At the controls of the global IP market express

Joe Chernesky

Playing the long game

The Kudelski Group has notched up a string of positive results in its licensing campaigns over the past couple of years. Much of these successes can be ascribed to former Intellectual Ventures executive Joe Chernesky, who joined the group to head up its IP function in April 2012 and reports directly to the company’s CEO.

Kudelski Group’s licensing campaigns seem to have gained a lot of traction in the past year, with licensees including Google, Disney, Bloomberg, Netflix and others signed up. What is behind this new momentum?

I joined the Kudelski Group because the board had already made a decision that intellectual property was a core, integral part of its growth plans. This provided the foundation that allowed me to build an organisation that operates with a view to the long term, not just the next win. Licensing is a relationship development exercise, like any business development effort, and it takes vision, investment, commitment and a highly skilled team. This, combined with the foundational nature of the group’s patent portfolio, enabled me to recruit a world-class team that has the ability to orchestrate enforcement on a global scale. André Kudelski, our chairman and CEO, has also been a great source of ideas and support as we have progressed. With a solid strategy, chairman and CEO support, strong patent portfolio and world-class talent, we have been able to get the programme off to a great start with broad group-wide support.

Kudelski Group generally appears to have been pretty successful in signing licensees without resorting to litigation – and where it has litigated, it appears to have succeeded too. How would you characterise the company’s licensing strategy and under what conditions will you litigate?

We explore a range of potential outcomes, whether it be a product partnership, strategic IP relationship or straight patent licence. From the outset, the group realised that we would have to be rational in our expectations of value based on the changing landscape, especially in the United States. I think that rationality has served us well. I see it as our responsibility to engage every company in good faith and with respect. However, it is a two-way street. While many companies respect IP rights and will engage in good-faith discussions, there are others which do not. Litigation is a very inefficient way for two companies to resolve IP disputes, but sometimes it is necessary. Based on how I am seeing some companies respond to the uncertainties in the IP marketplace today, I would not be surprised to see an increase in litigation.

You joined the group from Intellectual Ventures in 2012. What changes have you implemented in that time in terms of the company’s approach to IP management and strategy?

I have built on a strong base and history of innovation, which began with Stefan and André Kudelski, and have layered on top of that a team of technologists, product managers, business and IP experts, and attorneys that are executing on the plan I mentioned previously. We have recruited internally and externally a world-class team and, working with and across the organisation, have become integrated in all facets of the group’s businesses. I spend a lot of time with the executive team, the board of directors and across the group’s sites talking about innovation and intellectual property, and learning from the organisation about how to make a greater impact. I have also revamped our already effective patent programme by refocusing our investment in how and where we get patents (organically and through acquisition) to match our new IP strategy and business plans. (JE)

YP Jou

The renaissance man

YP Jou has quite a job on his hands. As chairman of ScienBiziP, the firm formed from the spun-out IP function of Hon Hai – otherwise known as Foxconn – he is in charge of managing one of the world’s biggest patent portfolios. The Taiwanese high-tech manufacturer files more patent applications on its home turf than any other entity and has done so for many years. Moreover, Foxconn is a highly active portfolio builder overseas; in 2014, it ranked ninth among corporate applicants in terms of patents granted in mainland China, receiving 811; while it placed 18th in a list of recipients of US patents last year, with 1,537 grants.

Despite the scale of this task, Jou has all the credentials to suggest he is the best person for the job. After all, he was Foxconn’s general counsel for 18 years before leaving to work as a consultant for the Industrial Technology Research Institute, the National Taiwan University and eventually to launch his own IP strategy advisory and law firm, Wispro Group. “I joined Foxconn nearly 30 years ago,” says Jou. “Foxconn in the past was a target for foreign competitors and faced multiple patent lawsuits every year. To assist the company to resist attacks and eventually grow, I built up a legal and IP team of around 400 persons during my tenure.” It is little wonder, then, that Foxconn founder and chairman Terry Gou invited Jou to head up ScienBiziP when it was established as a separate company in 2013.

One of the benefits of independence from Foxconn is that ScienBiziP, along with Wispro, can serve a range of clients – and this is at the heart of Jou’s self-assigned mission to improve IP sophistication in the region. “Industries in Taiwan and China have suffered and continue to suffer from patent barriers and litigations,” he explains. “Although Taiwanese and Chinese companies are filing numerous patent applications globally, the majority of these result in little to no return on investment. Meanwhile, they are being sued all over the world and forced to pay high royalty settlements to foreign entities.” As an illustration, Taiwan spent roughly $15 billion on R&D and $600 million on patent applications in 2014, says Jou. “These efforts resulted in a mere gain of $92 million in royalties, while each year Taiwan pays out $6 billion in royalties to foreign rights holders,” he continues. “One of my motivations for launching Wispro Group is to provide full services to help companies in the Greater China region to realise their IP value. Wispro has spent a significant amount of resources on developing our own methodology and system for helping companies to establish and enrich their IP portfolios. Through the services we provide, our clients can compete at an international level.”

Another firm in the Jou stable is MiiCs & Partners, which he established in 2014 with a team which has previously clocked up stints at licensing heavyweights such as Ericsson, WiLan, InterDigital, Siemens and IBM. MiiCs is focused on buying, selling, licensing and asserting patents on behalf of its clients, including Foxconn. As well as handling the Taiwanese company’s sales of patents to Google, it facilitated its purchase of a display-related portfolio from NEC. MiiCs later sued Funai, Toshiba and Mitsubishi Electric for infringement, reaching a settlement with the latter in July this year. 

For Jou, the increase in acquisitive – and assertive – activity by Taiwanese and Chinese companies that led to the founding of MiiCs stems from patent quality issues. “They cannot continue to rely on their existing low-quality patents without running into obstacles when expanding into other countries,” he says. “This is generating a need to obtain assets from other countries. In the coming years, the international transactions marketplace will become more active due to the participation of Asian companies.” (JE)

Joo Sup Kim

Against the grain

As vice president at LG Electronics’ (LGE) IP centre, Joo Sup Kim has been responsible for developing what is, in Korean terms, a revolutionary IP strategy. While its domestic competitors remain largely focused on high-volume patent filing to enable cross-licensing, LGE stands out from the crowd with its more aggressive approach to monetisation and litigation.

When did you first join the team at LGE? Have you always worked in the IP function?

I joined the IP division at GoldStar [a predecessor entity of LGE] in 1984 and worked for over 30 years in various LG entities, including LG-Philips Display and LG Display as head of the IP division; and finally at LG Electronics, initially as vice president of licensing and litigation. In that time, I have been involved in over 230 IP litigations and more than 30 trials worldwide.

Who would you say have been the greatest influences on your IP work?

At an early stage, I learned about licensing activities through my experiences of working and negotiating with Mr Zarember at GE/RCA Licensing. I learned much about IP legal issues from a contractual perspective from my old friend Roger S Borovoy [currently of counsel at Fish & Richardson in California].

After that, of course, I have had many experiences and lessons learned from partners and adversaries at companies such as IBM, Philips, Technicolor, Kodak and Sisvel.

How would you characterise LGE’s approach to IP strategy, in a nutshell?

To support our goal of becoming ‘Global Number One Business’ and to develop our IP portfolio accordingly. With this in mind, we work closely with our R&D colleagues, especially with respect to core technical areas such as standards technology and LG’s ‘unique selling point’ – or ‘LGUSP’ – technology. We are also implementing both offensive and defensive IP strategies, including licensing and litigation, to support our R&D’s operational freedom. Furthermore, we practise an active IP monetisation strategy to protect and create added value from the IP assets secured by LGE.

What are the biggest IP-related challenges facing LGE today?

As a manufacturer of consumer goods, we are facing many IP challenges from various NPEs in the United States, Europe and Asia. There are reasonable NPEs, but many of these entities make unreasonable requests with non-valuable patents. LGE manages various risks that may arise from patent disputes with them and is implementing various strategies to minimise IP risks.

Korean companies have typically been passive and defensive in terms of IP strategy, but there are signs that LGE has become more aggressive in terms of litigation and licensing. What factors made LGE change its strategy?

LGE will initiate offensive measures depending on the situation involved in each case. We will pursue a win-win solution for both parties if there is a reasonable request. However, with respect to unreasonable and frivolous claims, we actively respond to eliminate them even if the process may incur extensive trial expenses. In addition, we are trying to reduce royalties that consistently burden operating companies and strive towards providing an environment that offers us freedom to operate.

Do you think we will see a shift in the Korean marketplace, with Korean companies becoming more aggressive in enforcing and monetising their IP assets?

In Korea, there is a trend towards awarding higher damages for IP infringements. We can see how Korean operating companies are growing or declining in part due to global IP-related issues and we are dedicating our efforts to increasing our IP capacity. Also, with advances in Korean business and stronger leadership in the technology and IP fields, many Korean companies are beginning to better utilise their IP assets and are becoming more aggressive in monetising to help their business and take a more competitive position in the market. (JE)

John Lindgren

Best practices and best-ever deals

In many ways Conversant is as well positioned for the current patent market as any licensing business. Taken private in 2011 by a group of investors led by private equity fund Sterling Capital Partners, the company has been spared the stock market buffeting that has seen the share prices of many public IP companies plummet. It has also put in place a strategy of asserting both its own internally developed and acquired patents and those of other companies with which it works in partnership. Most recently, it has introduced a series of best practices to which it has committed in its licensing negotiations and which have helped to differentiate it in an NPE sector where even the most responsible operators are tarnished by the actions of others.

According to CEO John Lindgren, 2014 was another record year for Conversant in revenue terms. The business also got off to a strong start in 2015, signing two large licensing deals in the semiconductor sector, including one that was the largest that the firm has closed. “There are still quite a few reasonable players in the semiconductor industry that won’t take the chance of having a litigation result go against them,” Lindgren observes. He also claims that Conversant benefits in licensing negotiations from its best practices and a commitment not to pursue a litigation-led approach.

The strategy also helps Conversant to pick up companies which are looking for a firm to partner with to help monetise their intellectual property. “We believe you shouldn’t use litigation first unless the other party has shown a clear track record of being difficult or litigious,” Lindgren says.

Having started life as a semiconductor technology business (when it was called Mosaid Technologies), Conversant spun off its tech arm in the first half of 2015 to focus solely on its licensing business. Lindgren says that the company’s investors were keen for it to focus on patent licensing and not on riskier, more costly product development. Even in today’s tougher licensing conditions, Conversant has the experience and know-how to prosper. (RL)

Ashley Keller

Rewards through patience

Ashely Keller is the co-founder of Gerchen Keller Capital, the world’s largest investment adviser focused on legal and regulatory risk. At only two years old, the litigation fund has already exceeded $800 million and established itself as a leading backer of patent cases. “Our investors appreciate that there is a lack of correlation between patent cases and other risk asset classes,” explains Keller of his firm’s interest in intellectual property. “Similarly, they appreciate that we can construct a portfolio in which each individual patent investment opportunity has little correlation with other patent investments on our book.”

As a former partner at litigation boutique Bartlit Beck Herman Palenchar & Scott – and a past law clerk of Judge Posner at the US Court of Appeals for the Seventh Circuit and Justice Kennedy at the US Supreme Court – Keller has an intimate understanding of patent jurisprudence and the impact it is having on the market. This knowledge gives Gerchen Keller’s investors a level of assurance that their money is in safe hands. “Patent opportunities require a specialised set of skills that are finely tuned to separate the wheat from the chaff,” states Keller. “And with all due respect to others, we have built the best patent underwriting team in the business.”

The role of that team is to size up each patent investment opportunity based on three basic principles: infringement, validity and damages. “For Gerchen Keller, these elements have to line up perfectly in order for us to commit capital to an opportunity,” states Keller, “because there is such uncertainty in the patent market in the wake of recent judicial decisions and some of the legislative reform being considered in Congress.”

This uncertainty has meant that patent litigation is a riskier proposition than it has been in the recent past. Consequently, fewer capital providers are prepared to back patent cases and support those that are looking to monetise their IP assets, but lack the resources to do so alone. However, Keller is positive that – despite the challenges – the US patent market remains fertile: “It is certainly more difficult for investors than it was five years ago. But I still see lots of good innovations patented in the US and, if you have patience, those high-quality innovations will be rewarded if people are infringing them.”

Looking ahead to 2020, Keller predicts that patent owners will be increasingly dependent on services such as those provided by his firm. “Recent judicial decisions have made it easier to shift fees, and if the proposed legislative reform passes I think we will see a pretty dramatic increase in the incidence of fee shifting,” he states. “This in turn will increase the need for a risk partner like us.” (SJC)

Toshimoto Mitomo

Sony’s steady hand

As Japanese tech giant Sony has had its fair share of ups and downs over the past decade, senior management has sought to address years of financial losses and a bloated corporate structure with reforms, restructurings, divestitures and acquisitions.

Someone who has been with Sony throughout this transitional period – and who has played a key role in this initiative – is Toshimoto Mitomo. Having served in various IP management roles at the company, in 2013 Mitomo was named senior vice president and corporate executive responsible for intellectual property, signifying the importance that the company now attaches to its IP assets and their value creation potential. First and foremost, however, Mitomo’s role is to ensure that Sony’s IP strategy is aligned with the company’s product and service businesses. “Although Sony is known as one of a few Asian operating companies that have an active IP licensing programme and Sony generates sizeable IP licensing revenues, IP licensing is not the company’s main focus,” he says. “Sony has always been a consumer electronics manufacturer with massive R&D projects, and we use IP to support our main business.”

Mitomo has been central to many of the decisions that have seen Sony sell off or spin out existing parts of the business that did not marry up with its planned future product offerings. “Intellectual property is one of the most important assets to evaluate when we consider selling a business,” he explains. “We manage IP from a broader corporate viewpoint to determine what kind of strategy makes the most sense to Sony as a whole. Sony has a large IP portfolio and a lot of patents are valuable to multiple business units. Therefore, Sony’s IP strategy is to provide maximum value to the spun-out business as well as the other Sony business units that remain under Sony.”

Similarly, Mitomo’s team have been involved in patent-only sales where such transactions are deemed to make good strategic sense. “We review Sony’s IP portfolio from time to time to make sure it aligns with the company’s business directions, and if we find misalignments we consider selling those patents to outside entities which value and want to acquire them,” he says. “When we sell our patents, we take into consideration the economic value of such sales, who will buy such patents and the impact that selling such portfolio might have on the industry.”

The flipside of these divestitures has been acquisitions of patent portfolios and whole companies that can help Sony to break into new target markets – as well as deep-dive analysis of its existing IP assets to identify potential value creation opportunities. “We constantly review our very large patent portfolio to see whether it continues to align with Sony’s business direction and whether we can expand the value of our patents to new business areas,” says Mitomo. “This is because there is a great deal of convergence of technology areas due to the integration of cloud-based services, Internet of Things and other fields where there have been technological advances.” He adds that Sony also brings in patents from external sources to keep its portfolio “evergreen” and to support business models which evolve from time to time: “As part of our normal IP practice, we acquire patents from outside of Sony if we find patents that complement our business direction and strengthen Sony’s total IP portfolio value.”

With such an extensive patent portfolio to work with, Sony looks to have plenty of opportunities to generate revenues and launch new businesses as it presses forward with its reorganisation plans. “Sony has a long history of licensing its patents under reasonable terms and conditions to enable the market to have access to certain technological innovations, and we plan to continue to do that,” says Mitomo. “But while generating licensing revenue is important for us, we are more focused on enabling new markets with new technologies and the IP function is an important element in making that happen.” (JE)

Jean-Charles Hourcade

The convert who can

Jean-Charles Hourcade is a convert: having never worked in the public sector before being asked by the French government and Caisse des Dépôts et Consignations to establish France Brevets, he is now absolutely convinced of the value of sovereign patent funds. “I think France is most certainly benefiting from the initiative,” he states, “and I would welcome the introduction of similar funds in other European countries, although I don’t see that there is sufficient political will for that to happen in the near future.”

Much of the political will where patents are concerned has recently been directed towards the establishment of a single European patent system. However, now that the introduction of the Unified Patent Court (UPC) is nigh, there are concerns that it will make Europe a more appealing venue for trolls. “I believe that these fears are totally unfounded and that the UPC will be very good for Europe,” counters Hourcade. “Trolling is rooted in legal practices that are not and will never be present in Europe – such as juries, complicated court systems and forum shopping”.

There are those who would accuse Hourcade himself of creating a state-backed patent troll in France Brevets. However, he strongly rebuts this, emphasising that he is motivated by a desire to help the innovation ecosystem to become more efficient and IP aware. As such, the next stage of development for the firm will see an increased focus on the front end of the patent lifecycle. “We have a track record in the enforcement and protection of rights and it’s now time for us to educate clients about using IP to leverage and protect the freedom of their operations,” he explains. Hourcade also aims to educate French banking institutions about the value of intellectual property with the hope of easing access to IP-backed lending and providing better financing conditions.

Securing a fair deal for small and medium-sized enterprises is the primary objective of France Brevets, most of whose clients are small entities pursuing suits against powerhouses. However, this is becoming increasingly difficult to achieve due to a worrying trend, claims Hourcade: “A growing number of very large companies are refusing all licensing requests because they know that the cost and complexity of litigation will deter a significant number of patent holders, and they are prepared to risk losing one case rather than signing 10 licensing agreements.” This, he explains, makes having amicable licensing discussions more difficult than it was in the past. “This situation is a consequence of patent trolling, but these corporations must recognise that France Brevets is not a troll – we are both realistic and open for reasonable discussions – and at the same time that we are prepared to follow through to litigation,” states Hourcade. “So let’s have a discussion now rather than wasting a lot of time and money.” (SJC)

Ramzi Haidamus

An offer too good to refuse

For Ramzi Haidamus, the chance to head the newly created Nokia Technologies – the arm of the Finnish telecoms giant charged with developing new products and overseeing its patent licensing business – was in many ways the perfect opportunity. After leaving Dolby Laboratories, where he had most recently served in a chief operating officer-level role, Haidamus decided to take two years off to recharge his batteries; the offer to become president of Nokia Technologies, however, was so appealing that he cut short his sabbatical by six months and returned to work to help determine the direction of this crucial part of the Finnish company’s business.

“It’s truly rare when someone says, ‘Here’s a clean sheet of paper – write the new strategy and execute,’” explains Haidamus. “That’s a dream come true for any executive who has an entrepreneurial element in their blood.” Since taking over in September 2014, Haidamus has driven the focus on developing new, potentially market-disrupting technologies, ultimately deciding to concentrate on two areas: digital media and digital health. The focus on the former has already led to the announcement of a new product, a virtual reality camera called Ozo, which was unveiled in July.

As Haidamus is quick to point out, Nokia Technologies is a technology and innovation business, not a standalone IP licensing company. But in assuming his new post, he has landed one of the most influential positions in patents, with a significant opportunity to build annual licensing revenues. Part of that growth may well come from a change of approach centred on what Haidamus describes as “changing our posture from a defensive posture to more of a monetisation posture”. He has also encouraged the business to explore licensing opportunities in new geographical markets and in sectors beyond Nokia’s mobile core.

The patent business, now headed by Ilkka Rahnasto – a Haidamus appointment from Nokia’s central legal team – provides Nokia Technologies with the revenue stream to develop, manufacture, sell and license new inventions. Few in the tech world have the same kind of opportunity to lead and influence as Nokia Technologies’ new head. (RL)

Eran Zur

The money man

Eran Zur launched the IP investment group at Fortress in 2013 and has been doing deals ever since, with both NPEs and operating companies.

How would you assess your progress since you joined Fortress? What are the main challenges that you have faced?

We have made significant progress in getting our message out. As a result, more and more companies are now realising that collateralising their IP portfolio is a viable alternative to enforcement and sale, and a realistic option when considering debt financing.

Our initial challenge was to reacquaint the market with the notion that patents are assets per se, and that they can be leveraged. When we started providing debt solutions, most companies were unaware that they could use their patent portfolio as collateral for debt financing. Indeed, even companies that were aggressively exploring portfolio monetisation viewed their only options as selling or enforcing their portfolios.

We also had to answer the concerns of potential borrowers that our debt offering was an ‘end run’ by which we would end up acquiring their patents and they would lose control over the assets. After years of aggregators and arbitrage players buying patents cheaply only to extract a higher value for their own benefit, most companies were understandably suspicious of any financial transaction that involved patents.

Another major hurdle was overcoming misplaced – and mispriced – market valuation expectations. Such expectations had been unrealistically set by various consulting firms providing valuation numbers based on statistical quantitative approaches rather than actual qualitative and substantive reviews of the patents.

How many opportunities that you actively consider ultimately turn into deals?

Once an opportunity has been put through our underwriting process and we can confirm that the patents are valuable, we have a lot of internal flexibility to build a deal around them. As a result, we have a high conversion ratio for high-quality assets.

You have closed a number of deals with NPEs; how would you assess the condition of the NPE market?

There are different kinds of enforcement entity. Some have enough quality patents to use as collateral for debt financing. Nevertheless, all such entities are facing a negative political climate. Accordingly, entities that maintain the quick arbitrage model with weak patents will not, in my opinion, survive the recent political and judicial changes. On the other hand, well-capitalised monetisation entities with superior valuation models and a willingness to engage in drawn-out legal battles may not only survive, but thrive.

Because of some key court decisions and the ongoing debate around patent reform in Washington DC, considerable uncertainty is hanging over the US patent market. How does that affect you?

Uncertainties, unknowns and risk are part of any investment. Assuming that the end result of the patent reform is not to completely devalue patents – or better said – to divorce patent claims coverage from real economy goods and services patents cover, we do not expect to be adversely affected by the recent and proposed changes.

Looking forward, where do you see the main opportunities for growth?

Intellectual property in general, and specifically patents, will eventually be considered as assets per se and we expect corresponding increases in sophistication around their accounting and transactional rules. The main opportunities for growth will come by accurately identifying and defining a set of universal metrics for patent valuation – a standard, if you will – and providing alternatives to monetisation that don’t involve the courts while incentivising and rewarding innovation. (RL)

Laura Quatela 

World-class dealmaking

It is hard to think of anyone in the IP market who has had a busier five years than Laura Quatela. First at Kodak, and then at Alcatel and Technicolor, she has been involved in some of the biggest deals going at the very highest level. 

How did you get into the IP field?

As a general lawyer at Eastman Kodak, I did an internship with the chief financial officer to get a finance background. When I came back to the legal department, I was offered an IP job focusing on licensing; I had reservations because I lacked a technology background, but by building the right team we were able to bring in $4 billion in five years. It was a steep learning curve and a wild ride at Kodak, and I enjoyed it immensely.

Part of that wild ride was, presumably, Kodak’s bankruptcy. What role did you play in that process?

Our products and services businesses were increasingly challenged by digitisation. We were supplementing business revenue with licensing revenue, and it wasn’t sustainable. Our licensing targets had become tougher and required litigation to achieve meaningful settlements. At the time of bankruptcy, I was chief operating officer of the company and president of the consumer businesses, and was one of a handful of executives who took Eastman Kodak through the process.

After leaving Kodak, you established Quatela Lynch Intellectual Property. How do you balance your position there with your role at Alcatel-Lucent and what is your role in Alcatel’s sale to Nokia?

The Quatela Lynch business model assumes that we have an ‘anchor client’ and currently that is Alcatel-Lucent. We were brought in as advisers to focus on the monetisation efforts of the company and to ensure that the structure of the organisation supported those efforts. The CEO felt it was important that we have an executive presence, so I am a non-employee executive officer of Alcatel-Lucent, reporting to the CEO. 

My team and I had protracted negotiations with Nokia during our Kodak days and we developed a great working relationship with them. So we’ve been in a good position to collaborate with Nokia, as well as to get Alcatel-Lucent ready for acquisition. It has been very exciting and something we didn’t expect at all when we took on the engagement.

What are your plans once the acquisition closes?

At the moment, we are focused on delivering a very well-run organisation and set of IP assets at Alcatel-Lucent, so that the transition into Nokia can be seamless. What happens after that remains to be seen – let’s talk again in the spring!

You are also on the board of Technicolor. What does that role entail?

I was brought in to Technicolor at the time when BPI France, the French public investment bank and an investor in the company, was increasingly focused on protecting and leveraging the IP assets of French companies. As a board member, I look after those interests, ensuring that the company’s IP efforts are progressing smoothly and the right team is in place. I also chair the company’s strategy committee. Every three to five years, Technicolor formally reviews and refreshes its strategic plan; we have recently announced the plan to take us through to 2020 and have received very positive shareholder support for it, so we’re marching forward and wasting no time. Technicolor agreed at the end of July to acquire Cisco’s connected devices division and to enter a strategic partnership to develop and deliver next-generation solutions for the connected home focused on video, broadband and Internet of Things services, including a long-term patent cross-licence between the companies. 

Looking at the broader picture, what is your take on the patent market today and how do you think it will develop?

Three things stand out to me. First, I believe that the most meaningful patent transactions are occurring privately, between operating companies. Second, Chinese companies are rapidly acquiring assets and building portfolios to enable them to compete in foreign markets. Third, I am seeing exciting new talent coming up in the industry. 

Are there many women among this emerging talent? And why do you think there are still so few women in top monetisation and patent positions?

Research labs have traditionally been male dominated and therefore the technologists that emerge from these labs into IP business roles are much more likely to be men. However, I certainly think this is changing. I am seeing many more women with excellent preparation for these roles and I hope that they will become more visible. I would encourage any woman interested in this field to get finance training as, unless you can speak the language of profit and loss, you are unlikely to qualify for a top IP role. (SJC)

Jim Skippen

Bowing out

Back in July, NPE WiLan announced that Jim Skippen would be stepping down after nine years as CEO. During his tenure, he masterminded the transformation of WiLan from a struggling operating company to one of the patent monetisation market’s most formidable players.

When you joined WiLan, it owned few patents and was not focused on monetisation as a business model. How and why did this change?

WiLan at that time was really on its last legs. It was a failed product company that owned a handful of promising patents, but had no employees, revenues or cash in the bank, so it was risky. At that time I felt that WiLan, as a public shell with a handful of valuable patents, was a good vehicle to get a patent licensing business going.

At the beginning of the rebirth of WiLan, we focused on getting our patents licensed and on raising money when the stock market was receptive, which in turn gave us the ability to continue to build our patent and cash war chests.

One thing I really believe is that in patent licensing, it is critical to sign licences. I almost never subscribe to the view that you hold out for the last dollar. Some companies that have failed, I believe, made the mistake of holding out for too much money for their patents.

Why did you believe that patent monetisation was the right direction for WiLan to head in? Do those same reasons still stand true today?

Patent monetisation was definitely the right direction for WiLan. The truth is that it was probably the only direction. The company by that point had completely run out of money and was not selling its products. It was technically bankrupt, but still held a few patents. There was no other option.

WiLan was founded in 1992 and had never had a cash-flow positive year up until 2006, when we changed the model. Since then, every one of the subsequent years has been cash-flow positive. The company became one of the most significant public technology companies in Canada. It became part of the Toronto Stock Exchange Composite Index. It is still part of the S&P/TSX Canadian Dividend Aristocrats Index.

One of the key moments in the past year was the purchase of the former Qimonda portfolio. What were the driving factors behind this acquisition – particularly in light of recent suggestions from you that the company would be moving away from large-scale purchases?

For us, the Qimonda patent purchase made sense as an outright acquisition. We have had a war chest of cash for a while and we were always willing to deploy some of that if the circumstances warranted it.

I think if Infineon had been willing to transfer the Qimonda portfolio for only a revenue share, we would have considered that; however, Infineon was really trying to raise money with the portfolio. It was our understanding that competing bids for the portfolio were for cash upfront, so to be competitive we needed to offer cash upfront as well.

The fact that Samsung was willing to take a non-exclusive licence to the portfolio at the time of purchase helped to make it a lower-risk deal for us and made it much easier to pay cash upfront.

WiLan seems to have had particular success among NPEs in partnering with Japanese corporates to help them license and assert their patents. Why do you think this is?

Recently we have acquired two portfolios from Panasonic, two portfolios from Rohm and one portfolio from Funai. All except one of these portfolios involved no money upfront, so all of these companies are relying on our ability to license patents in order to get the expected value from these portfolios.

I think there are a number of reasons why we are able to conclude these types of deal with major Japanese companies. One is our track record: we have generated hundreds of licences from third-party portfolios from many different technology areas, so we have demonstrated our competence repeatedly. Another is that we are well capitalised with a large, stable team. Another factor that some find attractive is that we have an ongoing R&D effort. So we are not just lawyers or investors monetising patents; we are active in the engineering area. (JE)

John Amster

The more they stay the same

To RPX CEO John Amster, any suggestion that the defensive patent aggregator’s success in making the patent system more benign for its members is somehow undermining its raison d’etre simply doesn’t add up. “This is a big, steady state problem,” he says of the patent assertion threat that companies continue to face. “It’s driven by capital which is in the hands of people whose business is to buy patents and assert them, and that’s not going away.”

That said, RPX has played a pivotal role in providing members with a large degree of protection from assertions. It has also enjoyed a number of recent successes both in growing its business and in neutralising threats to its 200-plus members.

At the end of 2014, it masterminded what was undoubtedly the patent deal of the year, acquiring the Rockstar portfolio which had been the subject of a bitterly contested auction in 2011. To close the $900 million transaction, RPX put up a chunk of its own money, but also brought together a group of 36 tech companies – including Cisco and Google – which helped to finance the deal by taking licences to the portfolio.

Bringing that kind of deal to close presents multiple challenges, but perhaps the greatest, suggests Amster, was convincing all those involved that they wouldn’t get everything they wanted. As the recent debates over patent reform in Washington DC have shown, in this market that can be a tough sell.

While the Rockstar transaction was very much in keeping with RPX’s strategy, the company has also been continuing its push into new areas such as insurance. Amster maintains that this has been a natural step: “We always felt that one of the things missing in the patent market was insurance. It’s a cornerstone of every asset group out there.”

More recently, RPX made a $5 million debt and equity investment in digital security company Tyfone, the first of its kind for the patent business. “I’d put that deal in the more opportunistic bucket,” says Amster, adding that it is unclear whether others will follow. Perhaps more than anything, the move demonstrates that if parts of RPX’s business do slow down, it is always prepared to explore new avenues for growth. Under Amster, that flexibility will likely remain a hallmark. (RL)

Allen Lo

The busiest team in patents

Since joining Google from Juniper Networks in 2012, Allen Lo has slowly made his mark on the search giant’s patent group. In such a titanic company, with a sprawling portfolio and a complex web of interests in the patent market, Lo – who is deputy general counsel for patents and patent litigation – is quick to credit his team for much of the group’s success. However, he himself has played a crucial role in reorganising and expanding Google’s patent function – for instance, introducing a much greater emphasis on data analysis in portfolio management.

He has also overseen a series of recent initiatives focused on many of Google’s priorities, such as improving patent quality and neutralising the threat of NPE litigation. In the first half of 2015 the search giant announced the Patent Purchase Promotion, designed to give patent owners the chance to sell their assets to Google; and the Patent Starter Programme, which offered 50 start-ups two free Google patents and encouraged membership of the License on Transfer Network (LOTNet). As well as the direct dividends they yielded, these initiatives gave Google – with its high-powered analytics tools – detailed insight into what is out there that may cause future problems or present new opportunities.

Meanwhile, a revamped Google Patents, launched in early summer, gave users an improved platform through which to search for prior art. The company has also inked major cross-licensing deals with the likes of Cisco, LG, Samsung and Verizon, and secured a licence to the Rockstar patents as part of the deal which saw their purchase by RPX. When you also consider the 2014 launch of LOTNet, which aims to give members increased protection from NPE attacks and which Google played a central role in establishing, it is clear that no other company has been as busy in the patent market. And while he cannot be involved in every day-to-day decision around each project, Lo is committed to setting the right tone and establishing the ideal platform for these initiatives to thrive.

“A lot of my role is at the outset, or what I would describe as making sure that we have created the environment to allow these ideas to come up and help facilitate a certain amount of that discussion and try to foster a culture of risk following,” he explains.

This in turn has informed a far more creative approach to how Google uses its portfolio. Rather than seeing it as a purely defensive tool to ward off threats of litigation or as an asset to be monetised and add to the bottom line, Lo has encouraged a different mindset.

“There are a lot of areas where we could be more aggressive in terms of assertion of our patents or around monetisation and those kinds of things,” he reflects. “We’ve kicked around lots of ideas and in the end we want to make sure that all of these things that we’ve launched are consistent with what we believe to be the right thing – not only good for Google, but also good for what we would want other companies to be doing as well.” So each project is a way of leveraging the company’s vast portfolio and its standing within the tech industry to help promote Google’s vision of the patent system.

However, for some in the market, Google is typically the first name that comes to mind when asked which players are seen as attempting to undermine the US patent system. This is most often in the context of the ongoing debate around patent reform in Washington DC, where the company has been one of the keenest advocates of new legislation.

While doubts are growing as to whether anything will be approved in the current Congress, Lo insists that a consensus can still be reached. “If there’s a willingness among companies to engage in that discussion, to reach an agreement or solution that everyone is satisfied with, then I am confident that we can pass something this year,” he remarks. “If there’s not that willingness, then that reduces the chances.”

Overall, it seems hard to dispute that Lo’s tenure has given the Google patent group a far more influential profile. He concedes that he is unsure whether the team’s recent efforts have changed external perceptions, but he aims to ensure that the market knows what the company stands for.

“My hope is that by engaging more with other participants in the industry, others at least know what our positions are,” he says. “I think perhaps in the past there have been some questions about what Google’s interests are, what our motivations are. What I’d like to be able to do – not just through our words, but through our actions – is to make it clearer where we’re coming from, what we’re hoping to do.” For Google under Lo, it has definitely been a case of actions speaking louder than words. (RL)