Tag: Inventions and Patents

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Coronavirus Pushes Aviation Industry in New Directions

This article is part of our continuing Fast Forward series, which examines technological, economic, social and cultural shifts that happen as businesses evolve.

The coronavirus outbreak has upended commercial aviation, with consequences that are not fully realized. The airline trade group, International Air Transport Association, anticipates that the world’s air carriers will see this year’s revenues drop by more than half, and a number of industry watchers predict that it will be years before air travel returns to 2019 levels.

The crisis has created both hurdles and opportunities for entrepreneurs offering new products or services.

“Timing is often out of our control, but our ability to be nimble and keep pivoting, that is essential,” said Marie Forleo, the owner of an online business training program and the author of the book “Everything Is Figureoutable.”

Sometimes even that is not enough, as Heather Howley, the owner of Independent Helicopters, is learning. Her charter air service was thriving for nearly a dozen years, providing aerial inspection and mapping services in New Windsor, N.Y., a rapidly developing area about 60 miles north of New York City. But when drones started making inroads into that business several years ago, Ms. Howley looked elsewhere to keep her company aloft.

“We fill in in situations where a drone can’t go,” said Ms. Howley, the business’s chief pilot. “We do football games, baseball games.” At the same time, she increased her focus on flight training and offered the ground portion of it online. But with large events canceled and flight schools deemed nonessential, the coronavirus pandemic threatens Ms. Howley’s business in spite of her flexibility.

At the end of March, Ms. Howley was worried about how she would survive if the economy shut down for more than a month and projected that even after business resumes, it would be slow.

“We may see another drop in students even after we get back to work,” she said. “We’re still supporting the utility company, but they’re not paying us at the moment since none of their staff is in the office to cut the checks. It’s a vicious cycle.”

The opposite has happened to Arthur Kreitenberg, a physician and inventor, and his son Elliot. In 2013, the duo bet that airlines would be eager to buy a product that disinfects planes. After the Ebola virus outbreak in 2014, Virgin America (now part of Alaska Airlines) gave the Kreitenbergs access to its airliners so they could create the GermFalcon, a device that kills germs in airplane cabins using ultraviolet light.

“Airlines play a direct role in the way disease is spread around the world,” the younger Mr. Kreitenberg said, a claim supported by a 2015 U.S. National Security Strategy that cited the growth in intercontinental air travel as a factor in the global spread of dangerous pathogens.

But the Kreitenbergs misjudged the market; no airlines were interested. Instead, they turned their attention to disinfecting hospitals.

“People dismissed us as Chicken Little, but in the last couple of months there’s been a change of heart” in the aviation industry, the younger Mr. Kreitenberg said.

An entrepreneur can turn a crisis to an advantage by “focusing first what you can give and not what you can get,” Ms. Forleo said. In early March, Mr. Kreitenberg offered the free use of GermFalcon and a similar device for airports to help the air travel industry with the pandemic. Mr. Kreitenberg said he was in touch with nearly every U.S. airline. Seattle’s secondary airport at Paine Field is now a customer and an investor. Alaska Airlines evaluated the device but opted to use a different kind of disinfection technique, a spokeswoman said in late April.

Aviation, with its emphasis on safety, can be a challenging environment for new ideas.

“Regulations have taken risk-taking away, and not even swashbuckling risk, but even a way of looking at the future as something you can construct,” said Saras Sarasvathy, a professor at the University of Virginia Darden School of Business. As a result, many beneficial innovations may never be realized, Professor Sarasvathy said.

Luke Miles, co-founder and creative director of the London-based industrial design firm New Territory, came up with a novel idea for how to make airplane seats more comfortable. But he recognized that having to get government approval for an entirely new seat design would be an expensive and time-consuming problem, so he found a workaround. Last fall, he unveiled Interspace, a set of panels embedded in the upholstery of seat backs that already meet government regulations. During flight, a traveler can unfold the panels, lean into them and sleep.

“Sometimes, it is not about grand moves and everything has to change,” Mr. Miles said. “Here’s where we could enter carefully in a considered way and have more success.”

Mr. Miles, whose company has done design work for Airbus, Aeromexico and Virgin Atlantic, said his experience and connections with airlines contributed to the final product. This collaboration with potential customers is critical.

In his book “Upstream: The Quest to Solve Problems Before They Happen,” the author Dan Heath calls this “surrounding a problem.”

“When you have a complex problem, there is usually no one person or entity who has all the answers,” he said in an interview. “You have a situation where people only see a facet of the problem, and it’s only by assembling the different facets you can come to appreciate the whole and solve for the whole.”

But the Kreitenbergs had no experience in aviation and few contacts, only Elliot Kreitenberg’s evangelism for his father’s invention.

“All we could do was say, ‘We’re using this technology that works in hospitals, and we built it so it fits on an airplane,’” he said.

Stan Malicki, a Polish businessman, faced a similar problem generating buzz for his invention, a system that moves airplanes on an electric track, instead of using engine thrust. The company, Aircraft Towing Systems, claimed U.S. carriers could save millions of gallons of fuel each year while reducing their carbon emissions. But on its own, the company couldn’t get traction until the State of Oklahoma got involved.

“Thrust is a terrible way to move airplanes. It’s great in the air, but terrible on the ground,” said Vince Howie, who saw the idea’s value and could do something about it as director of aerospace and defense with the Oklahoma Department of Commerce.

Mr. Howie persuaded Mr. Malicki to move from Europe to Oklahoma, joining the state’s substantial aviation network, which includes two of the world’s largest aircraft maintenance stations, Tinker Air Force Base and American Airlines. A.T.S. contracted with Oklahoma State University to help develop the prototype, and Mr. Howie became the chief executive at the end of last year.

“It is a collaboration of 10 people with different ideas, and of course everybody we talk to, I always want to hear the negatives,” Mr. Howie said. “I want to hear the negatives so we can put a mitigation or design changes as needed.”

Because good ideas do not thrive on their own, Professor Sarasvathy said, entrepreneurs should remain open to the ideas of their potential customers and investors.

Ideas are the products the Florida-based aviation consultant Tricia Fantinato was selling to airports and aerospace companies until the coronavirus brought an abrupt halt to funding for many projects.

“This is going to be the new normal, so we have to be prepared,” she said she planned to tell them, adding that she was there to advise them during the crisis.

“Aviation is an industry that is crippled right now,” Ms. Forleo said. “But any industry, no matter how complex, is made of humans. In helping folks — that’s where all creative possibilities lie.”

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China Trade Deal Details Protections for American Firms

WASHINGTON — The trade deal that President Trump will sign on Wednesday includes commitments by China to curtail practices that American firms complain put them at a disadvantage and force them to hand over valuable intellectual property to Chinese firms, according to several people with knowledge of the deal.

Those concessions, along with China’s agreement to buy $200 billion worth of American goods and to allow greater access to its markets, are expected to be announced at a White House ceremony for the signing of the long-awaited trade deal.

As part of the agreement, China has promised to punish Chinese firms that infringe on or steal corporate trade secrets, satisfying a concern of American businesses. China will also refrain from directing Chinese companies to obtain delicate foreign technologies through acquisitions, including halting purchases by state-owned enterprises that “harm” American interests. American officials say Beijing has used the practice to leap to the forefront of advanced industries, like semiconductors.

Another primary concern of American companies — a requirement that they turn over technology as a condition of doing business in the country — is also addressed in the deal. China has agreed not to force companies to transfer technology, which it has done by requiring joint ventures with Chinese firms and forcing companies to license their intellectual property at low prices.

Trump administration officials say the deal to be signed on Wednesday is only the first step in talks that are expected to help cool tensions between the world’s two largest economies and start to stabilize relations after more than a year of escalating threats from both sides. Mr. Trump has said the second phase of the agreement would be negotiated “at a later date.”

To prevent China from violating the agreement, the administration will continue to have tariffs on $360 billion worth of goods, along with the threat of future tariffs if China reneges on its promises. The deal does not include any agreement for future tariff reductions, according to a spokesman for the Office of the United States Trade Representative.

The success of the deal hinges on whether China will follow through on its commitments on paper — something Trump administration officials and China hawks say it has failed to do in the past. Some critics say China’s promises appear both broad and vague and overlap with other changes it has been pursuing anyway.

Still, the concessions may go at least part of the way toward resolving some of the business community’s concerns about China’s treatment of foreign firms and the kind of unfair trade practices that Mr. Trump said his administration would end.

The agreement was “more positive” than expected, Myron Brilliant, the executive vice president of the U.S. Chamber of Commerce, said at a news conference in Beijing on Monday. He added that striking an agreement had calmed tensions in a long-running trade war.

“We are pleased from what we’ve heard,” Mr. Brilliant said.

Administration officials say the tariff threat gives the deal more teeth than previous pacts with China. But it also raises the possibility that both countries could wind up back in the same type of tit-for-tat trade war that has inflicted economic damage across the globe.

Text of the trade deal has not been made public in either English or Chinese. It appears to include significant concessions, but it remains to be seen how the pact’s legal language will translate into action.

For instance, China has yet to admit that it ever forced foreign companies to transfer technology to Chinese firms, said Derek Scissors, a resident scholar at the American Enterprise Institute. Reading the agreement from the Chinese perspective, he said, they have committed to continue doing the same thing they have always been doing.

“We’ve had the Chinese agree in this public fashion to things we think were important before, and it hasn’t made a difference,” Mr. Scissors said.

Clete Willems, a partner at Akin Gump who helped to advise on trade policy until he left the administration last year, said the deal would fulfill three of the four major conditions laid out in the administration’s initial report that justified tariffs on Chinese goods. That included a requirement that China not direct its companies to acquire sensitive foreign technology.

Mr. Willems said the deal also contained new language protecting trade secrets, including a promise to set up judicial proceedings and criminal penalties for Chinese entities that steal confidential business information. It would also provide greater patent protection for the pharmaceutical sector.

The one major concern outlined in the administration’s report that was not addressed in the trade deal is cybertheft, Mr. Willems said. China had rebuffed American demands to include promises to refrain from hacking American firms in the text, insisting it was not a trade issue.

“We didn’t fix every single problem with China in this agreement, there is no question about that,” Mr. Willems said. “But what was done is really significant.”

Some analysts have expressed skepticism that a broad threat of tariffs on the overall Chinese economy would really deter Chinese companies bent on gaining a technological edge by stealing trade secrets.

Senator Chuck Schumer, the New York Democrat, sent a letter to Mr. Trump on Tuesday expressing “serious concern” about the potential for entering into a weak trade deal.

“China pledging to make short-term purchases of American goods will not address the fundamental problems that undermine long-term U.S. economic opportunity, prosperity, and security,” he said.

The Trump administration itself has cited China’s failure to live up to its agreements. In March 2018, the Office of the United States Trade Representative detailed a pattern of failed promises by the Chinese government to no longer force foreign companies to transfer technology to Chinese firms. China had failed to live up to that commitment “on at least eight occasions since 2010,” the trade office said.

The deal also includes large purchasing agreements that Mr. Trump has said will raise exports and shrink the American trade deficit with China, but that experts say might be hard to achieve.

As part of the agreement, China has committed to purchasing an additional $200 billion of goods over the next two years. That total includes $50 billion of new oil and gas exports, $32 billion of new agriculture, $78 billion of additional manufactured goods and $38 billion of new services, according to three people briefed on the deal.

Some trade experts have said the agricultural export commitments, which would translate to $16 billion in new shipments a year, would be difficult to meet without rerouting shipments to other countries.

But the targets for manufacturing and services, which include tourism and education, may be even harder. The number of Chinese students coming to the United States has been trending downward. And exports of manufactured goods, which will include Boeing airplanes, medical devices, automobiles and auto parts and factory equipment, are set far above current levels.

The agreement also includes substantial changes to Chinese regulations surrounding food, which Robert Lighthizer, Mr. Trump’s chief negotiator, discussed in a briefing with reporters in December. The changes will reduce barriers for products including meat, poultry, pet food, seafood, animal feed, baby formula, dairy and biotech, likely increasing American exports to China in those categories.

The first-phase agreement does not address some of the administration’s bigger concerns about China’s economic practices, including its use of subsidies and state plans to build domestic industries that flood the global market with low-priced products, often driving American competitors out of business. Critics say the practice has undermined American industries like steel and solar panels, and could prove detrimental to high-tech manufacturers of electric vehicles, computer chips and robots.

The Trump administration, which had hoped to curtail state subsidies as part of a trade deal, tried to head off criticism on Tuesday morning by announcing progress on a multilateral effort to address these practices.

Mr. Lighthizer met with ministers from Japan and the European Union in Washington, and resolved to press for changes at the World Trade Organization that would ban many of the subsidies that China provides to its industries.

He said the three would work together to restrict a variety of unfair subsidies and funds provided through state-owned enterprises, which the W.T.O. had previously ruled were not subject to its subsidy rules. Both are practices China has relied on.

Jennifer Hillman, a trade expert at the Council on Foreign Relations who has worked at both the trade office and the W.T.O., said the statement represented “great promise to correct one of the major problems with the W.T.O. rules: its inability to discipline subsidies.”

“What remains to be seen is whether these good ideas can be brought into a formal agreement that is binding on China and others,” she said.

Keith Bradsher contributed reporting from Beijing.

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Sonos, Squeezed by the Tech Giants, Sues Google

SANTA BARBARA, Calif. — In 2013, Sonos scored a coup when Google agreed to design its music service to work easily with Sonos’s home speakers. For the project, Sonos handed over the effective blueprints to its speakers.

It felt like a harmless move, Sonos executives said. Google was an internet company and didn’t make speakers.

The executives now say they were naïve.

On Tuesday, Sonos sued Google in two federal court systems, seeking financial damages and a ban on the sale of Google’s speakers, smartphones and laptops in the United States. Sonos accused Google of infringing on five of its patents, including technology that lets wireless speakers connect and synchronize with one another.

Sonos’s complaints go beyond patents and Google. Its legal action is the culmination of years of growing dependence on both Google and Amazon, which then used their leverage to squeeze the smaller company, Sonos executives said.

Sonos advertises its speakers on Google and sells them on Amazon. It built their music services and talking virtual assistants directly into its products. Sonos workers correspond via Gmail, and run the business off Amazon’s cloud-computing service.

Then Google and Amazon came out with their own speakers, undercutting Sonos’s prices and, according to Sonos executives, stealing its technology. Google and Amazon each now sell as many speakers in a few months as Sonos sells in one year.

Like many companies under the thumb of Big Tech, Sonos groused privately for years. But over the past several months, Patrick Spence, Sonos’s chief executive, decided he couldn’t take it anymore.

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Credit…Adam Amengual for The New York Times

“Google has been blatantly and knowingly copying our patented technology,” Mr. Spence said in a statement. “Despite our repeated and extensive efforts over the last few years, Google has not shown any willingness to work with us on a mutually beneficial solution. We’re left with no choice but to litigate.”

Sonos executives said they had decided to sue only Google because they couldn’t risk battling two tech giants in court at once. Yet Mr. Spence and congressional staff members have discussed his testifying to the House antitrust subcommittee soon about his company’s issues with them.

Jose Castaneda, a Google spokesman, said Google and Sonos had discussed both companies’ intellectual property for years, “and we are disappointed that Sonos brought these lawsuits instead of continuing negotiations in good faith.”

“We dispute these claims and will defend them vigorously,” he added.

A spokeswoman for Amazon, Natalie Hereth, said the company did not infringe on Sonos’s technology. “The Echo family of devices and our multiroom music technology were developed independently by Amazon,” she said.

Sonos sued Google in Federal District Court in Los Angeles and in front of the United States International Trade Commission, a quasi-judicial body that decides trade cases and can block the import of goods that violate patents. Sonos sued Google over only five patents, but said it believed Google and Amazon had each violated roughly 100. Sonos did not say how much it sought in damages.

The evolving relationship between Sonos and the tech giants reflects an increasingly common complaint in the corporate world: As the biggest tech companies have become essential to reach customers and build businesses, they have exploited that leverage over smaller companies to steal their ideas and their customers.

After mostly keeping those grievances private for years because they feared retaliation, many smaller companies are now speaking out, emboldened in an age of growing scrutiny of America’s largest tech firms.

Dozens of companies have complained to regulators and lawmakers in the United States and Europe. Spotify has accused Apple of punishing Spotify’s iPhone app as it increasingly competes against it. Blix, a company that helps people create anonymous email addresses, recently sued Apple, accusing the iPhone maker of copying its technology and then kicking it off Apple’s App Store. And Elastic, which builds software that runs on Amazon’s cloud platform, sued Amazon for copying its branding to introduce a rival offering. Apple and Amazon deny the claims.

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Credit…Adam Amengual for The New York Times
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Credit…Adam Amengual for The New York Times

Mr. Spence and other Sonos executives said they had agonized over the decision to sue Google, largely because Google still underpins their business. Sonos executives suspect that their pressure on the patent issue has complicated other areas of the relationship, though they can’t say for sure.

After Sonos intensified its demands that Google license its technology, Google pushed Sonos to comply with stricter rules for using Google’s virtual assistant. Those proposed rules included a mandate to turn over the planned name, design and targeted start date of its future products — which Google would compete directly against — six months in advance, up from 45 days in the current deal, Sonos executives said.

“The fear of retaliation is a real fear. Any of these companies could bury them tomorrow. Google could bury them in their search results. Amazon can bury them in their search results,” said Sally Hubbard, a former assistant attorney general in New York’s antitrust bureau who now works at Open Markets Institute, a think tank. “It’s really hard to find any industry where corporations are not dependent on one of the big tech giants.”

Fifteen years ago, home sound systems typically meant a tangled network of wires and speakers and complicated instructions on how to make it all work. Then Sonos came along in 2005, promising wireless sound throughout a house, seamlessly controlled from a hand-held device. Its early ads boasted: “Any song. Any room.”

Sonos quickly began patenting its innovations, a stockpile of intellectual property it now proudly displays on its website.

Its devices made life a bit more comfortable for consumers who could afford them, and they made for a nice little business for Sonos, which is based a few miles from the Southern California coast in Santa Barbara. Sales of its devices took off after the advent of the smartphone and music streaming. Sonos now employs about 1,500 people and sells more than $1 billion in speakers a year.

When Sonos teamed up with Google in 2013, it gave Google engineers detailed diagrams on how its speakers interacted wirelessly with one another. At the time, Google was not a competitor.

Two years later, Google released a small device that could turn an old speaker into a wireless one, much like Sonos’s original product. A year after that, Google released its own wireless speaker, the Google Home. The device, marketed around Google’s talking virtual assistant, quickly began outselling Sonos’s offerings.

Sonos bought the Google devices and used a technique called packet sniffing that monitored how the speakers were communicating. They discovered that Google’s devices used Sonos’s approach for solving a variety of technological challenges. Sonos executives said they had found that Amazon’s Echo speakers also copied Sonos technology.

In August 2016, Sonos told Google that it was infringing. Google had little response. As Google released more products, it violated more patents, Sonos executives said. Over the next three years, Sonos told Google four more times, eventually handing over a list of 100 patents it believed Google had violated. Google responded that Sonos was also infringing on its patents, Sonos executives said, though it never provided much detail.

When Sonos delivered a proposed model for Google to pay licensing fees, Google returned its own model that resulted in its paying almost nothing, Sonos executives said.

Sonos executives said their complaints were hardly just about patents, however. They are concerned that Google and Amazon are flooding the market with cheap speakers that they subsidize because they are not merely conduits for music, like Sonos’s devices, but rather another way to sell goods, show ads and collect data.

Sonos’s entry-level speaker is about $200. Amazon and Google’s cheapest speakers are $50, and they often offer them at much steeper discounts.

In the third quarter of 2019, Amazon shipped 10.5 million speakers and Google six million, according to Strategy Analytics. For the 12 months ending in September, Sonos said it had sold 6.1 million speakers.

“Amazon and Google are making it a mass-market product at a price point that Sonos can’t match,” said Jack Narcotta, a Strategy Analytics analyst.

Amazon said that it was focused on creating the best experience for customers and that its virtual assistant had generated “billions of dollars” for developers and device makers.

To compete, Sonos has had to yield even more power to the companies. When consumers became hooked on Google’s and Amazon’s virtual assistants, Sonos also built them into its speakers.

But Sonos had a strategy to still stand out on store shelves. Instead of being locked into using just one of the assistants, Sonos customers could use both simultaneously. Sonos engineers patented the technology to enable the assistants to work side by side, and executives lobbied Amazon and Google to let it happen.

At first, the companies hated the idea. Hours before a New York news conference in October 2017, Sonos was preparing to unveil its first speaker with virtual assistants when the Amazon product chief Dave Limp called Mr. Spence. Mr. Limp had just found out that Google would also be onstage, and he said Amazon was now pulling out of the event as a result, according to two people familiar with the conversation. After negotiations, Amazon relented.

Sonos executives said Google and Amazon had ultimately forced them to make users select one assistant when setting up their speaker. Amazon said it had never asked Sonos to force users to choose its assistant or Google’s version.

Amazon later changed its position and joined an alliance with Sonos and other companies to make virtual assistants like Alexa function together. Google, along with Apple and Samsung, did not join the alliance.

Google has maintained, Sonos executives said, that it will pull its assistant from Sonos’s speakers if it works alongside any assistant from Amazon, Apple, Microsoft or Baidu, the Chinese internet company. Sonos has followed Google’s orders.

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NYT > Business > Entrepreneurship