Jack Ellis

IP Bridge – Japan’s first state-funded patent aggregator, or sovereign patent fund (SPF) – announced two significant deals on Friday. As a result it will take ownership of several hundred patents and become a licensor for an MPEG-LA patent pool.

IP Bridge will be assigned over 500 smartphone-related patents in the first of the transactions; a press release leaves the assignor unnamed, but describes it as a “Japanese electronics company”. The second deal consists of an unspecified number of patents transferred from Panasonic, which has been a consistent supplier of assets to – as well as an initial investor in – the aggregation fund operated by IP Bridge. It is noteworthy that this assignment will make IP Bridge a licensor for a video codec-related patent pool operated by MPEG-LA. Whether the SPF has made anything in terms of revenue since it was launched in July 2013 is unclear, but becoming a patent pool licensor may well ensure it of some steady income.

What these two deals hint at is an acceleration of IP Bridge’s monetisation activities. Since its establishment – with 90% of its ¥3 billion (approximately $25 million) in funding coming from the Japanese government’s Innovation Network Corporation of Japan (INCJ) and the rest from corporates Mitsui and Panasonic – the SPF’s progress has largely been shrouded in mystery (at least in public). Many observers will have wondered if IP Bridge was faltering in meeting its objectives, including: the promotion and facilitation of open innovation within Japan’s traditionally segregated high-tech industry; the commercial exploitation of Japan’s hoard of underutilised intellectual properties; and the need to keep patents out of the hands of foreign competitors and NPEs that might use them against Japanese companies.

Straight-up licensing and assertion were typically left out of the discussion at first. But speaking to IAM earlier this year, IP Bridge’s former chief strategy officer Norishige Hayakawa acknowledged that the SPF’s softly-softly approach to monetising its patents was going to have to change. “The fact is that no company comes to IP Bridge to ask to license its patents,” he said. “And if people think it is a ‘patent troll’, then you can see that IP Bridge is facing a difficult situation. We cannot rule out assertion if we want companies to respect the patent system… IP Bridge’s priorities are to build a high-quality patent portfolio, to ensure that when infringement is found, it is clearly proven and to be fair and open in its business.” He did add, however, that “overall, we think it more important to contribute to building an open innovation society… If some of our activities disturb that, then we should stop those activities”.

Litigation is a reality that IP Bridge’s fellow SPFs are also facing up to. It is not clear if South Korea’s Intellectual Discovery has filed any lawsuits, either in its own name or via other entities it controls, though its former executive vice president Choongsoo Park told IPBC Asia 2014 delegates that it has “generated substantial revenues from licensing and sales”. As well as being the first, and so far the only, SPF from Europe, France Brevets is also the only one to have launched patent litigation and to have succeeded, in cases against HTC and LG Electronics concerning patents relating to near field communications technology.

SPFs are set apart from private-sector NPEs in as much as their aims tend more towards the national and industry-wide interest. Nevertheless, they still have targets to hit and investors to report back to; and whether those investors come from corporate, financial or government backgrounds, they will all expect returns. Considering the nature of today’s patent market, that means that they will almost certainly have to litigate at least some of the time, however reluctant to do so they may be. The two deals struck by IP Bridge over the past week show that it has the ability to bring in portfolios; the next step is to prove that it can extract value from them, for all its stakeholders.

On a related note, I did a rudimentary search of the USPTO’s Assignments database to see where most of the SPF’s US patent assets originate from. It is not surprising to see that the lion’s share have been assigned from Panasonic (with another large chunk coming from Sanyo, which was wholly acquired by Panasonic in late 2010). The two deals mentioned above are probably too recent to be recorded on the USPTO database, if they do indeed comprise any US assets. Interestingly, US automotive parts manufacturer Visteon has transferred a number of patents to IP Bridge, allowing the fund to expand its coverage beyond consumer electronics-related technologies. A cursory search of Google Patents reveals that a small number of IP Bridge’s assets have been assigned by sole inventors. The US patent assets that have been transferred to IP Bridge, according to the USPTO Assignments database, are shown below; please note that this does not take into account assets that may later have been divested by IP Bridge:

Assignor Country Number of US patent assets assigned
Panasonic Japan 836
NEC Japan 100
Sanyo (Panasonic) Japan 88
Visteon United States 42