Atlanteknology - Technology News for Atlantic Canada

Internet Resource for buying/selling businesses

I received an email the other day from Acquisition.biz. I do not endorse it and have no affiliation with it. However, I have taken a look at the site and it seems like a useful tool for those who might be interested in buying or selling a business and want to reach a wide audience.

Take a look. let me know what you think.

License the patent, or litigate, or both?

Many children suffer from respiratory illnesses in their first year of birth. Not surprisingly, a treatment was created for the virus that causes the illnesses.

The treatment was created in 1998 by a company called MedImmune. The treatment has been very successful and accounts for a significant proportion of MedImmune’s revenue.

Unfortunately for MedImmune, the technology behind the treatment was patented by another company called Genentech (after some litigation involving a British company).

The two companies fought, as you would expect, and eventually settled the matter. MedImmune began paying royalties to Genentech – but not al that willingly. Indeed, MedImmune sued Genentech for, among other things, patent infringement.

At the same time, it kept paying royalties to Genentech. Sounds somewhat odd I think you would agree.

The issue (or one of the issues) was MedImmune’s status as a party to a lawsuit while at the same time paying royalties to the party it is suing.

The problem was patent infringement case law said there must be a “justiciable controversy” in order for a patent suit to proceed. In the USA case of Gen-Probe, Inc. and Vysis, Inc. the court concluded that for a patent dispute to proceed either the licensee (in this case MedImmune) must have stopped paying royalties or the licensor (Genentech) must have violated the terms of the license agreement.

Here, neither event had occurred. Obviously MedImmune wanted to have the right to use the technology – its revenue stream depended on it, and Genentech had no interest in breaching the license agreement.

Several lower courts sided with Genentech and held that MedImmune’s suit should be dismissed.

Not dissuaded, MedImmune appealed to the USA Supreme Court – and won. It could proceed with the patent litigation while continuing to pay royalty payments.

All of which is to say that if you operate under a royalty agreement (either as licensee or licensor) you must now be a bit more wary in terms of the business relationship with the other contracting party.

Venture Capital - KNow what you are getting into

I just read a short article in the 22 January 2007 issue of Businessweek magazine (yes, my reading list is getting long) and it reminded me of a conversation I had with the CEO of ITANS last Thursday night. We were chatting about the difficulties start-ups have in raising capital and the disconnect there is when venture capital gets involved.

As Mike noted, the owner has typically invested years in the creation of her company and the company is often like a family member, or cherished prize. The owner wishes to keep control and wants the ability to continue to direct and chart the company’s path well into the future.

This contrasts with what many in venture capital want – which is a defined strategy to maximize value over a relatively short time frame – often 5 years. Venture capital often does not want the original owner to remain as the primary strategic visionary – more often that not the reality is the original owner is not all that good a business person.

So venture capital wants the original owner to remain but in a secondary capacity as chief technology officer of some such position. Imagine the frustration and disappointment when the original owner has to play second fiddle to an outsider.

The article on Businessweek talked about corporate churn – the rate at which high level executives leave companies. The statistics are interesting. The churn rate increased by 68% from 2005 to 2006. That is to say, 68% more senior executives left their companies in 2006 than they did in 2005.

This can be explained in a number of ways but at the end of the day it often means a significant percentage of people have left their companies at least slightly disillusioned or worse.

One way we can help to alleviate this is to provide more information to the business owners who run growing companies. Now I know that we are all labouring under the deluge of information coming at us via the internet and other media and I have no easy answer other than to say we should work to provide more short straight forward seminars to business owners to give them the tools to manage their company’s growth.

Watch out counterfeiters!

Here is one which fits into the "don't follow in these footsteps" category.

A Canadian company imports Microsoft software from the USA and sell it in Canada. The problem is that the software is counterfeit. Microsoft sues.

Microsoft requests damages be assessed at $20,000 for each copyrighted work which was infringed. The range, pursuant to the Copyright Act (Canada), is 500 - 20,000. The court agrees, noting that the defendant company appeared to be continuing in its operations, that the company has not readily produced business records, and that the individual defendant (the principal of the company) had acted inappropriately.

The result - 500,000 in damages was awarded and, on top of that, the court awarded 100,000 in punitive damages and an additional award of 100,000 against the individual defendant.

Ouch. Read the case if you wish - here it is.

2007 Canadian New Media Awards

                                     2007 CANADIAN NEW MEDIA AWARDS

-- Call for nominations runs February 1 – March 2, 2007 --

The Canadian New Media Awards (CNMA), has unveiled one new and three revamped award categories that recognize excellence in the design, development or implementation of new media projects. In addition to the 11 recurring categories, Canadian individuals, students and companies are invited to submit nominations for Excellence in the Use of Social Media, the Emerging Innovator of the Year, Company of the Year and Most Promising New Company of the Year. Nominations will be accepted from February 1 to March 2, 2007.

Go here to submit your nomination!

The Awards are classified into the following 15 categories:

Product Awards:

• Excellence in Gaming
• Excellence in Children’s
• Excellence in Learning
• Excellence in News and Information
• Excellence in Culture, Lifestyle and Arts
• Excellence in Cross Platform
• Excellence in the Use of Social Media (new)

Individual and Company Awards:

• Company of the Year (revamped)
• Most Promising New Company of the Year (revamped)
• Lifetime Achievement
• Educator of the Year
• Producer of the Year
• Emerging Innovator of the Year (revamped)
• Designer of the Year
• Programmer of the Year

About the Canadian New Media Awards

The Canadian New Media Awards (CNMA) were established in 1999 to promote and celebrate excellence within the digital interactive industry. The Awards recognize the accomplishments and outstanding contributions made by Canadians working in this sector. Judges from across the country select 45 finalists and 15 winners from hundreds of entries submitted in featured categories (seven product and eight individual or company) that showcase the world-class skills of the new media industry’s top talent, services and products. Each year, hundreds of business and new media professionals from across Canada gather to honour the country’s top talent, services and products at the Gala Awards Ceremony in May. The Awards are presented in partnership with Canadian Heritage, Telefilm Canada, Delvinia Interactive.

Law in the Digital Age - Conference 2007

The Dalhousie Student Association of Law and Technology (SALT) presents:

Law in the Digital Age - SALT Conference 2007 - a day long conference with members of the Canada's legal community discussing law and technology issues.

Topics include:

Copyright, Artist & Creators' Rights
Privacy & Identity Theft
Software Protections
Cyber Crime

I do not yet have particulars as to the venue but I do know that admission is free. Check in with SALT's website frequently for updated information.

Emerging technologies - the next 7 years

Bionova, the Information Technology Industry Alliance of Nova Scotia (ITANS) and the Canadian Manufacturers and Exporters Association (CME), in partnership with PricewaterhouseCoopers LLP, have organized an event featuring Dr. David Jacobson, Director—Technology, Advisory Services, Toronto. He is the Canadian member of PwC’s Global Technology Centre of international subject matter experts. David will cover a potpourri of emerging technologies and their implications, including some truly remarkable developments in wireless, semiconductors, ubiquitous participation, haptics, programmable paper, phase-change memories, organic, printable semiconductors, tiny lasers, nanotechnology, biometrics, surgical robots and other healthcare devices.

Date: Thursday March 1, 2007
Time: 3:00 – 4:30 p.m., reception to follow
Location: Delta Halifax Hotel, 1990 Barrington Street
This event is open to all professionals free of charge but please
RSVP by clicking here: Halifax - Emerging Technologies Event

Google keywords - for sale? For how long?

Have you ever typed a phrase into the Google search engine and seen various link under the heading “Sponsor results”? Have you ever wondered how that works?

Well, if you have, let me enlighten you. Google will sell you keywords. Just about any keyword as it happens. So, for example, you might be able to buy the keyword “Xerox” even though you are not the Xerox corporation. But if you are a company that sells photocopiers, what a boon to your business if your company name/link appears right at the top of the search results page when someone does a search for “Xerox”!

Of course Xerox would not be all that happy with you and might take a shot at litigating the matter. Depending on where in the world you live, such litigation might or might not be successful. So far in Canada the issue has not been addressed. In the USA there have been mixed results and in Europe the results tend to favour the companies which own the trade-marks and sue the companies which bought the keywords.

The issue here relates to trade-marks. Xerox corporation owns trade-marks relating to the name “Xerox”. So, no one else can use the name “Xerox” in association with photocopiers (among other goods and services). So, by extension why should anyone else be allowed to profit form the name “Xerox” by buying that keyword.

Unfortunately trade-mark law does not easily lend itself to solving the issue but it will, either by virtue of legal decisions or by virtue of amendments to the law. However, for the time being, you should watch out for this if you are a business and you have a valuable brand name. Someone else (ie. your competitors) could be using the name in the sense that they have purchased its use from Google.

On the other side of the coin, if you feel that the risk is worth it, you may wish to consider buying such keywords. It is certainly a risk/reward decision and not a decision which is to be taken hastily. I certainly would not recommend it but then again I am risk averse when it comes to these things.

Food for thought.

Chicago Mama

If only my post on the same sort of topic elicited the same sort of answer......

A blogger named Chicago Mama posts an article on the topic of intellectual property as it relates to Louis Vuitton (and I am paraphrasing grossly here - the original article can be found here), commenting on how displeasing it is to see knock off garments.

A comment is received from a reader which can be described politely as passionate. Here is a part of the comment and a part of Chicago Mama's response. The response is called "Let's learn a bit about the law before commenting":

[Comment from a reader]: Actually, IP laws are a gross violation of basic economic principals, and I'm shocked that you would defend them with such fervor. It is this same argument which American pharmaceutical companies use to try and force African and other nations suffering AIDS epidemics to pay premium prices for drugs which can be manufactured for a fraction of that cost....

[Response (in part)]: We as a society could say that we felt getting much needed drugs and medicines shouldn't be held by privately own companies, and should rather be in the publics best interest to have government control. However - in a free market economy - I think that is going to be a tough sell, and with every single drug production costing at least $300 million  before it gets to market - I would love to see someone getting broad community support for taking that under government control.  The reason drug companies sell their drugs for a premium price is because they under wrote the hundreds of millions of dollars in R&D, and they are not chartered or incorporated as charities.  They are for-profit, money making entities....

A great answer to a statement you see/hear all the time.

I was also reading an article on Businessweek.com today and I read the best description of patents and patent law I have ever seen. Patents, so Businessweek says, are like real property (ie. land). Once you buy/create/acquire a patent, it is like owning land - you have the absolute right (subject to a few exceptions) to prevent anyone from doing anything with that patent or with the land you have acquired. Just like owning land, you can give other people the right to do things with your patent, but until you do so, hands off so to speak.