In a year of change for the IP market and its further internationalisation, some achievements and developments stood out
There have been few more action-packed IP years than the one just gone, so choosing our IP personalities for 2014 was no easy task. But in the end, we identified a group of individuals and corporations that, for various reasons, really stood out. As always, it’s important to understand that IAM defines a ‘personality’ in very broad terms. You don’t have to be a person to qualify – basically, the term encompasses whatever we want it to encompass and the list is all about who and what caught our eye over the year. In alphabetical order, these are the 12 we selected.
Erich Andersen, Microsoft: He began the year as leader of the business development and evangelism team inside Microsoft’s legal and corporate affairs department, but Erich Andersen ended 2014 as head of the company’s global IP group, having taken over from Horacio Gutiérrez at the start of July. That’s quite a gig to inherit. Under Gutiérrez, Microsoft developed an Android-based licensing programme that now contributes billions of dollars annually to its bottom line. However, with at least 27 companies already signed up to deals and the smartphone wars coming to an end, part of Andersen’s brief may be to begin recalibrating the company’s IP operations, with greater emphasis on areas away from monetisation. The sale of 4,000 Rockstar patents to RPX just before Christmas – in which Andersen was one of the main protagonists – may indicate that this process has already begun.
Ira Blumberg, Lenovo: In 2014 it sometimes felt like the only buyer in town was Chinese tech giant Lenovo. Over the course of the year, it announced deals for a 3,800 portfolio from NEC and a portfolio of 21 patent portfolios from Unwired Planet, and acquired Motorola Mobility from Google (the search giant retained control of most of the Motorola patents) and IBM’s server business. The transactions were a key part of Lenovo’s push into the US and European smartphone markets. Ira Blumberg, vice president of intellectual property, played a key role in convincing senior leadership that a strong patent portfolio was a crucial part of the expansion. Combining its deals with a focus on its own internal patenting means that the Chinese company, and Blumberg in particular, should be prominent fixtures in the patent market for some years to come.
Doug Croxall, Marathon Patent Group: Marathon was the breakout performer in the public IP company (PIPCO) space in 2014. The firm saw its share price soar from around $3 to just under $9; it joined NASDAQ, took control of a number of portfolios from IPNav’s Erich Spangenberg and started to commercialise a new patent analytics tool developed in-house by IPNav. On top of all that, it acquired a large portfolio of medtech patents, which quickly led to litigation success in Germany, among other places. Driving these developments was chairman and CEO Doug Croxall, whose focus on developing a balanced steered Marathon away from the kind of binary, litigation-driven events that have come to define some PIPCOs. A close relationship with IPNav, which became Marathon’s largest shareholder in May, has undoubtedly been one of the key factors behind the firm’s success; but much of the credit must go to Croxall.
Google: It’s possible that Google had some seriously bad patent news in 2014, but it is hard to think what this might have been. The RPX $900 million Nortel patent purchase at the end of the year – following on from Google’s settlement with the non-practising entity (NPE) – signalled the end of the patent smartphone wars started by the launch of the Android platform. In January, Google sold Motorola to Lenovo while retaining the vast majority of the patents it acquired from the company back in 2011 – all for a net spend that could have been less than $1 billion. Elsewhere, the company killed off its dispute with Apple and signed major cross-licensing deals with Cisco, LG and Samsung; it was also behind the launch of the License on Transfer (LOT) Network. On top of all this, the company received a record number of US patent grants and continued to develop its world-class patent function, led by Allen Lo. With patent reform back on the table in Congress, 2015 could turn out even better for Lo and his team.
Michelle Lee, USPTO: After a year or so auditioning for the role, in October 2014 Michelle Lee was finally nominated by the Obama administration to be the next permanent director of the US Patent and Trademark Office (USPTO). She had previously been named deputy director in December 2013 and, in the absence of a director, has been running the agency ever since. Given that, it remains a mystery why she was not nominated for the top job at that time; though the suspicion is that because of Lee’s links to Google, the White House wanted to buy itself some time before putting her in front of the Senate Judiciary Committee for a confirmation hearing. When she becomes permanent director, Lee will be the first woman and the first Asian-American to hold the role. She will also have a lot of work to do. There will be big calls to make on the extent to which the executive will support renewed reform moves in Congress, something that will require a great deal of political skill. If that were not enough, there are also ongoing issues to deal with around the quality of the USPTO’s output, as well as connected controversies relating to its teleworking programme.
William Merritt, InterDigital: In early 2012 things looked very difficult for InterDigital and CEO William Merritt. After scouting around for six months, the company had failed to find a buyer and stated that it would now refocus on licensing the 20,000 patents that it had been trying to divest. Fast forward a couple of years and the turnaround has been remarkable. In June 2014 the company announced a doubling of its quarterly dividend, embarked on a $300 million share buy-back and entered into a licensing agreement with Samsung, ending a long-running dispute with the Korean company. That news sent stock on an upward trajectory and InterDigitial towards a market capitalisation of just below $2 billion. Under Merritt’s steady hand, the company has shown that a large PIPCO backed by its own R&D can not only survive, but also thrive in this market.
Kenichi Nagasawa, Canon: Slowly but surely, Japanese companies are beginning to look more creatively at the large patent portfolios they have built up over the years, as well as at wider strategic IP issues. At Canon, Kenichi Nagasawa – head of intellectual property and also a member of its board of directors – is at the heart of this. While the likes of Panasonic, Renesas and ROHM Semiconductor have formed relationships with NPEs, Nagasawa is firmly and vocally of the opinion that such deals are counterproductive and potentially damaging – and it is a view that most patent owners in Japan still hold to. But not working with NPEs does not mean doing nothing: Nagasawa is clear that Japanese companies should be showing IP leadership. To that end, along with Google, Canon has been a prime mover in the creation of the LOT Network. There is little doubt that in the coming years, Japanese companies will seek to play a more active role in international IP markets. As a result, we will doubtless be hearing a great deal more from Nagasawa.
Laura Quatela, Alcatel-Lucent: There are few women at the top of the corporate tree when it comes to IP monetisation. That fact alone made the July 2014 announcement of Laura Quatela’s appointment as executive vice president of intellectual property at Alcatel-Lucent newsworthy; but the revelation that she was to be a direct report to the company’s CEO, Michel Combes, made it a big story. After all, it is rare for any corporate head of intellectual property to enjoy such access. With a brief to unlock the value of the company’s portfolio of more than 32,000 active patents, Quatela has a mighty challenge on her hands, but one that was made that bit easier in August when Alcatel-Lucent finalised the early pay-off of a $1.75 billion loan that had been secured against its IP assets. Given her previous job as president of Kodak – and her close involvement in the negotiations that led to the $525 million sale of the company’s digital imaging patent portfolio and saw it come out of bankruptcy – there is little doubt that Quatela has all the attributes needed to do the job that her CEO requires.
Quanlin Paper: While it may generally be true that big-ticket transactions tend to be of lower value than was the case a few years back, there was one major exception in 2014. That it was based in and on China, however, meant that many people missed it. In March it emerged that Quanlin Paper, a company based in Shandong Province, secured a loan of Rmb7.9 billion (approximately $1.3 billion) against a portfolio of trademark and patent rights. China Development Bank led the consortium which made the money available, with a portfolio of 110 patents and 34 trademarks as the collateral. The patents alone were valued at Rmb6 billion, or close to $1 billion. This put the deal among the top 10 most valuable publicly disclosed IP transactions ever. That fewer than 150 mainly Chinese IP assets were involved was especially noteworthy. Just a few months later, Quanlin announced that it would be investing $2 billion in building a paper mill complex and creating 2,000 new jobs in the US state of Virginia. That is a rather neat reversal of the normal narrative of Chinese IP abuse adversely affecting the US economy.
Chief Justice John Roberts, US Supreme Court: Once a partner at what was then Hogan & Hartson, John Roberts has a corporate law background that many of his colleagues lack, and on taking up his post he promised a court that would focus much more closely on cases involving business issues. When it comes to patents, he has delivered on that. Among others, the decisions in eBay, KSR, Bilski, Mayo and Myriad have all helped to reshape large parts of US IP jurisprudence over the last decade. But even in Roberts’ time as the country’s top judge, there has been nothing quite like the court’s last term. The nine justices heard a total of six patent cases, covering issues such as fee shifting, indefiniteness and patentability. Alice v CLS Bank was undoubtedly the highest profile. While the decision will not kill off all software patents in the United States, there are fears that it may have a profoundly damaging effect. Whatever your view, it is hard to argue against the notion that the case encapsulates the increasingly sceptical approach the Roberts court has taken to broad patent protection. For some, the chief justice and his colleagues have become key players in the weakening of patent rights in the United States; others see them as helping to rebalance a system that had become too pro-patentee. Either way, as a still relatively young 60 years old, Roberts will continue to have an impact for some time yet.
Matthew Vella, Acacia Research: When he took over as CEO of Acacia in August 2013, Matthew Vella certainly had big shoes to fill. His predecessor, the late Paul Ryan, had transformed the firm into a $2 billion business, only to see its value fall back in to the hundreds of millions of dollars range as investors got cold feet on the back of what were perceived as a series of disappointing financial results. In 2014 Vella led Acacia through a fundamental repositioning, as it shifted its focus to large, marquee portfolios, diversified into new sectors such as medical devices, energy and automotive, and continued its push into Europe and Japan. At the same time, Vella has been a reasoned voice in the debate on patent reform in the United States, pointing out that many of the proposed changes will benefit the larger, better-resourced NPEs. Acacia’s share price may still be below the highs it hit in the Ryan era, but it is on an upwards trajectory once again and there can be no doubt that under Vella’s watch, the business is back on firm footing.
Jay Walker, US Patent Utility and Patent Properties: In Spring 2014 Jay Walker and his team at Patent Properties announced that they were launching the US Patent Utility, an attempt to help the vast majority of patent owners that never see a return on their patented inventions to monetise their intellectual property. Given that 95% of US patents remain unused on the shelf, representing a massive waste of R&D dollars, the economic benefits from licensing even a relatively small chunk of that stockpile could be very significant. It is still early days for the utility – a beta version was launched in November, with full launch expected at some point in early 2015 – but whether it succeeds or not, it is arguably Walker’s skills as a communicator and his message on the problems of a dysfunctional patent system that will have the deepest impact on the market. He is right to observe that there is something inherently wrong when the courtroom has become the most popular venue to determine the value of a licence. As the founder of Priceline.com and the named inventor on over 500 issued and pending US and international patents, Walker has the kind of gravitas which makes people sit up and take notice of what he has to say. The patent market has few advocates like him.