Meet the elite

Aristocrat Technologies

Based in Sydney, Aristocrat Technologies is one of the largest gaming companies in the world, selling both electronic gambling machines and casino management systems. Companies in this sector are not typically thought of as high tech, so some observers were shocked when Aristocrat gave the large state-run R&D lab (and Asia IP Elite member) CSIRO the nudge to become the top Australian domestic patent filer in 2017 (having applied for 157 standard Australian patents). However, Aristocrat insists that innovation is embedded in every part of its business. Over 60 years, the firm has built a portfolio of over 2,000 patents and nearly 3,000 trademarks. Licensing the brands of other entertainment products (eg, TV shows and movies) also forms a key part of its product strategy. In addition, the sector has seen its share of competitor litigation – notably in a series of patent lawsuits between Aristocrat and International Game Technology. The company has also been an active participant in Australia’s patent reform debates over the past few years, arguing for the retention of the second-tier innovation patent, which it has used extensively as a tool to protect incremental innovations.

AU Optronics

Panel maker AU Optronics was created in a 2001 merger, with its in-house IP function starting up in earnest three years later. The company has since been through several rounds of major display industry competitor patent disputes and come through the other side. An IP function consisting of around 50 professionals now manages a formidable IP portfolio built around patents that have potential counter-assertion value. The Hsinchu, Taiwan-based firm’s recent patent and trade secret battles with China Star Optoelectronics Technology show that it has come full circle from upstart to incumbent and may rely on its patent lead to fend off new rivals from the Chinese mainland. For more on AU Optronics director of intellectual property, see Spencer Yu’s comments in our roundtable discussion.

Broadcom

Having officially moved its headquarters from Singapore to San Jose in April, Broadcom’s tenure as an Asia IP Elite company could be limited. But few companies cast a greater shadow over the overall mobile licensing market in 2018 than the chipmaker formerly known as Avago. Hard-charging Malaysian CEO Hock Tan relocated the head office to California, partly to smooth the way for his ambitious plan to take over Qualcomm. Tan canvassed Chinese smartphone makers in a bid to win their approval, promising that Qualcomm patent royalties would be slashed under Broadcom ownership. But it was over before it began in March, when the Committee on Foreign Investment in the United States took the rare step of nixing an acquisition before it had even been agreed on by the two companies. Nevertheless, this setback has not slowed Broadcom’s IP and licensing division, which has pushed into high gear since Tan took the reins. In May it launched its first campaign in the auto sector, suing Toyota and four suppliers in the United States.

BYD

China’s largest producer of electric vehicles, BYD sprang up in Shenzhen in 1995, a time and place of great industrial ferment. An IP function was established just two years later, which was indicative of a company that would remain ahead of the IP curve in China for many years to come. BYD had something of a baptism by fire in early 2002 when it faced US patent litigation against Sanyo Electric, a case that was settled in 2005. BYD is today best known as an automaker, but it began life as a manufacturer of rechargeable electric batteries. The company also had an electronics division that assembled smartphones, which it spun off in 2007 to focus on vehicles. BYD says that its origin story is a huge advantage, giving it “full expertise and intellectual property” in what it calls the three core technologies of new energy vehicles: batteries, electric motors and electric controls. A team of more than 50 IP professionals manages one of China’s largest patent portfolios.

Coolpad

Shenzhen-based Coolpad was a relatively early adopter of patent filing among Chinese smartphone manufacturers. This has given it a significant portfolio, which it is now counting on more than ever as it seeks to bounce back commercially from a couple of years which found it under the ownership of cash-strapped LeEco. Appointed in August 2017, CEO Jiang Chao said that the company’s 10,000 plus mobile patents are key to its efforts to turn the company’s fortunes around. “A lot of companies may have stolen our core technology or patents; our next step will be carrying out patent litigation against some of these companies,” he told the Chinese media. One thing that makes Coolpad unique among Chinese firms is that its top IP executive, Nancy Zhang, was elevated to chief IP officer in April. An early test of the company’s licensing prowess is the series of ongoing lawsuits it has filed in China against fellow Elite member Xiaomi.

Denso

As the second-largest auto parts supplier in the world, Denso looms large on the Japanese IP landscape. The company is based near Toyota and is partly owned by the automaker for which the city in Aichi Prefecture is named. With more than 10,000 granted US patents, Denso’s portfolio ranks as one of the sector’s biggest. Increasing litigation in the auto industry has entangled the company as of late; the past year has seen it defending infringement claims from Intellectual Ventures (IV) at the International Trade Commission (ITC) and from Broadcom in a US district court. The company also made a foray into the transactions market with a pre-initial public offering patent transfer to Xiaomi. For more on Denso, see IP division director Akitoshi Yamanaka’s comments in the roundtable discussion.

DiDi

After a series of mergers and the pullout of Uber from the China market, Didi Chuxing Technology is now synonymous with ride-hailing in China. But the company is also making significant inroads into overseas markets including Mexico and Brazil. Its technology ambitions also stretch beyond its current offering, with recently announced initiatives in autonomous vehicles and artificial intelligence (AI). The IP function was set up in 2015 and has grown quickly. In 2018 the company made its first known patent acquisition on the secondary market, gaining a portfolio from France Brevets. For more on DiDi, see IP director Raymond Chen’s comments in the roundtable.

Hisense

State-owned manufacturing firm Hisense has grown from humble origins as the Qingdao No 2 Radio Factory established in 1969 to a top global supplier of both electronics and home appliances. It is the company’s television business overseas that has drawn it into significant patent conflict. Most notably, it found itself in a knock-down drag-out fight with Foxconn over the use of the Sharp brand for televisions in North America, rights that Hisense acquired in 2015 when the Japanese firm was still independent. As each side sought to increase the pressure, patent infringement complaints were filed in both the United States and China, before the two parties settled in February 2018. IP director Zhongli Zhang has focused on building a team with a balance of legal and technical experts capable of generating countermeasures when IP suits threaten overseas business. Hisense has also participated in several alliances of Chinese IP owners in both the air conditioning and TV industries. The latter group recently came to Hisense’s aid to invalidate an NPE patent being asserted against the Qingdao company in China.

Kyocera

Based in Kyoto, Kyocera was founded as a supplier of ceramic parts for electronics in 1959. Components are still big business for the company, which supplies parts to chipmakers, auto companies and other industrial concerns. Kyocera also has an equipment and systems business of roughly equal size, selling products including printers, solar power systems and mobile phones (it acquired the handset businesses of Qualcomm and Panasonic). In addition to protecting these business lines with a portfolio of over 5,000 US patents, the IP team operates licensing programmes in several areas: SEPs, haptic touch panels and vibration speaker technology. Early results from the haptics programme include a deal with Robert Bosch Car Multimedia and ongoing litigation in Germany with German auto parts maker Preh GmbH.

Largan Precision

When Scott Lin founded lens maker Largan Precision in 1987, he reportedly set three ground rules: no contracting, no technology purchasing and no poaching talent from other companies. The company developed processes for manufacturing high-quality lenses made of plastic, which soon became a vital component in smartphones. By relying mainly on trade secrets to protect its proprietary manufacturing methods (the company says it modelled its strategy on that of Coca-Cola), Largan Precision has become one of the most profitable companies in the smartphone supply chain. The company has over 500 patents, which it has asserted against the likes of Samsung Electronics. It also has a CEO who seems to have a good grasp of IP strategy. “Patents are not protective, only offensive,” Adam Lin told investors in 2016. “Manufacturing processes and how to master them, that’s the main area of competition in the lens industry.”

Mahindra & Mahindra

The flagship business of Mumbai-based conglomerate Mahindra Group, Mahindra & Mahindra is a leading player in automobiles and farm equipment. It established a dedicated IP function approximately eight years ago, which is based out of the company’s main research campus in Chennai, India’s motor city. The team is strongly tech and engineering focused, with its reporting lines leading to the company’s chief technology officer (CTO). Its marque as a consumer auto brand is flourishing in the domestic market, but it is the company’s utility and commercial vehicles that have put it on the map in major IP hotspots such as the United States. This has led to some patent conflict, including an ongoing ITC dispute with Fiat Chrysler. For more on Mahindra & Mahindra, see the roundtable discussion with its principal engineer heading IP rights, Ram Sitaraman.

Maxell

Maxell was formerly a unit of Hitachi but is now independent, although the conglomerate still owns a stake. It operates across three key verticals: batteries, industrial materials and electronics. In recent years, it has also become much more active in the field of patent monetisation. The company launched a US enforcement campaign in 2016, which produced its first jury verdict last July – resulting in a $43 million damages award against Chinese smartphone maker ZTE. Patent transaction records also show that the company has made patent assignments to companies including Fujifilm. However, the company’s IP executives argue that licensing, rather than sales, is the key priority – the company hopes to cultivate royalty streams for investment in future R&D and new businesses. For more on Maxell, see the roundtable discussion with its senior manager for IP licensing and legal, Tatsuya Yamamoto.

Oppo

Dongguan-based Oppo is one of the leading smartphone brands in its native China and other developing markets such as India, while it is increasingly making inroads in other jurisdictions, including Australia. Any great commercial success story in the mobile sector generates a significant amount of pressure from other patent owners. Oppo’s response has been a clear-sighted IP strategy focused on deal making. The company has complemented its in-house patent filing programme with a string of third-party acquisitions from the likes of Sharp, Intel, IV, Intellectual Discovery and Hilco Global. Oppo’s most high-profile dispute to date has been a patent litigation against Dolby in India. The eventual settlement of that case led to a licence as well as an opportunity for Oppo to acquire hundreds of Dolby rights. In 2018 the Chinese firm completed an SEP licence deal with Nokia. Looking forward, Oppo is hoping to generate revenue from its own intellectual property, as it ploughs $1.4 billion into 5G and AI R&D this year and launches a programme to license out its fast battery-charging standard.

Petronas

Malaysian state-owned oil and gas giant Petroliam Nasional is one of Southeast Asia’s largest and most profitable companies and, like other leading energy firms, it is increasingly turning to technology as a differentiator. Although patent filing by Malaysian companies is at a relatively embryonic stage, Petronas is near the top of the list among its compatriots when it comes to both domestic and overseas filing activity. The company has set up a dedicated IP function within its legal function and conducts a range of IP awareness initiatives throughout the organisation. Protecting what might be its most valuable intellectual asset – the Petronas brand – is a key focus, with trademarks registered in over 65 jurisdictions.

PTT Global Chemical

Bangkok-based PTT Global Chemical is an affiliate of Thailand’s state-owned oil and gas company focused on petrochemicals. The company’s policy is to invest more than 3% of its net profit back into R&D. Its innovation efforts are focused on areas including advanced materials, green technology, health and resource management. PTT Global Chemical has set a lofty and concrete goal for its research efforts: to create new products that generate annual revenue of $1.8 billion by 2025. A 2014 investment in Boston-based bioenergy firm Myriant gave the Thai company a security interest in a US and overseas patent portfolio; it has since restructured the US firm, which in August changed its name to GC Innovation America and announced that it would undertake technology scouting activities for PTT Global Chemical in the United States.

Rio Tinto

Rio Tinto is at the forefront of implementing cutting-edge technology to the mining industry. Autonomous trucks have hauled more than 1 billion tonnes of ore and waste and in 2018 the company inaugurated an automated long-distance rail network, which it is billing as the world’s largest robot. The company has dual headquarters in London and Melbourne, but the IP function is based out of Perth in Western Australia. In addition to IP protection and licensing, IP-driven technology deals are part of the company’s playbook. In 2017 Tata Steel acquired the full IP rights to a steel-making process branded HIsarna in a transaction with Rio Tinto that entailed several patent transfers. Intellectual property has also enabled joint ventures such as a 2018 partnership with Alcoa to commercialise a carbon-free aluminum smelting process.

Samsung Bioepis

Samsung Bioepis is the biosimilar affiliate of Samsung BioLogics, the world’s third largest contract manufacturer of biotech drugs. The company made headlines in 2018 for all the wrong reasons – authorities are investigating allegations that Bioepis’s value was deliberately overstated in the run-up to a 2016 initial public offering that was South Korea’s second largest. It could be a setback to the Samsung Group’s plans to make biotech a key part of its future growth strategy. Against that backdrop, Bioepis has been at the heart of key biotech patent battles. It settled a dispute with AbbVie that allowed a biosimilar version of the blockbuster arthritis treatment Humira to launch in Europe this year. The company’s reportedly strong pipeline of biosimilars could tee up many more such conflicts in the years to come.

Sime Darby Plantation Berhad

Malaysian palm oil producer Sime Darby Plantation is one of three listed pure plays (alongside property and motors/industrial) that make up the Sime Darby conglomerate, one of Southeast Asia’s largest. In the plantation business, the group is banking on innovation to stay ahead through a strong focus on agricultural R&D. The company is one of the country’s leading patent filers, and its research efforts go beyond its core palm oil competency into areas such as robotics, which may have applications in the plantation business. Implementing a commercial patent strategy is one way in which the firm hopes to boost revenue streams.

TY: First, we regularly have meetings with each business division’s executives and engineers. IP departments create strategies for each business and R&D division and emphasise the importance of enforceable intellectual property. Second, the two IP-related departments work with engineers of each business division and encourage them to create patents. Finally, especially in our optronics division and our department, there are many R&D researchers and product engineers – they have been working in innovation for decades and are very good at creating intellectual property and considering IP strategy.

AB: Every employee can be both a source of intellectual property and source of IP risk. The best innovative companies elevate awareness of intellectual property to a point where employees can do the basic work and the IP team works with them to enable and empower the organisation’s IP strategy. It’s critical to have clear policies that are communicated to the workforce and great training about why intellectual property is important and why it may be a risk. All employees are given a flavor of IP at induction – as they progress in their roles there are different levels of awareness trainings, with more advanced training given to critical centers of excellence and product teams. At Mahindra and Mahindra, we have integrated IP strategy and deliverables across all stages and checkpoints of the product development lifecycle and this is communicated exhaustively across the entire organisation at multiple levels. Additionally, annual events like the Mahindra Innovation Awards have yielded benefits in channeling our R&D efforts and incentivising innovators.

RC: We interact with the general counsel and the upper management on a weekly basis. We have a weekly IP report that is circulated among the upper management team to inform them about new developments in the industry, as well as the IP team’s work. We also have a quarterly IP strategy review with upper management to examine the IP work that has been carried out in that period.

The patent team also interacts with the R&D team on a daily basis – our patent attorneys sit with engineers to collect patentable ideas and turn them into patent applications. At the same time, we provide patent training to the R&D team on a regular basis. There is also company-wide training for new employees. To encourage filing, we have designed a patent incentive programme to reward engineers who submit an idea for patent application.

Spencer Yu (SY): We report to a vice president under the chairman, so that’s a very high upper-level management system, independent from the legal department. We also have another legal team to deal with pure legal efforts. The IP team is independent; we lead all IP efforts, co-working with R&D and legal teams on things such as research and litigation. We report periodically to the chairman, who traditionally views this function as very important.

AY: We have a central R&D division as part of our corporate R&D centre, but also within individual business units. Twice a year, we have a so-called ‘patent promotion conference’ – a meeting in which we discuss the IP strategy for each business unit or R&D division. Each division, including individual business units and the R&D division, is responsible for setting out its own IP strategy for each business or product. We also have a company-wide IP strategy, which we communicate to the whole company.

Q: How would you sum up your company’s IP strategy? How does intellectual property add value to your company’s bottom line

TY: For decades, Maxell has been famous in the consumer electronics field. A huge portfolio of over 5,000 patents was transferred from Hitachi Consumer Electronics to Maxell, increasing the value of the consumer electronics business to Maxell’s bottom line. The purpose of holding these 5,000 patents is to monetise them.

At the same time, Maxell has many products and aims for the number one position in each product market, many of which are relatively niche. Given this business strategy, we always consider whether we open or close our proprietary technologies on a product-by-product basis. We often tend to take a closed strategy in niche markets because we have no reason to support other competitors.

RC: We want to protect everything innovative that we produce. As an example, Didi was one of the earlier providers of ride-hailing for corporate accounts. The system of patent protection that we built around this service has become key to our success. On top of this basic strategy, we actively manage our IP risk globally – in particular, patent risk. We carry out regular patent risk scanning in major markets, including new markets in which we are developing such as Latin America. The third part of our strategy is to give back to the community. We recently joined the Open Invention Network as a move towards open source development. We take advantage of open source software in our development, so we want to give back.

AY: Basically, our IP strategy is to maintain the benefit of each product by differentiating their market prices. Recently, there has been more need to collaborate with other companies. When companies from other industries contact our company to initiate such collaborations, it’s our strategy to use IP rights to facilitate this.

SY: We have always faced competition from outsiders and IP litigation is one way that companies compete in our sector. Because of this pressure, we have to defend ourselves and at the same time build up our own portfolio. As our IP team has grown, we have focused not only on defending ourselves from outside assertion but also aggressively building up our own portfolio, co-working with our R&D people to turn our valuable ideas into IP rights. I recall that this was very hard at the beginning because most of our time was spent dealing with litigation. We had to spend much more time with R&D people to incubate these valuable patents. In the years since our first major round of litigation in 2004 and 2005, we have built a portfolio in which every patent can be used as a tool in a potential countersuit.

Q: How is your industry changing and is the IP space becoming more competitive or more cooperative?

TY: In the consumer electronics industry, companies have been asserting valuable patent portfolios against each other since the early 1990s and have obtained royalty revenues or kept other parties in check, investing royalty revenues in future business and R&D. This cycle continues today. Meanwhile, Maxell’s original business – which now focuses mainly on batteries and materials such as adhesive tapes and camera lenses – is business-to-business (B2B) and IP assertions are not so active. In both industries, I believe that intellectual property is neither competitive nor cooperative – it’s quiet. Originally IP battles were not so active in the B2B field. The consumer electronics field was previously very competitive and active but, at least in Japan, I believe that the IP field is inactive.

RC: Most people know that DiDi provides ride-hailing but that is just part of our objective; Didi as a company is aiming much higher – we want to be a high-tech company in the transportation business. Within that industry, our basic strategy is to protect everything innovative that’s produced by our company, including innovative business methods. We very much seek opportunities to collaborate. For example, we see opportunities to form collaborations with other companies using our patent portfolio, be they patent pools or other types of patent cooperation entities through either cross-licensing or open source type agreements. We seek out these types of cooperation all the time.

SY: Patent conflict has been worldwide, with litigation in the United States, Japan, Taiwan and Europe. In the past 10 years, we have had nearly 40 separate litigations in the United States. So we already have some record of litigation with our competitors. But the newer companies in the sector emerging in China are keeping clear of the litigation games so far. That is another point we have to look at. There are different views about China litigation and the quarrel between China and the United States over trade makes the situation more complex. In addition, NPEs are still a headache for any practising entity. I cannot say that there is as much litigation, but there continues to be some. There are some hurdles for NPEs if they want to expand their litigation force in this industry.

AY: The automotive space is changing and we need to make our products by using technology developed by others. Our division uses analytics and data to provide some information to business units about what technology will be needed in the future and what companies it might be best to collaborate with. It is our IP strategy to use IP rights to facilitate such collaborations.

AB: If you look at the automotive industry, there’s been a lot of churn over the last few years. Everyone is cognisant of the fact that companies will have to scramble for every advantage with the introduction of game-changing technologies. Getting ready to hit the market as well as keeping the products relevant for a longer time is hard, and a strong yet economical IP base is necessary, not just to protect yourself but also to ensure strong commercialisation. You actually now see prominent automotive manufacturers across the world exploring joint ventures and collaborative partnerships to utilise their respective strengths, and such ventures or partnerships will be great only if both parties bring something of significant intellectual value to the table.

Q: Are non-patent IP rights playing a bigger role in your strategy?

TY: Especially in the field of B2B, we consider know-how more important. Maxell has many B2B products and materials for niche markets and in such fields we don’t need to disclose the inventions as patents. Trademarks are also important, particularly when they are licensed together with patents or know-how. The Maxell brand is one of the company’s most important intellectual properties.

RC: I have already mentioned the importance of open source to our strategy. In addition, business methods are one of the most discussed topics right now not only in the patent community, but in the IP community in general. We design our protection strategy according to the local rules. China is more supportive in terms of patent protection for business methods right now, so we’re pursuing patent protection for most business method type technologies there. In other countries, we’re using a combination – patents and trade secrets.

AY: The engineering division is responsible for trade secrets but of course the IP division discusses and consults with it on how to manage trade secrets and patents. Basically, the importance of trade secrets and non-patent rights has been increasing.

Q: What are the challenges to recruiting and retaining good in-house professionals in your jurisdiction and what are the key competencies you look for?

TY: Maxell is not so large a company but we strongly believe that it is a great place for IP professionals who want to improve their abilities. People tend to look for job opportunities according to the size of the company: large is attractive and small is not. This tendency is not unique to Japan but generally common worldwide.

Since Maxell’s intellectual property is built on the businesses and R&D in the business divisions, Maxell IP professionals must understand the company’s businesses. It would be impossible for a person with knowledge of intellectual property alone to lead Maxell’s IP department. In Maxell, intellectual property should always tango with business.

AB: This is a challenging issue across India, for two primary reasons. In this country there are a few educational institutions with standalone courses on intellectual property, but they are nowhere near as mature or established as what you might find in regions like the United States or Europe. Second, the niche and dynamic character of IP requires a balance between technical and legal education. We find a lot of talent with the right technical background, but knowledge of intellectual property depends on hands-on experience, which staff might have had in a previous organisation, but often only on a technical or legal level – rarely a combination of both. Because of that, we have a very strong internal training program to make sure IP team members are familiar with our organisation vision, structure and product line and what is expected of our IP work products. Being integrated with technical teams and innovators, IP team members also need to hone their communication skills to be able to navigate R&D products into protectable forms of intellectual property. Additional focused training from external vendors on an as-needed basis adds to the skillset of the teams.  Essentially, while hiring, what we look for in prospective employees is strong technical breadth and a good understanding and experience of IP law and skills.

RC: I think the main competency that we’re looking for is the ability to solve problems practically. We’re looking for someone who can hit the ground running, who has in-depth IP experience and can implement that experience in day-to-day work. Didi is a fast-developing business, with many business lines developing simultaneously; we want someone who’s very business-oriented.

SY: I would say that intellectual property as an occupation has become harder. When I started in this field 20-something years ago, I spent a lot of time persuading newcomers to join. Today it is getting even harder. A lot of people see intellectual property as a good career to work in, but I would say that the most experienced ones are still scarce. In our case, we train people regardless of whether they have deep experience or not. The average experience is around 10 years. Since we are a good-sized company, we can learn a lot internally. I recall seven or eight people who, after they joined the company, passed the patent agent examination – that’s a good sign for us.