4 Dec
2018

All the action from the final day of IPBC Asia 2018

The second and final day of this year’s IPBC Asia in Shanghai has just finished. Here are a few of the highlights from another action-packed set of plenary and breakout sessions from our team of reporters: IAM editor Joff Wild (JW), Asia-Pacific editor Jacob Schindler (JS), China editor (BZ) and life sciences reporter Adam Houldsworth (AH)

The winners – At last night’s Asia IP Elite gala dinner, IAM once again honoured IP teams from across the region that have added significant value to their organisations over the past year. It is our biggest group ever – 75 companies and public sector research entities. A record 18 new companies joined the list. Among the new entrants were five companies from China – BYD, Coolpad, DiDi, Hisense and Oppo. We also honoured the first Elite companies from Malaysia – PETRONAS and Sime Darby Plantation. This large pool of IP leaders made for tough competition in our industry-based award categories, with Huawei taking home the top overall team award after a year which often found the Shenzhen company at the centre of the patent world’s most consequential disputes and transactions. The award for deal of the year recognised Tencent and Google for a cross-licence which looks like the start to what could be a very powerful business alliance. And, finally, we honoured Canon’s Kenichi Nagasawa, one of the region’s most respected and influential IP executives, with our individual of the year award. Congratulations to all our winners.

Automotive team of the year – Honda

Electronics team of the year – Panasonic

Healthcare and biotech team of the year – ResMed

Industrials team of the year – Hitachi

Internet and software team of the year – Tencent

Mobile and telecoms team of the year – Huawei

R&D institution team of the year – ETRI

Semiconductor team of the year – TSMC

Asia deal of the year – Tencent and Google

Asia Team of the year – Huawei

Asia individual of the year – Kenichi Nagasawa, Canon

Long-term value - Patents are often described as monopolies, but while they can sometimes enable a de facto monopoly right to exist it’s wrong to see them in that way. If you can invent around a patent to get to the same solution, then the patent owner cannot stop you. A lot of companies spend a lot of money doing this. It’s how we ended up with Viagra and Cialis, for example! Instead, the best way to see a patent is to look at it for what it is: a right to exclude. For as long as the patent exists its owner can prevent anyone from practising it. But the key word here is “can” - a right is not an obligation. As everyone who attends an IPBC event knows, some companies make huge sums each year from the royalties they receive as a result of licensing out the assets in their portfolios. But licensing can take many forms and it’s not always about making money – at least directly. This was a point that Volvo Car’s Anna-Maria Lagerqvist Gahm reminded delegates of during the opening Innovation Chain plenary session today. She recalled how her company had invented and patented the three-point car safety belt in the late 1950s, and then promptly made it available royalty-free to every auto manufacturer in the world. It was, she said, too important an invention to profit from; giving it away for free sat squarely with Volvo’s guiding philosophy of safety. Since its invention the belt has saved many millions of lives, while Volvo itself has continued to benefit substantially from the brand equity its decision to share created. Patents last for 20 years, but if managed properly a reputation can endure for countless decades. Although it continues to be based in Sweden, Volvo Cars has not been a Swedish company since the 1990s. Instead it was first sold to Ford and then onto Geely in deals worth a combined $8 billion. Much of the value in both transactions would have been assigned to goodwill or, put another way, to intangibles. One of the biggest of those is reputation, of course; which takes us back to that decision to give one and all the right to use the seat belt patent royalty-free … (JW)

Meet iFlytek – If you have ever wondered what Donald Trump or Barack Obama would sound like speaking fluent Chinese, iFlytek has your answer here. The Hefei-based speech recognition company may not be a household name overseas yet, but it is China’s leader in voice recognition technology and IP manager Yuping Qiao introduced the company to the IP world with her appearance on this morning’s panel of Chinese IP business leaders. The company was founded in 1999 by Liu Qingfeng, who turned down an offer from voice recognition pioneer Kai-Fu Lee to work for him at Microsoft Research Asia because he was determined to start up on his own. If you look at the patent landscape in speech recognition, as IAM did in August, iFlytek is a blip in a field that is led by specialist firm Nuance Communications and big tech players like Microsoft and Google. But iFlytek’s technology has outperformed that of its western rivals in high-profile natural language processing competitions, and the Shenzhen-listed business is now worth $7.5 billion – one and a half times the market cap of Nuance. Qiao told IPBC delegates that the company is now working to bolster its patent position. She maintains that for an outfit at iFlytek’s stage of growth, the patent world’s ying and yang are not in conflict, they are complementary. “For us now, quantity counts as much as quality,” she said. iFlytek is competing on technology, not IP portfolios, for the moment; but as its core technologies get applied to more fields, such as healthcare, education and even the judiciary, Qiao explained, there will be plenty of avenues through which it can grow its patent collection in the future. (JS)

Court matters - In the afternoon, delegates were given insights into the IP litigation landscapes of several key Asia-Pacific jurisdictions in the Dispute Navigation breakout. Koichi Kishada of IP Bridge challenged perceptions that Japan is not a good place to assert IP, especially for patent owners. Such a view is based on a misunderstanding, he insisted, pointing out that - when settlements are factored in - 44% of cases end favourably for plaintiffs (in 30%, they secure beneficial settlements, while 14% of disputes produce favourable decisions). That said, 48% of cases involve a loss by decision, while 8% end up in unfavourable settlements. Japan also has the third highest median damages award in the world at $220,000 - higher than Germany’s. Judges in Korea are distinguished by high levels of technical expertise, Albert Lee of LG Display assured delegates. The jurisdiction is becoming more pro-patentee, with historically low damages awards rising gradually and punitive damages being handed down more often. The country hosts Asia’s oldest specialist IP courts and the Korean prosecutors’ office has also recently hired more IP experts. But inventiveness standards are very demanding in Korea, Lee cautioned. A less optimistic tone was struck by MediaTek‘s Steven Liu, who outlined some of difficulties faced by litigants in Taiwan. Patent owners have only a 16% chance of winning in first instance proceedings, he pointed out, with IP courts often declining to make a judgment on a case; significant damages awards are also very rare and border seizure not a realistic option, he added. (AH)

The 80% rule - Speaking in the Innovation Chain plenary, Donna Suchy, the managing IP counsel at Rockwell Collins, shared the company’s IP strategies designed help drive innovation. Everything starts with START, she explained: S (strategy - live and breathe in strategy); T (time - management makes sure engineers are given enough time to craft and master innovation); A (attention - paying attention to the innovation world); R (reward - capturing and protecting innovation is different from having the idea. The company has a well-established awards programme and awards should not be given to recognise only patentable ideas, but all kinds of others that can be protected in different ways; trade secrets, for example); and T (team - “We believe in teamwork and we also believe innovation must be fun otherwise no-one wants to talk about it,” Suchy said). On the subject of working with external counsel, Suchy stated the importance of effectively communicating goals and expectations, but also shared the significance of an analytics-centered approach to evaluating patent attorneys. Rockwell Collins deploys a 100 points system for every patent and each attorney has an average score. Those dip below 80 after a defined period of time will be stood down from writing patents for Rockwell Collin’s. But it’s not enough to evaluate the attorneys, Suchy said, you also need to evaluate firms to work with based on quality, service, timeliness and cost-effectiveness. The company decides the top 10 firms to keep each year using those criteria. So, if the firm you use has Rockwell Collins as a client, you can be pretty sure it is ticking a lot of boxes! (BZ)

Coolpad asserts – Although Chinese companies have usually appeared in court as patent defendants, we’re going to be seeing a lot more of them on the plaintiff side. So said Nancy Zhang, Chief IP Officer at Coolpad, during the China’s Litigation Landscape session this afternoon. And the Shenzhen-based company is one of those plaintiffs. The Chinese patent assertions it launched against Xiaomi this year stand as a relatively rare example so far of domestic competitor litigation within the country’s mobile phone industry. Coolpad was previously a fairly large player in Chinese smartphone sales and though it’s no longer near the top of the leaderboards, it was ahead of the curve patent-wise. This has left it with a significant portfolio. It would seem that the company is looking to get a licensing programme up and running as its products business transitions towards IoT, wearables and other smart devices. Zhang acknowledged that launching offensive suits can be a risk, particularly for a firm like Coolpad that is publicly traded. But the message she wants to send investors and the IP community is clear: “Companies focused on R&D and protection of IP may appear more aggressive, but by resorting to litigation they show their attitude of respecting innovation and R&D.” We’ve heard that many times before from US and European company IP chiefs, but rarely from someone heading up a Chinese IP operation. It’s another sign that change is in the air here. (JS)

Trust builder - Arbitration is a word that you hear more and more in the patent market. Some big licensors, such as Nokia, have been making use of it for years, and now its beginning to find favour among the people running patent pools. One such is Mattia Fogliacco, the CEO of Sisvel. Speaking in this afternoon’s Licensing Negotiation masterclass, the Italian explained that arbitration is efficient, far less expensive than litigation and comes with the benefit of strict confidentiality for both sides. What’s more, Fogliacco stated, an offer to arbitrate builds a licensee’s confidence that the rates Sisvel is offering are truly FRAND. Why else would the firm volunteer to allow a third-party to decide this otherwise? It’s an attractive line of thought. Expect to hear more of it in the future. (JW)   

Innovation incentives - Today’s opening Innovation Chain plenary included detailed discussion about the ways in which corporate IP departments can best help to promote innovation within their organisations. It raised several interesting suggestions on how to incentivise R&D departments to focus more attention on IP creation and protection. Judy Yee of Microsoft explained that it has sought to create a culture celebrating innovation, not only incentivising the filing of invention disclosures, but incentivising inventors based on their degree of engagement with the process of acquiring IP. Microsoft also rewards innovators with unique Patent Cubes when they file for patent protection and again upon the grant of their applications. The cubes also come with medallions, she explained, coloured either bronze, silver or gold to reflect the amount of value the company ascribes to the invention. This, Yee said, had been effective in engaging inventors - who are keen to know how they can get a gold, rather than silver or bronze cube - in IP commercialisation issues. She also explained that Linkedin - which Microsoft acquired in 2016 - encouraged its innovators with ‘inventor’ t-shirts developed specially by the company’s designers. Ericsson’s Gustav Brismark said his organisation holds a gala dinner each year for inventors engaged in the IP process. The inventors’ spouses are invited, too, which is a good way for them to see their partners’ contributions recognised. Several panellists also stressed the importance of incentives applying not just to patent applications, but to inventions that receive other forms of IP protection. Donna Suchy commented that her company - Rockwell Collins - gives awards for all types of IP, including trade secrets. She wants R&D people to innovate on good ideas and to let the IP department decide what type of legal protection is appropriate. Rockwell Collins also puts on a gala dinner for its inventors, although spouses are not invited - something Suchy said that she would now consider changing!  (AH)

Licensee wins – What does a win look like for a licensee? That is a question on the minds of many in-house IP dealmakers in China. The reality is that in fields like mobile and semiconductors, most high tech companies here find themselves on the licensee side of the table, and IP managers will be faced with the prospect of convincing management that a deal that involves a payout is nevertheless a win. “In a pure patent licence, a true win-win is very difficult,” conceded Nishant Jaiswal, senior manager of IP licensing at HP Enterprise during this afternoon’s Licence Negotiation masterclass. There are still ways to justify such deals on the licensee side, Jaiswal said, pointing to licences that don’t include a tech transfer, but do come paired with a patent assignment. Wade Zhu, IP counsel at DuPont, said that the biggest benefit Chinese companies can get from licence deals is building their company’s reputation for fair dealing. When an opportunity for a profitable tech transfer or other business partnership eventually does come along, companies that are seen to act in bad faith in IP negotiations will lose out: “Image is important. People will get the idea that you’re not a company that can be worked with long-term, and MNCs will always worry about giving you the crown jewels,” Zhu cautioned.  (JS)

Change in China - In the Dispute Navigation plenary, Jacob Zhang of Lung Tin Intellectual Property reminded delegates of the extent to which the environment in China has changed in recent years. Annually, the country now has by far the most first instance civil patent cases in the world (16,010), compared to less than 3,000 in the US (which is in second place) and 1,000 in third-placed Germany. And this figure is increasing rapidly, being 29.56% higher than in 2016, and several times greater than the 4,074 case-total from a decade ago. There had been good news for foreign litigants in recent years, Zhang said, with perceived unfair treatment no longer being an issue. Last year, 87% of decisions involving a Japanese company ended in a win for the foreign litigant, while European litigants won 88% of their cases, and 75% and 55% of court decisions went in favour of US and Korean firms respectively. This, Zhang suggested, partly reflects the cautious approach of international rights holders when prosecuting and litigating patents in China, as well as their disproportionate tendency to make use of the country’s most elite private practice IP lawyers. Change continues apace. Statutory damages, he pointed out, are set to be increased with the reform of the country’s patent law in 2019, while punitive damages will be introduced for malicious infringement. And the Supreme People’s Court of China is set to serve as the appeal court for first instance civil and administrative disputes as of 1st January 2019. These reforms, Zhang insisted, will bring about further improvements in the quality/impartiality of litigation decisions. (AH)

Tough call, brave move - Volvo Cars may have made a value-boosting decision to make its seatbelt patent available royalty free (see above), but according to Anna-Maria Lagerqvist Gahm until very recently it had not got much else right on the IP front. Speaking in the Innovation Chain plenary, the company’s deputy chief IP counsel painted a picture of a dysfunctional situation in which a business with a long history of innovation also had a long history of not safeguarding it very well, so that it was suppliers, rather than Volvo Cars itself, that largely got the benefit of the R&D the company did. Speaking with great frankness, Lagerqvist Gahm described a situation in which the R&D department itself, as well as the procurement function, often let IP slip through the net by sharing information too readily, by failing to insist on non-disclosure agreements or even to secure lower prices. “It was,” she said, “a nightmare.” And the IP department did not help matters by being distant, top-down and failing to align with overall business priorities. Something had to give and in March 2018 it did. It was then that an entirely new strategy was implemented designed to ensure that IP is embedded in all parts of the company’s innovation chain. The key principle underpinning what Lagerqvist Gahm described as a new bottom-up approach is consistent interaction between IP and R&D, and at all levels. To that end, an annual review meeting between the IP team and the vice-presidents of every technology area in Volvo Cars is now mandated with the aim of creating annual plans that are aligned with company strategy. On a monthly basis, IP executives meet with engineers in order to provide support, brainstorm ideas and generally be present. The R&D process also now has specific IP gates, checkpoints essentially, at which every project stops in order to ensure that all IP issues have been taken care of before progress to the next gate can get underway. Another important decision was to move an innovation leader in the R&D team to IP. She has acted as a bridgehead between the two groups, ironing out problems that may arise and helping IP professionals to communicate with their engineering colleagues in non-legalistic, accessible language. Visibility in the organisation is a priority, so IP workshops are held on a regular basis, while a high-profile dinner to honour Volvo Car’s inventors, with senior management in attendance, has become part of the calendar. A new inventor remuneration policy that prioritises the filing of invention disclosures over the receipt of a final patent grant has also been introduced. It’s early days yet for the new plan, Lagerqvist Gahm stated, but the initial signs are good: as of September disclosures are increasing, while there has been a lot of positive engagement. “The organisation is responding well,” she said. World class IP value creation strategies do not appear out of thin air – they take time to devise and then implement. Volvo Cars only changed tack once it had accepted that things were going wrong. That would have been hard to do, and it certainly was not the easy option. Sometimes failure is the best route to success, but it is a truth only the brave are prepared to accept. There is a lesson there somewhere. (JW)

Pro-patent China – The China’s Litigaiton landscape plenary was a Chinese language affair. Some highlights include the following. Patent litigation is a good way to push up Chinese patent values and influence global licensing negotiations. Nancy Zhang, CIPO at Coolpad contends litigation is the best way to gain return on R&D spend and to test patent quality. When companies are being sued in other jurisdictions, they can come to China to file invalidations or counter-suits because its quick and the invalidity rate is high. With the change of players and landscape in licensing, litigation in China can be used to affect global licensing negotiations. Speakers from Chinese companies and law firms on the panel all agree that injunction are more appealing and powerful than damages award in China, where the average in patent infringement cases is 350,000 RMB ($40,000). Although that number has doubled since 2012, it’s still too low to drive suits – and if the defendant is not a publicly listed company, it’s almost impossible to calculate the damage caused by their infringement. The availability of injunctions attracts NPE to litigate in China, and there are more and more domestic Universities and research & development institutions are becoming plaintiffs in patent cases around the country. (BZ)

All done – So, that’s another IPBC Asia done and dusted. Many thanks to all delegates, speakers and sponsors for making it such a successful event. Our thoughts now turn to future events on our calendar for 2019, including: IPBC Europe in Paris on 27th and 28th March; IPBC Global in Boston from 16th to 18th June; and then IPBC Asia once more, this time in Tokyo, from 28th to 30th October. There are plenty of other one day IAM and IPBC conferences taking place throughout next year. You can keep up with them here and here. We look forward to seeing you at as many of these as possible.