Centre for Internet and Society

Beyond Alcohol and Angel Investors: Building Business Models in an Age of Mobile Music Streaming (Conference Learnings)

maggie — 2015-02-23T12:39:36Z

This blog post is the first of a series of blogs to document, synthesize, and analyze learnings from attending various music industry trade conferences. This first post introduces the research question, and highlights learnings about the various business models which can be accessible via the mobile, and broadly how the music industry is attempting to respond to monetization challenges.

Introduction

The Pervasive Technologies: Access to Knowledge in the Marketplace project is conducting research on access to the mobile phone hardware, software, and content in the context of the intellectual property regimes in India and China. This chapter focuses on access to music content via the mobile phone in India with a particular focus on copyright law.

Following preliminary research, it was identified that the copyright organizing institutions in India lacked legitimacy amongst stakeholders within the music industry. For the purposes of this research, these institutions include the Copyright Act, the Copyright Board, and the copyright societies. Collectively, these institutions have received constitutionality petitions, corruption allegations, and critiques of overall ineffectiveness in regulating and balancing music copyright for the maximal benefit to society. This is of particular importance in light of new modes of digital music distribution technologies (such as mobile phones, and music streaming platforms) which have resulted in a tremendous increase in music consumption but simultaneous decrease in revenue. This is in part due to new business models for music streaming services, and the increasing complexity of music copyright and licensing management in the digital content industries.

1) How have evolving music distribution technologies accessible via the mobile phone impacted business models and licensing practices amongst stakeholders in the digital music industry?

2) What are the specific copyright challenges for each stakeholder in the digital music distribution chain? How can the copyright institutions provide for a more effective regulation and regulation of music in India?

The research methodology1 includes a series of expert interviews whose participants were identified by attending the following key music industry trade conferences in India, and remotely attending in the relevant conferences abroad:

1) 6th MixRadio Music Connects Conference in Mumbai ("MRMC")2

2) The Exchange UK Conference ("Exchange")

3) Indiearth Independent Music, Film, and Media Xchange Conference ("Indiearth XChange")

4) Future of Music Coalition Policy Summit (remote attendance) ("FMC")3

5) San Francisco Music Tech Summit (remote attendance) ("SFMT")4

This first post will highlight learnings from the above conferences5, primarily to respond to the question: What business models for digital music distribution exist in the market today? How is music production financed today? The question of how each industry stakeholder is responding to monetization challenges will also be explored. The main findings documented are mainly sourced from the MRMC and IndiEarth Xchange conferences due to their focus on India and its unique, context-specific challenges.

"India should stop chasing and build business models. We are already ahead... being a mobile-first market... now must lead by learning from our rich cousins - the film and television industry. " - Sridhar Subramaniam, CEO, Sony Music India⁶

Business models and monetization seemed to be the key buzz words at the 6th annual MixRadio Music Conference held in Mumbai, with industry veteran Sridhar Subramaniam, CEO Of Sony Music India giving the opening keynote speech 'How the Industry Stands Today?'. Despite Vijay Lazarus, Secretary of the Indian Music Industry preceding the keynote with a welcome speech warning of piracy as the biggest barrier to monetization. Subramaniam seemed much more optimistic, declaring 2016 as the 'year of music' despite a 10% decline in the former year due to decreased subscription in c first aller ring-back tunes 7. This was in part due to his belief that India was ahead of the game -- being a mobile-market amidst a global trend of mobile music convergence through streaming-based music consumption. Given India's increasing preference for music access in this form, Subramaniam suggested India "stop chasing and build business models" via learning from the music industry's two rich cousins -- the television and film industry.

Subramaniam outlined a strategic plan for growing the 200 million dollar music industry up to a billion in 5 years. He explained how the music industry is positioned where the TV industry was 5 years ago - giving content away for free via ad-supported revenues. This is due to the popular "freemium" business model for music streaming, which allows users to listen to music for "free" (data-consuming, supported by advertisements), with an option to upgrade to a paid tier.

Given recently overlapping ecosystems - standalone music services, device-embedded music services, and operator-supported music services - the question was whether there was enough advertising based revenue to sustain this cluttered industry. In three years, Subramaniam predicted moving from predominantly pirate-consumed music, to ad-supported to a consumer-paid revenue model.

This transition would be done via learning from the film industry through a technique called windowing. This is when the same content is released through multiple windows - for film, this is done first in a theatre, then via home video, then television, then broadcast TV. For the music industry, monetization could occur via exclusives, recommendations, personalization, quality, or regional restrictions; holding some kind of premium content behind a paid wall. This strategy according to Subramaniam's estimates could reach the billion dollar mark in 3 years with the goal of transitioning the 200 million pirated market, to 75 million ad supported, to 25 million subscribers.

" For the first time we have access [to music] from not just one, two, but three ecosystems - standalone music services, device embedded music services, and operator-supported music services." - Sridhar Subramaniam

Following the forward thinking strategy for future business models, the rest of MRMC's panels brought the conversation back to current services and ecosystems of standalone, device-embedded, and operator-supported music services. This increasingly crowded space, along with new international entrants makes the mapping of upcoming services extremely difficult. Nevertheless, the diversity of these services were attempted to be represented at MRMC, with "standalones" like streaming services Gaana, Hungama Australian-based Guvera, and RDIO (which acquired former Indian service Dhingana), along with download stores like Indian-based independent platforms OKListen, Songdew, and Insync. "Device-embedded" services were represented by Samsung with its MilkMusic service, and formerly Microsoft/Nokia owned MixRadio (which has been recently acquired by LINE messaging app8). Lastly, "operator supported" platforms was represented by Bharti Airtel who introduced their new Wynk app, only fully accessible for Airtel telecom subscribers. Multinational content aggregator Believe Digital also was present, providing insight on how the back-end aggregation of content works. A question from the audience inquiring about how to get ones' music onto the various platforms revealed content aggregators' main value -- providing smaller labels and independent artists the ability to ensure their content is distributed widely across multiple platforms.

Although the MRMC panel Streaming: Gathering Momentum hosted a variety of different streaming services, it seemed that there is increasingly less differentiation. Services like user-tracking playlist curation and recommendation, social media-inspired tagging, mood-based suggestions, friend-based recommendations, temporary offline downloads, and more were all being adopted in various forms. Business models of initial free-to-use/access with premium pricing for ad removal and full-on downloads were also becoming a standard across platforms. Some services prioritized specific stakeholders, like Guvera who described their advertiser/brand focused approach through brand play-list curation to target to certain music users.

The Global Music and Mobile panel at the San Francisco Music Tech Summit ("SFMT") highlighted challenges for music applications, with Kathleen McMahon, Vice-President at SoundHound noting the challenge of merely staying relevant in the app store, in part due to the decreasing differentiation with other services. In the streaming ecosystem, a variety of music consumption options are increasingly available through a singular platform (i.e. Hungama enabling on line streaming, download of songs, and purchase of ring-tunes). Given the principle product - the music itself - is the same, the differentiator is marked in part by the user interface, and perhaps more significantly, by price differentiation.

Panelists also spoke of interesting licensing challenges, one being the complexity of differing rates between web-streaming verses mobile streaming, wifi-data transfer, verses 3G access. This copyright challenge was also exemplified when a panelist lamented on the challenges of licensing in various geographic territories, asking "Should I be able to listen to my Spotify subscription wherever I go? Is this not possible purely because of rights and not technology? Do borders even make sense anymore?" These specific challenges will be discussed in an upcoming post highlighting copyright and licensing challenges, but it is worth mentioning here as a barrier to potential technological innovation and ultimately success and survival of these platforms.

" [MCNs are] the new age record label...except far more equitable and less exploitative." - Samir Bhanghra, Managing Director and Co-Founder, Qyuki ⁹

Despite the increasing competition and services, one particular streaming platform which need not be concerned is the audio-video streaming service YouTube, which has a reach of 1 billion consumers, averaging to a viewership of 450billion mins per month 10. Framed as the new broadcast company for user-uploaded content, this viewership directly translates into advertising revenue for the platform, with brands sponsoring specific content creators ("YouTubers") themselves. An interesting new stakeholder which is in part facilitating this phenomena are multi-channel networks ("MCNs"), who was represented in the MRMC Indian MCNs panel by MCNs Qyuki, Digital Quotient, Ping Network and YouTubers All India Bakchod. The MCNs described their business model as a relationship-service, which acts as an aggregator and optimizer of various YouTube channels. With back-end analytics and advertising strategies, MCNs aim to optimize monetization opportunities by focusing on maximizing CPM (clicks per impression) and identifying brand sponsors. Despite the seemingly disruptive service, Tammay Bhat of All India Bakchod was skeptical about the need for such service, asking "How will an MCN actually help me get more money and sustain? As a creator, brands are coming directly. They are so accessible and it's not that difficult. Perhaps it could help smaller creators but..."

Smaller creators and independent artists was definitely one of the target clientele for Qyuki. Samir Bhangra, co-founder of MCN Qyuki's held workshop They Say You Can Monetize Content Digitally - Really? at the IndiEarth Xchange ("the Xchange") independent music film, and media trade conference. He appealed to the independent artists by illustrating the potential reach of the one billion YouTube viewers, and explained some useful back-end analytics which can allow for more strategic and effective monetization. According to Bhangra, the CPM in India is about 1Rs per view, with the possibility of doubling or tripling this if viewed in the United States. Qyuki in particular sought to optimize monetization through ad-funded support (via CPM and brand sponsorship), payment via the MCN themselves for content creation, and 'forward integration' through increasing demand for live and digital gigs through increasing regular viewers. Bhangra even went as far as hailing Qyuki and MCNs as the "new age record label" which would allow content creators full creative control.

"Well, I support piracy so..." - Sohail Arora, Founder, KRUNK¹¹

For independent artists, social media tools like YouTube, Facebook, and other direct-to-fan digital services are of even greater importance considering the relative lack of accessibility to mass-media marketing power. In the XChange workshop Driving Your Career with Social Media, Sohail Arora, founder of booking agency and general artist management company KRUNK focused on search-engine optimization strategies for various social media platforms This included tips such as tagging influencers via social media, strategic timings of content posting, unique release and distribution of music, diversity in content posts, suggestions for increased fan engagement, and more.

The rise of new technologies seem to have brought an increased role and importance to not just social media tools, but also artists managers as well to utilize these services effectively as one of their duties. This new role and its various responsibilities was highlighted by the The Exchange Music Trade Conference ("the Exchange") in the panel The Role of Artist Management Agencies. Considering the diversity of distribution options available, and the difficulty of controlling content usage once released, I asked artist manager Arora for his thoughts on some musicians' strategies of giving away free music downloads. He responded by stressing that freely giving away music was an essential marketing tool for his artists. The ability to download and share would in turn translate to an increased number of fans, quantifiable, measurable social media support (via "likes" and "follows"), and subsequently increased ticket sales, attendance for live shows, and brand sponsorship. This perspective resulted in an interesting conversation/debate with the audience, one member of whom was Marti Bharath, producer/composer of electronic act Sapta who believed that giving away music for free led to piracy, and a devaluation of music. In response, Arora unashamedly stated that he supported piracy, which temporarily halted that conversation during the time-crunched presentation.

" Independent Music is... anything that is not Bollywood" - Nikhil Udupa - MTV Indies. "If you liked it, good. If you didn't, not my problem" - Verhnon Ibrahim, Consultant¹²

Despite the numerous social media tools and online opportunities available for self-promotion, the reach of mass media and its role as a marketing tool was not forgotten amongst the independent music scene.

In the Making Space for Culture panel, an interesting conversation arose on what it meant to be an "independent" artist. It seems that it boiled down to those who were mostly unconnected to the larger institutional support of the music industry like major labels and traditional media -- radio, newspapers, magazines, and television. On the one hand, there was a sense of ambivalence as to whether or not their work would ever appeal to the tastes of the masses. One panelist had asked - would popularization of a certain artist or music remove the label of being "independent"? Nikhil Udupa of MTV Music defined independent music in India as anything that was not Bollywood, due to its dominance in the Indian music market and overall appeal to the masses. Music industry veteran Verhnon Ibrahim conveyed the notion of an independent artist by expressing the somewhat indifference to likeability when reflecting on his days while in a heavy metal band: "If you liked it, good. If you didn't, not my problem". He seemed to imply that appeal to the masses was essentially irrelevant, and almost more revered due to a sense of being able to maintain artistic integrity and authenticity.

The title of the panel itself - Making Space for Culture - was interesting, seemingly alluding to the opinion that mass-consumed, popular music was perhaps not as "cultured" . The main grievance and topic of conversation was that independent music, film, and media did not receive adequate airtime space on traditional media - television, radio, and even print. This premise was probably the only agreement during the panel, as conversation soon evolved to heated debates on whether media created trends or merely picked up on them; and whether there was lack of quality independent content for full-time curation of independent channels, a sentiment expressed by Nikhil Udupa from MTV Indies. This panel's conversation also touched upon a sense of entitlement which independent artists held, in which audience member Guru Somayji of Bangalore-venue CounterCulture expressed his agreement. This echoed the comment from an audience member earlier in the day who stated "musicians do not deserve to be paid... venue spaces do not deserve to make money. There is no entitlement. You only make money when people are breaking down the door to listen to you."

Amidst a crowd of independent musicians and artists hoping to devote their lives to creating their art in a financially feasible way, there was an understandably ill response from the audience. The main criticism was the lack of broadcasters' efforts in finding quality content, and allowing independents a chance to perform in large venues and mass media channels. Verhnon Ibrahim, consultant and industry expert on the Making Space for Culture Panel attempted to explain that radio, television, and other traditional forms of media and communication was a mass-market game, whose purpose was to ultimately to sell ads. He cited radio's high cost of royalty payments to explain the need to curate for the majority so advertisers will get the most reach. Ibrahim stressed the need to demonstrate quantifiable forms of "deserving" - number of Facebook likes, YouTube views etc. to demonstrate virality and fan following, so the media would have to pick up on ones' popularity.

"It's public knowledge that vast sums of money in royalties have not been collected... [due to a] situation of buying out rights, but even labels and rights holders say hundreds of thousands of pounds are not making their way back." - Terry Mardi, Managing Director, Asian Music Publishing¹³

Although several independent musicians raised grievances about the lack of avenues to perform in, and the reoccurring problem of being paid on time, there seemed to be a hesitancy when discussing business strategies and the challenges of copyright due to technological innovation. In the independent space, this was anecdotally demonstrated by one panelists' response when asked about the impact of technology on the distribution strategies for their art, and on financial returns for their livelihood. He responded: "Those are two separate things... one is about making money and making a living. The other is about making an art form. These are two separate things." Within the larger industry conference MRMC, there seemed to be a lack of representation by musicians and content creators. Yet, one particularly vocal audience member, and later panel member of the UK Exchange was Terry Mardi, Managing Director of Asian Music Publishing. Numerous times throughout both conferences, he raised the controversial issue of missing royalty payments in India, and the absence of royalty collection and distribution by unregistered copyright societies IPRS and PPL. In MRMC, this issue was ever so briefly touched upon in a panel when Bollywood playback singer Natalie Di Luccio who's worked closely with A.R. Rahman mentioned that she had never received a contract outlining her rights and her royalty dues. Although there was very little curated conversation about this issue, coffee breaks demonstrated a clear gravitation towards those vocal and concerned about the issue, while many stakeholders, particularly the few musicians in the room seemed to find this a significant gap in voices not heard and expressed in MRMC. At IndiEarth, Vivek Ragpolan, representative of the Music Composers Association of India briefly commented as an audience member about the need to take collective action regarding composers and overall musicians' rights, stressing the importance of independent artists also being included within the new provisions of the Copyright Amendment Act. Though this issue of royalty licensing will be reviewed in a future post, this brief mention demonstrates the challenge of monetization and livelihood at multiple levels -- significantly for content creators, but also for the music platforms themselves.

"It seems like the pricing model is wrong... it's the only way to explain the drop in revenue" - Tarun Malik, Apps & Content Strategy, Samsung ¹⁴

Across different platforms, panels, conferences, and countries, one particular question seemingly common to all was that of price points band business model viability. Tarun Malik, Apps & Content Strategy of Samsung in Biggies Give Their View commented on the growth of the industry. Despite an increase in overall consumption, he noted - "It seems like the pricing model is wrong...it is the only way to explain the drop in revenue". Atul Charumani, formerly Head of Content with OnMobile and currently Managing Director of Turnkey Music stated that "in no other industry where the content is produced at such a high cost, is the product given away for free." In the Global Mobile and Music Panel at the San Francisco Music Tech Summit, the moderator asked a panel of music distribution service providers - "What is the value of music? Does music have intrinsic value at this point? Or is it just how it is presented?" In response, Dean Bolte, Managing Director of Omniphone expressed that the value of music was different for every person, and that some people were willing to pay more for access than others. The priority is to ensure that those who value music more have the opportunity to express through payment, since anything was better than zero. Beyond competition between music service apps, Bolte noted that the competition for funds also occurred across app categories, noting a generation of youth conditioned to acquire music for free through Napster, yet pay for additional levels in games. He closed the panel with the insight that "the product needs to be better than the sword".

The targeting of youth and young adults was also conveyed by the somewhat surprising pervasiveness of brands, who had a larger than anticipated presence for a music industry conference. The UK Exchange demonstrated the potential of partnerships in its Brands & Music - When They Combine Forces panel. MRMC panel The Brand Sponsor also invited the Taj hotel (who seem like an unlikely sponsor) an opportunity to express its interest in supporting the discovery of new talent. Aditya Swami from MTV & MTV Indies said that brands can communicate through music, and create conversations with their consumers. Subramaniam, CEO of Sony Music mentioned the importance of funding through brands and advertising in the MRMC keynote How the Industry Stands Today, while IndiEarth's Taking it Live panel opened the day with a conversation about live venues seeking sponsorship from alcohol, clothing and other 'lifestyle' companies. Even the MCNs in the MRMC Indian MCNs panel discussed one of its main services as the securing of brand sponsorship.

"Independent music in India would not exist if it weren't for alcohol sponsorships" - Tej Brar, Artist Manager, Only Much Louder ¹⁵

Music platform MixRadio, the title sponsor of MRMC was an understandably suitable partner, since it closely correlated to the main music product. Yet, particularly in India, it soon became apparent that alcohol brands have a very significant role in financing the music industry. This was highlighted when liquor-brand Bacardi received an award during MRMC for 'excellent brand association'. It was later learned in an interview that liquor and cigarette brands are not legally able to advertise in India, hence the popularity of alcohol sponsorships for live music festivals, venues, and club nights. Tej Brar, EDM Artist Manager for Only Much Louder believed that independent music would not exist in India if it weren't for alcohol brands. This is an interesting phenomenon considering just a decade ago, the idea of synchronizing ones' music with a corporate brand would be akin to "selling out". However, in today's increasingly digital world, especially in India where non-film musicians don't have much of a presence, brand sponsorship is one of the main 'monetization strategies' for music production. The last important significant financier to mention are investors, showcased in the MRMC panel Of All Things Finance. These "angel investors" play an instrumental role in backing many of the technology start-ups and other streaming services while experimenting with various business models. Yet whether these investment decisions are one that would reap sustainable returns is still a question to be answered.

Conclusion

It seems in this mobile first market, India has the opportunity to lead the way in developing business models that grow the industry through multi-tiered windowing of music streaming. Strategically, in an ecosystem still rampant with piracy, moving consumers towards legal access to music can facilitate new sources of revenue. This opportunity has also given rise to new intermediaries like YouTube and multi-channel networks. time will tell whether their contribution will legitimately grow the industry or simply take away more pieces of what seems to be a shrinking profit pie. Independent artists are able to use new direct-to-fan distribution platforms such as YouTube, amongst others to share their works. Yet, it is clear that the sustenance of a livelihood off of digital sales and distribution is extremely difficult. It is interesting to note that the bulk of financing for music seems to be trending towards live shows and brand sponsorship. However, despite increase in digital music consumption, the distribution of the revenue needs to be further studied and understood. Given the ease of replication, this will require a further in-depth understanding of licensing and copyright management in India today.

1 See the research methodology here: http://cis-india.org/a2k/blogs/copyright-management-in-age-of-mobile-music last accessed Jan 22, 2015

2 All of the panels from this conference can be found online here: http://musicconnects.indiantelevision.com/y2k14/videos.php last accessed Jan 20^th 2015

3 See here for the IndiEarth website: http://www.xchange14.indiearth.com/ last accessed Jan 20 ^th 2015

4 Watch and/or listen to the Future of Music Coalition panels here:https://futureofmusic.org/events/future-music-summit-2014 last acccesed Jan 19 ^th 2014

5 All data in this solely from public conference panels; including quotes, etc. Does not include any individual interview data.

6 As quoted from the MixRadio Music Connects Keynote panel:

7 Though it was not mentioned in the speech, it is useful to understand the initail demand for CRBTs was not necessarily genuine, for the fall in revenue was due to the crackdown by the Telecom Regulatory Authority of India to prevent false billing by telecom and value-added-service providers.

8 See http://blogs.wsj.com/digits/2014/12/19/messaging-app-lines-first-acquisition-music-streaming-service-mixradio/

9 As heard in the MixMusic Radio Connects panel Indian MCNs on Nov 5^th 2014

10 According to Samir Bhangra in MixRadio Music Connects' Indian MCNs panel on Nov 5^th 2014

11 As heard at the IndiEarth Xchange conference in the Driving Your Career with Social Media panel on Dec 5^th 2014

12 Stated at IndiEarth Xchange Conference in the Making Space for Culture panel on Dec 4^th 2014

13 As heard at UK The Exchange Submerge conference on Nov 7^th 2014

14 As stated on the MixRadio Music Connects panel Crystal Ball Gazing: Bigges Give Their View on Nov 5^th 2014

15 In a conversation at the IndiEarth Music Xchange Conference on Dec 5^th, 2014

For more details visit https://cis-india.org/a2k/blogs/beyond-alcohol-and-angel-investors

A Study of J. Sai Deepak's Comments on Competition Law in India

Aarushi Bansal — 2015-11-21T06:18:42Z

In his blog, 'The Demanding Mistress', J. Sai Deepak has commented on the competition law in India, using provisions of different acts, case judgments and amendments to these acts. He has also included a comment on India’s patent law. This review studies his comments to the Competition Act, 2002 (“Competition Act”) and the Patents Act, 1970 (“Patents Act”).

Read J. Sai Deepak - The Demanding Mistress[1]. Nehaa Chaudhari provided inputs and edited this blog post.

The Nexus Between the Competition Act and the Patents Act

Sai Deepak explains the nexus between the Competition Act and the Patents Act[2] using two positions. Firstly, by using two situations to explain which of these two acts will apply under different circumstances. Secondly, by explaining the overlap that is apparent in cases of abuse of power.

Under the first issue, the two situations are thus. In a case where a patentee's patent over a technology allows him to acquire a position of dominance, Competition Act will be applied if he abuses this dominance. In case a patentee imposes a high license fee on his product, many players cannot afford it and get ejected from the market. Here, both the acts would apply, thereby indicating an overlap.

Under the second issue, it is stated that abuse of power could also happen if a patentee sets an "unfair price". Therefore, Sai Deepak argues that for ensuring fair or affordable price, there should be harmony between Competition Act and Patents Act. He has derived harmonized interpretations of "unfair price" under the Competition Act and "reasonably affordable price" under the Patents Act. He explains that the price under each law is measured according to the price for the licensee and not the price demanded or the value of the licensed technology. He further, argues that such a harmonization is possible since "price" under these two acts is essentially used in the same context. It is necessary to harmonize the two acts since the overriding effect of Section 60 of the Competition Act can be effective only when an inconsistency is proved with the other provisions or laws.

Patents and Competition "Arrangements"

An arrangement[3] or collusion may exist between two market players if their activities can be foreseeably linked, even if there is no express act or formal arrangement between these parties. This has been explained through an example.

A sells a patented drug in the market. B sells another patented drug which is similar to the drug sold by A. A also has some share in B's company. When C introduces a similar drug at a much cheaper price, B is forced to reduce his the price of his drug. A follows suit.

It may be noted that since there were similarities between the drugs being sold by A and B, and, therefore the patent, it may have been possible for B to challenge A’s patent on prior art and eject A from the market, thereby reducing competition.

Since he did not challenge A's patent which was closest to that of B in terms of prior art, there may be an arrangement between A and B. This shows that A and B decided to divide the market and not encroach upon each other's trading space. In addition to this, the fact that A was a shareholder in B's company, points in the direction of a collusive activity.

Legality of Pay-for-Delay Settlement Payments

This post, as written by Amshula Prakash, refers to J. Sai Deepak's comments on the topic. She has described a Pay-For-Delay settlement [4] as a patent settlement wherein the patentee pharmaceutical company pays the generic manufacturer to remain ejected from the market for a certain period of time.

She justifies these agreements by relying on the case of Federal Trade Commission v. Actavis [5],which upheld that such agreements are lawful as long as their anti-competitive activities are covered under the exclusive patent granted to them. She opines that entering late into the market is better than not entering at all, and such a deal would anyway not go beyond the life of the patent. She concludes by reiterating J. Sai Deepak's statement that the exact impact of the agreement cannot be ascertained, as no such cases of Pay-For-Delay agreements have arisen in the Indian market yet.

Collective Bargaining

J Sai Deepak has addressed two issues under this post. Firstly, the relation between collective bargaining and cartel-like conduct. Secondly, whether any defense under S.3(3) [6] of the Competition Act is available against cartel-like conduct.

In first issue, [7] J. Sai Deepak suggests that collective bargaining is a joint venture as it increases efficiency of entities in providing services. Similarly, an agreement to reduce such efficiency is also a joint venture, since it may ensure competitiveness in the market and control over prices. He specifies grounds to determine the purpose of a collective act which helps ascertain whether it will be covered under "collective bargaining". These include the nature of business, parity between parties, past negotiations etc. He has relied on foreign sources to justify cartel-like behavior of smaller entities, like Australia's Dawson Committee and Taiwan's efforts to integrate smaller enterprises into the mainstream market to increase efficiency and competitiveness. Hence he suggests that an amendment should be made in law to permit small businesses to make an exception to cartel-like conduct and collective bargaining.

Under the second issue, [9] he opines that a strict assumption of the presence of any anticompetitive nature or agreement is counter productive to the intention of the law. The available defenses under S.3(3) for parties accused of cartel-like conduct can be justified using the proviso[10] under this section. He explains that collective bargaining may be seen as a "joint venture" under the proviso of S.3 if it is not anti-competitive. He has further supported this argument by relying on FICCI - Multiplex Association of India v. United Producers/ Distributors Forum, [11] where "collective bargaining" was accepted as a valid defense to cartel-like behavior.

Power of Competition Commission with Respect to Abuse of Powers

J. Sai Deepak has explained the powers of the Competition Commission of India (CCI),[12] firstly, with respect to abuse of powers and secondly, in terms of imposing liability.

With Respect to Abuse of Powers

With respect to abuse of powers, he refers to Section 4 of the Competition Act. It refers to a situation wherein a dominant player in the market sets a discriminatory (including predatory price) or unfair price in the sale of his good. Predatory pricing is explained in this section and not discriminatory or unfair price. J. Sai Deepak argues that since they are capable of having different meanings, there might be different forms of abuse which a dominant entity can exercise.

He relies on a test laid down in a case on unfair price, namely United Brands Company v. Commission of the European Communities.[13] A question arising under this test was whether the regulator is expected to fix prices if they are found to be unfair. To show that the CCI has the power to fix prices, S.27 and 28 of the Act have been compared. Section 27(d) empowers the CCI to direct that agreements which are in contravention of Section. Furthermore, Section 27 (g) allows the CCI to pass orders 'it may deem fit'. Section 28(2)(a) empowers the CCI to vest property rights, which creates licenses for third parties. The CCI can set future commercial terms in agreements remove complexities of the market in the interest of equity and justice. This shows the abundant powers the Competition Commission of India has to set prices.

In Terms of Imposing Liability

To answer whether these decisions of the CCI are in rem [14], he explains that the CCI can regulate market transactions and the finding of an abusive practice would be applied to other enterprises with similar practices. This shows that CCI lays down rules prescribing acceptable practices in the market.

Review of the Competition Amendment Bill, 2012

This post discusses the proposed amendments in the Bill [15] regarding three issues. Firstly, in regards to joint dominance, i.e. position of dominance enjoyed by one or more enterprises, J. Sai Deepak argues that the Bill recognizes an oligopolistic market's collusive activities, thereby providing a legal method of identifying it. He argues that it is not yet time to introduce it into the Indian industrial arena, since S.3 which regards anti-competitive agreements, is too rigorous to harmonize the concept of joint dominance with it.

Secondly, another proposed change is to render the decision taken under S.21[16] appeal-able under S.53A of the Act. He criticizes this by saying that an appeal on S.21 while adjudicating on S.53A may lead to a multiplicity of legislations and jurisdiction issues.

Lastly, the amendment of S.5A, empowers the government to specify the values of any assets or turnovers based on the class of enterprises. The government may consult the CCI, but the consultation is not binding or of mandatory assent, which shows that the CCI might turn into a tool which furthers the powers of the executive.

Conclusion

On reading J. Sai Deepak's comments on the competition law in India, I have concluded that several provisions under legislations regulating competition in Indian markets might still not be comprehensive. This may be because many scenarios for which these provisions have been made have not yet arisen in India. Hence a few outcomes of these legislations remain to be mere speculations and as several developments in the market are still underway, laws like the Competition Act should adopt to these if and when they arise.

[1]. http://thedemandingmistress.blogspot.in/

[2]. http://thedemandingmistress.blogspot.in/2013/09/the-overlap-between-patents-and.html#links

[3]. http://thedemandingmistress.blogspot.in/2011/10/patents-and-competition-need-for.html#links

[4]. http://thedemandingmistress.blogspot.in/2013/06/legality-of-pay-for-delay-settlement.html#links

[5]. 570 U. S. ____ (2013)

[6]. Defines the type of agreements which would qualify as anti-competitive

[7]. http://thedemandingmistress.blogspot.in/2012/01/collective-bargaining-and-cartel-like.html#links

[8]. Committee of Inquiry for the Review of the Trade Practices Act of the Australian Parliament

[9]. http://thedemandingmistress.blogspot.in/2012/01/competition-act-is-collective.html#links

[10]. Refers to “any agreement entered into by way of joint ventures”.

[11]. Case No. 01 Of 2009

[12]. http://thedemandingmistress.blogspot.in/2015_01_01_archive.html

[13]. C-27/76 [1978]

[14]. http://thedemandingmistress.blogspot.in/2014/07/are-decisions-of-competition-commission.html#links

[15]. http://thedemandingmistress.blogspot.in/2015/03/a-review-of-competition-amendment-bill.html#links

[16]. Reference by Commission to statutory authority in case of contravention with the Act

For more details visit https://cis-india.org/a2k/blogs/a-study-of-j-sai-deepaks-comments-on-competition-law-in-india

[Updated] Exclusive: OnePlus 5T’s Face Unlock feature may have infringed upon SensibleVision’s face recognition patents

Admin — 2018-01-17T01:07:51Z

The blog post by Nachiket Mhatre was published by mysmartprice on December 22, 2017.

Update

We had reached out to OnePlus early in the morning yesterday (that is, December 22) for an official statement prior to publishing the post later in the evening. Even a day later, as of this update, OnePlus hasn’t issued any clarifying statement either confirming or denying the patent infringement claim made by SensibleVision.

We had also contacted George Brostoff, the CEO and Co-Founder of SensibleVision, regarding the legal ramifications of his claim and if SensibleVision is contemplating legal action against OnePlus. Brostoff issued the following statement in response:

“Actually the comment by the patent expert quoted in the linked article is spot on,” noted Brostoff before issuing additional clarifying statement. “Legal process is always SensibleVision’s last resort. We pursue legal patent infringement only with companies that we have approached first through non-legal means and if they choose to then use our patented technology in the markets that our patents cover. Some of our patents are US only. We see companies like OnePlus as our possible customers. Our technology, both patented and proprietary, provides them with the possibility of better performance and more secure solutions. When companies license our solutions, they get the benefits of our broad patent portfolio and SensibleVision’s early entry into the market, something that helps minimize other companies claiming patent infringement against them. Unlike India, OnePlus currently has little to no US sales presence. So while they are on our partnership ‘radar’, they are not on our ‘legal’ radar for infringement.”

The gist of SensibleVision’s statement is that it probably won’t file a patent infringement lawsuit, but instead approach OnePlus to settle the matter amicably — say, by forging a Global Patent License Agreement (GPLA) — wherein OnePlus could be expected to pay to licence SensibleVision patents that are allegedly being employed in the OnePlus 5T’s Face Unlock system.

What’s interesting is Brostoff admitting that some of SensibleVision’s patents are valid only in the US, with him further insinuating that OnePlus’s sales volumes in the USA cannot justify prohibitive patent litigation costs.

We asked our resident patent expert, Rohini Lakshane, for her opinion on this statement and she confirmed that, in some cases, patent infringement settlements awarded by the US courts are in proportion to sales value and volume of the infringing products. In short, SensibleVision might not be too keen on taking the legal route against OnePlus, because the potential settlement payout might not be enough to cover the excessive cost of litigation in US patent courts.

The original story continues…

The OnePlus 5T’s Face Unlock technology has been critically acclaimed across the board, with our personal experience too pegging the biometric security system as one of the fastest face recognition implementations available in the market today, while being seemingly secure and impenetrable to simple workarounds. Even as technology critics and consumers wonder if this piece of biometric security is too good to be true, there could be a patent war brewing on the horizon for OnePlus.

Speaking in an interview with MySmartPrice, the CEO and Co-Founder of SensibleVision, George Brostoff, claimed that OnePlus might have infringed upon at least one of the patents belonging to the biometric security solutions provider. He also revealed that, in addition to other unspecified face recognition patents, OnePlus may have employed SensibleVision’s patent pertaining to the use of the screen as an illuminator. In fact, Brostoff claims to have notified “several companies” about their infringement of that particular patent.

“This is nothing new. We have been doing this for years. It even appears that they may be using several patented technologies,” said George Brostoff when asked what he made of OnePlus 5T’s Face Unlock implementation. “We have not licensed our patents to OnePlus or their supplier. From the video on Forbes, they are likely infringing at the very least on our illumination patent.”

Analysis from a patent and IP expert

Brostoff refused to divulge further details citing that SensibleVision has since handed the matter over to its legal firm, which probably means that we might hear more about this in the near future. Patent infringement claims in particular are extremely difficult to verify, so we spoke with Rohini Lakshane, who’s a Public Policy Researcher with extensive experience on patent and intellectual property regulation for more insight into the matter and an expert analysis on what this potential patent spat could entail.

“SensibleVision is a US company. Patents are valid only in the jurisdiction where they have been granted. Unless the company has registered a patent application or was awarded one for face recognition in China, there is no infringement. That is with respect to sale of the devices in China. With respect to sale in India, again, SensibleVision needs to have registered the patents in India,” explains Lakshane. “The way licensing works is the companies that hold many patents for a particular technology often license entire patent portfolios for use anywhere in the world. This is called Global Patent Licence Agreement (GPLA). This is usually confidential. What patents and how many are in the portfolio and what are the licensing terms [Editor’s note: in other words, how much money changes hands, among other things] is also confidential.”

From what Brostoff has revealed to us during the course of the interview, there seems to be no patent sharing agreement between OnePlus and SensibleVision to our knowledge. While it’s not easy to file and win patent lawsuits against Chinese companies in China, Lakshane suggests that SensibleVision can at least potentially begin patent infringement proceedings in the USA, where it has filed for the aforementioned patent.

However, all of this is conjecture from an expert in the field, as there’s no concrete corroborating proof legitimising SensibleVision’s patent infringement claims against OnePlus either. We have contacted OnePlus for its response on the matter, and will update this article with the official statement, so keep watching this space.

Read the original story here

For more details visit https://cis-india.org/a2k/news/nachiket-mhatre-december-22-2017-exclusive-oneplus-5ts-face-unlock-feature-may-infringed-upon-sensiblevisions-face-recognition-patents

[Open] Innovation and Expertise > Patent Protection & Trolls in a Broken Patent Regime (Interviews with Semiconductor Industry - Part 3)

maggie — 2014-12-26T13:19:46Z

This is the third of a four-part blog series1 highlighting findings from a small sample of interviews with fabless semiconductor industry professionals in Taiwan. These industry insiders was approached for the intent of understanding expert knowledge on the process of integrated circuit design. However, the conversations resulted in leanings far beyond that scope. This post explores some of their views on the current intellectual property system.

The intellectual property framework is meant to provide a temporary monopoly so those taking the risk to invest time, money, and resources into research and development can reap the returns for that investment without having to worry about others undercutting their price and competing for market share. Registration of patents supposedly encourages the dissemination of ideas and overall greater knowledge contribution for public access and eventual public domain. The interviewees were asked about their thoughts on this system of protection, incentivization, and knowledge-share, resulting in five broad themes:

1) Expertise trumps patent ownership

Particularly today in a digital world where innovative ideas and concepts can be easily shared, the first thing many people think about when discussing innovation, is the need to protect via patents. A vast amount of literature attempts to review the implications of patents' on technological innovation and economic development.

However, one interviewee noted that this emphasis on patent protection often overshadows what is much vital to the success of a technology business or industry - the people: the expertise and experience of the companies, their engineers, and their management. A lot of knowledge and 'intellectual property' lies in the procedures and processes which have resulted in effective application of standards and high level of performance for ones' products. The value of these skills and intelligence of human resources far outweigh the importance of protecting and owning patents.

2) Broken patent system

There was a clear consensus that the number one intellectual property concern is the need to revamp the current patent regime, with all interviewees agreeing that "useless patents" were being filed. Some suggestions for improvement included international standardization regarding the definition of a patent, the process of patent applications, and the scope of what a patent should cover. One interviewee believed that currently, the patent system actually prevents technological innovation, because one single patent can cover many ways of achieving something. The Apple patent entitled ' Method for providing human input into computer' which patents nearly every single possible human-computer interaction is an example of this.

"Patents today are trivial, and don't contain information regarding HOW to make something; there are too many process and design patents, and not enough functional patents...merely competitive differentiations rather than fundamental technological changes" .

This quote expressed the perception that only inventions that affect functionality in a fundamental way should be patented. A patent should not be claimed for something you cannot do, or does not show any kind of knowledge for how to solve a problem. One interviewee suggested that if a patent is granted without use for 3 years either by the owner or through licensing, the patent should be considered invalid.

Another industry expert explained that numerous patent applications are entered into the system without enough resources and competencies in the government to review them well. Albeit suggested in a joking manner, there may be truth to his claim that a knowledgeable intellectual property tech expert would opt to work for the more lucrative law firm over the government. He observed over the years a cycle where patents are easily approved, in which if a lawsuit arose, the patents are assessed more carefully again, resulting in massive inefficiencies for the system.

3. Patent Trolls

The poor execution of the patent system has resulted in the phenomenon of 'patent trolls', or what is more neutrally termed as non-practicing entities ("NPEs")[1] or patent assertion entities ("PAEs").[2] As explained by one interviewee, the business models of these entities often begin by conceiving of future technologies which may be necessary or foreseeable in the near future. Then, they seek to patent those ideas with no intention of actually producing producing or manufacturing the product. The main purpose is to profit through litigation and licensing. An example given of a patent trolling company was "Intellectual Ventures", which describes themselves as an "invention capital company" that "owns some of the world's largest and fastest growing intellectual property portfolios"[3]

The difficulty is that patent trolls are virtually indistinguishable from aspiring inventors and engineers, who may seek to manufacture and scale up their products through outsourcing and licensing. In addition, the lack of actual production makes valuation, legislation, and enforcement around this practice extremely difficult.

"The problem is, the guys who have patents think it's worth this much money… and the company that wants to license think it's worth another amount. From a regulatory or legal point of view, it's very difficult to legislate these things… you can't legislate a value right? In the end, it's how much the customer is willing to pay for it. It doesn't matter how many years someone's been working on it, if no one wants to buy it, it's not worth anything."

Robert L Stoll, former USPTO Commissioner of Patents says the most effective way to reduce predatory behavior is to ensure bad patents don't get issued in the first place, highlighting a legislation in the America Invests Act of 2011 which allows third parties to challenge granted patents on basis of former prior art, and non-technical financial or product patent.[4] Increased collaboration shown through standards and cross-licensing

The development of standards is very "fashionable" at the moment, according to one interviewee, who expressed his desire for his own company to be more involved in the process. However, another interviewee stated that more could be done to enhance collaboration within industry so that technologies could be provided free of licensing and ultimately benefit society at large through greater interoperability. Although there are signs of partnerships through cross-licensing agreements, particularly amongst larger firms, there are limitations because not everyone, including small firms, can afford it.

Most interviewees also expressed the need for greater emphasis on knowledge and research, rather than relying on proprietary technologies, which may actually hinder technological innovation. Examples given for companies doing this were Google and IBM, who both have more of a research background, and potentially have more research and development resources to engage in this kind of work.

5) Need for more openness

One interviewee who had extensive experience in the hackerspace community was an advocate for openness within the industry, and believed many companies had the option to become more open and effectively 'outsource' their research and development to the larger community.

Some successful projects he suggested was an open-sourced graphics processing unit ("GPU"), which does not exist even for the largely open Rasberry Pi. Even the development of a lower quality open sourced GPU in the market would result in tremendous demand, in his opinion. The ARM technology, the most popular CPU in the market is also currently semi-closed, and could in his opinion have benefited from more openness.

One interviewee expressed disappointment that all of the chips in his company was proprietary, even those that were no longer in production due to fear that competitors would be able to anticipate future developments from past projects. He suspected that many things were protected simply because the legal department assumed confidential and proprietary, without necessarily a coordinated long-term vision from head management. It is this normalized culture in industry that is, in his opinion a great hindrance to innovation, development, and accessibility of technology.

https://www.patentfreedom.com/about-npes/background/

http://www.ftc.gov/policy/studies/patent-assertion-entities-pae-study

http://www.intellectualventures.com/about

http://www.wipo.int/wipo_magazine/en/2014/02/article_0007.html

For more details visit https://cis-india.org/a2k/blogs/interviews-with-semi-conductor-industry-part-3

2016 Works-in-Progress Intellectual Property ("WIPIP") Colloquium

praskrishna — 2016-03-20T05:10:52Z

Prof. Jorge Contreras presented a paper co-authored by Rohini Lakshané on the patent landscape conducted for the Pervasive Technologies project at WPIP. The event was held in Washington D.C. on February 19 and 20, 2016. It was organized by School of Law, University of Washington.

For more details click here

For more details visit https://cis-india.org/a2k/news/2016-works-in-progress-intellectual-property-wipip-colloquium

“Copyright Management in the Age of Mobile Music” - Living Methodology Document

maggie — 2014-12-26T13:44:25Z

This blog post outlines the research methodology for a chapter in the Pervasive Technologies: Access to the Marketplace project, in which access to the mobile phone hardware, software, and content is assessed within the intellectual property framework in India and China. This chapter focuses on copyright and access to music content in India.

Research Problem:

In light of new music distribution business models accessible via the mobile phone, there has been increasing complexity in music copyright licensing, revenue, and royalty distribution. Despite the intent of the 2012 Copyright Amendment to resolve stakeholder grievances, the copyright institutions in India continue to lack legitimacy amongst relevant stakeholders for the management of music copyright.

Research Objective:

Provide evidence-based policy proposals which may aid industry leaders and policy makers to more effectively manage music copyright in India

Research Questions

How have evolving music distribution technologies accessible via the mobile in India impacted business models and licensing practices amongst stakeholders in the digital music industry?
What are the specific copyright challenges for each relevant stakeholder, and how can the copyright institutions provide for more effective management in the industry?

Research Objects

Modes of mobile music access

Value-added-services
Device- bundled music
Online download stores
Online streaming (primary focus due to increasing popularity)

Methodology

How have evolving music distribution platforms impacted business models and licensing practices amongst stakeholders in the digital music industry?
- Map out digital platforms' business models
- Identify stakeholders within these ecosystems, and their copyright licensing negotiation process, terms, and revenue distribution
What are the specific challenges pertaining to copyright and licensing for each relevant stakeholder? How can the copyright institutions provide for more effective management?
- Identify and evaluate grievances pre- and post-2012 Copyright Amendment
- Identify proposals for improvement of copyright institutions: Copyright Act, Copyright Board, copyright societies.
- Compare music copyright institutional structure and process in other jurisdictions
- Gather list of policy proposals and evaluate
Methods:
- Literature review – industry reports, media reports, industry blog posts, academic research,
- Expert interviews of stakeholders – handset manufacturers, copyright societies, government, lobby groups, content aggregators, music labels, music publishers, online streaming platforms, online music retailers, venture capital investors, telecom operators, musicians, multi-channel networks, legal practitioners
- Stakeholder analysis of policy proposals

For more details visit https://cis-india.org/a2k/blogs/copyright-management-in-age-of-mobile-music