Jack Ellis

Since launching its first IP aggregation fund in April 2014, Beijing-based IP consultancy firm Zhigu has focused on obtaining Chinese patent assets from the domestic research sector. But assignments data suggests that the outfit has recently stepped up efforts to acquire intellectual property from foreign companies in order to expand its global portfolio.

IAM reported on Zhigu last year when it initiated Ruichuan IPR Funds, which was hailed in the Chinese press as the country’s “first [investment fund] dedicated to IP rights trading and technology industrialisation”. Financial backing came from state sources – including Rmb20 million each from Beijing Haidian district government and Haidian’s Zhongguancun science and technology park – as well as from the private sector, with corporates Xiaomi, TCL and Kingsoft among the publicly known investors. Zhigu’s stated aim at the time was to assist Chinese companies to gain access to relevant intellectual property while also helping them to defend against litigation; however, some market players told me that the firm may have grander plans involving IP monetisation and commercialisation in mind; a suggestion backed up by the fact that several members of Zhigu’s management team are Intellectual Ventures alumni.      

Both the Chinese and English-language press have been pretty quiet when it comes to reporting anything related to Zhigu in terms of transactional or other business activities. Market sources have suggested to me that the firm has exhausted most of the initial funding that it had available for patent acquisitions – with most of that spent on Chinese patents produced by universities and research institutions – and that it is now in something of a doldrums as it plots the next phase of its value creation strategy.

Whether that will involve assertion, ‘carrot’ licensing, commercialisation, venturing, a combination of the above or something else entirely remains to be seen. What is for sure is that Zhigu’s prospects for success in these endeavours are going to be highly uncertain to say the least if they solely involve Chinese patents – even if they are some of the highest quality assets that the country has to offer. Speaking at IPBC Asia in Shanghai last December, Zhigu president Lin Peng explained that research undertaken by the firm had indicated that Chinese patents originating from the public research sector generally represented a better investment than those filed by private sector businesses, being trumped in quality terms only by domestic counterparts of patents filed internationally by foreign corporates.

However, cursory searches using ktMINE’s database, Google Patents and USPTO assignments records reveal that Zhigu has not only been focusing its attentions on China; and in the past few months its foreign patent buying activity has accelerated considerably, though it remains relatively low-key for the time being. The table below outlines all of the firm’s patent acquisitions, as recorded by the USPTO, that have not expressly involved Chinese entities on the ‘sell’-side and for which I have been able to find information on:

Assignor entity (as recorded by USPTO) Date of assignment Details
Artois LLC 5th June 2015 Including 7 US assets relating to internet communications technology
Roussillon LLC 5th June 2015 Including 9 US assets covering wireless telecommunications technology

Inventec Appliances (Jiangning) Corporation 

1st June 2015 Including 2 computing-related US assets: 'Method for automatically switching windows of different sizes' and 'Method for enlarging/reducing digital images'
Inventec Corporation 22nd May 2015 Including 34 US assets relating to personal computer technology (eg display, BIOS updating, CPU temeprature control, Chinese charatcer input, etc) 
Inventec Appliances Corporation 22nd May 2015 Including 7 US assets relating to telecommunications and mobile device technology (eg, encyption, data filtering, document display, 3G, etc)
Inventec Appliances Corp. 25th April 2014 Including 11 US assets relating to telecommunications and mobile device technology (eg, dialling methods, number storage, international calling, etc)

Of particular note is Zhigu’s ongoing relationship with Taiwanese original design manufacturer Inventec, which was the island’s ninth most prolific domestic patent filer last year, submitting 223 applications to the Taiwan IP Office (data here in Chinese). It would be interesting to find out if Inventec maintains any ongoing interest in those patents and would get a portion of any licensing proceeds Zhigu may generate.

Something else that catches the eye is the nomenclature of the other two entities that have assigned patents to Zhigu – Artois and Roussillon. Intriguingly, both are named after historic provinces of the pre-Revolution kingdom of France. The nine US patent assets assigned to Zhigu by Roussillon LLC had previously been owned by TeleCommunications Systems – a Maryland-based company that has also transferred patents to IP monetisation-focused businesses including Acacia Research, IPNav and South Korea’s IP Cube Partners, while also running an active in-house licensing and sales programme, having sold patents to operating companies including Citrix Systems.

The seven US patent assets assigned to Zhigu by Artois LLC were previously owned by 3E Technologies International, which is also headquartered in Maryland. On its website, 3E Technologies – which trades as Ultra Electronics, 3eTi – is described as “a leading provider of military-grade secure communications that enable critical systems security, infrastructure security, and facilities management  for the defence, government, utilities and industrial markets worldwide”. There is no suggestion that any of the patents obtained by Zhigu from Artois LLC are related in any way to any military-focused R&D projects undertaken by 3eTi. However, at a time of heightened concerns in both the United States and China about cybersecurity and each country's alleged misappropriation of the other's intellectual property, this IP transaction involving a US-based company specialising in military-grade communications technology seems like it has all the makings of one that might come under close scrutiny of the relevant authorities. If they have spotted it, that is.