Inside the multi-million dollar Chinese patent buying fund with IV connections 19 Jun 14
Last month, IAM reported on the launch of Beijing-based patent aggregation entity Ruichuan IPR Funds. At the time, facts about its plans and structure were thin on the ground; but, with the help of contacts in the Chinese IP marketplace, I have been able to piece together some additional detail on the entity and its objectives.
First of all, let’s take a look at Ruichuan’s shareholders and finances. The target for its first fund is between RMB300 million (around US$48.2 million) and RMB500 million (US$80.4 million), according to people familiar with the matter. In terms of corporate investors, it is public knowledge that mobile handset manufacturer Xiaomi, electronic appliances producer TCL and software developer Kingsoft have each contributed capital, though the relative size of their commitments is unknown. Governmental entities have also provided some backing; apparently, the government of Beijing’s Haidian district has put up RMB20 million, while the body responsible for running Zhongguancun, Haidian’s high-tech hub, has invested another RMB20 million. Despite this, most of the finance is expected to come from the private sector.
Haidian-based broker China Technology Exchange (CTEX) has already assisted Ruichuan on patent acquisitions. “The fund will purchase patents in the fields of smart devices and mobile internet,” CTEX vice president Josh Li told IAM. “It is interested in both overseas and domestic patents.”
One head of IP at a Chinese corporate told me that Ruichuan’s initial objective is defensive, but things could quickly become more complex as it tries to secure a return for its investors and further its strategic goals. “To my knowledge, the fund is focused on defence in the beginning, in order to help Xiaomi and other Chinese companies pave their way into overseas markets,” he explained. “In order to build up a strong patent portfolio, they will also invest a lot in third-party R&D, including working with universities and research institutions in China, acquiring innovations, and so on. I think it could be more like IV [Intellectual Ventures] by that stage.”
These aims are reflected to an extent in Ruichuan’s management team. The entity’s general manager is Lin Peng, a former executive director of patent licensing at Intellectual Ventures who has also held roles at Microsoft and Cargill, among others. Lin is also president and chief operating officer at Zhigu IP, the firm that is behind the creation of Ruichuan. Zhigu’s chairman is Zhang Hongjiang, who is also CEO of internet business Kingsoft. (It is also worth noting that the head of IP at Xiaomi, Zhang Liang, is another IV alumnus.)
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