Trademarked Scents a Rarity

Trademarking a scent is an uncommon event. This is because scents usually serve as a particular function, such as perfumes or air fresheners, where their purpose is to make something smell a certain way. Therefore, scents are typically patented rather than trademarked. While patents often protect something that serves a function, trademarks typically help consumers associate certain products with a brand. Trademarks that are most familiar include logos, symbols, and slogans. However, scents, sounds, and colors may also serve as trademarks, but trying to prove that they work as trademarks is a hard sell.

To trademark a scent, the scent must be distinctive, reminding consumers of a particular product. However, this is a rare occasion. In fact, only 13 active scent trademark registrations exist today. Although distinctive smells surround us daily, we do not typically think of a particular company or product to attach that smell to. For instance, while McDonald’s French fries or even a Starbucks coffee may have a particular smell, these smells are not distinctive enough to separate them from other fast food French Fries or coffee. For instance, when we smell greasy fries, we do not automatically think of McDonald’s. We typically just associate that smell with French fries in general.

Therefore, obtaining a trademark for a scent is a remarkable feat. However, in May of this year, Hasboro joined an elite group of scent trademark owners. The USPTO determined that the Play-Doh scent is distinctive enough for consumers to associate it with the product. Given that Hasboro has sold more than 3 billion cans of Play-Doh since 1956 and sells 100 million cans annually, it is likely that millions of people have become familiar with the scent. This means that the scent is unique enough that when consumers smell it, it reminds them of Play-Doh. It means that the scent is like no other. In comparison to other companies that have been awarded trademarks for scents, Hasboro’s Play-Doh scent was likely incidental based on its ingredients. This means that the company likely did not purposefully create a scent for its products like Verizon did to help customers associate its scent with Verizon stores. Rather, the mixed ingredients just had a particular scent that worked to Hasboro’s advantage. Filing for a trademark for that scent was a smart business move for Hasboro.

Could Blockchain Technology Be the Game Changer in Combatting Cybercrime?

Cybercrime poses a huge threat, costing the world an estimated $600 billion in 2017, up from $450+ billion in 2016. Among cybercrime is the threat of identity theft. In 2017, 16.7 million U.S. citizens were victims of identity theft at a $16.8 billion cost, up from 15.4 million victims at a $16.2 billion cost in 2016. These statistics indicate that cybercrime is a serious problem that continues to climb at a rapid rate.

Cybercrime can happen in a variety of ways including sending unsolicited emails, illegally downloading music, stealing personal bank account information, creating computer viruses, and so much more. With all of these options, it’s no wonder cybercrime is so high! Furthermore, technology changes so rapidly that businesses and individuals often use outdated technology. Using outdated technology presents a host of opportunities for cybercrime to occur.

As cybercrime continues to create challenges, companies continue to improve technology. A relatively new concept called blockchains is on the horizon, which may be the game changer in slowing down cybercrime. Blockchains are digital registers that permanently and securely store transactions. This technology uses a hierarchical method to save data in blocks, with each block pointing to a previous block with a timestamp of each transaction. This method makes it easy to trace and audit transactions. It is also a secure way of tracking transactions as data saved in blocks cannot be modified or breached. In addition, the decentralization of blockchains makes it hard for cybercrime to occur.

While the technology is in its infant stages, interest continues to increase. According to Statista, the blockchain technology market will rise from an estimated $210 million in 2016 to an estimated $2.3 billion by 2021. An increase in blockchain patent filings corroborates a significant increase in the field as blockchain patent applications more than doubled in 2017 with more than 1200 applications compared to 594 in 2016. Some of the biggest companies in the world are conducting research and filing patent applications, including Sony, Google, Microsoft, Bank of America, Walmart, MasterCard, IBM, and many others. Blockchains can support a variety of industries that conduct many transactions such as finance, real estate, healthcare, music, insurance, and many others, as evidenced by the various types of companies filing for patent protection.

As blockchain technology becomes more mainstream and more companies continue to file patent protection, potential exists for combatting cybercrime on a higher level.

IP Potential in eSports

Sports play a big role in entertaining people around the world. The variety of sports brings a significant amount of fans, amounting to tens of billions. Each sports market involves some form of intellectual property. For instance, the football market has many patents. Football patents exist for helmets, trousers, the ten-yard line, artificial turf, shoes, and more. Trademarks exist for Super Bowl logos, specific team names, taglines, and much more. And of course copyrights exist for televised games. Without intellectual property, these markets would not make near the revenue that they do and there would be no entitlement to the pieces that make up the markets. For instance, without copyrights, any fan could sell or copy televised events, merchandise, or tickets without repercussions. At that rate, the sport would not be able to make a profit to pay the team players or other personnel that make events happen. In turn, the markets would fold and billions of fans would be in mourning.

While traditional sports command big followings, another type of sport is receiving great interest, eSports. eSports is hitting the market by storm. In 2017, eSports drew 258 million unique viewers with $1.5 billion revenue, with an expected reach to 299 million viewers this year and $2 billion revenue by 2021.

eSports is the sport of video gaming on a professional level. It typically involves a team. Popular eSports include League of Legends, Dota 2, Counter-Strike, and Overwatch. Fans can watch via online or at special venues such as arenas. Prize pools are in the millions of dollars, with an expected rise as eSports continues to garner more interest. Just like traditional sports, eSports advertises, endorses, and brands its events. Therefore, obtaining intellectual property to protect the eSports market is a necessity.

What makes eSports so enticing and exciting to so many people is that it does not take extraordinary athletic ability, a specific body build, or an exorbitant amount of money in training, equipment, and apparel to make it in the sport. The average person could make it in the eSports world with lots of practice in front of a video screen at home. Honing one’s skills still takes commitment, but the costs of getting there are not quite as high as traditional sports. Furthermore, the average person is more likely to relate to eSports competitors because he or she can also be a participant, making it even more exciting to watch others at the professional level. In contrast, most average people can only dream of having the skills, knowledge, and build to make it to a traditional sports level. For all of these reasons, the eSports market is expected to soar in the coming years. As a result, it is likely that intellectual property surrounding eSports will increase.

In the past ten years, patent grants for “digital gaming” have reached nearly 160,000, according to a search in ipAnalytx, an IP analytical database. Companies involved in the market include technology giants such as Samsung, Google, Microsoft, Intel, and many others. However, patents are just one type of intellectual property that will experience an increase in the eSports market. Gaming companies that broadcast or hold events must file for copyrights to avoid piracy. Teams and their players must invest in trademarks to protect their identities, market their brands, and gain sponsorships. Therefore, the IP potential for eSports may be enormous.

China’s IP Changes and Their Impact

China is a big contender in the innovation world. According to the WIPO, China was closely on the heels of the United States in 2017 for the most international patent applications. The United States filed 56,624 PCT (Patent Cooperation Treaty) applications, while China filed 48,882 PCT applications. In 2016, China received more overall patent applications than any other country with more than 1.3 million applications. In comparison, the United States paled with a little more than 605,000 patent applications.

Given the sheer size of China and the number of patent filings, China will remain a big contender in innovation for years to come. While competing with the volume of innovation coming from China is cumbersome, the United States also faces billions of dollars in IP theft from China. The exact number is not known, but estimates range from $225 billion to $600 billion annually. Furthermore, inconsistent protection of foreign patents and various rules make it challenging to solve IP infringement cases fairly. In addition, China typically offers damages awards at the low end of the spectrum, making litigation exceptionally expensive due to the time, effort, and loss in sales during the process.

In order for the United States and other foreign parties to feel that they are getting a fair shake, the treatment of IP via China must conform to higher standards. Fortunately, albeit slowly, China is showing signs of improvement resulting in fairer outcomes. For instance, in late 2017, China awarded New Balance $1.5 million in damages for trademark infringement. This was a significant win for New Balance as it previously had little luck winning counterfeit arguments in China prior to this point. Also in 2017, the Motion Pictures Association of America (MPAA) won a copyright infringement case against a large online Chinese video company, indicating China’s effort to crack down on piracy. Furthermore, according to a 2016 study, foreign companies won more than 70% of patent infringement cases in China.

While China is showing marked improvements in its treatment of IP, the standards do not rival those of the United States. Treatment of IP in China will likely be challenging for years to come as the country works to define its standards and policies. However, the good news is that the country is working on the issue. Therefore, a positive outlook for fair treatment of IP may strengthen U.S. and China business relationships.

2017: A Year in Review

The year 2017 was a great one for Pellegrino & Associates. We worked with a number of repeat clients and enjoyed working with many new ones. All of these clients bring interesting concepts from a variety of industries. Among these industries, the law industry increasingly seeks our services. In fact, nearly half of our engagements in 2017 involved law firms. As a result, we provided our expertise to two of the biggest IP litigations in the country last year! Also, one of the rulings on Mike’s opinions made headlines on Docket Navigator. Our firm’s experience as expert witnesses continues to prove valuable in many cases related to intellectual property.

Throughout the year, we attended a variety of conferences and were invited by several organizations for speaking engagements. These organizations and conferences included the following: Global IP ConfEx, ICLEF webinars, Financial Poise webinars, LES webinars, USPTO Global Intellectual Property Academy, and IAM’s 3rd Annual Patent Licensing.

Via our projects and speaking engagements, we have traveled all over the country. For instance, we traveled to Baltimore, Battle Creek, Chicago, Columbus, Dallas, Los Angeles, Philadelphia, San Francisco, and Washington, D.C., to name a few. Not only do we get to travel to some interesting places for our projects and speaking engagements, but we get to learn about interesting topics daily. Some of our project topics in 2017 included the following: airlines, battery technology, bicycle crank systems, biotechnology, cardiovascular innovations, catheterization, chain drive systems, customer service, electronic health record systems, face protection market for both industrial and extracurricular activities, medical, monoclonal antibodies, system and methods for allocating resources in a network, and women’s handbags.

Other highlights include the publication of Mike’s article, “Flawed System Leaves Innovators Without Fair Patent Protection” in the Indianapolis Business Journal. Click the article title to read Mike’s perspective on the topic of patents and asserting patent rights. Mike was also nominated as one of the world’s leading IP strategists on IAM’s Strategy 300, which lists the top 300 people in the intellectual property world. Check out Mike’s bio at the following link: http://www.iam-media.com/strategy300/directory/Detail.aspx?g=eb47c05b-eac0-4f8a-a182-4e292d59c7a4&q=P. In addition, Mike is working on a new version of BVR’s Guide to Valuing Intellectual Property. This third edition will feature updated content, as well as new chapters. Examples of new chapter content will include information on Monte Carlo simulations, the intersection of big data and patent valuation, ways to build models to account properly for time variance, and others.

While we love what we do, we also find great value in taking time every quarter to regroup and connect as a team. This past year, we enjoyed some friendly competition at former racecar driver Sarah Fisher’s go kart facility. We also took some opportunities to take in some fresh air for a hike in beautiful Brown County and another adventure in southeastern Indiana for a peaceful kayak trip. We finished the year collaborating on an island in the Breakout Game room. All of our adventures as a team outside the office give us a moment to appreciate each other and a chance to regroup. And every adventure is so much fun!

As you can see, we’ve had a productive year filled with fun adventures, interesting projects, great business relationships, new speaking engagements, and educational conferences. As we enter our 15th year in business, we look forward to learning more about innovations and working with former and new clients in 2018!

Tax Reform and Its Effect on IP

Tax reform typically has many implications for businesses and people in general. In terms of the 2018 tax reform specifically, the new changes will have positive effects for a lot of businesses and people as tax rates will be lower. This reform presents a positive outcome for intellectual property (IP) owners as well. Since many valuation analysts use the income-based approach for determining IP value, the tax reform changes the value of IP for the better. Read more to understand how the tax reform changes IP value for IP owners.

Generally, the income-based approach is a common and accurate approach for determining value of IP. A valuation analyst using the income approach bases his or her opinion on the intellectual property owner’s business plan, marketing and operational inputs, and other external references. Using this method, the valuation analyst projects the economic income generated solely from the intellectual property over a discrete period, known as the remaining economic life (REL) as well as any residual value after the REL.

To determine economic income, the valuation analyst projects the revenue (or cost savings or other economic benefit) generated from the intellectual property over the REL, and then offsets that revenue with costs related directly to the intellectual property’s exploitation such as labor, materials, required capital investment, and any appropriate economic rents or capital charges.

With cash flows for each discrete year in the REL and a calculated residual value, the valuation analyst discounts the cash flows and the residual value using an appropriate discount rate to the present value. The present value becomes the intellectual property’s value before the valuation analyst applies any applicable value adjustments.

As indicated, a valuation analyst has to discount cash flows to determine the present value of IP. The tax reform directly affects the value of IP as income tax places a direct burden on cash flows. Since the tax reform now has a lower tax rate, the value of the cash flow is higher. For instance, if a patent owner has an asset that generates $1,000 and $100 in profits, the owner will now pay a lower percentage in taxes. For instance, the owner may have paid 40% of the $100 in 2017 versus 20% of the $100 in 2018. Therefore, the patent owner generates more cash flow as they pay fewer taxes, making their IP worth more.