The phenomenal economic growth in China has brought with it a stronger focus on intellectual property (IP) as Chinese companies increasingly develop their own IP and recognize the importance of protecting their valuable intellectual assets.
Indeed, China is now the world's fastest growing market for IP and one of the top filers of international patents. According to the World Intellectual Property Organization, China's international patent filings grew by around 56.2 percent in 2010, ranking the country the fourth largest filer in the world after the US, Japan and Germany.
In the US, filings are estimated to have dropped 1.7 percent, but it is still the largest international filer with an estimated 27.5 percent of total patent filings in 2010, compared with China's 7.6 percent.
That imbalance is certain to change as China's growth in IP continues to accelerate. A number of major Chinese companies are already leading the way on the global stage. Telecommunications companies ZTE Corporation and Huawei Technologies, for example, are the world's second and fourth biggest patent filers respectively.
Chinese companies are also quick to protect their IP, bringing an increasing number of cases against infringers of their IP rights both in China and overseas. For many observers, there is a great irony in this "poacher turned gamekeeper" transformation, with Chinese companies, so often accused of infringing the IP of others, now being the ones who are being infringed against.
This "build and protect" IP strategy is a common approach among Chinese companies, and, indeed, many other corporations around the world. Companies build up their IP portfolios to safeguard their innovation, and take swift action against anyone infringing their IP rights.
However, as patent portfolios mature and new technologies are developed, there comes a time when companies realize that, in addition to protecting their most valuable intellectual assets, they could create greater value for the organization by making some of their less important patents work harder for them - through licensing or selling them to third parties and saving on high renewal costs.
Through a comprehensive patent portfolio review process, companies can gain important insights and make informed strategic decisions about how to best protect and leverage their patents, addressing questions such as:
Which patents are business critical and need to be protected?
Which patents are potential future strategic assets that may become more valuable to the company over time?
Which patents can I sell or license for profit?
Which patents in my portfolio should be pruned?
Armed with answers to these questions, companies are able to evaluate how they can:
Better protect their prized IP assets to enhance the company's competitiveness.
Encash non-critical assets.
Reduce costs associated with maintaining patents that are no longer of use or of little value to the company.
It also helps to know what the competition is up to. Making an assessment of competitors' patents will help companies ring fence their own innovations, benchmark against the market, track the evolution of fledgling inventions, and identify potentially lucrative opportunities for monetizing patents.
While a particular invention may be of value now, it could be susceptible to being overtaken within a relatively short period by a new technology. A detailed review of the relevant IP landscape might lead a company to take full advantage of that value while it still can, and generate short-term revenue by selling the relevant patents or through third-party licensing.
This, in turn, can lead to opportunities for strategic alliances and collaboration between companies, with mutual licensing of patents to help fill potential gaps in their respective technologies.
In any patent portfolio assessment, the input of the company's research and development team is vital in order to provide the technical perspective.But it is also important for companies to gain an independent view, helping them to value their IP assets from an objective, market standpoint. Together with the insights gleaned from within the company, this will create a more accurate assessment of the value of a company's patent portfolio and how that value can best be realised.
For IP-rich Chinese companies, a more flexible approach to their IP strategy represents an opportunity to maximize the value of their intellectual assets, while, at the same time, continuing to demonstrate to the world the increasing strength of Chinese innovation.
The author is head of Asian business at CPA Global, one of the world's leading providers of intellectual property management services. The opinions expressed here are entirely her own.
(Source: China Daily)
