Joff Wild

We have reached the end of IPBC Asia 2017 at the Palace Hotel in Tokyo. Delegates are enjoying one final cocktail at the closing reception before heading off to catch their trains and planes home. It’s been a highly successful event that attracted 530 attendees and a top class speaking faculty, the members of which provided a series of compelling sessions. The IAM editorial team - Joff Wild (JW), Richard Lloyd (RL) and Jacob Schindler (JS) - has been hard at work monitoring proceedings. Here’s what grabbed their attention on the final day.

View from the JPO - Delegates were fortunate this morning to hear directly from the Japan Patent Office’s new commissioner on her view of the global IP market and her plans to reform Japan’s IP system. Naoko Munakata, who took up the JPO’s top post in July, signaled that the Internet of Things and its implications for SEP licensing will be one of her top priorities. The JPO has formed cross-disciplinary teams to examine IoT-related inventions as technology becomes more complex. It has also released a commentary on 23 hypothetical cases in Japanese and English that clarify the level of detail needed in patent claims. Something else on the commissioner’s radar is how technological convergence is making it harder to resolve patent disputes through cross-licensing. Munakata encouraged industry to participate in the JPO’s ongoing public consultation as it prepares to issue SEP guidelines. The commissioner clarified that these will be voluntary, but said the office hopes to narrow the gap between parties in royalty negotiations and forestall or quickly resolve disputes. The JPO is also planning to provide advisory opinions on essentiality in the near future. What’s more Munakata shared her views on the state of the global IP market. Japan has long engaged actively with smaller IP offices, she stated, especially in the Southeast Asia region. “Emerging countries may be reluctant to make formal commitments, but when it comes to domestic policy they are becoming pro-patent”, Munakata added. The commissioner may also have been thinking of China when she stated: “Systems that distort competition by seeking to accelerate technology transfer will … hamper the development of an innovation friendly environment.” When it comes to the US, Munakata acknowledged concerns that Alice and IPRs could have been overcorrections, later adding that globally: “The problem of patent trolls has created some scepticism in IP rights, but it is actually not so fundamental as to shake the entire IP system.” (JS)

China’s courts evolve - The relative attractions of China’s court system is a regular topic for discussion at IP events in Asia and beyond. In recent years that has only increased with the creation of specialist courts in Beijing, Shanghai and Guangzhou. It is not uncommon, however, to hear foreign observers still talk with some scepticism about whether they’ll get a fair hearing in a Chinese lawsuit, particularly when asserting against a local company. But in the day’s opening Stress point strategies plenary, Ant Financial’s Benjamin Bai, made the case for how far the Chinese system has evolved and its growing appeal for overseas companies. “I have not seen a situation where IP enforcement in China by multinational company has ruined relationships in the country,” he said. First and second tier Chinese companies, he continued, have developed a healthy respect for patents and other forms of IP and will avoid situations in which they might be aiding infringements (though third and fourth tier businesses may be less picky, he added). What’s more, compared to the US, which has become an increasingly tough jurisdiction for patent owners, thanks to the decline of injunctive relief and the ability to challenge validity through inter partes reviews (IPR), China is a pro-patent jurisdiction – with high plaintiff win rates and the strong probability of obtaining injunctive relief, even at the preliminary stage. The US still has the edge in damages; typical awards there far outstrip those in China, though Bai observed that the Chinese average had grown from around $50,000 a few years ago to somewhere between $100,000 and $200,000 today. “It’s still low, compared with the millions of dollars you see in the US, but the trend is upwards,” he commented. That doesn’t mean that infringement litigation in China has suddenly become a walk in the park for plaintiffs, but these changes show how much the system has evolved and has improved its relative standing. “It’s challenging to litigate anywhere, not only in China,” Bai pointed out. “It’s also difficult in the US, even though most people would say that the system is well defined, is precedent-based and so gives you a level of predictability.” While some might respond by saying well a Chinese lawyer like Bai would say that, wouldn’t he?, what was striking was the fact that his three co-panellists Gustav Brismark of Ericsson, Heath Hoglund of Dolby and Yoshiaki Tokuda all agreed. The latter went so far as to predict the possible rise of a global IP transactions market worth trillions in the coming years with Chain at its centre. And that is not going to happen if there is no confidence in the country’s courts. (RL)

In-house opportunity – In the Stress point strategies morning plenary, the director of Panasonic’s IP Centre, Yoshiaki Tokuda, presented a range of strategies in response to a hypothetical scenario in which a CEO asks the IP function to return more revenue to the company without an increase in budget. But, as he later explained, it was just a few years ago that Panasonic revamped its own IP function in response to a budget crunch within the company. “With close to 1,000 IP people within the company, we were also spending lots of money with external counsel,” Tokuda explained. It then began to do almost all work internally from three years ago, he explained. Also around that time – in September 2014 - Panasonic spun-out a part of its in-house IP unit, forming a subsidiary called Panasonic Intellectual Property Management. Since then, it has taken further steps in the direction of offering IP services to third parties – another form of IP value creation. While the big change apparently began with a business crisis, its effect on the IP function may one day be looked back on as a positive one. (JS)

R&D matters - A phenomenon seen across Asia, as well as other parts of the world, is the entry of new players into the mobile communications space. These companies generally do not compete on unique new technology offerings, but on the price of the devices they offer for sale. For licensors that may be seen as a problem, creating downward pressure on royalty rates or protracted disputes in jurisdictions that may be getting increasingly sceptical of licensing practices (or more protectionist, depending on your point of view). However, speaking in the Stress point strategies plenary session this morning, Ericsson chief IP officer Gustav Brismark said he sees potential opportunities. Phones, tablets and other handheld devices are becoming ubiquitous, but they are also becoming essential. End consumers use them to watch TV programmes and films, to listen to music, to play games, and a whole lot more. That means they are looking for top quality in audio and video – and that means they want the best technology. However, you don’t get this if you don’t pay for it and that gives licensors a strong hand to play when sitting down to negotiate. If mobile manufacturers are looking for savings, it may not be in IP that they will find them – unless, of course, they can get antitrust authorities and other regulators on the case. If they manage to do so, the issue then becomes how to pay for the next generation of innovations that we have got used to seeing at ever-shorter intervals. Taking away the incentive to invest in R&D (and companies like Ericsson and Nokia have spent billions of dollars doing just that) will ultimately reduce the ability of mobile manufacturers to generate sales. After all, there’s not much reason to purchase a new device that essentially does pretty much the same as the one you already have. If you are going to fork out the cash, you want something better – which is where the R&D comes in. (JW)

The promise of youth  - Given the size and scope of the Chinese market it’s often easy to forget just how young many of its largest companies are in terms of the development of technology and IP strategy. That was on full display in the second plenary of the day - What success looks like - as Midea’s IP head Mingyun Sun explained that given the relative youth of the company’s IP function it was too early to talk about the success of the group. He pointed out that while his 15 years of experience in the IP sector gave him the longest track record of anyone in his team, it meant that he was the greenest member of the plenary panel which included such senior figures as Billie Chen of TSMC and Canon’s Kenichi Nagasawa. Midea’s recent transformation into a global business (it has been well-established in the domestic market since the late 1960s) means that it has only just decided on the English pronunciation of the company’s name - it’s My-dea. Perhaps the biggest challenge for Sun’s relatively inexperienced team is keeping pace with Midea’s growth. “The business is running so fast that everything else is trying to catch up with it,” he commented. That means that Sun and his team often have to rethink priorities on a quarterly or even monthly basis. “We frequently change the IP strategy to match the changing business situation,” he revealed. At that kind of pace it’s probably advantageous Midea’s IP function is so young and, presumably, in possession of the stamina to keep up. (RL)

Success metrics – Almost every IP executive probably has a different concept of what makes a successful IP strategy. In the morning What success looks like plenary we heard from a diverse group of Asian corporates on what metrics they use to judge the effectiveness – or lack thereof – of their teams’ performance. Here are five of the top metrics mentioned: (1) The payments you don’t make – minimising settlement costs is a key priority for Sony, said senior general manager Tomonori Okuwaki, who revealed that the company made zero payments in 23 of its 29 litigation settlements during fiscal year 2016. (2) The secrets you don’t spill – multiple panellists stressed that patents are not the end of the story when it comes to how they measure success; Billie Chen, chief IP counsel of TSMC, noted that the company patents a small share of its total inventions, while Canon’s head of corporate IP Kenichi Nagasawa added data management as a core competency of his team. (3) IPR institution percentage – both Okuwaki and Chen highlighted their companies’ performance in IPR proceedings; TSMC has managed to get 88% of its petitions instituted and Sony 85% (both well above industry average). (4) Internal reputation – frequent meetings with the CEO and other corporate officers is one way to communicate success metrics within an organisation. It is also a good way to gain trust: Nagasawa said that after building a relationship with top Canon executives over many years, they trust his gut instincts on critical patent questions. (5) Industry opinion – Okuwaki said that external voices are one way that Sony benchmarks its performance against competitors, and he highlighted IAM’s most recent list of top 40 market makers, published in issue 86 of the magazine, which came out at the end of September, as an example (Sony corporate executive Toshimoto Mitomo is #14, a rise on his previous position). (JS)

The rise of the machines - There’s no doubt that the rapid development of artificial intelligence has the potential to disrupt many sectors and IP is no exception. The ability for a new breed of super computers to process vast reams of prior art from sources around the world on a level that a human researcher has no hope of matching promises to have a massive impact on patent prosecution, for instance. According to Ant Financial’s Benjamin Bai, who was speaking on the opening Stress point strategies plenary session, AI is likely to have a massive impact on worldwide filing practices. In five years’ time, Bai predicted, AI platforms should be able to handle most translations to a high standard, significantly bringing down the worldwide patent filing costs for large multinational players. “Then maybe in 10 years a machine will be able to play some in drafting patent applications,” he went on.  “AI is here to stay and it’s going to change our lives.” (RL)

Playing by numbers - Trademark filing has long been a numbers game. Brand owners tend to give population and GDP very close attention when deciding where to seek protection. In patents, though, an additional key factor has traditionally been the ability to reproduce the relevant technology. In many instances, that reduced the need to file to just a handful of countries. But perhaps no longer. In many industries these days, fast technology adoption is a fact of life. What could once have been assembled in only a few, highly sophisticated manufacturing centres can now be recreated relatively simply in any number of locations, so lowering product prices at a time when growing levels of affluence are also increasing consumer demand. For senior IP managers, explained Dolby chief patent counsel Heath Hoglund in the Stress point strategies session, that means thinking about patent coverage in jurisdictions that only a few years ago would not have come under consideration; countries like India, Brazil, Russia and even Nigeria. Of course, the more countries you file in, the higher the costs you incur; so Hoglund and others in similar positions of corporate responsibility will be hoping that the prediction made in the same plenary by Ant Financial’s Benjamin Bai – that within 10 years machines will be doing most patent translation work and perhaps even some drafting – comes true. Private practice patent attorneys, on the other hand, may be less than thrilled at the prospect. (JW)

New faces in high places – Moderator Mike Moriya from Nokia Technologies Japan, a former leader of Sony’s IP function, pointed out in the morning’s What success looks like plenary that there has been an unusually high level of turnover in the highest levels of Japanese companies’ IP functions this year. As past executives have moved on to different roles within businesses or retired, at least five major patent owners in Japan have a relatively new executive overseeing the day-to-day operations of the IP function. Here they are: Fujitsu – Maki Ohmizu, Deputy chief legal officer, intellectual property, legal, compliance and IP unit; Hitachi – Yuji Toda, General manager, IP division; NEC – Shigeki Wada, General manager, IP division; Panasonic – Yoshiaki Tokuda, Director, Intellectual Property Center; and Sony – Tomonori Okuwaki, Senior general manager, intellectual property division. (JS)  

Sticking points - Different views on when encumbrances should be brought up in patent sales negotiations were on display during the Dealbreakers afternoon session. For IBM’s IP transactions chief in Asia, Eric Damon, the sooner the better is the rule. “Bring them up and discuss them early - before you talk about the price,” he said. AT&T vice-president of IP Joe Sommer was not so sure. “We don’t have to bring them up necessarily,” he stated. “If they are an issue they are going to get mentioned at some stage.” On occasions, he continued, it’s better if it happens later on in a negotiation, when momentum has been created and trust generated. “That helps when it comes to sticking points like encumbrances,” he advised. For Roger Tu, vice president of Foxconn affiliate MiiCs & Partners, the real issue is who is on the other side of the table: encumbrances really matter to NPEs, they do not want any; while for operation companies they are less of a concern, as long as there is certainty around the position of a few key players in the relevant market. Perhaps, overall, Kenny Rogers caught it best when he sang in the Gambler: “You've got to know when to hold 'em, Know when to fold 'em, Know when to walk away, Know when to run. You never count your money, When you're sittin' at the table, There'll be time enough for countin', When the dealin's done.” In other words, the best dealmakers – such as those on this afternoon’s panel - always play it by ear. (JW)  

Local lingo – During this afternoon’s Right-sizing your portfolio breakout, Xiaomi’s director of patent acquisitions, Wei Shi, shared some insights into the company’s strategy for growing its collection of rights through the transactions market. Shi moved to Beijing five years ago after a long spell with Intellectual Ventures in the US. He says he was surprised to find that in China it is very common to class patents as offensive and defensive, a concept that isn’t very popular State-side. Basically, offensive patents are those for which you can produce a claim chart or evidence of use mapped to another company’s product. Defensive patents, by contrast, are those for which you do not necessarily have infringement proof but if you aggregate a large number of them, so the thinking goes, you can still put pressure on competitors. Whether or not you think these are useful labels, you should be familiar with their local meaning if you are interested in selling patents in China. (JS)

Killing time - The many ways in which a patent deal, be it a disposal or a licence, can be killed were in the spotlight in the afternoon Dealbreakers session. According to Eric Damon director of Asia-Pacific IP licensing at IBM, one of the biggest issues can be the relatively simple factor of time. “My boss Bill LaFontaine has a saying - “time kills deals”,” Damon explained. “If, say, company X wants to buy patents to protect against company A, B or C and we establish a dialogue with company X then our aim is to get the deal done as quickly as possible.” In that scenario if X is being sued by A and so is looking for defensive or offensive assets then Damon and his IBM colleagues could discover that the situation has changed if they don’t reach a quick agreement.  “We might find that X and A have come to the conclusion that they should reach some sort of peace, such as agreeing a cross-licence,” he remarked. Similarly, Paul Maier, who heads up the Siemens IP licensing and transactions team, said that internal factors can also cause problems. A business unit that in one quarter decided that it did not need a back-licence to a patent that is being sold might change its mind later on, and if the deal has not been completed that could complicate things dramatically. (RL)     

Winners - Last night’s Asia IP Elite Gala Dinner once again provided IAM with an opportunity to publicly recognise just a few of the many IP teams and individual executives in the region who have made significant contributions to their organisations over the past year – through deal-making, enforcement and other value creation practices – as well as to salute all the 60 plus members of the Asia IP Elite. Congratulations to all of the winning organisations and let the betting begin on who takes the stage next year in Shanghai. (JS)

  • Automotive Team of the Year - Toyota

  • Chemicals and Materials Team of the Year - LG Chem

  • Electronics Team of the Year - Panasonic

  • Healthcare and Biotechnology Team of the Year - Takeda

  • Internet and Software Team of the Year - Alibaba

  • Mobile and Telecommunications Team of the Year - Xiaomi

  • R&D Institution Team of the Year - CSIRO

  • Semiconductor Team of the Year - MediaTek

  • Asia IP Deal of the Year - HTC and Google

  • Asia Team of the Year - Huawei

  • Asia Individual of the Year - Shigeharu Yoshii, IP Bridge

(JS)

All done – And so we say goodbye to Tokyo. It’s been a fantastic host city for IPBC Asia 2017 and that’s in no small part down to the wonderful support we have received from so many of Japan’s IP leaders from the corporate, regulatory and policy spheres. Over the three days of the event it has been clear just how much Japan’s corporates and institutions have to offer as the IP world looks to develop solutions to the challenges posed by the rapidly changing global innovation economy. We are, of course, also very grateful to all IPBC Asia delegates, speakers and sponsors. Without them there would have been no event. Our attention now turns to San Francisco, where the next IPBC Global will take place from 10th to 12th June 2018. Look out, too, for a number of regional IPBC events in both Asia and Europe between now and then. We look forward to seeing you wherever in the world you are able to join us. (JW)