Article prepared by and republished courtesy of our colleagues in the Intellectual Property and Technology practice group of DLA Piper; originally published here: http://www.dlapiper.com/obama-moves-to-curb-patent-trolls/.
President Barack Obama has announced a new executive and legislative initiative aimed at curbing patent infringement suits by "patent trolls," who generate revenue through extortionate litigation, not real innovation.
Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q1 2013. As the report notes, the first quarter included a quiet encore of the performance seen near the end of 2012. Leasing activity was modest, but positive, tenants showed renewed interest in the middle of the Seattle central business district (CBD), Amazon leased any large space that came available in the CBD, and investors continued to be bullish on the Seattle office market.
The performance of the office market is especially encouraging in light of the fact that general economic indicators continue to vacillate. One example significant to the office market is that after six quarterly increases in forecasted 2013 job growth, the March 2013 Puget Sound Economic Forecaster reduced the growth rate to 2.6%. It was a minor adjustment, reflecting the inability of the national economy to gain consistent momentum and the likely effects of the sequester. Nonetheless, the overall performance of the office market is still expected to be similar to that seen in 2012.
CONTRIBUTED BY
Karen Katz of DLA Piper's Venture Pipeline
The Global Corporate Venturing (GVC) group has released its first quarter report making clear that there is a consolidation of traditional financial venture capital and the growth of corporate venture capital. GE's investment of $105M in Pivotal is a great example. What this means for both the early stage company community and the venture capitalists is a need to truly focus on the customer - early and often. Corporates provide customer access and when a new company can demonstrate that its offering provides true customer value, high growth and bigger exits will follow.
These findings highlight for me Harvard Business Review’s May 2013 recent article outlining the lean start up framework. Lean start-ups are iterative, customer focused and the wave of the future. They require early partnership and interaction with customers, buyers, strategics and financing sources all at the same time.
Check out these two reports showing this convergence around the customer in the links below: here is a link to the GVC report; and here is one to the HBR article called "Why the Lean Start-Up Changes Everything" by Steve Blank.
Here is an first-hand account of Karen Katz of DLA Piper's Venture Pipeline:
Nearly every physical point of the Massachusetts start up community has been touched by the Boston marathon bombing and on-going manhunt. Back Bay, where the marathon concludes, hosts Flybridge, HLMVP, Partners Innovation Fund, Excel Medical, Siemens Medical, Encandle, and many others. Events after Monday, have spread fear further.
Yesterday’s shootings and death of an MIT police officer are tragic. The ecosystem of MIT’s start-up community – at a most basic level - is predicated on safety and the proximity of like-minded individuals. Today, justified fear bolsters the police advisory that Cambridge residents – and those in nearby Watertown, Newton, Waltham (Home of the 128 Technology Belt), Belmont, Allston and Brighton remain in-doors. All public transit is shut down. Businesses have been asked not to open.
On Monday, I was visiting colleges with my high school senior. I learned of the initial events on Twitter and Facebook minutes after they happened. These timely communications give me hope that, despite this terrorist attack, our technological advantage, innovative knowhow and community will continue to come together. I’m on-line at 6 am EST after a scared night – but am connecting nonetheless. Meet-ups have been re-scheduled, not cancelled. While businesses may not be physically open, start-up business will continue.
CONTRIBUTED BY
Trent Dykes
trent.dykes@dlapiper.com
The Angel Resource Institute, Silicon Valley Bank and CB Insights recently released their angel group update 2012 year in review, the Halo Report. The Halo Report analyzes angel investment activity and trends in the United States. Here are a couple interesting 2012 highlights:
A copy of the full report can be found here and the infographic can be found here.
Article prepared by and republished courtesy of Ed Batts of DLA Piper; originally published here.
Negotiation fatigue is an age-old problem in completing any contract – and often, whether fair or not, the further back in the document the clause is positioned, the greater the fatigue.
A choice-of-law provision, which decides which jurisdiction’s law shall govern the contract, is almost always near the last clause in a contract. How often have dueling sets of lawyers (and more frequently, frazzled and puzzled clients who simply want a contract done before the end of the quarter) exhausted themselves on other provisions, only to trade away choice of law for a perceived gain elsewhere in the document?
Delaware Vice Chancellor Donald Parson’s February 22 decision in Meso Scale Diagnostics vs. Roche Diagnostics (Delaware C.A. No. 5589-VCP) highlights how important this seemingly mundane provision can be years later in a change-of-control situation. It also highlights a potentially critical divergence between Delaware and California state law.
On March 12, 2013, the Federal Trade Commission issued its long-awaited update to its 2000 guidance on disclosures in online marketing and advertising.
The guidance, entitled .com Disclosures: How to Make Effective Disclosures in Digital Advertising, not only reaffirms many of the FTC’s longstanding principles for effective online disclosures, but also provides guidance as to how those principles will be applied to new technologies that have emerged since 2000, such as mobile phones and tablets with more limited space, banner ads and multimedia messaging, and social media platforms such as Facebook and Twitter.
The FTC has broad powers under Section 5 of the FTC Act to protect consumers from “unfair and deceptive acts or practices.”i Under the FTC Act, the FTC has long required effective disclosures for claims that would otherwise be deceptive or misleading without them. .com Disclosures is designed to help businesses comply with the FTC Act by providing examples and direction on how to avoid unfair and deceptive practices through appropriate disclosures in their online and mobile marketing.ii
Although the new guidelines do not carry the force of law, they provide insight into how the FTC will apply the FTC Act to online and mobile marketing disclosures. Advertisers and marketers are well advised to review and potentially modify their existing and future online advertising to ensure they are complaint with these guidelines.
CONTRIBUTED BY
Trent Dykes
trent.dykes@dlapiper.com
A great reminder compliments of our colleague Mark Radcliffe: On March 16, the US patent system will undergo a fundamental change from the current “first to invent” to a “first to file” system.
By way of quick background, a “first to invent” system means that even if another party files a patent application on your invention first in the US Patent and Trademark Office, you will still be entitled to obtain a patent on your invention if you can prove you created the invention first. The new “first to file” system, which becomes effective on March 16, 2012, provides that you can no longer get a patent by proving that you actually created the invention before the filing date of the first patent application.
Patents have become an increasingly important part of the assets of startups, especially since most startups exit through merger. PwC, in its recent report on US technology M&A, explains that “companies with strong patent portfolios continue to be likely targets for future acquisitions, as modern competitive pressures force businesses to acquire and defend intellectual property rights.”
CONTRIBUTED BY
Trent Dykes
trent.dykes@dlapiper.com
On February 22, 2013, in its Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH decision, the Delaware Court of Chancery held that a reverse triangular merger is not an assignment by operation of law, meaning that licensor consent is not required for the surviving entity to retain the target company’s rights, benefits and obligations under an existing technology license.
For background, in a prior post, we discussed the impact of common M&A structures, as well as the impact of common anti-assignment provisions, on the assignability of contracts of the target company (in other words, whether or not the target company is required to obtain a third party’s consent to “assign” a contract in a M&A transaction).
The Meso decision is of interest because it is contrary to the position taken by the Northern District of California court in its1991 decision, SQL Solutions, Inc. v. Oracle Corp., which held that a reverse triangular merger constitutes an assignment by operation of law in the context of a technology license. In SQL Solutions, the court held that a legal change in ownership of a business results in a transfer if “it affects the interests of the parties protected by the nonassignability of a contract.” Delaware courts have consistently held that a corporation may engage in a stock purchase transaction without effecting an assignment by operation of law. In its Meso decision, the Delaware court concluded that a reverse triangular merger is not an assignment by operation of law reasoning that “[b]oth stock acquisitions and reverse triangular mergers involve changes in legal ownership, and the law should reflect parallel results.”
Courtesy of John Reed, a partner in DLA Piper’s Delaware office, here is a more detailed summary of the case. The full text of the case is also available here: Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH, C.A. No. 5589-VCP (Del. Ch. Feb. 22, 2013).
CONTRIBUTED BY
Megan Muir
@megan_muir
Q&A: Why this former Microsoft exec wanted to become a venture capitalist Ted Kummert announced on February 5th that he would be leaving his longtime position as a Microsoft executive to take a new role at venture capital firm, Madrona Venture Group. In this Q&A with John Cook of Geekwire, he answers questions about his experience and what caused him to take the leap into VC. “I...look forward to spending time, more broadly, across the Madrona portfolio of companies. I don’t tend to single out. I see so much opportunity, whether we are talking about consumer or we are talking about B2B — I think there is significant opportunity across all of that space,” Kummert said.
He added that his interest is especially drawn towards innovation in the cloud, explaining that “The cloud is really one of those things that is going to change things for the enterprise.” As he moves on from a long career at Microsoft, most recently as head of the company's Data Platform group, Kummert is looking forward to becoming part of Seattle’s flourishing startup ecosystem. “It is just a fantastic thing to be a part of.”
The Venture Alley is a blog about business and legal issues important to entrepreneurs, startups, venture capitalists and angel investors. The Venture Alley is edited by Asher Bearman, Trent Dykes and Megan Muir, corporate and securities lawyers at DLA Piper. Contributing authors to The Venture Alley...
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