Thursday 9 July 2015

Licences under wraps: how much can we deduce?

The attention of this blogger was directed to a post on Aistemos's LinkedIn Group yesterday, which picked up on the news that Microsoft and Kyocera had struck a cross-licensing deal that reportedly settled Microsoft's Android US patent infringement claims against the Japanese company.

The LinkedIn piece added that, while -- as is a fairly common practice -- the details of the cross-licence  arrangement have not been made public, if you know the respective patent holdings of the two sides, their current market involvement, the degree to which their IP portfolios cut across or complement each other's and how far the antitrust authorities will let them go, it should be possible to get a reasonable idea the licence terms even if they're not made public.

This blogger rather liked this notion.  The idea of deducing the terms of an undisclosed set of cross-licence terms does depend on the assumption that both parties display rational behaviour. In the case of Microsoft and Kyocera this is almost certainly the case. Another variable unknown factor is the cost-effectiveness on the part of each business in unbundling and individually examining large numbers of its own and the other's patents in order to evaluate their relevance to the licence settlement and their individual value; but here, given that the number of patents would probably be high and the process of examining them frustratingly labour-intensive, one might be entitled to assume that they would be licensed in bulk rather as single items.  Would any money change hands? The answer to this might be referable to the cost to Kyocera of making and selling Android-enabled devices in a crowded, highly competitive market.

For as long as the cross-licence arrangement remains under wraps, the visible dimension of the commercial activities of its parties may emit further clues as to its terms.  With which other businesses are the parties partnering, or refusing to partner? In which new markets are they concentrating their efforts, and in which existing markets have they gone quiet? Where and for what products and processes are they filing patents, industrial designs, utility models and the like? What opportunities are offered on their 'positions vacant' web pages? All this data, available to all, enables the licence-term deduction enthusiast to fill in some of the gaps.

Ultimately, while technology has long been discoverable by a process of reverse engineering -- which may or may not be lawful, depending on national IP laws and the terms of any relevant contracts -- the idea of reverse engineering licence terms has not been given much serious consideration. Maybe, with the increased commoditisation of intellectual property rights and a heightened realisation that we need to know more about how they behave in the hands of owners and investors, the time for reverse enginering of licensing arrangements has arrived.  The value of IP is a creature of the marketplace and, while rarely are two pieces of intellectual property completely exchangeable, the terms on which they are bought, sold, licensed or securitised give a clue as to how the value of other rights, or portfolios of rights, might equally be assessed.

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