Jack Ellis

WiLAN announced yesterday that it has acquired a third patent portfolio from Panasonic in a further expansion of the two companies’ licensing partnership. While the deal underlines the level of confidence and trust that WiLAN has been able to secure among Japan’s traditionally conservative major IP owners, it also points to the complex of relationships that the Canadian NPE – and others that want to replicate its success – must expertly and diligently manage as it increases its footprint in Asia.

The portfolio – which will be assigned to WiLAN subsidiary Micro-Optimus Technologies, Inc – covers motion-sensing micro-electromechanical systems (MEMS) technologies used in devices including handsets and personal fitness trackers. It follows two separate tranches of IP assets that WiLAN has obtained from the Osaka-based electronics giant since they kicked off a licensing partnership back in December 2013.

WiLAN has arguably been the most successful NPE in terms of partnering with Japanese operating companies to monetise their patents. In addition to the three portfolios it has acquired from Panasonic, it has also entered similar relationships with electronics manufacturer Funai and semiconductor company Rohm. What makes these achievements stand out is the fact that Japan’s large high-tech companies have, for the most part, eschewed IP monetisation activities that could upset the apple cart and land them in legal disputes with their peers. Moreover, Japanese companies have been among the most regular and repeated targets of NPE lawsuits; the idea of joining forces with such entities remains anathema to many senior executives in the country.

For all that, WiLAN’s combination of a solid track record in securing licensees, as well as the perceived transparency it offers as a publicly listed company, have contributed towards its good name with some of the larger IP players within Japan Inc.

But this week, WiLAN took on a contrary mantle, pitting itself against Japan’s Sony in a Chinese patent lawsuit. It is no longer an open secret (or, put another way, an unspoken truth) among Japanese industry that some of the country’s companies are pursuing a more aggressive approach towards realising value from their vast patent portfolios. As such, the fact that WiLAN, the licensing partner for three major Japanese manufacturers, has sued one of their competitors for infringement should not come as too much of a surprise in Japan’s boardrooms. Moreover, the patents in suit were originally owned by Finland’s Nokia – so it is not as if this is a case of a Japanese company engaging in ‘privateering’ against its domestic rivals.

Nevertheless, patent litigation remains a highly sensitive issue in corporate Japan. While WiLAN clearly has a range of operating company and SME partners from across the world, it would not want to harm its potentially very lucrative relationships with the handful of Japanese corporates that it has allied with, and the others it may build relationships with in the future.

Then there is the choice of venue for this particular action. Beijing-based Rouse partner Erick Robinson suggested to IAM that the decision to sue in Nanjing Intermediate People’s Court was likely made due to the depth of local contacts in the district and the speed of its docket. But, as IAM’s Jacob Schindler and Richard Lloyd reported last week, there is potentially an added dimension. Anyone familiar with twentieth century Asia-Pacific history will know the significance of the city of Nanjing to both Chinese and Japanese societies, and how it remains – along with many other things – a geopolitical sore point for the two neighbours to this day.

Bearing this in mind, my colleagues wrote that “the choice to sue a Japanese company there is unlikely to have been entirely coincidental”. I’m not so sure. If there is any indication that this was calculated and was a factor in forum selection, then WiLAN is running the very real risk of deeply upsetting its Japanese partners, and potentially wrecking its chances of signing up any future alliances in the country.

One thing that can be said with more certainty at this point is that, as Asia’s patent marketplace develops, this particular scenario highlights the cultural issues that face players from outside the region who are after a piece of the pie. Relationships with Asian patent owners and governments – and, perhaps most importantly, the Asian public – will have to be meticulously managed if WiLAN is to build on its early successes and others are to follow suit.