG) Inc., over alleged infringement of a 1998 patent. BCG’s stock, which was quoting at $30 per share on NASDAQ in 2001, declined sharply after the patent troll incident and touched a low of $1.17 in September 2005. Said Day, “The cause of the lawsuit is not that we are patent trolls. The cause of the lawsuit is that these defendants used our patented technology to make over $1.5 billion in revenue.” Forgent Networks Vs Adobe Systems & Dell Forgent Networks, a Texas-based company, founded in 1985, acquired a US Patent No. 4,698,672 (’672 patent) related to data compression technology, when it acquired Compression Labs in 1997. The ’672 patent conferred on Forgent the exclusive rights to the JPEG method of compressing digital video images. The ’672 patent covers several areas including digital still image devices, such as digital cameras, personal digital assistants, cellular telephones, printers, scanners, and other devices used to compress, store, manipulate, print, or transmit digital still images. In 2004, Forgent initiated lawsuits against 40 global technology companies including Adobe Systems, Macromedia, and others for infringement of their ’672 patent and garnered over $100 million in intellectual property licensing revenues. Several of Forgent’s pending lawsuits and licensing agreements with other companies, such as Dell, is expected to catapult the company’s revenues from intellectual property to about $1 billion. In mid-2005, Forgent filed lawsuits against 15 more companies for infringing on its US Patent No.6,285,746 (’746 patent), relating to computer regulated video system enabling playback during recording. Acacia Technologies Vs Nokia & Walt Disney California-based Acacia Technologies (AT) group, a leader in technology licensing, is also considered a patent troll. The AT group and CombiMatrix group are the two operating groups of Acacia Research Corporation (ARC). The AT group, which holds 29 patent portfolios comprising 127 US patents and a few foreign patents, develops, acquires, and licenses patented technologies. The list of their licensees includes National Instruments, Nokia, Playboy, Petco, Sunglass Hut and Walt Disney. Acacia’s patents cover a gamut of technologies across several industries ranging from audio-video synchronization, broadcast data retrieval, credit card fraud protection, database management, data encryption and product activation, digital media transmission to digital video production, enhanced internet navigation, image resolution enhancement, interactive data sharing, interstitial internet advertising, network data storage, etc. It is patents that have given the company the courage to take on giants. Emphasizing the importance of patents, Paul Ryan, CEO of ARC, says, “Patent protection is a fundamental right. It is why some people left Europe.” Echoing similar views, Jadallah of Mohr Davidow Ventures, a California-based venture capital firm, said, “With patents, an individual can succeed against big companies.” Medtronic Vs Karlin Technology In May 2005, Medtronic Inc., settled a 4-year long battle on patent infringement claims in spinal fusion technology with Dr. Gary Michelson’s licensing company, Karlin Technology Inc., a private patent holding company, for a stupendous amount of $1.35 billion. This amount involved the transfer of ownership of more than 100 issued US patents, about 110 pending US patents, and nearly 500 foreign patents to Medtronic. The agreement also enabled Medtronic gain ownership of future patents related to technology developed by Dr. Michelson during the next decade and a half. This settlement agreement emphasizes the significant impact of intellectual property portfolio on companies’ growth and survival, especially those that operate in a lucrative and high growth industry, such as pharmaceuticals and advanced medical devices. In this case, the global market for spinal implants was estimated at nearly $4 billion in 2004, and the market is expected to grow at a compounded annualized growth rate of 25-35% in the next decade. ThinkFire Thinkfire, another patent troll, is a New Jersey-based intellectual property licensing and advisory company that acquires patents and manages patent licensing for other companies. Thinkfire was started in July 2001 by Nathan Myhrvold, Microsoft’s ex-Chief Technology Officer, and supported by high-tech companies and venture capital investors. Similarly, IMS, a wholly-owned subsidiary of Indiana-based Hurco Companies Inc., a global industrial automation company, owns the patent on interactive control of machine tools. IMS has collected over $50 million in licensing fees by enforcing its patent, and is acquiring more patents. While some criticize patent trolls, others seem to have a diametrical view of them, since patents are also considered as tradeable properties. Says Carl Gulbrandsen, Managing Director of Wisconsin Alumni Research Foundation (WARF), “Patent trolls don’t exist. Trolls are imaginary creatures. I think the whole issue is overblown. Patents are a piece of property. To say that it’s wrong that a company acquires property and then expects to be paid for use of that property, I think, is a pretty simplistic approach.” However, patent trolls have become a very lucrative business (Refer Table-1). From 1980 to 1999, royalties on patents in the US soared from $3 billion to approximately $110 billion. IBM alone generates about $1 billion in income from patent royalties, which is 2,000% higher than in 1988. Texas instruments also make more than $1 billion through licensing revenues.

Brace! Brace! Take Your Cash Positions! One way of avoiding or averting patent terrorism is to evaluate and analyze your patent portfolio frequently to gauge any threat of infringement. Strategic management of intellectual property assets, especially patents, is the key that will help in optimizing value. It is critical that you have sound knowledge of patents and patent rights to avoid infringement or damages arising therefrom. Obtaining a patent for your invention or product is always a wise decision. Says Kent Richardson, Vice President of Rambus, an intellectual property firm, “Patent work is no longer just a defensive insurance policy. It is a part of your product offering.” When your company is accused of patent infringement, consulting a qualified and competent patent attorney is the first logical step. Trolls can be very risky, and neglecting it could prove to be a really costly mistake. A troll could lead to prolonged litigation as well as paying astronomical damages, which could prove disastrous for your business. In case of possible infringement litigation, it is always advisable to get an expert opinion of a patent attorney. Obtaining a patent attorney’s opinion as to whether a particular product infringed upon a patent will lessen your exposure to a case of willful infringement. If the patent is found to be infringed, then a patent attorney may suggest various ways to circumvent the patent or suggest that you enter into a licensing agreement with the troll. The US government is working on introducing a new draft bill – the Patent Reform Act, 2005 – to seriously tackle the issue of patent troll. The new bill aims at minimizing the incentives for patent trolls and makes it very difficult for them to chase companies and prove patent infringement. The proposed bill also seeks to achieve the following: ³ restrict the damages that a patent-holder could extract from an infringer ³ limit the patent-holder’s ability to obtain injunction against the alleged infringer, and ³ raise the level of proof for willful infringement. The bill also gives courts the discretion to decide on the patent-holder’s failure in commercializing an invention before granting an injunction against the alleged infringer. Patents are very potent weapons, whether they are used to protect intellectual ideas or to make profit through licensing agreements and litigation threats. Many companies, over the years, have discovered and harnessed the intangible value of patents through shrewd intellectual property strategies, which have yielded them significant returns. Applying for your own patents is always the best move. As always, attack is the best defense. The only confusing truth for the intellectual property war-mongers is that the battle over patents has to be fought with patents. It goes against conventional wisdom and reason. “But then, mine is not to reason why, mine is but to do or die.” May the best Attorney win!
Today’s post comes from M. Qaiser and P. Mohan Chandran with iPrex Solutions, Hyderabad. Copyright © 2006, iPrex Solutions. All Rights Reserved.

Thursday, June 22, 2006

Dr. Reddy’s Rocks!

Merck’s top selling anti-cholesterol drug Zocor which worth around U.S. $ 4.4 billion worldwide (2005) is going off-patent tonight paving way for Indian generic manufacture Dr. Reddy’s to enter U.S. market as Merck’s Authorized Generic for Simvastatin tablets. On June 20, 2006 Dr. Reddy’s also launched Authorized Generic of Merck’s yet another blockbuster drug Proscar (estimated U.S. $ 406 million in U.S) after Ivax successfully obtained 180-day marketing exclusivity for finasteride 5mg tablets. Couple of months back Dr. Reddy’s also launched its fexofenadine tablets, a generic version of Sanofi’s blockbuster anti-allergic drug Allegra, in U.S. market. Even there are chances that Dr. Reddy’s may enter into some sort of settlement with Sanofi-Aventis and Bristol-Myers for pending Plavix patent litigation. Plavix is world’s second largest selling drug which worth around U.S $ 6 billion worldwide (2005). With all these developments Dr. Reddy’s is all set to Rock US generic market.

Newsletter – iPrex Solutions

GameChanger: New ‘Code’ at USPTO! The US Patent and Trademark Office (USPTO) has recently introduced few sweeping changes in the examination procedures in an effort to cut down the number of pending patent applications. The USPTO has put forward two new proposals that restrict the number of filings. As per the proposed changes, a patent applicant would be allowed to file no more than ten claims in the patent application. This rule would be applied with retrospective effect and include any patent application that is pending but has not yet been examined. The second proposal relates to restricting the number of ‘continuation applications’ to only one, contrary to the traditional practice of repeating the applications until the applicant developed legitimate new positions. A second continuation application could, however, be submitted, provided the filer proves that the issues raised in the second continuation application necessitates such a filing. This new development is said to have a negative impact on the patent applicants who feel that patents limited to only 10 claims will fail to achieve their strategic objectives. In the new scenario, the patent agents/attorneys who understand the business strategies will be best suited to draft patent applications. According to the USPTO, about 400,000 new applications were filed in 2005, and 900,000 were pending hitherto, which is further expected to grow. The USPTO fears that if the current trend of patent applications continues, then the average period of issuing patent would substantially increase from the current 2-3 years. Analysts are of the opinion that the increase in patent filings in the USA is indicative of the increasing importance of patents in the current business world. Just when the world’s patent attorneys had understood the game, USPTO has changed the rules. Patent agents/attorneys may now have to upgrade their skills. IndiaGra? Farmers in India are vying to cultivate the ‘Desi Viagra.’ About 600 farmers in Madhya Pradesh, out of a total of 800, sought permission to cultivate ‘Safed Musli,’ more popularly known as ‘Desi Viagra.’ Safed Musli, found in the Central regions of India, is considered as a natural alternative to Viagra because of its aphrodisiac qualities. Scientifically known as ‘Chlorophytum borivilianum,’ Safed Musli belongs to the family of Liliaceae, and has been identified by the Indian Medicinal Plants Board as the sixth important herb to be preserved and marketed. The grounded roots of the plant are used as a tonic for stimulating sexual impetus, and also in a number of other herbal drug formulations. 17 of the 256 species of Chlorophytum exist in India, and have high demand both domestically and globally. It is estimated that the overall demand for Safed Musli’s dried tubers in Indian and foreign markets is more than 35,000 tonnes per year, while the supply is only a meager 500 tonnes per year. In foreign market alone, the demand is estimated between 300 and 700 tons per year. Using the Intellectual Property Rights with a good marketing strategy, India can seize this opportunity to earn some “hard” currency. Patent Scoreboard The USPTO issued the seven millionth patent to DuPont Senior Researcher John P. O’Brien for ‘polysaccharide fibers’ and a process for their production in 2006. It took the USPTO 75 years to get from patent No.1 to patent No.1 million. However, it has taken less than one-tenth of that time to go from 6 million to 7 million patents. The USPTO issued patent No.1 on August 8, 1911, for a tubeless vehicle tire. Approximately 400,000 patent applications were filed with the USPTO in 2005. Indian inventors were granted 495 patents in the US in 2004-05 while China had 943 US patents to its credit. The USPTO issued 151,079 utility patents in fiscal year 2005. The highest number of patent applications in India during the period 1995-2005 was filed by Pfizer. A total of 8,900 patent applications were filed in India during 1995-2005. 7,500 of these applications were filed by foreign companies, while 1400 applications belonged to Indian companies. There are around 1 million IT-related patents in the US alone. ‘Maha’ Damages: Yamaha Sues Yamoto Yamaha Motor Corporation, USA, and Yamaha Motor Co. Ltd., sued Yamoto Motor Corporation (Yamoto) and Patriot Motorcycles Corporation for trademark infringement in the Los Angeles Federal Court. Yamoto faces charges of trademark infringement, copyright infringement, trademark dilution, unfair competition, and misleading advertising. Yamoto imitated Yamaha’s Raptor ATVs and TT-R 125 line of off-road motorbikes by manufacturing look-alike bikes with inferior quality and cheaper price. Yamaha has claimed triple damages as well as legal damages from Yamoto for confusing the public and misleading them with similar logo, colour, trademark, and appearance. Yamaha has also sought delivery of all of Yamoto’s products and advertising material to Yamaha Corporation. So, it is quite possible that even without getting into an accident, your bike may be damaging someone’s name and reputation. Do you have insurance for that? Jet Airways Asked To Change its Name Jet Airways (India) faces a lot of turbulence as it got into trademark infringement row when a Maryland-based airline carrier, Jet Airways Inc., filed a case with the US Transport Department alleging that the Indian carrier immediately abstain from using the “Jet Airways” trademark. Jet Airways (India) had obtained exclusive licensing rights of the “Jet Airways” trademark in India, from Jet Enterprise Pvt. Ltd. (JEPL), in an agreement signed with them on October 15, 2000. JEPL is jointly held by Mr. Naresh Goyal and Mr. Hasmukh Gardi. Jet Airways (India) has subsequently bought the ‘right, interest and title’ in “Jet Airways” from JEPL for a one-time payment of $7 million. Jet Airways (India) has now roped in two law firms to fight their case before the US Transport Department. Enter: The Power Shave In Gillette’s world, this can be the fifth wonder. Gillette launched the world’s first ever manual five-blade razor, ‘Gillette Fusion,’ and an equivalent battery-powered version, ‘Gillette Fusion Power.’ The new razor alleviates pain and increases shaving glide and comfort. Fusion comes with a breakthrough ‘shaving surface technology’ that integrates a frictionless coating on its blades, with an expanded “Lubrastrip” blended with vitamin ‘E’ and aloe vera. The enhanced Lubrastrip turns white, indicating the end of optimum shave conditions. Gillette Fusion Power integrates sophisticated technology into wet shaving. Gillette has patented its on-board microchip that adjusts the voltage and frequency, and maximizes razor performance. The razor’s ‘Low Battery Indicator Light’ glows when the battery has to be replaced. In case the razor is activated accidentally, the Auto Shut-off feature turns the razor off after about 8 minutes of operation. In 1998, Gillette Mach 3 became the market leader in the U.S., with 34 percent market share, and is now the world’s highest selling razor in its category. Mach 3 skyrocketed Gillette’s sales in 2004 by 50 percent, to $4.3 billion, while sales witnessed a record $1.63 billion. With all those shaves, looks like it’s still a man’s world. Blackberry Still in Motion BlackBerry saw a silver lining in a dark cloud when Research in Motion (RIM), the Canadian-based manufacturer of BlackBerry, agreed to settle the long-standing patent litigation dispute with NTP for a full-and-final one-time settlement of $612.5 million. As per the latest agreement, NTP need not refund the amount to RIM even if USPTO ruled in favor of RIM. NTP Inc., a small patent troll company based in Arlington, Virginia, founded by late Thomas J. Campana Jr., and his northern Virginia lawyer, Donald Stout, has no products and little infrastructure. It acquires patent portfolios with the intention to file lawsuits against potential infringers. NTP – who claim to own the US patents for the software that powers BlackBerry, and which expires on May 20, 2012 – filed a lawsuit against RIM in 2002 for infringing upon their patent. It is estimated that NTP’s patents have 1920 claims. In 2003, the US District Judge, James R. Spencer, who heard the case, found RIM to have infringed upon NTP’s patents, and invoked an injunction against RIM that prevented them from manufacturing, using, or offering to sell handhelds, services or software in the US. However, the court stayed the injunction pending an appeal by RIM. RIM and NTP made an endeavor to settle their dispute amicably, when RIM agreed to pay NTP a sum of $450 million in March 2005. But, the deal fell through. The intense dispute resulted in RIM’s sales dwindling from the forecasted $590-$620 million to $550-$560 million. The Earnings Per Share (EPS) declined from the company’s forecast of 76-81 cents to 64-66 cents. However, the settlement news made RIM’s stock jump from $10.43 to $82.35. The stock owners were happier than the product owners. Indian American Named in Top Ten An Indian American has been named as the youngest ever-IBM fellow, with more than 300 patents, and has been listed among the top ten living patent-holders in the United States. Mr. Ravi Arimilli is a researcher, based in Austin, Texas, who specializes in computer chip innards. His most recent patent issued on November 29 is for ‘’Layered local cache with lower level cache optimizing allocation mechanism'. In 2002 alone, Mr. Arimilli won 78 patents, i.e., three patents every two weeks. He is forging ahead as Chief Scientist on the 500-person Power 7 eServer development team. An IBM Fellow is an appointed position at IBM, made by IBM’s CEO. Usually, only 4 or 5 IBM Fellows are appointed each year, at the annual Corporate Technical Recognition Event (CTRE) in June. It is considered to be the highest honor a technologist at IBM can achieve. iPrex Solutions on the Cover Page Several articles written by iPrex experts have been published on the cover pages in the USA and UK media. Here is a couple. Patent Insurance: Teflon Coating on Armour? Thankfully, there is always some insurance protection available against all the dreadful calamities that can befall the human race: accident, fire, earthquake, floods, death, and now, patent infringement. But wait! Patent insurance sounds like re-fried beans. A patent itself is a kind of insurance. A patent, by definition, is an exclusive right granted by the government to make, use or sell the patented products. In other words, no one other than the patent-holder can manufacture or market the patented products. This appears to be a sort of insurance. What then, is a patent insurance?....... To read more, go to Patent-Holder Deserves the Monopolistic Rights Picture this: A man sits on an ergonomically designed chair that reduces fatigue, and clicks away on a key-pad technologically enhanced to ‘sense’ the touch of his fingers enough to type the letter just once (not twice) on his laptop screen, which has the right resolution of horizontal and vertical lines to perfect the illumination on his screen so that his eyes are better protected. He finishes typing, checks his spelling and grammar on word processing software, which has a thousand features, and saves his document on his miniscule thumb-drive, using a high-speed USB port through a giga-powered processor. He e-mails it to his publisher, who will soon use the full power of the available technology to get the article to the readers with the shortest elapsed time and best quality print or even a web-cast. He sits back and sips his drink, which has sugar-free ‘Equal,’ non-dairy creamer, and de-caffeinated coffee. He has just written an article criticizing Intellectual Property Rights, (IPRs), patents and innovations – ironically, the key drivers which made all of the above possible… To read more, go to Did You Know? Texas Instruments (TI) was one of the first organizations to understand that IP was more profitable than actual products. TI earned more than half of its annual revenues through patents. The brand name “Coca Cola” in 2004 was valued at more than $67.5 billion, equivalent to approximately 51 percent of shareholder value. Less than 1 percent of brand names are globally protected. Google’s brand is worth about $18 billion. China is the world’s largest market for pirated/counterfeited goods. Indian government loses more than Rs. 9 billion (900 crores) every year in counterfeit products due to loss of excise revenues and tax evasion. The loss to Indian companies every year because of counterfeit products is estimated at Rs. 40 billion (4000 crores). Lebanon has the highest level of piracy among Middle East countries at 75 percent, followed by Kuwait at 59 percent and Saudi Arabia at 43 percent. The year 2005 saw a record number of international patent filings of 134,000 applications through Patent Cooperation Treaty, which represented an increase of 9.4 percent over 2004. The top five patent filing countries were USA, Japan, Germany, France and the UK. For more details and queries about our services and support in India and other countries, please visit or call 91-40-66756868.

Monday, June 19, 2006

Simvastatin Generic Brawl

Merck is on the verge to lose patent protection for its multi-million dollar drug compound Simvastatin, paving way for euphoric generic players to enter U.S. Simvastatin market which worth around U.S. $ 4.4 billion worldwide in 2005. Even though there are no Para IV litigations for Simvastatin tablet, the story so far is quite interesting and central for future of U.S. generic industry, more particularly for First Para IV filer and subsequent Para IV filers. On June 23, 2006 generic players will start commercializing their generic versions of Simvastatin tablets but the debate surrounding the Generic launch and entry still continue to prevail --- Whether all generic players would get FDA final node to market their generic versions or only Teva and Ranbaxy would reap the benefit of 180-days exclusivity for their generic Simvastatin tablets? Food and Drug Administration (FDA), which earlier denied Ranbaxy and Ivax’s citizen petitions for not to approve subsequently filed ANDAs before expiry of their 180-day exclusivity for respective strengths and to reinstate the delisted patents to Orange Book, has already made an appeal with U.S. Court of Appeals against the decision of U.S. District Court which remanded and send the case back to FDA for decision. Now interestingly, rather been a conventional generic tussle between Innovator and Generics, this case is turning out to be decisive regulatory tussle between FDA and first Para IV filers’ concerning 180-day exclusivity issue. Let us go back and revisit this unusual case history from its inception to figure out the issues involved and their impact on future generic industry, particularly when the Authorized Generics are turning out to be next big hurdle for 180-day exclusivity holder. Merck’s Goldmine Merck hit the goldmine when Merck scientists synthetically derived Simvastatin from a fermentation product of Aspergillus terreus while developing and researching lovastatin. In 1980, Hoffmann et al filed a US patent application for Simvastatin, its pharmaceutical composition and use thereof to treat hypercholesterolemia against which U.S. Patent No. 4,444,784 was issued on April 24, 1984. Merck filed the new drug application (NDA) for simvastatin for anti- hypercholesterolemia indication, which was approved by FDA on December 23, 1991 in 5mg, 10mg, 20mg, and 40mg strengths. Subsequently FDA listed Simvastatin tablet along with the ‘784 patent with the Approved Drug Products with Therapeutic Equivalence (Orange Book) under 21 U.S.C. § 355 (b) (1). Listing Additional Patents & PTE On May 20, 1993 USPTO under 35 USC § 156 extended the term of the ‘784 patent for a period of 1704 days, adjusting the patent expiry of the ‘784 from April 24, 2001 to December 23, 2005. FDA later approved 80mg strength of Simvastatin tablet in 1998. In 2000, Merck further listed two additional patents stating to be metabolites of Simvastatin, namely --- 1. U.S. reissued Patent No. RE36,481 (the ‘481 patent) 2. U.S. reissued Patent No. RE36,520 (the ‘520 patent) Later, Merck also obtained Pediatric Exclusivity from Simvastatin tablets extending the patent terms of the ‘784, ‘481, and ‘520 patents with additional 6 months. Ivax Para IV Attack Like other blockbuster drugs, Simvastatin also became Para IV target in the same year when Merck listed additional patents for Simvastatin tablets. On December 14, 2000 Ivax submitted ANDA with FDA seeking marketing approval for its generic version of Simvastatin tablet in 5mg, 10mg, 20mg, and 40mg strengths. Ivax filed Para III certification with respect to the ‘784 patent but filed Para IV certification in respect to additional patents contending that the ‘481 and ‘520 patents were invalid or unenforceable, or that their drugs would not infringe the patents. Ivax notified Merck of Para IV certification, detailing the factual and legal basis for its belief that its generic drug would not infringe the patents, or that the patents are invalid or unenforceable. Ranbaxy Joins the Para IV Race In November 2001, Ranbaxy became the second generic player to file Para IV certification with FDA seeking marketing approval for its generic version of Simvastatin tablet in 5mg, 10mg, 20mg, 40mg, and 80mg strengths. Ranbaxy was, however, first to file Para IV certification in case of 80mg strength as Ivax’s Para IV certification was intended for 5mg, 10mg, 20mg, and 40mg strengths. Like Ivax, Ranbaxy also filed Para III certification with respect to the ‘784 patent and Para IV with respect to additional patents contending that the ‘481 and ‘520 patents were invalid or unenforceable, or that their drugs would not infringe the patents. Ranbaxy also notified Merck of Para IV certification, detailing the factual and legal basis for its belief that its generic drug would not infringe the patents, or that the patents are invalid or unenforceable. Conquering 45 day Barrier Merck did not sued Ivax and Ranbaxy within 45 days as required under 21 U.S.C. 355 (j) (5) (B) (iii) to trigger an automatic 30-month stay of FDA approval of the ANDAs. As a result of this, both Ivax and Ranbaxy get entitled to 180-day exclusivity for their respective strengths and expected to launch their generic Simvastatin tablet after expiry of the ‘784 patent. Till here everything seems to be clear and evident that with the expiry of the ‘784 patent Ivax and Ranbaxy would enjoy 180-day marketing exclusivity and would be the sole generic players in U.S. Simvastatin market. Big celebrations for Big Generic Predators! FDA 2003 Rulemaking On June 18, 2003 FDA published its revised rules clarifying the types of patents that must and must not be submitted to FDA for listing in the Orange Book which got effective from August 18, 2003. Under the revised rules, NDA holders are not allowed to submit patent information for listing in the Orange Book for drug packaging, drug metabolites, and intermediates of a drug. In addition to this, revised rules also added requirements for submission of 1) polymorph patents (only if the NDA holder must have the test data demonstrating that a drug product containing the polymorph will perform the same as the drug product described in the NDA) and 2) product-by-process (only if product is novel). However, these developments had no role to play in Ranbaxy and Ivax’s 180-day party. Merck Unexpected Maneuver Following the FDA revision, on October 10, 2003 Merck submitted a letter to the FDA requesting that the ‘481 and ‘520 patents be delisted from Orange Book. The following month, the FDA received a letter from Kenyon & Kenyon (intellectual property law firm) challenging the listing of additional patents under revised FDA regulation published on June 18, 2003. The FDA forwarded this letter to Merck, which renewed its request that the patents be withdrawn. In June 2004, Merck sent a third request to the FDA to delist the patents. In September 2004, Ivax and Ranbaxy learned that the FDA had delisted the ‘481 and ‘520 patents from the Orange Book. FDA Nullify 180-day Exclusivity Discovering that FDA has delisted the ‘481 and ‘520 patents, both Ivax (on January 05, 2005) and Ranbaxy (on February 01, 2005) submitted citizen petitions with FDA requesting that the FDA confirm that it would not approve subsequent ANDAs until after the 180-day period and the FDA relist the patents in the Orange Book. On October 24, 2005 FDA denied both petitions, deciding that it would not relist the disputed patents, that no applicant will be eligible for 180-day exclusivity for delisted patents, and that it will approve all subsequent ANDAs for simvastatin tablets. Following the FDA denial, Ivax and Ranbaxy separately sued the FDA, challenging the FDA’s refusal to relist the ‘481 and ‘520 patents and refusal to grant any ANDA applicant eligibility for 180-day exclusivity for generic Simvastatin tablets. All three parties moved for summary judgment. Ranbaxy and Ivax moved for summary judgment seeking to vacate the FDA decision and the FDA filed a cross for summary judgment seeking to maintain its decision. Thumbs Up for Ranbaxy & Ivax! On April 30, 2006 Judge Richard W. Roberts of U.S. District Court for the District of Columbia, in his memorandum opinion, ruled in the favor of Ranbaxy & Ivax by granting them summary judgment and contending that the FDA has acted contrary to the clear intent of Congress in its decision to deny Ranbaxy and Ivax’s citizen petitions. The issue was sent back to the FDA by the District Court for a decision giving Ranbaxy and Ivax much expected relief. FDA Not Ready to Give Up On May 24, 2006 FDA appealed against the decision of District Court and filed a motion with U.S. Court of Appeals seeking expedited review concerning Ivax and Ranbaxy’s 180-day exclusivity issue and also proposed a schedule whereby the appeal will be fully briefed over the summer, with arguments to be heard at the Court’s earliest convenience thereafter. Teva (which earlier acquired Ivax) has agreed to an expedited schedule as proposed by FDA. The Generic 23/6: The Day Belongs To? As of now, FDA has already re-listed both the delisted patents to the Orange Book which implies that Teva and Ranbaxy will receive final marketing approval for their generic Simvastatin tablets on June 23, 2006 and will market their respective strengths with 180-day exclusivity period. Considering that appeal will be briefed over the summer and Teva and Ranbaxy will commence their marketing in June 2006, there can be either of two situations--- 1. If U.S. Court of Appeals rules in favor of Generics, then Teva and Ranbaxy will enjoy marketing exclusivity till the end of December; or 2. If U.S. Court of Appeals rules against Generics, then FDA will grant final marketing approvals to the rest of generic players and end Teva and Ranbaxy’s marketing exclusivity before 180-days. Whatever the outcome of appeal would be, four things are very much evident on June 23, 2006 --- 1. Simvastatin will lose its patent protection 2. Generics would enter the U.S. Simvastatin market 3. Dr. Reddy’s Laboratories will be there as Authorized Generics 4. Merck will continue to market its branded Zocor What is important is that, in case, if U.S. Court of Appeals rules in the favor of FDA, delisting may become one more viable strategy for Innovators to negate the 180-day exclusivity. However, if U.S. Court of Appeals rules in favor of Generics, Well!!! That will keep there hope intact with this High Risk, High Returns strategy.

Monday, June 12, 2006

Global Search for Software Patents: Is Google on eBay’s Auction?

All the available money in the world today is simply not enough to buy all the patents at their valuation. A good software patent can generate hundreds of millions in revenues through use and licensing. What, then, is the password to access the software billions? Who has the ‘code-next?’ Is there a ‘road ahead’ for the citizens of countries where software patents are denied? Which software-driven business model will swallow the other? Has Google already gone on eBay’s auction? On September 07, 1998 when Google Inc. started its operations in a garage in Menlo Park, California, perhaps the only luxury it could afford was the remote control device for its garage ‘office’ door! Even with its Google-vision and foresight, it could not have visualized the journey which catapulted Google from the garage to its headquarters in Mountain View, from 3 to more than 3000 employees, and from $100,000 to an $ 80 billion company, in a short span of 7 years. Starting as a college research project by two graduate students, it evolved into a multi-billion dollar company, with a global market share of 36.5% in search engine industry! Well, it’s not a unique story and there are several such examples of successful companies. But the real ingenuity of Larry Page and Sergey Brin – the founders of Google – lie not in just establishing the company but in driving it to a phenomenal success using their judicious mix of unconventional wisdom, angel investments, and strategic use of Intellectual Property Rights. Could we have ever thought of making billions of dollars from a 'bot’ – an intelligent software program which searches for terms matching certain criteria? Here’s how bots crawled up in the global mindspace. With the advent of affordable connectivity and faster broadband, millions of potential customers started getting on-line more often, and staying on-line longer; and the internet, almost suddenly, became a very powerful sales channel. Simultaneously or consequently, companies also started strutting their stuff on the net with equal zeal. Traffic on the highway to international marketplace was increasing daily. Internet was surpassing the British Empire as the territory upon which the Sun would never set. The concept of ‘forever open’ was even more beckoning than ye olde 24/7 store. With the aim of having their own store window on every home screen in the world, all businesses were soon fighting tooth and nail for ‘eyeballs.’ While customers were keen to search for products and services, the sellers of those products and services were even more eager to be found. And the ‘match-maker’ took the cake (and maybe, even the bride). The match-maker programs, or search engines, appeared into the mainstream business about eight years ago (1997), when companies realized that search results influenced transactions. For instance, Domino’s Pizza’s on-line sales increased by 64% in July 2005 and now contribute 10.6% to its total business sales. Yahoo’s earnings growth increased by 84% in 2003. Search-engine advertising is one of the fastest-growing businesses now with a Compounded Annual Growth Rate (CAGR) of about 35%. According to Jupiter Research, on-line advertising will continue expanding for the next five years and will reach $18.9 billion in 2010 as against $9.3 billion at the end of 2004. In Europe, search engine marketing is expected to increase by 65% this year (from approximately $1.04 billion in 2004 to $3.66 billion in 2005), according to a study by Forrester Research. The search engine market in France – largest growth market in Europe – is expected to grow by 19% by the end of 2005 and 31% by 2010. UK’s search marketing spend will grow from approximately $932.61 million at the end of 2005 to $1.22 billion in 2010. Similarly, Netherlands’ search engine market is expected to grow by 40% and Sweden’s by 26% by the end of this year. However, the market in other European countries will grow only by 4%. According to Google’s own predictions, their on-line advertising accounts are expected to increase by 35% between 2004 and 2005, and the company expects to acquire 372,000 new advertiser accounts in the next 4 years. On an average, Google adds about 100,000 customer accounts every year. By 2008, Google expects to add 652,050 advertiser accounts to its customer base. Google always focused on building a better search engine, better than their competitors, such as AlltheWeb, 20search, AOL Search, Ask Jeeves, Dogpile, Excite, Infospace, Iwon, Lycos, Mamma, MSN, Open Directory, Yahoo, Contact Us, and LookSmart. A search engine, in fact, is a result of team work – three mechanisms working together: one identifies web pages to be included in the database; the other indexes the sites; and the third includes a search mechanism with an interface, which scans for keywords within the index. In other words, if we want some specific information from the vast internet having billions of web pages, we have to rely on search engines. Google is one of the most respected registered trade marks in the industry. Google loves technology and has developed its own server infrastructure with the breakthrough PageRank™ technology to change the way we search on the web. The patent for PageRank technology is currently owned by Stanford University, which has licensed it exclusively to Google till 2003, which has been further extended till 2011, when the license becomes non-exclusive. The patent expires in 2017. Apart from search engine technology patents, Google’s intellectual property (intangible assets) include innovative business models and trade marks such as Froogle, Gmail, Ride Finder, Zeitgeist, Blog Spot, etc. We may wonder why Google comes out with so many innovations and seeks to obtain patents and trade marks. The reason is simple: patents give their owners the right to exclude others from making, using, or selling an invention and therefore, the patent-holder can increase profits and remain protected from direct competition. Patents that are used to limit competition are also useful in strengthening a company's position in licensing negotiations. Microsoft holds general search-related patents which include methods of searching information in directory catalogues; a system for enhancing search area selection; and a method of ‘concept-searching’ which utilizes Boolean or keyword search engine. Amazon, an on-line retailer, has also claimed a patent which could impact the search-related advertising industry. In March 2004, Amazon updated its application for a method that auctions-off ads appearing on a particular web page. Patents were also awarded to NEC for its “focused search engine” and to Alexa Internet (part of Amazon) for tracking web surfing history. Microsoft has hired a team of experts in natural language information retrieval who are writing academic papers to file search-related patents. The boom in the search engine industry has now flagged-off a patenting race among Yahoo, Google, Microsoft and IBM. Patents are critical to any organization that is engaged in technology-oriented business, and ignoring it could prove to be fatal. The dynamics of search engine business is governed by patents. Google’s competitor, Yahoo – after acquiring Inktomi (March 2003) and Overture (July 2003) – received a treasure chest of patents. Before its takeover, Overture acquired AltaVista in April 2003 (for $106.6 million), and with that some of the ground-breaking patents on web search. AltaVista had seven patents on web crawling technologies, seven on indexing and two on query processing. It had 16 patents pending related to forward-looking search technologies. In addition to Inktomi, Yahoo also acquired a few more search-related patents. Yahoo’s CEO, Terry Semel, commenting that he would acquire more patents, said, “We'll our technology assets Overture's impressive intellectual property portfolio of both algorithmic and sponsored search patents.” Smaller companies and individuals are also applying for patents with the prospect of licensing the patents to the bigger companies, for a price which may rival a first-born’s ransom. Outside US, most other countries don’t grant software patents. This can be a huge advantage or disadvantage for the residents of those countries. How you look at it depends on whether you are an unprotected inventor or an unauthorized user of the software. A search engine, in the final analysis, is a software program, and therefore, it must be dealt with in a particular manner to meet the patent office requirements. For the software inventors, who deserve to patent their software but are deprived of the monetary benefits because of their country’s patent laws, there are ways and means to achieve the desired goals. Google’s revenues have soared high because it has patented its technologies and protected its trade marks, and has harnessed them over the years to yield billions of dollars. Its net income rose sharply from approximately $90 million in 2002 to $100 million in 2003 and $400 million in 2004. Google’s licensing revenues have increased tremendously from $20 million in 2002 to $40 million in 2004. If we relate the search engines’ utility to other popular on-line business models, eBay seems to be another wonder in the virtual world. eBay was established in 1995, and has more than 1.4 billion listed items (2004) and 50,000 categories for sale, with 2.3 million unique visitors (Dec 2004), and transactions worth more than $34.2 billion (2004). Although eBay is the world’s on-line marketplace and not a search engine, yet it performs similar functions of a search engine. When we type the ‘keywords’ or ‘characteristics’ of items to be bought through eBay, it gives a list of detailed offers with sellers’ profiles. eBay also uses DoubleClick's solutions for its on-line advertising programs, where sellers reach targeted buyers on eBay through "bid-per-click" keyword advertising to increase traffic and attract more buyers to their item listings or store located in the eBay marketplace. Google is fast becoming a rival to eBay in the on-line advertising business. Ultimately, whoever gets the maximum exposes of the advertisers will be the winner. The fascination of this business model is pulling Yahoo too into the arena. The value-addition of a search engine sometimes overshadows even the value of the product or service in the transaction. eBay and Amazon, horizontals and verticals, they must all have underlying search engines. So, is Google on eBay’s auction? Although there is hardly any chance of Google going under the virtual hammer on eBay’s auction, one would have expected that Google would be the search engine behind the global auction house. However, eBay uses a different search engine to power its website. With all the ironies in life, it would not be surprising if eBay had used Google to find the provider/developer of their search engine. Will eBay move to any other innovative search engine anytime soon? (Till the time this article was written, there was no comment from eBay). It is generally expected that eBay will keep improving its service. The world has never stopped seeking to better its best. And, when it comes to new software patents, the ‘search’ is always on!
Today's post comes from M. Qaiser and P. Mohan Chandran of iPrex Solutions, Hyderabad. This article was earlier published with US-based online IP Portal --- IPFrontline dated November 14, 2005. Copyright 2006 iPrex Solutions.

Wednesday, June 07, 2006

Join Patent Café

Join Patent Café to discuss issues regarding patents and other IP related issues. Patent Café is newly formed Yahoo Group intended to provide single platform to share views, discussions, opinions, queries, and suggestions regarding patents including regulatory affairs related to USFDA such as Data exclusivity, ANDA, Para IV certification etc. and also issues related to other form of IPR. To Join Patent Café Visit Yahoo Groups and type Patent Café in search bar and sign-in to become member of Patent Café. Or
Send a blank email to and subsequently you will receive a confirmation message. Just reply to it and you will become member to Patent Café.

Sasken 007: Licensed to Make a Killing!

While some of us were waking up to the fact that intellectual property rights (IPRs) are the biggest strategic business advantage, and some of us were still sleeping, Sasken was inventing, patenting, licensing, and laughing. Yes, they were laughing all the way to the bank! The revenues of Sasken Communication Technologies Ltd. (Sasken) soared 34% from Rs.1.66 billion in March 2004 to Rs.2.23 billion for the financial year 2004-05, while its profit after tax (PAT) during the corresponding period increased 18% from Rs.184 million to Rs.217 million. The Net Asset Value (NAV) went up from Rs. 77.53 to Rs. 83.46 (Refer Table-1). A large part of this rise was attributed to wise investment in IPRs and efficient management of the company’s portfolio of IPR assets. Sasken has been focusing on its IPRs since its inception in 1989. However, after the emergence of the Knowledge Economy, IPRs have assumed increased significance in the new millennium. India is in the forefront of this IPR revolution in the world. Says Mody, Chairman and CEO, Sasken, “India is on fire right now. All over the world, India is recognized for its intellectual capabilities and contribution towards the growth of technology, especially in software and telecom. Indians have earned great respect for their technological prowess. We believe there is a huge potential for India's intellectual capital that can be put to great use by the world.”

Company Background Sasken was founded by Mody in 1989 in a small garage in Fremont, California, from where it operated. Mody and four of his friends together invested $200,000 as initial capital to set up the company. Soon after its inception, Sasken was set up in Bangalore (India) in 1991. Offices were also established in San Jose. Sasken was initially registered in Gujarat as ASIC Technologies Pvt. Ltd. In 1992, the company changed its name to Silicon Automation Systems (India) Pvt. Ltd. In 1993, the company relocated its corporate office to Karnataka. In 1998, the company’s name was again changed to Silicon Automation Systems Ltd., and subsequently to Sasken in 2000. The name ‘Sasken’ is derived from a combination of the initial letters of its earlier name of Silicon Automation Systems, and the word ‘ken.’ ‘Ken’ implies knowledge, which is considered as the company’s primary driving force in the new knowledge era. Sasken is an embedded telecom solutions company that aids and expedites product development life cycles to businesses across the telecom value chain. Sasken, unlike other providers, facilitates clients to expedite product development through a distinct combination of ready-to-use technology blocks and services and matchless telecom experience. Sasken’s clients comprise the top 16 tier-one companies worldwide, with top ten customers accounting for 82.26% of the company’s total revenues. Some of Sasken’s clients also include Fortune 500 companies such as Nortel, Motorola, Nokia, Intel, Sony, NTT, Texas Instruments, Philips, Hitachi, Toshiba, Sharp, Fujitsu, etc. Mody hired four professionals who comprised the core group at Sasken. Sasken’s first client was Nortel, which was then a part of Bell Labs. The company bagged a huge order worth $40,000 for assisting Nortel in developing a translator for converting their models into VHDL. In 1999, Intel entered into a strategic deal with Sasken and funded it for working in the areas of multimedia and DSL. Intel is still one of the largest customers for Sasken. Sasken has grown from a small company into a global player. Today Sasken is No. 3 telecom player in the world. The company aspires to capture the No.1 spot by displacing TTP Com of UK. Says Mody, "Success in developing embedded systems depends not only on the availability of intellectual property components, but also on being able to integrate these components effectively so that the systems work. This is, without doubt, at the heart of our business." Sasken’s Services Sasken is India’s largest silicon Internet Protocol vendor, and provides semiconductor firms a range of licensable Internet Protocol solutions such as GSM, GPRS, and Internet Protocol services such as DSL, DSP, IC design, SoC, hardware design, and full chip design, and Universal Mobile Telecommunication System (UMTS) Protocol stacks, L1 Controller, and JBIG Silicon Internet Protocol. It provides product development services in the areas of physical layer services, system design services, analog front-end related services, network management, interoperability testing and data telemetry solutions. In addition, Sasken also offers services such as component design, product development and maintenance, and customizable solutions for high-bandwidth data telemetry applications. Sasken provides multimedia applications such as multimedia framework, codecs and wireless protocol stacks to terminal device manufacturers, while it offers them testing and verification, and platform and OS support services. Sasken offers domain expertise in wireless (2G, 2.5G, 3G), enterprise data communication, and mobile internet to the network equipment manufacturers. Sasken’s solutions are certified by ISO 9001:2000 quality, and the company has been assessed at CMM Level 5, the highest process quality certification in the world for software companies. Sasken’s proprietary intellectual property comprises its software, and the company depends on a portfolio of intellectual property such as trade secrets and copyrights, apart from services. Says Sunil D. Sherlekar, Chief Technology Officer, Sasken, “Services is a lucrative business, but we never wanted to depend upon it. Therefore we decided to enhance focus on creating IPRs in niche areas.” Hybrid Business Model Sasken followed a hybrid business model, which offered a combination of software products and services which complemented each other. Sasken’s hybrid business model is largely based on maximizing revenues through licensing of its intellectual property, and leveraging on its existing and new IPR portfolio. Says Dr G Venkatesh, "We were the first company in India to adopt a hybrid business model, in which we derive roughly half of our revenues through IP licensing and another half through services. Sasken firmly believes that this is the only viable business model that can be competitively sustained in the long run. Sasken has been able to differentiate itself from competition in the services space on account of the competencies it has built in the IP space. Likewise, Sasken has leveraged its services relationships to mature and propagate its IP licensing business." Sasken’s business model combines the value of intellectual property with a gamut of services through its various streams of business, viz., semiconductors, hand-held terminals, and networking equipment providers. Says Mody, “Financial markets don’t seem to understand our model. You don’t need a large amount of capital, you need a different attitude with capital. You have to stay focused and be patient. This is a long haul.” Mody feels that product companies have to come out with their own unique business models rather than aping globally successful models. In 2001, Sasken’s mobile software division contributed 30% to the company’s total revenues. This contribution is expected to increase further in the future, as Sasken is establishing strong relationships with suppliers in this area. On the customer front, Sasken added 27 new customers to its portfolio in 2002. Sasken’s services, including network services, contributed 85.97% of consolidated revenues for financial year 2005, while products businesses accounted for 14.03% of consolidated revenues. The consolidated revenues rose by 45.5% to Rs.2.42 billion in 2005, compared with the previous year. Says Vaibhav Parikh of Nishith Desai & Associates, “The beauty of IP is that unlike products, you do not need a high profile marketing plan to succeed in the market place. And unlike software services, IP can be used not only as a way to earn revenues from licensing but can also act as a competitive barrier to stop other companies from targeting your niche domain. Additionally, the same IP can also be used to provide services in a faster manner.” The Value of Innovation Sasken has been shaped by the corporate values of the company. Sasken’s key values that serve as the foundation of Sasken’s growth and governance are Integrity, Respect, Innovation, Customer Intimacy, and Excellence. Though the Indian R&D services and software product exports are in a fledgling stage, they are undergoing a gradual change. Kiran Karnik, President, NASSCOM, says, “If you look at the evolution of Indian software companies, you will notice that Indian companies are now looking at becoming truly global companies. One more distinct trend I see is the increasing thrust of software companies on IP creation and R&D services.” The Indian R&D services, which currently account for US$ 2.3 billion and is about 1.3% of the global market, is likely to grow rapidly because of the impetus provided by the strong global demand for embedded software and systems, and the increasing demand for offshore product development. According to the analysts’ prediction, the Indian R&D services and software products market is expected to grow to about US$ 8-11 billion by 2008-10. Sasken considers R&D as the life-blood of its business, and always accords due importance to it. According to Mody, commitment to research, patent filing, and protecting the inventions are key to Sasken’s business growth. Sasken established its corporate R&D group in 2001. A significant portion of its turnover is spent on R&D. Sasken invests about 5-8 percent of its total revenues on R&D. Sasken’s R&D expenses constituted 5% of the revenues during fiscal year 2002, and 4% during the fiscal 2001. However, though R&D expenses constituted 1% of the revenues in 2003 and 2004, in absolute terms, it increased by 75%. Sasken’s R&D investment for the year ended March 2004 increased by 66.77% to Rs.19.38 million from Rs.11.62 million in 2003. Sasken’s R&D investment for the period 2000-01 to 2004-05 was nearly Rs. 160 million. In 2003, Sasken focused its R&D in the areas of DSL, multimedia codecs and applications, and mobile platform solutions. Explaining the need for increased investment in IPR, Dr. G. Venkatesh, Chief Strategist at Sasken, says, "The IP licensing model requires sustained investments for a long period before significant payback can be expected. It also requires supporting activities like marketing at various forums, patenting and participation and influencing standards bodies." Sasken takes active part in technology working groups worldwide. Says Mody, “We have enough and more experience. Now, it’s time to build world-class products.” Sasken has always focused on R&D and innovation to create value through its intellectual property portfolio. The company started developing Intellectual Property in 1997. Sasken’s policy on IPR focuses on identification and protection of patentable ideas through filing of patents. With a strong intellectual property base, Sasken has partnered with big names such as Intel, Nortel Networks and Nokia Growth Partners, who have invested in them $4 million, $10 million and $3 million respectively. The company constantly encourages its employees to file for patents, as patents help transform R&D investments into economic benefits for the organization. Filing of patents constitutes a key aspect of the company’s business strategy. In 2002, Sasken also launched an innovation centre in Bangalore to give an impetus to the creation of new products ranging from hardware for internet access to 3G software solutions. Sasken, a pioneer in telecom R&D outsourcing, is the first Indian company to have more than 7 patents filed in the US. In 2002, Sasken filed 21 patent applications that included 12 provisional applications in India and the US, 6 non-provisional applications in the US, and 3 Patent Cooperation Treaty (PCT) applications. Sasken has also filed for the registration of its Trade Marks – ‘Sasken,’ ‘Aparate,’ and ‘IWAVE’ – in India, US, China, Japan, Russia, and the European Union. By March 2005, Sasken had filed a total of 32 patent applications, of which 5 were granted by the USPTO. The company had 27 patent applications pending in India, US, Europe, Japan and Korea. The number of PCT applications filed by the company rose to 6. Sasken now has more than 40 IPRs in its kitty. Sasken has also identified several new areas where intellectual property can be created, and which holds the key to Sasken’s growth and progress. According to Swaminathan, who is heading the central marketing organization at Sasken, the company’s key growth lies in its product innovation, customer intimacy, and operational excellence. However, Mody felt that creating intellectual property was not sufficient, and one needs to get enough insurance cover to protect their inventions from infringement and possible legal actions. Many Indian companies either have lack of adequate knowledge about IPRs or lack the mindset of filing patents to protect their intellectual property. Only few companies such as Sasken have strong legal teams to file patents for the company. Many companies hold a lot of valuable IPRs but never go for a comprehensive IPR audit to evaluate their IPRs, resulting in loss of tremendous potential opportunities. Mody opined that timely filing of patents is necessary for product companies to protect their valuable intellectual property rights. Extending Mody’s views, Sunil Desai, Technical Director (Engineering), Aftek Infosys, says, “IP certainly gives an edge over the competition as you can not only prove your technical prowess but also reduce delivery time by a significant percentage.” Sasken is engaged in the areas of Multimode, Wireless LAN, and software-defined radio. Says Sunil D Sherlekar, Chief Technology Officer (CTO) of Sasken, “The next logical step is to design a chipset and offer it through a licensing model.” Sasken was the first to market Wideband Code Division Multiple Access (WCDMA) stack protocols. Sasken has also developed GSM/GPRS protocol stack, a kind of telecom software, to garner more revenues. Protocol stacks are software components embedded in a mobile phone to facilitate and manage the communication link between the handset and the network. Sasken’s stacks are approved by Global Conformance Forum (GCF), thereby placing Sasken among the first companies to acquire the GCF approval for a telecom software product. Sasken’s emphasis on 3G communication by developing protocol stacks in the areas of GPRs, UMTS and Multimode has catapulted it as a leading player in the global telecom sector. Stack protocols now account for nearly 30% of Sasken’s sales revenues and are found in computers worldwide. In 2001, Sasken had important successes on the technology front with a GSM/GPRS protocol stack confronting the challenges of Field Trial Approval, and 3G stack triumph with key customers. Says Mody, “We are now regarded as one of the leading independent suppliers of protocol stacks in the world for next generation mobile terminals.” 3G protocol serves as an interface between the multiplexing and other transceiver circuitry in mobile handsets and enables 3G transmission. This technology, however, will be used only if it is included in the comprehensive 3G standard by 3GPP. And, if included in the standard, Sasken will be entitled to get royalties for each 3G handset sold in any part of the world until some other company comes up with an advancement and the standard is revised to better technology. Sasken has done significant work on IPRs. It is one of the only two independent sources for ADSL technology worldwide. The company owns the entire implementation IPR of the modem, as it has carried out the whole design in a bottom-up approach. In addition to ADSL, Sasken has a number of IPRs in 3G space and is currently the leading independent provider of protocol stacks in compliance with 3GPP specifications. Sasken is also one of the first companies in the telecom sector to have been granted patent in the DSL space, which is regarded as the first US patent in core communication technology granted to an Indian company. Licensing Revenue: The Big Kill On an average, Sasken makes about 55% of its revenues from IPR licensing, customization, and royalties, and the rest from services. In 2002, Sasken’s revenues from product licensing accounted for 47% of its total revenues, compared with 43% during the previous year. In 2005, Sasken earned Rs.30.4 million as royalties and Rs.156.2 million as licensing revenues from its intellectual property. Similarly, in 2004, royalties and licensing revenues from intellectual property contributed Rs. 9.4 million and Rs. 279.3 million respectively. Creation and protection of intellectual property also ensured steady growth in the sales and profits for Sasken. (Refer Table-2).

Sasken, which has created a prototype in the area of mobile 3G, is now planning to license it to a semiconductor company or a mobile phone manufacturing company. The company expects this stack to bring significant money every year through intellectual property licensing revenues. Sasken licenses its multimedia solutions to terminal equipment manufacturers and has an association with six of the ten global handset manufacturers. Sasken has licensed its ADSL technology to a multitude of suppliers, the prominent being Ambient, which was acquired by Intel. Sasken has adopted its multimedia component technology for NEC’s generation-next FOMA (NTT DoCoMo’s 3G service) phones. The company expects more than ten different models worldwide to run on Sasken’s intellectual property. The future for Sasken looks bright with the bottomline witnessing a healthy 30-35% growth rate. Says Mody, “We track our business by revenues generated from services and IPR separately. Our services business has been growing handsomely over the last 8 quarters at 21% growth per quarter.” Mody said he was proud of the achievements accomplished by Sasken on the IPR front. Sasken’s DSL IPR is deployed in about 400,000 lines. A phone that uses Sasken’s GSM/GPRS protocol stack was launched in China and tested in several global networks. Sasken’s multimedia application suites is currently present in 9-10 various handset models launched in the markets of Japan, China, UK, Australia, and Hong Kong. By focusing on IPRs and licensing, Sasken has gone from very humble beginnings to become a global player in a very short span of time. Call them trend-setters or pace-setters, but several companies will soon follow Sasken’s license-revenue model all the way. Banks better be ready.

Today's post comes from M. Qaiser and P. Mohan Chandran of iPrex Solutions, Hyderabad. Copyright © 2006, iPrex Solutions. All Rights Reserved.

Tuesday, June 06, 2006

Long Live King’s Ramipril

Ramipril and Orange Book Status Ramipril was disclosed in U.S. Patent No. 4,587,258 assigned to Schering Corporation and which later expired on January 27, 2005 (received 632 days patent term extension). Marketed by King Pharms, Ramipril is present in US market under the brand name ALTACE and was approved by USFDA on January 28, 1991 with four strengths (1.25mg, 2.5mg, 5mg, and 10mg). Till date there are two orange book listed U.S. Patents for ramipril --- 5,061,722 and 5,403,856. ‘722 patent covers ramipril isomers, their hypotensive compositions, and their method of use for reducing blood pressure. ‘856 patent covers method of using ramipril for treating cardiac insufficiency. USFDA has approved ramipril to treat hypertension, heart failure, and to reduce the risk of heart attack, stroke, and death from cardiovascular causes. Patent Infringement against Cobalt Para IV Certification On March 14, 2003 King Pharms and Aventis Pharma jointly filed patent infringement lawsuit against Cobalt Pharmaceuticals in the District Court for the District of Massachusetts in response of abbreviated new drug application (ANDA) under Para IV certification submitted on November 22, 2002 with USFDA seeking approval to market generic ramipril capsules. In Para IV certification, Cobalt challenged the validity the ‘722 patent contending that the patent is unenforceable due to Aventis’s inequitable conduct in prosecuting the ‘722 patent before United States Patent & Trademark Office concerning the first-to-invent dispute over ramipril with Schering Corporation’s ‘258 patent. Initially, Cobalt Para IV certification do not include any statement regarding ‘856 patent because it was not listed with Orange Book until Aventis and King filed infringement suit. Upon learning of the ‘856 patent, Cobalt subsequently informed FDA that it was seeking approval for indication covered by the ‘856 patent, that is, treating heart failure. Cobalt also amended its proposed labeling with the FDA and removed the pharmacological information regarding the use of ramipril for treating heart failure and only limit its intention to market generic ramipril solely for treating hypertension and reducing the risk of heart attach, stroke, and death from cardiovascular causes. However, King Pharms & Aventis filed additional patent infringement suit regarding ‘856 patent contending that Cobalt will actively induce or contribute to infringement by others and will indirectly infringe the ‘856 patent because doctors will prescribe generic ramipril for treating heart failure. Summary Judgment for the ‘856 patent Regarding the ‘856 patent, Cobalt moved for summary judgment on Aventis/King contention that Cobalt’s generic ramipril will indirectly infringe the ‘856 patent. Court maintained that there is no genuine dispute regarding the ‘856 patent as Aventis/King has never asserted that the ‘856 patent claims the “reduction of risk” indication, and they have not challenged Cobalt’s assertion that the ‘856 patent does not claim the reduction of risk indication. On this basis, the court granted Cobalt summary judgment of non-infringement of the ‘856 patent. Summary Judgment for the ‘722 patent Aventis & King moved for summary judgment on Cobalt’s affirmative defense of inequitable conduct before USPTO during prosecution of ‘722 patent. Cobalt contended that the ‘722 patent is unenforceable due to Aventis’s inequitable conduct before USPTO, specifically, alleging that Aventis submitted materially false and misleading statements, in several affidavits, to the USPTO during prosecution of ‘722 patent. To counter Aventis/King motion for summary judgment, Cobalt supported their contention with supporting evidence on following facts that - 1) In 1980 Merck introduced enalapril, which was further used by Schering Corporation as a “lead structure” in developing the ramipril compound for which U.S. patent application was filed on July 30, 1984 and against which ‘258 patent was granted on May 06, 1986. 2) In November 1985, Aventis also filed a U.S. patent application for ramipril which was initially rejected by USPTO on the grounds that Schering had been first to develop ramipril against which Aventis responded that the ‘258 patent did not enable a person of ordinary skill in the art to produce ramipril and submitted several affidavits to the USPTO, over a five year period, supporting its claim that the ‘258 patent did not enable synthesis of the ramipril isomer. 3) In November 1986, Aventis submitted the declaration of Dr. Hanjorg Urbach to the USPTO that the method of synthesizing ramipril described in the ‘258 patent did not work. During trial proceedings Cobalt’s expert, Dr. Michael Crimmins asserted that Dr. Urbach’s experiment failed to apply ordinary chemical synthesis protocols when replicating the ‘258 patent process. Further, he also asserted that Dr. Urbach’s statement were materially false because someone skilled in the relevant art of 1981 only needed to know ramipril’s chemical structure to reproduce the compound. 4) In January 1988, in order to determine priority, USPTO declared an interference proceeding between Aventis’s application and Schering’s ‘258 patent. Cobalt contended that Aventis conceded priority to Schering and purchased Schering’s license by taking a license, promising to pay Schering a royalty on Aventis’s future sales. 5) Later, Aventis submitted declarations of Dr. Reinhard Becker to the USPTO asserting new claims to a “superior” and “substantially more effective” version of ramipril-a purer “all S” isomer. Dr. Becker claimed that the purer “all S” isomer was “far superior” to the compounds claimed by the ‘258 patent. During trial proceedings, Cobalt’s expert, Dr. John Caldwell, claimed that Dr. Baker failed to make highly relevant comparisons between the allegedly “superior” ramipril and other ramipril isomers. Further, he also asserted that Dr. Becker misrepresented the sources of test results and failed to disclose the inaccuracy of his test methods. 6) On January 12, 1989, Aventis filed a patent application for these claims to the superior ramipril isomer and yet again had to confront the prior art. In March 1989, Aventis submitted the affidavit of Dr. Volker Teetz to the USPTO claiming that the ‘722 patent did not work and only produced small amounts of ramipril when Teetz employed “extraordinary” procedures not revealed by the prior art. Cobalt’s expert asserted that these statements were false and misleading and the Dr. Teetz’s own laboratory notebooks plainly contradict his conclusions. 7) On October 29, 1991 USPTO granted Aventis the ‘722 patent. Aventis states that Drs. Urbach, Becker, and Teetz submitted declarations to the USPTO attempting to correct some of their earlier mistakes and updating the USPTO with more accurate data and test results. Cobalt insisted that these corrections were either insufficient or misleading. And further argued that that neither Dr. Urbach not Dr. Teetz cured their false testimony regarding the ‘258 patent. Court, however, concluded that elements of materiality and intent are reasonably disputed and thereby denied Aventis/King summary judgment on inequitable conduct of the ‘722 patent. Settlement between Aventis/King and Cobalt After more than a year from obtaining District Court order, on February 27, 2006 Aventis/King and Cobalt agreed to enter into an agreement to dismiss the pending litigation relating to the enforcement of ‘722 patent. The parties agreed that, subject to certain conditions, with 38 days of singing the agreement, will submit a joint stipulation dismissing without prejudice the litigation before the U.S. District Court for the District of Massachusetts. Additionally, King has granted Cobalt a non-exclusive and non-transferable right to enter into the U.S. ramipril market with a generic capsule formulation of ramipril, which would be supplied by King. Lupin --- Another Para IV Filer In July 2005, King/Aventis has filed patent infringement lawsuit against yet another ANDA filer – Lupin in the U.S. District Courts for the District of Maryland and the Eastern District of Virginia in response of Para IV certification made to USFDA seeking approval for generic ramipril capsule. Lupin in its Para IV certification challenged the validity and enforceability of the ‘722 patent. On February 01, 2006 the Maryland and Virginia cases were consolidated into a single action in the Eastern District of Virginia. Trial is currently to begin on June 06, 2006. Long Live King’s Ramipril Whatever may be the outcome between King/Aventis and Lupin patent lawsuit, one thing is sure that 180-days exclusivity is gone with the entry of Cobalt’s generic ramipril but what cannot be ignored is Lupin’s chances of wining this lawsuit, particularly in the light of arguments made by Cobalt during summary judgment for ‘722 patent.

Saturday, June 03, 2006

USFDA files appeal with U.S. Court of Appeals

United States Food & Drug Administration (USFDA) has appealed against the decision of U.S. District Court for the District of Columbia which ruled against the FDA’s decision of denying Ranbaxy and Ivax’s Citizen Petitions concerning exclusivity issue. On May 24, 2006 USFDA filed a motion with U.S. Court of Appeals seeking expedited review concerning Ivax and Ranbaxy’s 180-day exclusivity issue and also proposed a schedule whereby the appeal will be fully briefed over the summer, with arguments to be heard at the Court’s earliest convenience thereafter. Teva has agreed to an expedited schedule as proposed by USFDA and expects to receive final approval for simvastatin tablets with exclusivity on June 23, 2006 when the U.S. Patent No. 4,444,784 covering simvastatin per se expires. In another development, Teva has obtained a tentative FDA approval for the Ivax’s Abbreviated New Drug Application (ANDA) for simvastatin tablets (5mg, 10mg, 20m, 40mg, and 80mg). Considering that appeal will be briefed over the summer and Teva will be commencing its marketing in June 2006, one thing is quite certain that Teva will receive final approval on June 23, 2006 and thereafter sells its generic version with marketing exclusivity just as the District Court ordered and subsequently fight the appeal filed by the FDA. If U.S. Court of Appeals rules in the favor of Teva, then Teva will enjoy marketing exclusivity till the end of December (exclusivity period will run till end of December), and if Court rules against Teva, then FDA will grant marketing approvals to the rest of generic players and end Teva’s marketing exclusivity before 180-days.

Friday, June 02, 2006

Procedure for making application for patent to the NBA under Biological Diversity Act, 2002

If any foreign company wants to protect its invention based on biological material obtained from India and want to apply for a patent protection in or outside India, then the procedure is prescribed within Biodiversity Rules, 2003. First of all, application for patent cannot be made without approval of National Biodiversity Authority. In this regard Section 6 of Biodiversity Act, 2002 says that --- (1) No person shall apply for any intellectual property right, by whatever name called, in or outside India for any invention based on any research or information on a biological resource obtained from India without obtaining the previous approval of the National Biodiversity Authority before making such application. Providing that if a person applies for a patent, permission of the National Biodiversity Authority may be obtained after the acceptance of the patent but before the sealing of title patent authority concerned: Provided further that the National Biodiversity Authority shall dispose of the application for permission made to it within a period of ninety days from the date of receipt thereof. (2) The National Biodiversity Authority may, while granting the approval under this section, impose benefit sharing fee or royalty or both or impose conditions including the sharing of financial benefits arising out of the commercial utilization of such rights. (3) The provisions of this section shall not apply to any person making an application for any right under the law relating to protection of plant varieties enacted by Parliament. (4) Where any right is granted under the law referred to in sub-section (3), the concerned authority granting such right shall endorse a copy of such document granting the right to the National Biodiversity Authority. The corresponding procedures for the application of intellectual property rights are given under Rule 18 of the Biological Diversity Rules, 2004. Rule 18 states --- (1) Any person desirous of applying for a patent or any other intellectual property based on research on biological material and knowledge obtained from India shall make an application in Form III as given in schedule. Every application shall be accompanied by paying a fee of Rs. 500/-. (2) The Authority after due appraisal of the application and after collecting any additional information, on the basis of merit shall decide on the application, as far as possible within a period of three months of receipt of the same. (3) On being satisfied that the applicant has fulfilled all the necessary requirements, the Authority may grant approval for applying for a patent or any other IPR subject to such terms and conditions as it may deem fit to impose in each case. (4) The approval shall be granted in the form of a written agreement duly signed by an authorized officer of the Authority and the applicant. The form of the agreement may be decided by the Authority. (5) The Authority may reject the application if it considers that the request cannot be acceded to after recording the reasons. Before passing order of rejection, the applicant shall be given an opportunity of hearing. Author’s Recommendations Author recommends filing of patent application in respect of invention related to biological resources. Soon after making the patent application, the application for approval of NBA should be made. In the event the decision of the NBAs unfavourable, applicant may even withdraw their patent application without allowing it to be published. If applicant waits till the acceptance of the patent then they are closing their option of withdrawing the patent application and preventing publication. Today’s post comes from Seema Singh, Patent Attorney working with Mumbai-based Pharmaceutical Company. (

Who Moved My 'Apple'?

This is not cheese verse apple. We are not proposing to replace the famous metaphor for what we want in life. This is not about Washington’s apples; this is about Silicon Valley’s Apple. Unlike Steve Jobs’ annually predictable blue jeans and black T-shirt till last year, Apple has changed its products and services ever so often. From the revolutionary personal computers of 1970s to the very recent iPod and iTunes, Apple has never looked back. In the good old days, when the world was round, life was simple and the businesses so easy to understand: General Motors sold cars, Pfizer sold medicines, McDonald’s sold burgers, Coca Cola sold what-else, Kraft sold real cheese (not the metaphor), and Apple sold personal computers. Press fast-forward. Today, as Apple marches ahead in its technology and design journey, competitors and commentators keep searching for the answer: who (or rather, what) moves Apple? Apple Computer, Inc. is a Silicon Valley company whose core business is computer technologies. The company designs, manufactures, and markets personal computers and related software, services, peripherals, and networking solutions. Apple is known for its innovative and well-designed hardware and software. Its products and services (Refer Table-1) include the iTunes Music Store, which is an online distribution service of third-party music.

Apple reported the highest revenue and earnings in the company's history in December 2005, by posting a $430 million quarterly profit on increased revenues of $3.68 billion. Year-over-year (YOY) growth was also the best for 2005. The company shipped 1,236,000 Mac units and 6,451,000 iPods during the quarter, representing 48% growth in Macs and 220% growth in iPods over the previous year’s quarter, thereby recording a revenue-growth of 68% and net profit growth of 384%! Apple’s annual revenues for the financial year 2005 were $13.93 billion, while it clocked a profit of $1.34 billion – both of which were new records in the company’s history. Think Different Apple's phenomenal growth was possible because of its continuous thrust on innovation, resulting in a range of products like Mac OS X v10.2 Jaguar, 'Switchers', iPods, iMacs and iBooks. These innovative products have attracted new customers and are in great demand. The demand for iPods exceeded its supply! For instance, in October 2001, 1 million iPod Nanos were sold in the 17 days between the device's debut and the end of that quarter. The videos purchased and downloaded by customers from Apple’s iTunes Music Store, which had about 3,000 music videos, were more than 2 million songs, over 1,000 independent labels, Pixar and Disney short films, and popular TV shows. According to Peter Oppenheimer, Senior VP and CFO of Apple, the company sold 6.45 million iPods in total in the fourth quarter of 2005. Apple offered the TV shows at $1.99 per episode, while music videos and short films were also sold at $1.99 each. By February 2006, 12 million videos were purchased and downloaded, which made iTunes Music Store the world’s most popular video download store. By February 2006, about 1 billion songs were sold on the Apple iTunes digital music store. Also, compared to 2004, Apple’s desktop sales in 2005, increased by 56%, while notebook sales increased by 41%. Clearly Apple’s physical and financial achievements are the result of its deep commitment to continuous innovation-led business strategy. The highly competitive market for personal computers and related software, and peripheral products is characterized by rapid technological advances in both hardware and software. The main competitive factor is innovation in products and services. Apple’s Innovation-based Business Strategy Rapid technological advances have increased the capabilities and use of personal computers, thereby triggering frequent innovation of new products. Apple stays ahead of competition because of its emphasis on innovation-based business strategy since its inception. Over the years, Apple has continuously invested in research and development (R&D) to design and develop new products and peripherals. Apple maintains competitive advantage by effectively integrating an entire solution, including the hardware (iPod), software (iTunes), and distribution of third-party digital content (iTunes Music Store). The company has succeeded in implementing innovation-driven growth strategy despite persistently difficult economic environment in the beginning of the millennium. According to Steve Jobs, CEO, Apple Computers, "This is the direct result of our focus on innovation and the immense talent and creativity at Apple. We could not be more excited about the new products we're working on for 2006." Apple’s Intellectual Property Focus The core competency of Apple is its capability to innovate continuously, which was systematically facilitated by investment in R&D. Apple’s R&D expenditures totalled $534 million, $489 million, and $471 million in 2005, 2004, and 2003, respectively. Apple’s continuous investment in R&D provides returns because the company protects its innovations through patents. The company takes stringent action against those who infringe upon their intellectual property rights. For instance, Apple has recently accused Iops, a minor Korean portable music player manufacturer of MP3 player models, Iops Jock and Iops Z3, of illegally copying the design of its mega-selling iPod music player. According to Apple, Jock and Z3 models resemble the exterior design and case colors of the iPod Mini, especially, the layout of a display screen and a round-shaped control button on the front panel. Apple has lodged a complaint with Iops demanding Iops to stop selling the two products and compensate Apple for their lost sales. Apple currently holds patents and copyrights relating to certain aspects of its computer systems, iPods, peripherals and software. In addition, the company has registered, and applied for registering of trademarks and service marks in the U.S., and a number of foreign countries for its “Apple,” logo, “Macintosh,” “iPod,” “iTunes,” “iTunes Music Store,” and numerous other trademarks and service marks. Apple-cart of Innovation Apple has 143 recently published patents, and already has a stockpile of 1,943 patents. In February 2006, the US Patent and Trademark Office (USPTO) granted Apple a patent related to touchscreen technology, which it had applied for on January 31, 2005. The patent, relating to different types of touchscreen technology like touch pad and touch-sensing technology, could be applied on Apple’s numerous products such as iPod, iMac, iBook, MacBook, and PowerBooks. Apple’s iPod is supposed to be one of the first products to get this technology. According to Apple, the US patent process is a very tedious one but Apple would continue to pursue all its patent applications. According to ThinkSecret, an online magazine, Apple is now developing a button-less iPod video player, which has a 3.5 inch diagonal display with Touchscreen technology. This video player would have a bigger and wider display screen for watching the video content, and users could control the video player by just using the screen. ThinkSecret also claim that Apple had developed this product long before, but was just waiting for the grant of patent to release the product into the market to avoid any unwarranted litigations, as witnessed by it in the past. Apple is also reported to be working with a couple of companies in developing the digital click wheel display technology. Apple expects to retain the exclusive usage rights of this technology for a definite span of time, and market it effectively to capture market share. Apple's success of iPod was because of several factors such as on-screen menu, its distinctive click wheel and general trendiness. iPod has catapulted Apple on the top of the digital music market and earned it immense popularity. iPod contributes about 75% of all MP3 players sold in the U.S. Since iPod’s launch, Apple has sold more than 21.8 million iPods; 18.1 million iPods were sold in 2004 alone. In October 2005, Apple filed for two patent applications related to iTunes. The first patent application is titled “Method and system for sharing playlists.” The invention relates to graphical user interfaces (GUI) that help users share or view a playlist, perform different search queries, sampling, listening, buying items listed in a playlist, or notified to the user through publication of the playlist. The second patent application titled “Method and system for configurable automatic media selection,” relates to Party Shuffle. In January 2006, Apple surprised the market by shifting from IBM’s PowerPC chips to the Intel platform, and by launching the Intel powered Apple iMac and MacBook Pro. Leveraging Intellectual Property for Competitive Edge Apple's success story is an outstanding example of deep commitment to innovation. Each innovation is a differentiator. Customers’ perception of a company improves with every innovation. Most companies who focus on innovation and inventions have excellent returns on their investments in R&D. Comparisons prove that innovators are the industry leaders, whether the comparison is apples and apples, or ‘Apple’ and oranges. Today’s post comes from M. Qaiser and P. Mohan Chandran with iPrex Solutions, Hyderabad. This article was first published with US-based Online Portal IPFrontline. Copyright © 2006, iPrex Solutions.