Top players of the global game

Top players of the global game

The fourth annual IAM Market Makers listing reflects an environment which is becoming more focused on operating companies and increasingly international. Those named in this year’s top 40 are striking more innovative deals across more industries than ever before

If you want to know how much the global IP market has changed over the last few years, just take a look at the inaugural IAM Market Makers ranking published in issue 66, back in July 2014. The United States was absolutely dominant, being home to 29 individuals on the list; Europe provided the base for six and Asia a mere five. Among the types of entity represented were 15 operating companies, 14 – yes 14 – non-practising entities (NPEs) and aggregators, and seven funds and institutional investors. Fast-forward to this year’s listing and it is a very different story: the number of individuals based in Asian entities has more than doubled, while US representation is down; operating companies are forging ahead, NPEs are dropping back and there are hardly any representatives from the world of finance.

For market observers, none of this will come as much of a surprise. Thanks to Alice and other US Supreme Court decisions affecting eligibility, as well as the rise of the Patent Trial and Appeal Board (PTAB), the climate in the United States has changed dramatically, just as companies in Japan, China and Korea have become a lot more focused on patent acquisitions and IP value creation generally. Some things do remain the same, though: while Europe may have become more of a centre for assertion, engagement in the IP market among the continent’s corporates continues to lag (though one European company which would have been represented in this year’s rankings – Philips – is not there thanks to the very recent departure of chief IP officer Brian Hinman).

The IAM Market Makers listing identifies 40 individuals who – in the opinion of the IAM editorial team – are driving the global IP market. These are the people who we believe are doing or facilitating the most patent-based transactions or are involved in the most interesting deals – ones which set precedents, challenge established ways of doing things and generally blaze a trail that others will follow.

We make our decisions based on our own observations and what we have been told in the countless conversations we have with market participants and service providers each and every week. Of course, IP deal making is as opaque a business activity as you can imagine, so it is quite possible that people we have never heard of are doing amazing things under the radar. If that is the case, they will not feature on the following pages – but we would love to know about them for next year.

For our 2017 feature, we have made a slight change to the way in which we present information, with fewer one-on-one interviews and more overviews of specific market developments. This has given us the opportunity to focus on a few important trends, including the growing overlap between antitrust and standard-essential, fair, reasonable and non-discriminatory (FRAND) based transactions, and the increasing emphasis some are placing on innovative, patent-plus deals.

Obviously not everyone will agree with our selections, let alone the order in which they appear. Past experience tells us that some people might even get a little angry when they see what we have done. However, please accept our good faith: the following is the product of many long debates among the team, frequent emailing and any number of calls. We first sat down to discuss who we should feature in May. The list was not finalised until September – and even then circumstances (in other words, big-name corporate departures) forced a couple of significant last-minute changes.

So, having got our excuses out of the way, here is the list.


4Michael Friedman, Hilco Global

As someone who marries considerable Wall Street experience with an in-depth understanding of the patent market, Michael Friedman is part of a select group. Joining Hilco Global in early 2016 has clearly given him the kind of platform he had been craving, with the financial powerhouse providing the perfect entrée into mid-market corporate America, as well as access to a balance sheet to potentially make his own investments. Friedman now heads Hilco IP Merchant Banking, which was formed in November 2016 following the hire from Marquis IP of John Veschi and his team of former Rockstar colleagues. With considerable experience in the telecommunications sector and a growing profile in the semiconductor space, this new financial player numbers BlackBerry among its clients.


3Joe Siino, Via Licensing

It has been a year of significant progress for Via Licensing, led by its president, Joe Siino. The business has ramped up the focus on its long-term evolution (LTE) patent pool for fourth-generation mobile technology, hiring Taraneh Maghamé from Apple in January to head expansion. It then announced new royalty rates for the pool in an attempt to attract more low-volume manufacturers. That followed the introduction of a revised royalty structure for its AAC pool for audio compression technology which was designed to benefit domestic manufacturers in emerging markets such as China. Add in a string of new members for the LTE pool – including Lenovo, Conversant and Verizon – and Via’s recent successes suggest that a collective approach to licensing may be key to resolving some of the patent market’s problems.


3Kasim Alfalahi, Marconi/Avanci

As CEO of Internet of Things (IoT) licensing platform Avanci, Kasim Alfalahi is hoping to show that the tried and tested patent pool model can provide an efficient solution to the numerous patent challenges that will arise from the boom in connected devices. The initiative launched with five members (Ericsson, InterDigital, KPN, Qualcomm and ZTE) and the ex-Ericsson chief IP officer has managed to sign up several more in the year since, including Sony, Vodafone, Panasonic and Sharp. Alfalahi also led the young licensing business through a significant restructuring – Avanci, NPE PanOptis and a new entity called the Marconi Group were all brought together under a common holding company in February. Alfalahi leads Marconi, which handles back-office tasks for all three entities. For Avanci, the year ahead will be pivotal. Continuing to grow the network will be a great test for this consummate deal maker.


3Keith Bergelt, Open Invention Network

As the convergence of communication and automotive technologies continues to upend a major global industry, the Open Invention Network (OIN) has stayed ahead of the trend with initiatives designed to protect Automotive Grade Linux as an open source platform for smart cars. Keith Bergelt, who has served as CEO since 2008, has made headway in getting automakers involved in this project, especially in Asia. Toyota recently joined the community as its eighth board member, meaning that it will help to fund OIN’s patent acquisitions going forward. This news capped a four-year period in which the share of Asian members in the OIN community rose from 12% to 22%. Bergelt claims that the alliance is focusing on diversifying its aggregation to include more non-US assets, which should fuel plenty more deals around the world.


3Phil Hartstein, Finjan

Finjan’s recent run of wins demonstrates that companies which make the majority of their revenues from patent licensing can still succeed in tough market conditions. Under CEO Phil Hartstein, the cybersecurity business has enjoyed a string of successes including fighting off sustained attacks against its patents at the PTAB. Licensing agreements have also been put in place with the likes of F5 Networks, Veracode and Sophos, helping the company’s revenues jump by 290% in 2016 to $18.4 million and then hit a record $24.7 million for the first quarter of 2017. With an impressive track record behind them, Hartstein and his team wisely chose to bolster Finjan’s balance sheet, raising just over $15 million in a private placement. The company put some of its new capital to use with the acquisition of a portfolio of cybersecurity patents from IBM, which will cost $8.5 million over five years and almost double Finjan’s IP stockpile. Few in the licensing community can match that kind of recent success.


3Deirdre Leane, Technicolor

Working with a tough taskmaster like Erich Spangenberg is not for the faint hearted, let alone the mediocre, so the fact that Deirdre Leane did this is for so long at IPNav and ended up as president of the firm demonstrates not only her calibre but also her ability to make deals. Appointed vice president of licensing at Paris-based Technicolor in December 2016, Leane found herself thrust into an even more senior position in June when Arvin Patel quit the firm to become chief IP officer at TiVo. Having reported to Patel, she is now in overall charge of the worldwide licensing operation of a company that in 2016 had a spectacular year, producing earnings before interest, tax, depreciation and amortisation of €190 million – a record amount. Given Technicolor’s less than stellar performance in other areas, its licensing operation is becoming ever more important to its future. Leane has a big task on her hands but she is well equipped to get the job done.

Michael Friedman
CEO, Hilco IP Merchant Banking

Barbarians not quite at the gate

Six years ago it seemed to be a question of when not if large financial institutions would descend on the patent sector, establishing specialist groups to pick up deal-making fees from what many saw as a rapidly emerging asset class. In Summer 2011, the auction of assets formerly owned by Nortel raised $4.5 billion as the Rockstar consortium comprising Apple, Blackberry, EMC, Ericsson, Microsoft and Sony emerged victorious from a multi-round bidding war. Google – which had missed out in the bitterly contested auction – turned its attention to Motorola Mobility, handing over $12.5 billion for the US mobile company whose 14,000 patents made it such an appealing target.

It was not just the giants of the smartphone market that were competing for rights. Pre-initial public offering Facebook was also scouting around for assets and would eventually pick up a batch of former AOL grants from Microsoft for $550 million and a portfolio of just under 700 patents from IBM for $83 million. Meanwhile, in the non-practising entity (NPE) sector a handful of public IP companies – including Acacia and VirnetX – were enjoying sky-high valuations as investors waited for the next district court victory to provide a stock market bump.

In short, the patent sector was booming and so the titans of Wall Street might have been expected to dominate the investment and advisory market in the years to come. But, of course, that did not happen. Instead, legislative and legal changes in the United States took their toll on patent values, deal flow slowed and transactions such as Nortel came to be regarded more and more as curious anomalies.

Instead of an explosion of big Wall Street names, the patent market has seen the emergence of a number of smaller, opportunistic players who match IP expertise with deep pockets. Fortress, for instance, has carved out a very profitable niche initially as a debt provider to NPEs such as Inventergy and Marathon Patent Group and, more recently, as a more full-service IP investor.

In the last 12 months the ranks of specialist IP investors and advisers have grown thanks to the entrance of Houlihan Lokey and Hilco Global, two mid-market financial players with global reach and broad investment expertise. Hilco made its move into the space first with the hire of Michael Friedman, formerly of Ocean Tomo and before that with a multi-strategy hedge fund. In November 2016, Friedman added significantly to the platform with the hire of John Veschi and his team at Marquis Technologies, and officially launched Hilco IP Merchant Banking. That was followed at the start of 2017 by Houlihan Lokey snapping up Blackstone IP, the advisory business headed by Elvir Causevic and Edmund Fish which has been working on the disposal of Yahoo!’s portfolio (at the time of going to press this remained unsold).

The new IP groups at both do some similar things in helping patent owners value and monetise their assets, advising on IP-rich M&A and restructuring. Hilco also has significant capital to source its own investments or to back deals alongside its clients.

“From my experience there’s enormous reticence to make bets in intellectual property,” claims Friedman. Institutions, he said, are instead looking for an “Indian guide” to help them understand the underlying assets and the market in general. “I continue to believe that one of the biggest barriers to entry is the enormous gulf between Wall Street’s ability to understand intellectual property and technologists’ and engineers’ ability to explain it to investors,” Friedman adds.

According to Causevic, new opportunities are emerging for the likes of Houlihan as chief IP officers (CIPOs) at major patent-owning operating companies are seeing less of a litigation threat from NPEs and so now have more bandwidth to turn their attention to monetisation. “CIPOs are coming back up for air after years of fighting NPE suits,” he argues. He adds that the improving market conditions have helped his team at Houlihan hit its 2017 target in the first six months of the year. But will others follow? According to Causevic he spoke to other interested investors before settling on his team’s current home, which suggests that there are still interested players out there. “I think people will wait to see how we go,” he says.

3BJ Watrous, Apple

Apple may not push the envelope in IP value creation as far and as publicly as rivals such as Google and Microsoft, but it still plays a crucial role in the market. Under chief IP counsel BJ Watrous it has significantly bolstered its own patenting efforts, receiving around 2,000 grants annually for the last few years; while it occasionally makes news in the secondary market, such as its 2017 acquisition of a small portfolio of assets previously owned by failed Korean smartphone maker Pantech. Then there is its role as one of the most powerful licensees in the market, including recent deals with the likes of Nokia and InterDigital. The terms of transactions such as these often provide valuable benchmarks for the rest of the patent licensing market.


3Joo Sup Kim, LG Electronics

Under the leadership of Joo Sup Kim, vice president of its IP centre, LG Electronics has become one of the most formidable Korean patent owners. This past year, the company took a big step forward in its drive to extract value from its portfolio, launching its first-ever US patent litigation campaign as a lead plaintiff. Even before the recent suit against phone maker Blu Products, Kim had been monetising the firm’s vast array of rights for some time. LGE has carried out deals in recent years with NPEs including Evolved Wireless, France Brevets and PanOptis, as well as operating companies such as Microsoft, Ericsson and Amazon. Whether or not LG Electronics begins to monetise more of its portfolio in-house, expect Kim to remain a central mover in the global transactions market.


3Erich Spangenberg, Hermes Patents, SK14 Advisors SARL

It has been a busy year for the IPNav founder. Having become Marathon Patent Group’s director of licensing and acquisitions in May 2016, he stood down from the role in August 2017; this after launching yet another patent venture in March, teaming up with former France Brevets head of licensing Pascal Asselot to unveil Paris-based Hermes Patents, a new IP strategy firm. To top things off, Spangenberg is managing director at SK14 Advisors SARL, an organisation about which little has been said publicly. It will not be the first time that Spangenberg has worn multiple hats but his latest moves signal that he still sees plenty of opportunity in the IP deals space – especially outside the United States. Given his track record, it will surprise no one if one or more of his current vehicles undertake major IP transactions over the year to come.

Shigeharu Yoshii
CEO, IP Bridge

A banner year for a changing sovereign patent fund

If IP Bridge manages to make the transition from sovereign patent fund to private entity – a shift that CEO Shigeharu Yoshii claims has been part of the plan all along – then the past year might be recalled as a major turning point. When the fund was established in 2013, making it the last of the major state-sponsored patent entities to emerge, little in the way of proof of concept had been produced by counterparts in France and South Korea. However, the deals inked in this, IP Bridge’s fourth year, look like important validation for the business.

When IP Bridge started asserting patents in late 2015, it was hardly wading into a friendly enforcement environment. What cases we knew about were all in the United States and, unsurprisingly, the fund was hit by a slew of inter partes reviews – with the identity of the petitioners revealing that many of the biggest names in semiconductors were extremely keen to eliminate certain rights in its portfolio.

So it was a big deal in June, when the company announced a global settlement and licence agreement with Broadcom for its semiconductor portfolio. What made the deal stand out was that at the time of the announcement, there were more than 20 pending inter partes reviews on the patents-in-suit. Around the same time, Patent Trial and Appeal Board records indicated that the Japanese fund had probably reached an agreement with ARM as well (the two sides settled an inter partes review dispute), not long after the UK chip designer came under Japanese management. While terms were not disclosed in either case, IP Bridge executives were clearly excited about the news.

Perhaps more significant was the announcement of the first licence to IP Bridge’s wireless standard-essential patent (SEP) portfolio. Yoshii describes the counterparty in the agreement as a major US multinational, which makes it the first publicised deal the fund has made in the absence of some kind of litigation. “That particular company realised it’s better to do an agreement as soon as possible,” remarks Yoshii. The fund’s fair, reasonable, and non-discriminatory negotiating strategy is very balanced, he suggests: “We were not seeking extraordinary damages; at the same time, we secured enough profit distribution back to the original patent holder.”

Taken together, the deals demonstrate that there is a place for entities like IP Bridge in Japan’s patent market, Yoshii explains: “We have a strong belief that there is a business necessity for firms like ours. Some companies hold good patents, but cannot monetise them themselves for various reasons.” Even as its licensing efforts pick up, he points out that the fund is still in growth mode and looking to add assets to a stock of around 700 semiconductor patents and 800 wireless SEPs.

Deals announced this June have already resulted in approaches from new potential partners, according to Yoshii. Intriguingly, not all of these are Japanese corporates. The fund’s client list is currently composed of domestic blue-chips including Panasonic, NEC, Fujitsu and Hitachi. But as IP Bridge contemplates a future in which it is more than a sovereign fund, Yoshii says that it is open to diversifying the kind of organisation it works with. “Not only Japanese companies but companies outside of Japan are interested in our business, and we believe patents should be utilised regardless of nationality,” he declares.

In addition, IP Bridge’s experience in China could be a selling point for prospective partners. Yoshii confirms that it litigated against Broadcom not only in the United States, as was previously known, but also in China. That may have been decisive in the US company agreeing to settle even as a large number of inter partes reviews were in motion. “Though litigation is our last resort, we don’t limit the jurisdiction to the United States,” confirms Yoshii. “If we have a good case in China, we will choose China.” However, while he acknowledges that US litigation can be costly and time consuming, he maintains that the strength of IP Bridge’s US portfolio means that it cannot ignore enforcement options there.

Yoshii is quick to say that patent licensing is only one of two core offerings at IP Bridge, alongside the company’s innovation business. It has announced several new initiatives focused on the Association of Southeast Asian Nations region – convinced that Japanese start-ups with quality intellectual property and technology can generate significant returns by tapping into business opportunities. There are also lessons to be learned from dynamic markets such as Singapore and Malaysia, Yoshii adds: “Already they have a good innovation ecosystem compared with Tokyo.”

The upcoming year will be pivotal for IP Bridge’s licensing efforts. If it can build on the momentum it has picked up this summer, it will have established an Asian non-practising entity model which may well generate imitators across the region.

3Didier Patry, France Brevets

As Europe’s only sovereign patent fund, France Brevets has been a trailblazer since it was established in 2011, with investments of €50 million each by the French government and the state-owned Caisse des Dépôts. Appointed as the firm’s CEO in June 2016, Didier Patry brought with him long experience of working in intellectual property, having held senior in-house positions at both EATON and HP. Over the last year, he has overseen the development of additional funds and helped to reconfigure the firm’s focus towards acting as a third-party IP adviser to technology-rich French businesses via the Patent Factory programme. This is headed up by ex-Infineon executive Malcolm Meeks and involves France Brevets managing and paying for all filing and prosecution activities in return for a 50% share of any future licensing revenues.


3Jim Skippen, Quarterhill

This year WiLAN went through a major restructuring which saw it acquire a $47 million IoT operating business and change its name to Quarterhill. Jim Skippen, the man who has run the Canadian NPE since 2006, stepped aside in favour of an interim CEO in April, but has stayed on as executive chairman. However, even as the corporate overhaul proceeded, Skippen remained an active player in the deals market. Following late 2016 patent acquisitions from Kodak and Global Foundries, management signalled that it would begin to cull the portfolio, which could result in yet more transactions. However, this move to diversify signals that the IP business will no longer be the main driver of the company’s growth. As of now, Skippen – who in 2015 announced and then reversed a decision to leave WiLAN – continues to be involved with the patent licensing side of the business as it seeks a permanent new head. How active he remains as chairman will depend on how much value he feels he can offer.


2Joe Chernesky, Kudelski/NAGRA

The deal making never seems to stop at Kudelski and NAGRA, where former Intellectual Ventures (IV) licensing big hitter Joe Chernesky operates as senior vice president of intellectual property and innovation. In a stellar 2016 – and armed with a portfolio of over 5,000 patents – Chernesky and his team agreed significant transactions with companies including Apple, Verizon, Hulu, Yahoo and RPX; these were followed up in 2017 by further agreements with the likes of ARRIS and Scripps, and a major cross-licensing agreement with AT&T. A particularly eye-catching hook-up occurred in January when NAGRA established a new corporate body with Samsung to license their co-developed TVkey solution to home entertainment industry stakeholders. With an increasing focus on cybersecurity, it looks as if next year will be just as busy.

Jury is still out on China as a life raft for NPEs

In the non-practising entity (NPE) world, China remains a source of both great hope and great uncertainty. It seems that 2017 is the year that several well-known foreign licensing companies have decided to bring cases in venues such as the Beijing IP Court; but while virtually everyone agrees that this is a crucial jurisdiction to watch, NPE executives are split on whether China will ultimately be a hospitable or profitable place to operate.

Erich Spangenberg
Founder, IPNav

The most high-profile recent assertions have been WiLAN’s November 2016 standard-essential patent (SEP) infringement case against Sony and an IP Bridge suit against Broadcom that resulted in a negotiated settlement. The granting of the country’s first-ever SEP-based injunction in a suit filed by Chinese operating company Iwncomm further piqued the interest of major licensors in the telecoms space.

Jim Skippen
Chairman, Quarterhill

However, a few headline cases do not mean that the floodgates are about to open, says IP Nav founder Erich Spangenberg: “The volume isn’t there and I don’t think it will be.” But he does believe that China will produce innovation in terms of how intellectual property is thought about and managed.

Spencer Shen
Chief IP officer, ZTE

Others in the sector point out that interest in China may be driven more by a hostile US environment than by underlying factors in the country itself. “We think the current rise of China is a footnote on the condition of US patent law,” argues Quarterhill chairman Jim Skippen. “It is sad that US IP owners increasingly must look to other jurisdictions to enforce their patent rights. Unlike the United States, which we believe has adopted an increasingly anti-patent stance, at this particular juncture China still seems to have a neutral or balanced position on patents.” He adds that patent owners need to understand that the jury is still out on whether China will be a great jurisdiction for patent cases.

David Pridham, CEO of Dominion Harbor Group, calls China an “exciting jurisdiction for litigation”, and says the contrasts to the United States are hard to ignore. Dominion Harbor recently launched a joint venture with a local Chinese firm, so Pridham and his team have been studying the situation there carefully. “They’re actually trying to streamline a lot of the process and to make it more efficient and more predictable and at the end of the day, like any market, having more predictability is a really good thing,” he observes.

Skippen agrees: “The system seems to be trending towards valuing inventions and patents. Some of the blatant unfairness towards patent holders evident in the US system is missing.” But there were more concrete factors that went into WiLAN’s decision to file a case against Sony in Nanjing, he notes. Among these were very reasonable litigation costs, the size of the market, the ability to get injunctions on exports and the possibility of full contingency arrangements.

Chinese companies are not waiting to see whether foreign NPEs get more prominent in China – they are actively preparing for it. ZTE sees not only that foreign entities are becoming more active, but also that local Chinese ones are beginning to take root. Chief IP officer Spencer Shen points to the government’s efforts to strengthen enforcement and the growing wealth of Chinese companies as two important pull factors. He says that conventional wisdom on the ground is that “there is a firm foundation for NPEs’ successful licensing business in China”.

However, questions remain over how the Chinese government and judicial authorities might react to an influx of cases filed by foreign NPEs. The view in some Chinese companies is that they will be insulated from much of the risk by their nationality, believing that it is highly unlikely that a foreign NPE would seek to enforce against a Chinese business. Many NPE executives seem to agree. Yet when asked about potential policy responses, Shen notes that the Chinese government has left no doubt about its intention to continue strengthening the IP system: “Companies will never invest more to create intellectual property and protect their IP assets without a well-developed IP litigation system and licensing market.”

Indeed, Skippen notes that he has not come across any blatant anti-NPE sentiment in the market: “We are hopeful on balance that the essential issue will be the property right rather than the identity of the party owning the IP right.” Still, he advises NPE executives that there are some unique considerations to be made in this market: “First, it is important to try and gauge the political climate, since that can be a factor in Chinese cases; second, it is important to try to find ways for your company to be a friend to China. Finally, make sure you line up competent, experience counsel and over-prepare at the beginning.”

While Pridham notes that Dominion Harbor has always viewed litigation as an expensive and risky prospect, it may not be long before it follows WiLAN in bringing a China case. The firm has retained Beijing East IP Group in connection with the monetisation of the Kodak portfolio it acquired from Intellectual Ventures in February. “I’d be very surprised if we didn’t have a number of active cases in 12 months if trend lines continue as they’re going right now,” Pridham remarks.

Spangenberg is singing a different tune. “I’ve had an office in Shanghai since 2007,” he notes. “I still don’t understand the market and I don’t think I want to stand out as the leading troll – in fact I know I wouldn’t want to.” But you can be sure that he and many other NPE heads will be carefully observing what becomes of plaintiffs like WiLAN. “Expect the unexpected,” counsels Skippen. “China is still the Wild West.” Or should that be East?

Deirdre Leane
Chief IP Officer, Technicolor

Getting creative with patents

Speak to anyone in the licensing business and they will tell you how hard it is to close large patent deals. That is true in any legal climate, but when things are as tough as current conditions in the United States then getting over the line is particularly tricky. Patent owners and accused infringers both know that even if a plaintiff is successful at district court level, that decision stands every chance of being reversed by the Court of Appeals for the Federal Circuit (CAFC). What is more, any patent owner in possession of a potentially monetisable asset faces a swarm of inter partes reviews as potential deep-pocket targets look to invalidate rights even before they are asserted or to drag out proceedings in order to exhaust a licensor’s finances.

Although there are some indications that conditions are improving, licensing is not for the faint-hearted. However, in the last couple of years some companies have begun to change their strategies, moving from generating value through a simple, royalty-driven approach to structuring deals which include collaborations around specific technologies or which make them part of much broader business relationships.

Among recent trailblazers is InterDigital, which in January 2013 finalised an agreement with Sony to set up a joint venture called Convida Wireless focused on communications in the Internet of Things and other connectivity areas. This was then expanded in 2015 to include fifth-generation wireless technology. In one of its most recent licensing deals with Huawei, which was announced in 2016, the company also revealed that it was looking at joint R&D efforts with the Chinese tech giant.

“A straight, plain patent licensing deal is hard to do,” admits InterDigital CEO and top 40 Market Maker Bill Merritt. “It’s harder to do compared with a licence that has other things in it such as research or access to other patents. I love to do more customised deals because they are stickier and you get to know the customer better so when the renewal comes up you’ve actually found things in the market that’re going to be of interest to them.”

Microsoft has also sought ways of using its stockpile of intellectual property more collaboratively and as a way of ensuring that its products are on as many devices as possible. In May 2016, for instance, it announced a broad-based deal with Xiaomi in which the two agreed a cross-licence and the Chinese smartphone maker acquired patents from the Windows giant and agreed to pre-load a suite of Microsoft applications onto several of its devices. This year, the company launched its Azure IP Advantage programme, using its patents to attract customers to its Azure cloud-based services; and in March its new auto licensing programme kicked-off with the announcement of a deal with Toyota which saw the Japanese company license-in parent underpinning ley aspects of connected car technology.

However, these collaborative approaches do not work in every case and can run into problems as a result of corporate bureaucracies. “We’ve always seen less interest in this than I thought we would,” admits Intellectual Ventures CEO and co-founder Nathan Myhrvold. “We do deals like that in other parts of our business such as global health where we make them a lot, and with some of our own inventions, but many companies are just not set up to bring in outside technology.” Instead, he says, they prefer outside products. “There are exceptions, but a typical scenario is that we’ll show a company something and they’ll say, ‘well that’s great but we need it to be much further along’,” Myhrvold explains.

Currently, then, the emphasis for many remains on closing traditional royalty-bearing licences. According to Technicolor chief IP officer Deirdre Leane, deals are possible without resorting to the courtroom. “They are still very achievable from a soft campaign, but you need to have done your homework,” she insists. But despite a more collaborative mood among some, according to Phil Hartstein, CEO of cybersecurity business Finjan, an in-built reluctance on the part of many businesses to take a licence persists. “For all we’ve gone through I thought there would have been an inflection point where the nuisance rebuttal arguments would have gone away, but we’re still hearing the same things as we did four years ago,” he comments. Licensing’s entente cordiale still has some way to go.

2Spencer Shen, ZTE

In seven years with ZTE, Spencer Shen has helped to direct one of the world’s fastest-growing patent portfolios. Since 2016, he has served as the company’s chief IP officer, making him one of relatively few IP executives in China to use that job title. Shen has steered the group in a progressive direction. Emulating other major regional patent players, ZTE has an independent subsidiary – Inteq Technologies – which handles licensing, patent sales and IP consulting within the company. In February 2017, ZTE took the significant step of making a patent deal with a third-party NPE when it transferred a portfolio of patents to Longhorn IP, a firm set up by former Acacia executives.


2Laura Quatela, Lenovo

The chief legal officer position at Lenovo is just the latest high-profile post Laura Quatela has been appointed to in the last decade. As head of intellectual property and then president of Kodak, she was intimately involved in the 2012 patent sale which enabled the company to escape bankruptcy. From Kodak, Quatela moved to Alcatel-Lucent where she reported directly to the CEO and played a big role in the mechanics of the company’s merger with Nokia. She hooked up with Lenovo in October 2016 and although she is responsible for all aspects of legal affairs, given the importance of freedom to operate and other issues to the company’s success she no doubt keeps a close eye on the IP function run by Ira Blumberg. Then there is the small matter of her directorship at Technicolor, where she chairs the board’s strategy committee; not to mention the IP consultancy Quatela Lynch McCurdy, which she runs alongside one-time Kodak colleague Tim Lynch and former RPX vice presdient Dan McCurdy.


2John LaBarre, Google

Allen Lo’s August move from Google to Facebook had, at the time of going to press, left a significant vacuum at the top of the search giant’s patent group. However, as head of patent transactions, John LaBarre has played a prominent part in what has been, in recent years, one of the most innovative operations in the market. Few other companies have looked to use their patent portfolios as creatively as Google in defensive terms and for wider IP value creation. Most recently, it introduced PAX – a new cross-licence agreement for users of the Android network including Samsung Electronics, LG Electronics, Foxconn and HTC. With Lo’s replacement still to be confirmed, senior figures within the patent group such as LaBarre have a crucial role to play in ensuring Google’s ongoing success.


25 Kurt Brasch, Uber

After joining Uber in September 2016, Kurt Brasch was charged with quickly bolstering the ride-sharing company’s embryonic patent portfolio. Following stints at Google and Motorola Mobility, Brasch has clearly demonstrated his worth to his new employer by notching up deals with AT&T for a portfolio of more than 70 US patents and with HP Enterprise for more than 20 US assets. In the process, Uber’s portfolio has grown to a few hundred. Brasch, who is senior manager for patents at the company, also borrowed from his previous employer’s playbook by rolling out a version of Google’s Patent Purchase Promotion, which he helped to develop when he was at the search giant. Under Brasch’s direction few companies have been as aggressive as Uber when it comes to taking advantage of good conditions for patent buyers.


2Allen Lo, Facebook

Allen Lo’s departure from Google to head up the IP function at Facebook is undoubtedly one of the highest-profile moves of the last 12 months. As deputy general counsel for patents at Google, Lo led a team that was among the most innovative in IP value creation. Facebook has nothing like the same IP profile, but it has recently been growing its patenting efforts – receiving almost 450 US grants in 2016 – and has started using inter partes reviews more frequently to challenge others’ patents. With Lo at the helm, the social media powerhouse should become a more prominent player in the market.

Joo Sup Kim
Vice president and head, IP Centre, LG Electronics

Asian corporates cast a wary eye over major US legal developments

East Asian tech companies are among the most frequent users of the US patent system. As traditionally high-volume defendants, they have been among the biggest beneficiaries of patent reforms. However, of late, some big court decisions have had a mixed impact on their strategies.

Toshimoto Mitomo
Corporate executive, Sony

Non-practising entity (NPE) assertion has always been one of the top US risk factors for Asian corporates and there seems to be agreement that the threat has abated significantly in recent years. “We are seeing a decline in NPE litigation, but it hasn’t disappeared,” explains Toshimoto Mitomo, corporate executive at Sony. He credits inter partes reviews and Alice with making it more difficult for certain entities to assert. LG Electronics vice president and IP centre head Joo Sup Kim agrees and adds another factor to the NPE decline: “The manufacturing industry has changed its attitude regarding litigation,” he observes, saying that such companies “will not hesitate to litigate very aggressively in defending their products and business from plaintiffs”.

When it comes to the latest setback for the NPE sector – the Supreme Court decision in TC Heartland v Kraft Food Group – it is something of a question mark for foreign companies. “It is not clear what impact TC Heartland will have as to filings against foreign defendants,” notes Mitomo, as the new venue rules apply to suits against domestic companies only. Based on early trends, observes Kim, there may be some indirect impact on Asian companies tied to the location of their subsidiaries. Since local entities have the right to have cases transferred to their own state, some plaintiffs are filing cases against the parent company there too, in order to simplify things.

The question of whether the Supreme Court might strike down the inter partes review process in the upcoming Oil States Energy Services case is a significant one for companies that have been big users – and targets – of the system. “Sony has been very successful in the Patent Trial and Appeal Board by invalidating claims of those asserting invalid patents against Sony and so inter partes reviews have been an important component of our IP strategy,” Mitomo explains. He argues that if that tool is taken away by the nation’s top court, Sony will just have to adjust its strategy, just as it has done many times before in response to events. Kim does not hazard a guess as to the outcome of Oil States, but he sees the pendulum swinging back in favour of patent owners regardless: “In the next five years, I absolutely think the IP litigation trend will go back to a pro-patent era again.”

The Trump administration’s trade agenda has raised some eyebrows in the IP community as well. That is certainly true in China, which is the target of a US Trade Representative Section 301 investigation for various IP policies which are alleged to have created trade barriers. However, wariness is not limited to Chinese corporates. Noting the administration’s desire to raise trade issues, Kim notes that the International Trade Commission and other IP-related tools may come into play, which “could create some pressure on foreign countries”.

But perhaps the biggest recent US development in terms of day-to-day impact has been the ruling in Impression Products Inc v Lexmark International Inc. Kim says that it is already creating a lot of work re-negotiating licences in light of the new exhaustion doctrine. “Most licensors have to at minimum amend or correct relevant clauses or else lose a lot of income,” he observes. “For foreign companies, this case has been much bigger than TC Heartland.”

Looking outside the United States at the global risk balance, Mitomo ranks Chinese litigation as one of the top trends to watch, alongside European issues including the possible development of the Unified Patent Court regime, how standard-essential patents are valued in the United Kingdom post-Unwired Planet, as well as in other jurisdictions, and the continued prominence of Germany. Kim believes that as a result of Brexit “Europe will become a much smaller IP market”. The one to watch, he says, is in Asia: “I think the next IP market is India, it’s growing very fast, so overall the importance of Asia will grow much bigger.”

2David Pridham, Dominion Harbor

Since breaking away from IPNav in 2013, the team at Dominion Harbor, led by CEO David Pridham, has become one of the leaders in the IP advisory and investment space. Having made a series of small purchases from IV in the second half of 2016, in early 2017 the firm made its biggest acquisition yet by picking up around 4,000 former Kodak patents from the firm. Pridham’s next move was arguably even more ambitious, as Dominion entered into a partnership with investment firm Hawkeye Ventures to launch a $50 million patent-buying fund. Dominion will provide the nous to pick the patents and then monetise them, while Hawkeye stumps up much of the cash. The deal underlines how Pridham and his team have become major players in the value creation market in under four years.


2Joe Sommer, AT&T

There has been a major uptick in patent monetisation activity at AT&T over the last year. Managing a team of highly experienced professionals, vice president of IP Joe Sommer is deal making on the back of one of the world’s biggest and highest-quality telecoms-related portfolios. It has proved attractive to many, not only with regard to licensing (AT&T runs several well-regarded patent pools) but also, and increasingly, on the sales front. In January, Uber picked up a package of 66 patents and 10 applications; while the US Patent and Trademark Office database records other transfers to the likes of Nuance Communications, Google, Huawei and E Ink. There is little indication that this rate of activity is set to drop. In fact, if anything, it could speed up – Asia, in particular, looks as if it could be a happy hunting ground.


2Shigeharu Yoshii, IP Bridge

It has been a banner year for IP Bridge. The settlements it announced with Broadcom, ARM and an unnamed but major US corporate are important milestones for the company’s IP monetisation business, about a year after it initiated its first litigation campaigns. That has got to be gratifying for president and CEO Shigeharu Yoshii, who has led the patent aggregator since its foundation in 2013. The deals are an important proof of concept for the sovereign patent fund model, even as IP Bridge continues its planned advance to a private-led structure. The test will be whether these results can attract more clients to the firm, including from outside the Japanese market.


2Russell Binns, Allied Security Trust

This year defensive patent aggregator Allied Security Trust (AST) has been celebrating its 10th birthday and building on the success of a seminal 2016, during which it oversaw the ground-breaking Industry Patent Purchase Programme (IP3) on behalf of a range of big companies, including Google, IBM, Microsoft and Ford. As AST’s CEO for just over three years, Russell Binns has played a big part in developing the kinds of relationships with all sides in the IP market that not only enabled IP3, but also led to the launch of a follow-up version this year covering patents reading on technology relating to the IoT, wireless, content delivery and video distribution, networking and communications. This ran for a fixed period between August 1 and September 30; it will be interesting to see whether the results exceed those achieved by the IP3 last year, when 56 offers to purchase 107 active patent filings were made.

Kurt Brasch
Patent Transactions Lead, Uber

Slowly but surely — a patent deals market in transition

For the last several years it has undoubtedly been a buyer’s market out there. Patent transactions have been deeply affected by legal and legislative changes in the United States (still by far the largest market for deals), such as the advent of inter partes reviews and the lack of clarity around Section 101 of the US patent statute concerning patent-eligible subject matter. While rights holders have seen the value of their assets plummet as a result of this uncertainty, it does mean that there are potential bargains to be had for canny buyers.

“It’s sort of like the real estate market in 2008/2009,” Dominion Harbor CEO David Pridham comments. “It’s incredibly undervalued right now and there are huge portfolios that people won’t even touch because of 101 concerns or other risks. Our view is if you cut through all that stuff there’s a lot out there to invest in.” Dominion Harbor, a non-practising entity (NPE) which was formed by a breakaway of former IPNav executives in 2013, is among those spying opportunities in the market.

In early 2017 it was behind one of headline deals of the year when it picked up a portfolio of around 4,000 former Kodak patents from Intellectual Ventures (IV). That deal was notable not only for the number of assets that changed hands but also because it highlighted IV’s switch from being one of the most active acquirers on the secondary market to one of the most prominent sellers as it looked to slim down its huge portfolio. The transaction was also typical of many others in the market in that IV retained an interest in the assets: it is set to receive a portion of future profits from Dominion’s monetisation efforts in the kind of privateering-style deal that has become increasingly popular in the last five years as buyers have grown reluctant to part with a lot of cash upfront.

Dominion followed up its Kodak purchase by announcing in July that it was partnering with Hawkeye Ventures to invest $50 million in patent portfolios worldwide, suggesting that investors with little experience of patents are now following the sector closely.

However, it is not just opportunistic investors and NPEs who are seeing the upside in a sluggish deals market. Conversations with senior in-house IP executives and advisers suggest, anecdotally at least, that more operating companies are actively looking for opportunities.

No one in an operating company has a better view of this than Uber’s Kurt Brasch. The former Google and Motorola executive was hired in September 2016 and since then his track record of building the ride-sharing company’s embryonic portfolio has earned him a place in our top 40. Deals with HP Enterprise and AT&T have added around 100 patents alone, while Brasch has also taken a concept he helped develop at Google to launch UP3, a platform designed to give patent owners a quick and efficient way of selling assets to the company.

Brasch admits that it is still a buyers’ market, but believes that things are starting to turn. “You can feel it’s changing a little, I believe the market bottomed out in 2016,” he explains. He points to some judicial decisions as being more pro-patent owner, but concedes that the signs of a change are part of a general sense that he has, rather than hard evidence.

It should be stressed that any signs of an uptick in patent values and general optimism in the market are particularly fragile and that there is still a lot of caution. “What people don’t understand is that whenever you’re in a cyclical decline it feels like a secular decline,” comments IPNav founder Erich Spangenberg, now head of Hermes Patents and SK14 Advisors. Like many experienced patent monetisers, Spangenberg is increasingly looking to new deal opportunities in Europe and Asia, particularly China, where there is a thirst for assets and interest in new methods of IP value creation. “Can you imagine if there wasn’t Europe or Asia right now?” he asks. “We’d all be on Xanax.”

A big moment in the global FRAND environment as China moves centre stage

There are few professionals among this year’s Market Makers who remain unaffected by the pressing policy and legal questions posed by standard-essential patents (SEPs) and fair, reasonable and non-discriminatory (FRAND) licensing terms. Whether major implementers or key contributors towards standards (or both), corporate executives need to be more careful than ever in how they conduct negotiations over SEPs. For those in the transactions market, court rulings and regulatory pronouncements in a range of jurisdictions can significantly affect the value of FRAND-encumbered assets.

However, at a recent symposium on FRAND matters hosted by China’s Ministry of Commerce in Beijing, it was clear that there are some emerging elements of consensus across global competition regimes on issues such as injunctions. Key differences on patent policy remain when it comes to the major standards development organisations (SDOs), yet standards development is carrying on apace. Looking to the year ahead, many of the most significant issues appear to be concentrated in major Asian jurisdictions, including China.

When it comes to SDOs themselves, the most significant recent change was the Institute of Electrical and Electronics Engineers Standards Association’s (IEEE-SA’s) 2015 patent policy update. The revisions – which addressed issues including reasonable royalties, injunction availability and reciprocal licensing – generated pushback from a vocal segment of the industry; companies including Qualcomm, Ericsson and Nokia all said they would not license their SEPs under the new guidelines.

While there were concerns about whether the dispute would slow the development of standards, IEEE-SA director Dave Ringle claims that two years on, there is no evidence that this has happened. The organisation has received 150 letters of assurance accepting the revised guidelines, as well as 16 which declined to do so. Nevertheless, Ringle says that an increase in new work items in 2015 and 2016 shows that predictions of major disruption and delay to standards-setting activity were unfounded. “SDOs cannot avoid their own responsibilities and shift the burden to the courts,” Ringle argues. “It is much better to have clear, upfront rules.”

So far, other major standards-setting bodies have not followed IEEE-SA’s lead. For example, Bardo Schettini Gherardini, the director for legal affairs for the European Committee for Standardisation (CEN) and the European Committee for Electrotechnical Standardisation (CENELEC), observes that while patent density in standards has certainly increased, his organisation sees no major problems that would call for a complete overhaul of patent policies. One area where Schettini Gerardini acknowledged that CEN and CENELEC are willing to take additional steps is in increasing the organisations’ transparency. The European Commission is due to publish a communication on “SEPs for Europe’s digitalized economy” by the end of 2017, in which SEP declaration transparency will be a key theme. The document will also seek to clarify issues surrounding FRAND valuation and SEP enforcement.

As for courts and regulators, there does seem to be some international convergence. According to Microsoft’s general manager of standards strategy and policy Amy Marasco: “We are seeing a consensus emerge that seeking an injunction against a willing licensee over a FRAND-encumbered patent can violate competition law.” Regulators are concerned about the seeking, rather than mere obtaining, of injunctive relief, Marsaco explains, because they believe that it tilts the balance of power in negotiations. In addition to major court cases in the United States and Europe, Marasco points to guidelines issued by competition watchdogs in Japan, Korea and Canada, all of which essentially hold that bringing action for injunction against a party willing to take a truly FRAND licence can violate the law.

Of course, serious disagreement persists among large corporates at different ends of the developer-implementer spectrum. As Apple’s senior legal counsel for China Steve Wang explains, the company has major reservations about the way that SEP portfolios are currently licensed. One of the sharpest differences with major licensors is over the proper royalty base. “To use end product price will lead to royalty inflation and discrimination, a violation of the FRAND principle,” he argues. On the other side of the debate – one that is playing out now in venues including the Beijing IP Court – Qualcomm senior vice president Mark Snyder points to the explosion of Chinese smartphone makers onto the global stage, most of which are licensed by Qualcomm. It’s clear, maintains Snyder, that “there’s no holdup in our industry; it’s flourishing”.

It is fitting that many of these debates, including Apple’s current dispute with Qualcomm, are playing out, at least in part, in China. Yonghua Zhang, director of the Department of Treaty and Law at the State IP Office (SIPO), notes that companies are engaged in fierce public argument over FRAND issues. “SEP holders and implementers need to work together to make money, but now they’re fighting,” Zhang remarks. “Both sides’ unhappiness stems from systemic issues,” he says.

SIPO, along with China’s major regulators – the National Development and Reform Commission, the State Administration for Industry and Commerce and the Ministry of Commerce – is currently developing a final version of new antitrust and IP guidelines that could have a significant global impact. Zhang believes that future efforts should strive to balance the interests not just of standards developers and implementers, but also of consumers and seek to create a “common community of interests”. Interestingly, Zhang describes the reformed IEEE-SA policy as “a step in the right direction” and also says that he will be watching with interest to see whether Avanci can successfully bring the patent pool model to the Internet of Things.

Chinese litigation has become a key flashpoint in global SEP disputes. This is especially true after the Beijing IP Court issued the country’s first SEP-based injunction in March. That case featured Chinese standards developer Iwncomm, which sought to halt sales of Sony mobile devices. However, other companies including Dutch telecom Royal KPN are lining up to enforce their patents in this venue, too.

Beijing IP Court presiding judge Ying Jiang argues that one clear message from the court is that “FRAND does not equal free”. In weighing the appropriateness of an injunction, parties’ behaviour in negotiations is the top factor. “Our major concern is to protect the companies that have not engaged in misconduct,” Ying says. She states that the Beijing IP Court’s recent SEP rulings should be “a way to encourage people to have good and willing negotiations”. It is clear from speaking to companies in China that very high-level FRAND negotiations are playing out in the country right now. Whether they produce deals or disputes, the effects will be global.

1Leslie Ware, PanOptis Patent Management

The first half of 2017 saw a big court victory for Leslie Ware and PanOptis Patent Management, the NPE that he heads as CEO. In 2016 PanOptis acquired Unwired Planet, which not only gave Ware and his team a large portfolio of former Ericsson assets to monetise, but also control of a key case against Huawei in London’s High Court over the FRAND licensing of several standard-essential patents (SEPs). The court’s decision, which largely went in Unwired Planet’s favour, has provided greater clarity on the responsibilities of licensors and licensees in FRAND licensing. As well as overseeing PanOptis, Ware is one of the founders of the Marconi group, a new platform for a collection of licensing programmes, which has only strengthened his influence in the IP value creation space.


1Yoshiaki Tokuda, Panasonic

Yoshiaki Tokuda has big shoes to fill as the new director of Panasonic’s IP Centre. Tokuda, who previously helmed the centre’s strategy department, took the top job in March 2017 when former chief Hideo Toyoda stepped down to an advisory role. Tokuda has been with the company since 1989 and spent 16 of those years negotiating IP deals and contracts for its mobile phone division. That experience should prepare him well for leading an IP monetisation effort which has already had a big impact on the mobile space. Panasonic’s most recent move was to become a member of the Avanci network – a major piece of the puzzle for the new IoT patent pool. We will see whether Tokuda’s tenure includes the kinds of collaborations with NPEs that have made Panasonic stand out from the crowd in Japan.


1YP Jou, Wispro/ScienBiziP/MiiCs & Partners

The former general counsel at Foxconn, YP Jou, is still very much the maestro when it comes to directing the Taiwanese contract manufacturer’s IP operations. In addition to the IP firm Wispro, Jou leads ScienBiziP – a spin-out comprising Foxconn’s former in-house team – as well as MiiCs & Partners, a monetisation entity which counts the original equipment manufacturer as a major client. Jou’s influence could be seen after Foxconn (also known as Hon Hai Precision Industry) took over Sharp, as the Japanese display maker’s IP function was spun off into a new independent entity called ScienBiziP Japan. MiiCs & Partners has remained one of the most active players on the patent transactions market and is currently looking to sell parts of the Sharp portfolio. Now spanning Taiwan, mainland China and Japan, this three-headed IP player is a major force in Asia.


1Marty Roberts, RPX

The last 12 months have been particularly turbulent for leading defensive patent aggregator RPX. In February co-founder and long-time CEO John Amster, who had pushed hard for a take-private deal, left the business over a disagreement with the board of directors about delisting the firm. He was replaced by general counsel Marty Roberts, who had previously done the same job at Linden Lab and before that was deputy general counsel of eBay. Roberts takes over what remains one of the leading players in the transactions market, offering companies a way of reducing risks from NPE litigation. As the volume of disputes in the United States has fallen significantly in the last year, with private equity bidders rumoured to be circling, he has a key role to play in RPX’s ongoing success.


1Kenji Kondo, Toyota

No company looms larger on the automotive landscape than Toyota Motor. Kenji Kondo, president and general manager for intellectual property, is charged with making sure its IP strategy befits its status as the world’s biggest automaker. Toyota tops the auto sector patent filing charts by a significant margin; and during Kondo’s tenure it has taken the lead among companies figuring out what the future of patent licensing will look like in the era of connected and smart cars. Most notably, Toyota was Microsoft’s first partner in the latter’s new automotive licensing programme. Kondo is also a major industry voice in Japan’s policy environment as president of the Japan Intellectual Property Association and a member of the planning committee of the Japanese Cabinet’s IP Strategy Headquarters.


1Toshimoto Mitomo, Sony

With a role that straddles IP strategy and mid to long-term business development, Toshimoto Mitomo of Sony is one of relatively few Japanese heads of intellectual property whose remit extends to overall company strategy. Splitting his time between New York and Tokyo, he has kept Sony positioned as a leading player on both sides of the licensing equation – not least through its status as a founding member of the Avanci network and one of IV’s key investors. Mitomo is equally comfortable discussing Sony’s latest start-up acquisition and its landmark SEP dispute in China from this year – a great distillation of what a modern IP executive needs to be.


1Bill Coughlin, Ford

As president and CEO of Ford Global Technologies, Bill Coughlin has arguably the biggest influence of any patent executive in the auto sector. His team helps to support the car giant’s position as one the most forward-thinking players in the market, with a commitment to produce a high-volume, fully autonomous vehicle for ride sharing by 2021. In patent terms, Coughlin has steered Ford to be a regular supporter of cross-industry initiatives designed to bring more efficiency into the sector, such as AST’s IP3 patent-buying programme. He has also overseen the company’s rise to become one of the top patent filers in the United States – in 2016 it received 1,530 new grants, the second most of any car company – ensuring that Ford has freedom to operate in a rapidly evolving auto sector.


1Paul Lin, Xiaomi

Paul Lin, vice president of IP strategy at Xiaomi, brought a substantial team with him when he joined the company in 2016 after working closely with it for several years at Zhigu. Since then, Lin has played a pivotal role in negotiating two major hybrid licensing deals – a 2016 agreement with Microsoft and another with Nokia in July 2017. Senior vice president Wang Xiang, who still oversees the three IP teams within the smartphone company (strategy, legal and prosecution), has taken on a bigger role in the past year, succeeding Hugo Barra as the head of Xiaomi’s international business (he is also still in charge of the supply chain and strategic cooperations). With so much on his plate, he is fortunate to have such a capable lieutenant as Lin.

Nathan Myhrvold
Co-founder and CEO, Intellectual Ventures

The reinvention of Intellectual Ventures

As one of the trailblazers in the modern IP value creation market, Intellectual Ventures (IV) has long been the subject of fascination. For the first 15 years of its life the Bellevue, Washington state-based pioneer has amassed cash for three patent-buying funds and a stockpile of rights more typically associated with multinational operating companies (according to its website IV has owned, at one point or another, 70,000 patents around the world).

However, like many non-practising entities (NPEs), IV has suffered in recent years from adverse legislative and judicial winds in the United States, meaning that its attempts at monetisation through litigation have been challenged in inter partes reviews or invalidated in the courts. As the climate has become tougher, it has also become clear that some IV investors have changed their attitudes about the merits of pumping cash into a huge monetisation vehicle.

Faced with those conditions, in the last 12 months IV has opted to change tack. It has always been open to selling assets but it has significantly upped its rate of disposals of late and in February this year sold a portfolio of around 4,000 former Kodak assets to Dominion Harbor. That was just one of several deals it has carried out with Dominion – although it was by far the largest – while it has also sold assets to the likes of Equitable IP.

The Kodak deal was followed by an announcement that IV was ending acquisitions by its third and most recent fund, effectively taking the iconic patent accumulator out of the secondary market as a buyer. For a company that has dominated the space for a large part of its existence, it was a highly significant move.

Then, in another surprise announcement, IV revealed that it was reshuffling its management team with a number of senior executives departing, including COO Adriane Brown. That shake-up means that IV’s seven business heads now report to CEO, co-founder and IAM Market Maker Nathan Myhrvold, effectively giving him more day-to-day, hands-on responsibility. Myrhvold plays down the significance of the changes, claiming that “I was hardly twiddling my thumbs before”, and pointing out that he had fairly regular contact with the business heads. However, as more senior figures depart, the former Microsoft chief technology officer has become the one big constant in what remains an extremely potent force.

In many ways that potency has only increased with IV’s beefed-up sales strategy. Many of the patents that the firm has sold have ended up in the hands of assertion vehicles which have quickly turned to the courts to convince recalcitrant licensing targets of the need to talk turkey. IV chief revenue officer Cory Van Arsdale admits that the sales have caused some companies to look again at taking a portfolio licence. “The reaction is that for some it precipitates them to thinking more quickly about whether working with us is going to be more efficient while there are others who are always going to fight,” he comments.

While some potential licensees reconsider their positions, the new sales strategy in part reflects the fact that while IV has built a considerable licensing operation, monetising such a large portfolio is an extremely onerous proposition. As Myhrvold explains: “We have a pretty full plate of things we’re going to be developing with our portfolio which means that if there’s something that’s off that plate and there’s somebody else who can get to it quicker than we’re going to, then yes we should find a way to do a deal.”

The IV head also claims there are some technology areas where others are better placed than it to carry out the heavy lifting, pointing to a 2016 deal through which IV gave Rovi (now TiVo) the right to license patents that relate to over-the-top content technology. Van Arsdale reveals that they are looking at a number of other similar arrangements in what they call “channel deals”.

The series of changes at IV which have come about during a time of intense pressure on patent monetisers is now running up against tentative signs that the market might be starting to improve. In the US Congress pressure to pass more legislation to effectively further weaken patent rights has died down, while some Federal Circuit decisions have helped make recent Supreme Court rulings around patent-eligible subject matter a little less opaque.

“We watch this very closely, as you can imagine, and there’s lots of evidence that it is coming back,” Myhrvold states. “We have some pretty significant deals in progress right now that suggest some of our licensees also see it coming back, otherwise they wouldn’t be doing transactions of that magnitude with us.” But he also sounds a word of caution: “I don’t want to claim that it’s all over and it’s all back and it’s all great, there are still lots of companies who think they don’t have to pay for patents anymore.”

Myhrvold insists that recent developments at the firm do not represent some radical, overnight revolution for IV. It still expects a return on its intellectual property, whether the pendulum swings forcefully towards stronger patent rights or travels in a longer, slower arc. But the new attitude at the pioneering business is clearly that it needs to work smarter to realise a return on its assets and to open up new opportunities.

And might there be a fourth fund at some point in the future? “Sure,” Myhrold replies. “Right now with the pendulum where it is I don’t think it makes sense, but in the future of course that would be a possibility.”

1Seungho Ahn, Samsung Electronics

Strategic M&A moves by Samsung Electronics over the past 12 months have meant that huge IP portfolios are on the move. In September 2016, the Korean company offloaded its printer division – including more than 6,500 patents – to HP. Just two months later, it splashed out $8 billion to acquire Harman, in a deal that gained it around 1,800 US patent assets in the highly competitive automotive technology sector. Moreover, pure IP transactions from the same timeframe suggest that big changes are afoot under the leadership of Seungho Ahn, Samsung Electronics senior vice president and head of the IP centre. In January, the company announced a partnership with the Kudelski Group to license co-developed technology to home entertainment companies. Also this year, a US antitrust lawsuit claimed that the Korean company played a pivotal behind-the-scenes role in financing WiLAN’s 2015 acquisition of the Qimonda portfolio. Samsung is usually thought of as a licensee and defensive patent player, but Ahn’s tenure has done plenty to cast it in a different light.


1Eran Zur, Fortress

Four years since it moved into the IP space, Fortress has clearly established itself as one of the leading debt providers in the market. Under IP finance group head Eran Zur, the giant investor has also expanded its horizons to include portfolio investments and the acquisition of IP-rich companies. However, it is Fortress’s early debt plays which have attracted attention in the last year, as restructuring deals with the NPEs Inventergy and Marathon Patent Group have handed Zur and his team large portfolios of hundreds of patents to monetise. Soon after taking control of the Inventergy assets, Fortress’s assertion vehicle filed infringement lawsuits against Apple and HTC. With deep pockets and considerable knowledge of the market, Fortress has become an even more potent player in the sector under Zur’s leadership. It will be interesting to see how Softbank – which acquired Fortress in early 2017 – gets on with what on the face of it is a very un-Japanese operation.


William LaFontaine, IBM

As general manager, intellectual property at IBM, William LaFontaine has one of the most high-profile jobs in intellectual property. In patent terms Big Blue is perhaps best known for receiving the most US grants every year, with its 2016 total of just over 8,000 new patents placing it around 2,500 ahead of Samsung Electronics in second. That portfolio gives LaFontaine and his team considerable sway in the market, typically on the sell-side, as it has become a popular source of patents for pre-initial public offering tech companies such as Snap and Twitter. As IBM continues to focus its R&D dollars in areas such as cloud computing and the IoT, the company looks set to remain a powerful patent player.


Nathan Myhrvold, Intellectual Ventures

In his capacity as one of the founders of IV, Nathan Myhrvold has been closely associated with the IP value creation market for over 20 years. While IV has made its name as an acquirer of patents for most of its existence, more recently it has been in the headlines for ramping up its rate of sales – including selling a portfolio of 4,000 former Kodak patents to Dominion Harbor – and bringing an end to its buying programme. It has also undergone a management shake-up which now means that the head of each business section reports directly to Myhrvold, who has taken the CEO position. With a patent portfolio that still stretches into the tens of thousands, IV remains a significant player in the monetisation space and will do so for some time yet.


Arvin Patel, TiVo

During his relatively brief time as chief IP officer at Technicolor in 2016, Arvin Patel delivered record-breaking results for the Paris-based company, with licensing revenues coming it at €285 million – well over 60% of the company’s entire earnings. It was, said CEO Frederic Rose, a “fantastic performance by the licensing team”, one that had given him “a lot of confidence for the robustness of our portfolio and the strength and quality of our teams in order to be able to negotiate new deals”. You can only imagine Rose’s reaction, then, when he found out that Patel had accepted an offer by TiVo to jump ship and run its IP function. Tivo has a much bigger operation than Technicolor’s and a board that has publicly committed to growing its licensing business, thus offering the perfect opportunity to make a big splash. It is a chance you can be sure that Patel, an ambitious, creative and top-class deal maker, will seize with both hands.


Bill Merritt, InterDigital

It has been an outstanding 12 months for InterDigital, one of the smaller players in the mobile space but still a technology leader. In September 2016 it announced a licensing deal with Huawei bringing a series of long-running disputes largely to an end. It followed that up in December with another headline settlement with Apple meaning that along with Samsung, InterDigital had the three leading smartphone companies under licence. That gave the business record revenues of $665.9 million in 2016, an increase of 51% from 2015, confirming it as perhaps the best year of Bill Merritt’s time as CEO. With the purchase of sensor business Hillcrest Labs, the company looks increasingly well placed to compete in the IoT sector and to make further acquisitions.


Gustav Brismark, Ericsson

The last few years have been tough going for Ericsson. This is reflected in the company’s licensing returns, which after showing upward growth for a number of years have now begun to dip. Gustav Brismark has been chief IP officer since April 2016 – after having spent most of his working life at the company; and nobody knows its patents and what they read on better. Given the portfolio’s size and widely acknowledged high quality, as well as its potential importance to the emerging IoT and fifth-generation (5G) landscapes, Ericsson will always be a major player in the IP space; Brismark’s task, though, is to develop strategies that will allow it to make the most of what it has in today’s tougher licensing climate. Transparency and pricing flexibility are two ways that he is looking to do this – having gone public with the company’s SEP royalty fee price range for 5G mobile phone networks in March. This should reap dividends in China and other emerging markets over the coming months.


Alex Rogers, Qualcomm

Few if any operating businesses with significant licensing operations currently face as challenging a set of circumstances as Qualcomm. At the start of 2017, after a lengthy investigation, the Federal Trade Commission filed a suit against the giant chipmaker accusing it of anti-competitive practices. That was quickly followed by a claim from Apple which accused Qualcomm of abusing its dominant position in the market for mobile chipsets. As head of Qualcomm Technology Licensing, Rogers is responsible for a part of the business that is much smaller than the other, chip-making half, but which contributes a larger chunk of Qualcomm’s profits. That gives him a key role in ensuring that the company’s licensing business weathers the current storm and holds onto its market share.


Jason Ding, Huawei

Huawei has a knack for winding up in landmark FRAND cases, which puts head of intellectual property Jason Ding at the centre of global SEP developments. The dispute with Unwired Planet in the United Kingdom did not go the Chinese company’s way when the decision came down last April, and Huawei will once again face a test in London’s High Court after a recent suit was filed by Conversant. In China, the lawsuits against Samsung that announced Huawei’s arrival as a patent plaintiff appear to be going in its favour. Outside the courtroom, Ding’s team – commonly cited as China’s best by foreign deal makers – continues to cast a large shadow in the transactions realm. Assignments records show that Huawei bought patents from companies including Hitachi and AT&T last year, as it continues to build one of Asia’s biggest portfolios. The Shenzhen-based business also transferred patents to InterDigital as part of a November 2016 licence agreement; the two sides say that they are exploring co-research opportunities. As Huawei’s smartphone business continues to lead China commercially, it is sure to remain one of the country’s pre-eminent IP players on both the licensor and licensee sides.

Table 2The IAM Market Makers 2016

1.

Erich Andersen, Microsoft

2.

Allen Lo, Google

3.

Jason Ding, Huawei

4.

Mark Kokes, BlackBerry

5.

Erich Spangenberg, Marathon Advisors

6.

Wang Xiang, Xiaomi

7.

Steve Mollenkopf, Qualcomm

8.

Gustav Brismark, Ericsson

9.

Illka Rahnasto, Nokia

10.

Eran Zur, Fortress

11.

Jim Skippen, WiLAN

12.

Edward Jung, Intellectual Ventures

13.

Hideo Toyoda, Panasonic

14.

Bill LaFontaine, IBM

15.

Seungho Ahn, Samsung

16.

Brian Hinman, Philips

17.

William Coughlin, Ford

18.

John Amster, RPX

19.

William Merritt, InterDigital

20.

Toshimoto Mitomo, Sony

21.

Russell Binns, Allied Security Trust

22.

Simon Segars, ARM

23.

YP Jou, Wispro

24.

Kasim Alfalahi, Avanci

25.

Phil Hartstein, Finjan

26.

Keith Bergelt, Open Invention Network

27.

Arvin Patel, Technicolor

28.

Didier Patry, France Brevets

29.

Shigeharu Yoshii, IP Bridge

30.

Courtney Quish, Rovi

31.

BJ Watrous, Apple

32.

Joo Sup Kim, LG Electronics

33.

Ashley Keller, Gerchen Keller Capital

34.

Graziado, Acacia

35.

Masayoshi Son, Softbank

36.

Joe Chernesky, Kudelski

37.

Kwang Jun Kim, Intellectual Discovery

38.

Leslie Ware, PanOptis

39.

Robert Amen, Vector Capital

40.

Billie Chen, Taiwan Semiconductor Manufacturing Corporation

Table 1The IAM Market Makers 2017

1.

Ilkka Rahnasto, Nokia

2.

Erich Andersen, Microsoft

3.

Jason Ding, Huawei

4.

Alex Rogers, Qualcomm

5.

Gustav Brismark, Ericsson

6.

Bill Merritt, InterDigital

7.

Arvin Patel, TiVo

8.

Nathan Myhrvold, Intellectual Ventures

9.

William LaFontaine, IBM

10.

Eran Zur, Fortress

11.

Seungho Ahn, Samsung Electronics

12.

Paul Lin, Xiaomi

13.

Bill Coughlin, Ford

14.

Toshimoto Mitomo, Sony

15.

Kenji Kondo, Toyota

16.

Marty Roberts, RPX

17.

YP Jou, Wispro/ScienBiziP/MiiCs & Partners

18.

Yoshiaki Tokuda, Panasonic

19.

Leslie Ware, Marconi/PanOptis Patent Management

20.

Russell Binns, Allied Security Trust

21.

Shigeharu Yoshii, IP Bridge

22.

Joe Sommer, AT&T

23.

David Pridham, Dominion Harbor

24.

Allen Lo, Facebook

25.

Kurt Brasch, Uber

26.

John LaBarre, Google

27.

Laura Quatela, Lenovo

28.

Spencer Shen, ZTE

29.

Joe Chernesky, Kudelski/NAGRA

30.

Jim Skippen, Quarterhill

31.

Didier Patry, France Brevets

32.

Erich Spangenberg, Hermes Patents, SK14 Advisors SARL

33.

Joo Sup Kim, LG Electronics

34.

BJ Watrous, Apple

35.

Deirdre Leane, Technicolor

36.

Phil Hartstein, Finjan

37.

Keith Bergelt, Open Invention Network

38.

Kasim Alfalahi, Marconi/Avanci

39.

Joe Siino, Via Licensing

40.

Michael Friedman, Hilco Globa

 

Erich Andersen, Microsoft

It has been quite a year for Microsoft’s IP head Erich Andersen. In March 2017 he was promoted to a corporate vice president role, in a clear sign of his rise in status in the three years since he assumed responsibility for running the company’s IP group. In the same month, a deal with Toyota kick-started the company’s new auto licensing programme. Perhaps the standout development for Andersen and his team from the last 12 months, though, was the launch of Microsoft Azure IP Advantage, a programme designed to take advantage of the software giant’s patent strength to offer greater protection to open source technology providers which power the Azure cloud platform – this will be expanded to cover China from October 1. In the highly competitive cloud space where Microsoft is trying to catch market leader Amazon, the new initiative underlines the way in which Andersen and his team are positioning intellectual property to support broader business goals rather than merely looking to secure freedom to operate and extract licensing royalties.


Ilkka Rahnasto, Nokia

Nokia has long been recognised as the owner of one of the leading patent portfolios in the mobile space. While the company’s licensing return has not always fully reflected that, this situation is transforming under Ilkka Rahnasto, head of Nokia Technologies’ patent business. The highlight from the last 12 months was undoubtedly the broad licensing deal announced with Apple in May this year which saw the iPhone maker hand over an upfront licensing payment of $1.7 billion. This was followed by a big-ticket licensing agreement with Xiaomi subsequently described by the Finnish company’s CEO as “a milestone win”. Comments such as this confirm that Rahnasto, licensing chief Eeva Hakoranta and the rest of the patent business team at Nokia are operators of the very highest calibre.

Ilkka Rahnasto
Vice president, Nokia Technologies

A team operating at the very highest level

The Market Makers rules state that only individuals can be named in the listing and that only one person from any given entity can be featured. However, while we have awarded the number one spot for 2017 to Nokia Technologies vice president, Ilkka Rahnasto, he would be the first to insist that he shares this honour with the entire IP team he leads. The group has had one hell of a year, which was rounded off nicely on September 18 with the announcement that an international patent licence arbitration that pitted the Finnish company against LG had ended well for it, with a decision which will boost Nokia’s patent licensing income even further.

Eeva Hakoranta
Head of patent licensing, Nokia Technologies

The LG news followed revelations in Nokia’s 2017 quarter two results, published in July, that Apple had made a one-off payment of $2 billion to it following the worldwide settlement of a dispute between the pair earlier this year and that the tech giant would be making ongoing royalty payments on top of that. Even for a business as cash-rich as the iPhone superpower, that is a serious amount of money.

As the entire IP market knows, Apple fights its corner as hard as anyone; so to be forced – and that is surely the right word here – into handing over such an amount would have been a bitter pill to swallow in Cupertino. On the other hand, at Nokia HQ in Espoo, just outside Helsinki, it would have been viewed as yet another vindication of the major reorganisation the company went through in 2014 which saw the creation of Nokia Technologies and the assignment to it of 30,000 patents, along with a brief to increase the monetary returns that Nokia makes from them. Under Rahnasto, that is exactly what has happened.

This was acknowledged by the company’s CEO Rajiv Suri in comments on the first half of the 2017 financial year, when he referred to “the excellent performance of Nokia Technologies”. To get a one-off $2 billion payment from Apple with more to come was a spectacular result; indeed, it may represent the biggest publicly announced return on a single licensing agreement there has ever been. However, it was not just the Apple deal that has made waves.

Suri also referred to a recently concluded deal with Xiaomi, which saw the two companies announce a business collaboration and a multi-year patent agreement, including a cross-licence to each other’s cellular standard-essential patents and the Xiaomi acquisition of assets from Nokia. Referring to the transaction, Suri described it as “a milestone win with a Chinese smartphone vendor, setting the stage for us to engage further with other vendors in the country”.

For Suri to talk so specifically about the Xiaomi deal and what it may lead to shows how central he believes the activities of Rahnasto, licensing chief Eeva Hakoranta and other team members are to Nokia’s future – and it is undoubtedly the case that striking such an agreement with the fast-growing Chinese smartphone maker, on top of the Apple deal, in a climate that is not conducive to patent owners shows a business team operating at the highest level. As Xiaomi’s Paul Lin told IAM: “The Nokia team is not soft… They are persistent and professional; they understand the key elements well and negotiate hard. Each party did a lot to defend their own interests, and at the end of the day we did a deal that I think both sides can be happy about.”

Most significant of all about the last few months for Nokia is what they promise for the future. The Apple, Xiaomi and LG agreements are not only big news in and of themselves; they also provide major validation for a high-quality portfolio built up over years of heavy investment in R&D, as well as of the strategic approach the company has decided to take to exploiting it. These days, it is a brave business that decides against sitting down to talk when Nokia knocks on the door.

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