Only recently formed, a once ambitious competitor is to be absorbed by the CPA Global organisation, which surely already holds an overwhelmingly dominant position in the unregulated IP services sector. This merger, hard on the heels of the acquisition of Clarivate, will allow CPA Global access to enormous amounts of client data and numerous new clients, some of whom will have moved away from CPA Global only to find themselves right back where they started.
Deposition of former employee opposed by CPA Global
In June this year, lawyers representing Polymer Solutions International, Inc filed an application with the US District Court of Maryland seeking to depose a former CPA Global employee in relation to claims of unauthorised charging for renewals payment services to be brought in the Island of Jersey, where CPA Global has its headquarters. The order was granted and CPA Global promptly intervened seeking to quash the order. If you have access to PACER (Public Access to Court Electronic Records) you can search using the case number 8:18-cv-01864-DKC.
US law allows for discovery orders to be made in relation to proceedings to be brought outside the US under what is called a ‘Section 1782’ procedure. This is not the first time a procedure has been instigated to obtain evidence from former CPA Global employees. In the US class action against CPA Global (see my earlier posts), also pursuing claims of unauthorised charging, an application was filed on 19 January 2017 seeking assistance from the English Courts in obtaining testimony from nine former CPA employees. This application was not pursued further as the case was settled the following month.
Stop the tide
CPA Global is throwing everything it has at the present 1782 process and doing its utmost to prevent evidence being taken from its former employee. There is plenty of fun to be had for the lawyers and countless hours will be spent arguing what are doubtless very interesting points of law. The arguments advanced by CPA Global include assertions that the former employee doesn’t have any relevant knowledge; and yet it is doing all it can to prevent him being deposed. Is it unfair to speculate that CPA Global doesn’t want any of its former employees giving evidence for fear of what they will say?
Set for another fall?
CPA Global has, one imagines, deep pockets and so can afford to throw money at stopping this discovery. It did the same when it tried to stop the Kobre & Kim law firm from using the domain https://cpaglobal-litigation.com, though that didn’t turn out well (see my post). The present proceedings could go to appeal and I suspect CPA Global will keep up the fight for as long as process allows.
Business as usual
Meanwhile, CPA Global continues to charge fees for renewal payment services that are, based on comparative data I have seen, vastly more than any of its major competitors; including applying foreign exchange mark-ups to Official Fees that are commonly between 20% and 50%! With its patent renewals business reported to be 70% of CPA Global’s revenues, and with reported debt funding of £1.7bn to support, it can hardly afford to reduce charges.
If you are using CPA Global to pay your renewals, then I strongly recommend you ask to see its tariff of charges. What you will then also see, unless you have been made an exception, is that it also charges ‘Country Fees’ that, unlike any other competitor I know of, increase with each annuity year. It is time that CPA Global clients woke up to the reality of its charging practices.
Fake news? No, absolutely true - CPA Global was found to have acted in bad faith in trying to prevent use of the domain “cpaglobal-litigation.com”.
You may have missed this story, reported by World IP Review (WIPR) and World Trademark Review (WTR) among others, involving the World Intellectual Property Organization (WIPO) panel decision that went against CPA Global and must have caused some embarrassment at CPA Global HQ.
What had CPA Global so concerned that it pursued such a hopeless claim? The website at https://cpaglobal-litigation.com states its purpose on its homepage:
“Bentham IMF has put in place funding for current and former CPA Global clients to pursue legal proceedings to recover unauthorized charges for patent annuity payment services.
Investigations have uncovered evidence that suggests CPA Global charges fees for patent renewal services that are consistently and significantly more than what is allowed for under its service contracts with clients.”
The decision by CPA Global to attempt to stop the domain name from being used brings to mind a fascinating book (mentioned in my article on unethical behaviour published on 28 March 2017) titled The Power Paradox – how we gain and lose influence by Dr Dacher Keltner. In his book, Keltner demonstrates that those who are afforded power tend to believe that the rules that apply to others don’t apply to them.
WIPR reported on the launch of https://cpaglobal-litigation.com in September last year when CPA Global told the publication: “CPA Global categorically and emphatically denies any wrongdoing in our business. The fees for our service are defined in our agreements with our customers, and we adhere to those agreements fully.”
It went on to say, “We consider any speculation about future litigation that might or might not take place to be a deliberate attempt to tarnish our good business reputation and, as we always have, will continue to vigorously defend ourselves against any such vexatious speculation.”
Vigour is, happily, not enough to sway a WIPO panel. When approached by WTR following announcement of the panel decision “CPA Global declined to comment”.
In an earlier article, I discussed the US Class Action against CPA Global, the world’s largest patent annuity payment services provider, involving allegations of overcharging. In this article, I will probe a little into the impact this has on a commoditized yet stubbornly opaque service sector.
The spectre of hidden charges has been haunting this sector for some time, in large part thanks to Dennemeyer, whose US leadership team have been acting as industry Ghostbusters with webinars probing a murky world of unexplained charges. Dennemeyer certainly have an axe to grind, and who can blame them, if competitors have been indeed been making super profits from clients ignorant of the extent of apparent overcharges.
How long has this been going on?
The settlement agreed by CPA Global in the current US Class Action, brought by Run Them Sweet LLC in the summer of 2016, covers a five-year period to the end of December 2016; though this may have more to do with applicable rules governing limitation on claims than anything else. The alleged overcharging, by its nature concealed from clients, could have been going on for far longer; in some jurisdictions, this could mean that time does not begin to run for limitation purposes until a client becomes aware of a potential claim.
What of the rest?
Schadenfreude will likely abound among CPA Global’s competitors who may hope that further litigation will follow brought by claimants not covered by the very limited class defined in the current US action. However, CPA may not be the only suppliers to feel the sting of litigation and at least one other US Class Action may even now be rumbling down the track. Where does this leave patent holders who may be wondering whether they have been overcharged or whether by moving to another supplier they might end up in a similar situation?
Anyone researching leading suppliers will be met with an array of marketing puff that cannot be independently verified. These include, for example, references to: “significant cost-savings” and “minimizing expenses” (Anaqua); ‘‘cost efficiency” and “no hidden or additional fees” (IPAN); “cost effectively” and “no hidden costs” (Pavis); “unmatched fee transparency” and “competitive agent fees” (Clarivate). CPI (Computer Packages Inc.) go so far as to assert that theirs is “the only transparent annuity service” and that they are “at least 10% less expensive (in total cost) than the other major annuity services.” What is a patent holder to make of all this?
Market opacity and procurement discipline
Resistant as the legal services sector is to the involvement of procurement, perhaps because it places less emphasis on relationships and more on factors such as performance and price, the annuity payment sector is one where using a tender process is essential. This is primarily because only in the context of a properly structured tender process will it be possible to have the right questions asked and answered so that apples can be compared with apples. Understandably perhaps, suppliers refuse to disclose essential information other in the context of a confidential tender process.
Help is at hand
My firm has teamed up with procurement industry expert Jonathan O’Brien and his Positive Purchasing firm to create the first dedicated service for patent holders who want to learn how to tackle this somewhat tricky IP service sector. Our Patent Plus service is available now to patent holders looking for value going forward, as well as clarity regarding historical charging.
IP management and software company CPA Global could be put on the market for as much £2 billion ($2.5 billion).
Private equity firm Cinven, the owner of CPA Global, has invited banks to pitch for the work, according to sources speaking to The Sunday Times.
Established in 1969 in Jersey, CPA Global began as a provider of patent renewal services. It started offering trademark services in the 1980s and providing IP software in 2000.
Cinven acquired the company in 2012 for £950 million, according to the Financial Times.
CPA Global now has 25 offices across four continents and 12 countries, and an agent network of 1,300 across 200 jurisdictions.
Sister site LSIPR reported in March that CPA Global had agreed to pay $5.6 million as part of a settlement agreement in a class action lawsuit.
In July last year, Run Them Sweet, a US medical diagnostic company, filed the class action lawsuit alleging it was overcharged for foreign patent renewal fees by CPA Global.
According to the proposed final judgment, the settlement will only benefit US patent owners with fewer than 40 non-US patents renewed in any one year between January 1, 2012 and December 31, 2016.
Peter Rouse, director of Patent Annuity Costs, said that liabilities may affect the profitability of the business and therefore the £2 billion valuation.
“If there’s any merit in these overcharging claims, and others choose to pursue similar claims, it could have a very significant impact on the valuation of CPA Global,” he explained.
Back in October last year, Thomson Reuters completed the sale of its IP and science business to Canada-based Onex Corporation and Baring Private Equity Asia, based in Hong Kong.
The business, which included trademark research and protection company CompuMark and online brand protection company MarkMonitor, was sold for nearly $3.6 billion and renamed Clarivate Analytics.
This article was previously published in World Intellectual Property Review and is reproduced with kind permission.
CPA Global Limited, the world’s largest intellectual property management company, has recently settled a class action case in the US, where it was alleged that it had been overcharging for patent management fees. The alleged overcharging occurred by “inflating certain fees and outright inventing others.” CPA has now settled this case out of court for $5.6 million.
The terms of settlement were arrived at after mediation, with a 64-page Court document filed in the District Court of Eastern Virginia on 13 March 2017. Once approved by the Court, the class action, which commenced on 29 June last year, will end. The Court’s approval process will take a further four months during which time potential claimants will be contacted and given the option to take the money or opt out.
The settlement only benefits US patent holders, with a maximum of 40 non-US patents renewed in any one year, who between 1 January 2012 and 31 December 2016 used CPA Global to pay their annuities. Class members who do not opt out will be compensated from what remains from a $5.6m fund to be provided by CPA. It must also provide last known contact information for current and past clients in the defined class; subject to the Court’s approval, as much as 33% of the settlement fund may be paid to the claimant’s lawyers and $25,000 to the claimant.
Many would commend CPA for resolving the class action before it reached trial and for keeping the class definition so restricted and the settlement fund so small. Once the case had become a ‘rocket docket’ to be tried by end July 2017, the urgency to settle must have been all the greater and doubtless this is what the rocket docket process is designed to encourage. Was this simple expediency aimed at limiting legal and other costs of litigation or was it a deliberate choice to prevent potentially embarrassing evidence being presented in open Court and, worse still, a judgment finding that CPA had indeed been engaged in systematic overcharging?
On the one hand, settlement makes sense for CPA, especially given rumours that there will be a change in ownership within the next six months. On the other, why would CPA pass on the opportunity to have the claims of overcharging tested by a Court in a case which pleaded only two instances of overcharging and involved a claimant with a very small portfolio? As one might expect, the Court document records, at length, that the settlement in no way amounts to an admission of any of the claims in the action and that CPA refutes those claims completely.
CPA may have dodged this bullet but there will almost certainly be more to follow, not least because US law firms will doubtless be offering their services to patent holders outside the prescribed class with larger portfolios and potentially much larger claims. This is not going to go away and CPA can expect further claims in the US and on their home ground in Jersey, UK.
Dennemeyer, the second largest patent annuity payment provider, has run several webinars in which it has presented carefully sanitized data pointing to egregious levels of overcharging by some providers. Patent holders have been given enough cause to question whether they are in fact paying considerably more than the service fee agreed with their provider.
For those willing to look under the covers, my firm offers a ‘no saving, no charge’ service that includes advising on and negotiating terms with their existing providers or with an alternate provider.