Tuesday, 24 March 2015

Are coding boot camps the answer? President Obama announces the TechHire inititiave

Can software coding boot camps solve the twin problems in the United States of the alleged shortage of IT personnel as well as how to create a new kind of middle class employee, especially among minorities and other underserved populations in the high tech world, thereby creating the 21st century version of the 20th century auto worker? The Obama administration apparently believes that the answer is “yes” to both questions. At least that is the message being delivered by the administration in conjunction with its March 9th announcement of its TechHire initiative. In a speech given that day, President Obama noted that there are more than five million job openings, of which more than one-half million are described as openings in the IT field. TechHire is intended to address this shortage as well as to address the problem of stagnant wage growth for the folk in the middle. In the words of the President,
"What's more, these tech jobs pay 50 percent more than the average private sector wage, which means they're a ticket into the middle class."
A report on March 16th on techrepublic.com characterized the program as follows:
"There's not one fix to get people moving in this direction professionally. The initiative includes getting employers to change the ways they recruit and place applicants based on skills; $100 million in federal investments toward "innovative approaches to training and successfully employing low-skill individuals with barriers to training and employment"; efforts on the part of "private sector leaders" to aid with free training online, and the expansion of coding boot camps, to name a few.”
The most interesting, and most controversial aspect of this initiative, is the focus on coding camps. The initiative currently involves partnering with various bodies in 21 communities, with the emphasis on reaching out to locales removed from the likes of Silicon Valley and New York City. An example brought is the TechHire Initiative is Louisville, Kentucky, which techrepublic.com described as follows:
“In 2013, a free, 12-week course called Code Louisville launched, fueled by volunteer mentors, partnerships with local companies, and help from the KentuckianaWorks department. The program aims to help students develop coding skills through a mix of in-person mentorship and self-driven learning, done through a learning platform called Treehouse, available through the Louisville Free Public Library system….. Next year, Code Louisville will expand as part of the Workforce Innovation Fund grant from the Department of Labor, as well as grow relationships with local businesses.”
The debate over the program focuses on four related issues: first, is there really such a mismatch between skills and available IT positions. Skeptics question this, including no less an expert than Professor Alan Blinder of Princeton, the Vice-Chairman of the US Federal Reserve, who expressed doubts in a recent radio interview on Bloomberg. Secondly, can a coding camp provide sufficient training to enable a graduate to function at an entry-level position? Thirdly, does the training provide a sufficient skill set to enable one to advance from that entry-level position, i.e., will it enable a graduate of the program to enjoy a bona-fide career in the field? Fourthly, will it complement or supplant at some graduates of degree programs in computer science?

President Obama apparently thinks the answer to each of these questions is “yes”, having observed in his speech that "[i]t turns out, it doesn't matter where you learned code, it just matters how good you are in writing code." President Obama’s statement was particularly well received by Dave Hoover, co-founder of Dev Bootcamp, who stated that , “it's true that not every employer is comfortable with hiring someone without a four-year computer science degree, but they're limiting their talent pool.” Also, it provides an alternative for persons who cannot afford a four-year degree program for whatever reason.

Despite the Obama administration’s support and the upbeat position of people such as Hoover (who admittedly may not be strictly neutral), this blogger still wonders how the Obama administration and will go about evaluating the effectiveness of these various local programs in light of the four questions raised above. As well, one can ask whether it is appropriate to view the skill set that is meant to be developed in such boot camps in strictly local terms. In a world where coding skills are international, why will an employer in Louisville necessarily engage a newly minted graduate of a boot camp when it obtain coding work product from equally or even more highly trained IT personal from places such as Bangalore and Estonia? Maybe yes, maybe no. The golden age of the Detroit autoworker in the 1950s was characterized in part by the absence of any credible substitutes. That is not the case for today’s IT world. The TechHire initiative definitely warrants close attention as it continues to be rolled out.

Monday, 23 March 2015

"IP Protection: Under Attack": Hyperbole or On Point

In Adam Jaffe and Josh Lerner's excellent 2004 book, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, the authors describe the historical ebb and flow of the availability and scope of patent rights.  The authors point to the 1980s to 2004 as a time when patents rights were strong and appeared to be getting stronger.  Indeed, those rights were becoming so strong that they were endangering innovation, according to the authors.  The rights were certainly flowing during that time.  And, for sure, there has been a backlash against patent rights.  The authors caution, however, that we tend to push either too far in one direction toward weak rights or too strong rights.  Are we moving too far against patent rights already? 

On March 27, 2015, from 1:00 to 2:00 pm Eastern Time in the U.S., the Federal Circuit Bar Association's Corporate Counsel Committee is sponsoring a webinar titled, "IP Protection: Under Attack."  The panelists are Fernand A. Lavallee, Partner, Jones Day, Nicole J. Owren-Wiest, Partner, Wiley Rein LLP, and Andrew E. Shipley, Partner, Perkins Coie.  The moderator is Mary M. Calkins, Senior IP Counsel, SAP.  The description of the panel states:

Please join us for a panel discussion about current threats to intellectual property protections that rights owners and businesses have long relied upon. The panel will cover areas such as limitations on software and data rights, procurement concerns, developments in 28 U.S.C. § 1498 actions in the Court of Federal Claims, and recent decisions of the Supreme Court and Federal Circuit affecting the scope of IP protection.

Does this panel title accurately describe the current situation concerning patent rights, and IP more broadly?  Is IP protection under attack?  Is it hyperbole?  Is it a bad thing for IP protection to be under attack?  Have we already gone too far against IP rights?  How do we know when we have gone too far—in either direction?  Do we continue to “reform” so long as a so-called "patent troll" exists?  Where are we headed?

Thursday, 19 March 2015

If you think that crowdfunding is only for small fry games, think again

For those of you who think of crowdfunding for artistic endeavours in terms of modest amounts, a million or so dollars at the most, the report in the February 14th issue of The Economist, “The stars are the limit”, is certainly an eye-opener. The article describes the fundraising that has accompanied the development of a new video game by Cloud Imperium Games (CIG), entitled “Star Citizen”, set for release in 2016. According to the report, this game has attracted aggregate investment of more than $72 million dollars, which amount puts it on a par with several of the most expensive game development budgets ever, such as the iconic series “Grand Theft Auto”. The magnitude of this amount can be seen by comparing it with the second largest amount invested via crowdfunding, $18 million dollars for a Bitcoin-related publishing platform called Ethereum. This makes the current aggregate investment in Star Citizen four times larger than the next largest crowdsourced amount ever invested.

It is not merely the amount that has been invested in Star Citizen which is remarkable, but the number of investors who have participated in the funding of the game’s development. The article reports that over 750,000 people have pledged to invest in the game, with the amount of the investments ranging from $36.00 to $18,000. What do these investors expect to receive in return? If you think that the answer is equity, or a share of any profits, you would be wrong. Instead, the investment in the Star Citizen project is perhaps the leading example of what is called “reward crowdsourcing.” In this context, it means, in the words of the article, that the investors receive “virtual spacecraft to use in the game, early access to unfinished versions, T-shirts and so on.” As such, the motivation derives more from a certain commitment to the game itself and the collective desire to see the game successfully published.

The article suggests that this type of investment, as opposed to seeking more conventional sources of funding, enables the developer to connect with the population most likely to become users of the game once it is launched. As such it represents the use of social media in the dual role of product development and product marketing. Thus CIG is releasing the game in stages, in part to reassure investors about the viability of the project, as well as to elicit their feedback regarding the game itself. The ultimate goal is to instill “rabid devotion in fans” long before the actual launch. It is crowdfunding that makes possible this integration of funding with pre-launch marketing. That said, the question remains whether this form of engagement of small investor-cum-user can be generalized to other video games and the like, or if the Star Citizen project is a one-off success.

Wednesday, 18 March 2015

IP tax and the Budget

A quick overview of the UK Budget today, from an IP tax perspective:
R&D relief - from 1 April 2015, the rates are going up (again) to:
  • R&D expenditure credit: 11%
  • SME relief: 230%
  • repayment credit rate stays at 14.5%
(all as announced at Autumn Statement, confirmed to be in next week's Finance Bill)

And also:
HMRC are planning to provide (on request!) advance assurances (valid for three years) on whether R&D activities qualifies, for smaller companies, giving certainty for those new to the regime - it's just a pity we have to wait until Autumn 2015 for the assurances to be available. The planned new guidance for smaller companies also welcome, as is the plan for publicity campaign to raise awareness of the relief.
HMRC are proposing to reduce the time taken to process claims from 2016 (but no detail on this provided). There's also a 'roadmap' for “further improvements over the next two years” to come, which could be interesting.
HMRC have confirmed that the restriction on prototypes and first in class etc announced in the Autumn Statement will be in the Finance Bill next week. The change will mean that the cost of consumables incorporated in products of R&D activity which are sold (not scrapped or given away) will be excluded from R&D tax credits. It's interesting that this change appears to be estimated to save half of the cost of increasing the rates.
Creatives reliefs extensions:
Film relief: extended to be 25% of surrendered losses for all, removing the distinction between limited budget films and others (subject to State aid clearance). This simplifies the relief and makes it easier for films with budgets on the borderline of £20m to determine the amount of relief available to them; it effectively extends the FA2014 change which softened the cliff edge element of the relief for large budget films.
High-end tv relief: the minimum UK expenditure reduced from 25% of filming activities to 10%, and the cultural test is to be modernised (all subject to State aid clearance). Broadens the range of productions that will qualify.
Children’s tv relief: confirmed from 1 April 2015 (includes game shows and competitions, which are excluded from the ‘Downton Abbey’ high-end tv relief).
The proposed orchestra relief is confirmed to be introduced from April 2016 (subject to the views of the government in power in April next year!)
Paintings as plant and machinery
This could re-named HMRC’s belated revenge on the Howard estate: assets which have been lent to a business will not be able to be treated as plant and therefore a wasting asset unless the vendor has used it in their own business. This follows, unsurprisingly, from the case brought against HMRC by the estate of the late Lord Howard, which succeeded in having a 200 year old painting, previously displayed at Castle Howard, treated as a wasting asset and exempt from CGT on sale.
Investment reliefs - changes to Enterprise Investment Scheme(EIS), Venture Capital Trust, and Seed EIS reliefs
The employee threshold (500) to qualify for these investment reliefs is being doubled for “knowledge-intensive” company (whatever that might mean; no detail yet!). This is in line with R&D relief, although financial thresholds not apparently being increased.
The total investment cap for VCT is expanded £15m, or £20m for “knowledge-intensive” company but the company must now  be less than 12 years old to qualify for all these reliefs unless investment for substantial change in activity. It seems odd to restrict investment relief in companies that are trying to continue to grow; there's no magic about passing your first decade in business that means suddenly that investment is only needed for substantial changes.
Perhaps unsurprisingly, patents are mentioned nowhere … we'll have to wait for the BEPS reports to see what happens there.

Tuesday, 17 March 2015

Academic-Industry Patent Licensing

The US-based Biotechnology Industry Organisation has just released a fascinating study on the impact that academic technology transfer makes to the US economy. The study is limited to US universities, but is probably equally indicative of the impact that technology transfer makes in other countries. The study (available here) estimated that in the 18 years from 1996 to 2013 academic licensing boosted industry output by USD 1.18 trillion and US GDP by USD 518 billion, creating 3,824,000 US jobs.

The study concludes that the Bayh-Dole Act passed in 1980 which allowed universities to maintain the rights to US government sponsored research has contributed to this success. Prior to the passage of the act, no drugs had apparently been commercialised based on the results of the government R&D spending. Subsequently over 183 drugs have been developed, as was report by the New England Journal of Medicine in 2011 in this article. Unsurprisingly a number of countries have adopted similar laws.

The survey submits that absence the incentives of patent ownership and exclusive licences, companies and investors could not justify the effort in bringing these drugs to market. The results seem to be in contradiction to the study by Robin Feldman and Mark Lemley available here, which argued that licensing did not contribute to innovation. Gene Quinn of IP Watchdog argued very succinctly that that study was seriously flawed since it relied on a subjective survey of practitioners.

The argument about whether research funded by governments should be patented and licenced by private companies for their own benefit is one that has been running ever since this author carried out his own Ph.D. research. The latest study seems to demonstrate the value of allowing universities to patent and licence their own IP, even if the public has paid for the research through their tax dollars/euros. It’s probably a question of finding the balance - there may be some research that really should not be patented.