The IP personalities of 2015, part two
Yesterday, we revealed the first five of our IP personalities of 2015. Today, in alphabetical order, we name the final five. Remember - we define a “personality” in very broad terms. You don’t have to be a human being or even a single identifiable entity to qualify - basically the term encompasses whatever we want it to encompass; it’s all about who and what caught our eye during the year. With that in mind, here goes:
David Kappos – Last year, legislative patent reform in the US stalled in Congress. As discussed in yesterday’s blog, one of the reasons for this was the IPR petitions filed by Kyle Bass and Erich Spangenberg against patents owned by life sciences companies. But it was not the only one. The other very noticeable aspect of the process during 2015 was how much more organised those opposed to the Innovation Act had become. Their lobbying efforts were far more extensive, they kicked in far earlier and, most importantly, they were far more effective than they had been during 2013, a year that culminated in the House voting overwhelmingly in favour of Bob Goodlatte’s proposed legislation. Among the most persuasive and persistent voices in the No camp last year was David Kappos, the former Director of the USPTO and now a partner at law firm Cravath Swaine & Moore. Having steered the America Invents Act onto the statute books while in government, Kappos is very familiar with how the legislative process works, knows who to speak to and can get meetings others can’t. What’s more, if an Obama-appointed USPTO Director is against a piece of patent legislation, that carries weight. The reasons for Kappos’s sudden departure from the agency have never been fully explained, but one thing is clear: he could not have carried on in the role given the Obama Administration’s current stance on reform. Whether it was Kappos or the White House that realised this first is something we may never find out.
Qualcomm – It was a year bookended by major developments in China for Qualcomm, and one that saw plenty of action in between. In the end, the business probably ended 2015 in a much better position than it had begun it, though there may be shadows on the horizon. In February, the company announced that in order to end an investigation by Chinese anti-trust authorities it had agreed to pay a $975 million fine and make changes to its licensing policies in the country. Throughout the rest of the year, Qualcomm sought to agree new licensing deals with individual Chinese companies, a process that took longer than expected and had a negative impact on income. But as the holiday season approached, the news got better; agreements were struck with Xiaomi and then Tianyu, Haier and QiKu. On the standards front, the company made its displeasure at the IEEE’s patent policy change very clear, but then seemed to have found a way round them. Most important of all, though, following shareholder agitation, the company’s board looked at whether it would be a good idea to split into two businesses – one focused on production, the other on licensing. In December, it was announced that the idea had been rejected. So, plain sailing from here on in? Well, not really. The challenge of securing sustained growth remains, while further anti-trust worries in Asia could prove bothersome and the threat of the legislative patent reform in the US the company has lobbied so hard against is still there.
Patrick Racz – When Smartflash LLC was awarded over $530 million by a Texas jury that found Apple had infringed three of its patents, the cries of troll were as loud as they were predictable. Here was a business owned by Channel islands-based Patrick Racz that did not make a product, but had taken on and defeated one of the biggest companies in the world. It was unforgiveable. That Apple may have hastened its own demise and that Racz may actually have had a valid case did not compute – he was a troll and deserved all the abuse he got. Except, of course, he didn’t. No-one does. Indeed, it turns out that Racz has a very interesting story to tell and one that does not put Apple in the best of lights. Despite the major boost he received in February, Racz has a long way to go before he can declare victory. In July, the jury award was set aside, while at the PTAB Smartflash is facing multiple challenges to the patents it has asserted against Apple and other big tech companies. In 2015, Racz showed that despite everything it is still possible for little guys to win patent trials against huge multinationals in the US. In 2016 we may find out whether it is still possible for them to finally prevail. If Racz does win, many will see it as just another troll successfully exploiting a broken patent system. If he loses, others will regard it as one more validation of the efficient infringement business model.
Jim Skippen – Times are tough for NPEs and being the CEO of one that is publicly-quoted must often seem like a thankless task. So when Jim Skippen stated that he was to stand down after nine years in charge at WiLAN it did not come as a huge surprise. Much more of a shock was the announcement a few months later that the firm’s board had persuaded him to change his mind and that he was going to stay on for at least another three years. Although like others in the sector Skippen has sometimes struggled to get investors to understand the patent licensing business model, he has undoubtedly done a tremendous job for WiLAN, most recently building strong relationships with several major Japanese companies and overseeing the acquisition of two major patent portfolios – one from Qimonda and the other from Freescale – in moves that have considerably increased the size and diversity of the WiLAN portfolio. Above all else, Skippen is a dealmaker who places more emphasis on getting an agreement done and dusted than in extracting top dollar from every negotiation. As he explained in an interview with IAM last autumn: “It is often better to sign a deal when you are starting for less money than you really expect or want. This is because in the long run the collateral benefits will more than make up for any shortfall in the actual deal proceeds.” In today’s challenging NPE climate, this is not only the pragmatic approach, it’s the right one.
Tsinghua Holdings – As everyone knows, the Chinese are on a journey that they hope will take the country from being the world’s manufacturing centre to its innovation hub. Part of the process can be seen in the huge numbers of patent applications being submitted to the State Intellectual Property Office and increasing use of the PCT by major domestic technology companies, but the other part of the equation is acquisition – the mantra being that if you cannot build it, just buy it instead. During 2015, Tsinghua Holdings – the mainly state-funded investment vehicle of Beijing’s Tsinghua University - was among the most prominent of China’s technology M&A players and did a couple of deals that had significant IP angles. In May its affiliate Unisplendour agreed to the $2.3 billion acquisition of a majority stake in H3C, a company that was formed out of a merger between H3C Technologies and Hewlett-Packard’s China-based server, storage and technology services businesses. Then in October, another affiliate, Tsinghua Unigroup, paid $3.78 billion for a 15% equity stake in US hard disk drive maker Western Digital. Both deals would have been trumped had Unigroup’s reported $23 billion attempt to acquire US chip-making giant Micron come to fruition, but it was apparently stymied by American national security concerns. No matter, we are likely to be hearing much more from Tsinghua Holdings and its various offshoots in the years to come.