Three Emerging Trends to Watch in Asia IP

Thursday, November 23, 2017
The Patent Lawyer Magazine

By Karen Taylor, General Manager of Asia Pacific at Anaqua

Asia is home to many of the world’s most innovative companies… as well as some of the most ingenious imitators. It’s a region where highly developed, sophisticated intellectual property (IP) systems and regulatory frameworks in some markets co-exist with relatively immature IP regimes in neighbouring countries.

However, there is one ongoing development that’s consistent across the region: the greater recognition by Asian companies of the need for better, more effective IP management to help them align their IP rights with their business strategies for commercial success. No longer is it simply a case of ‘prosecute and protect’ when it comes to IP rights. Asian companies are taking a more holistic view of their IP portfolios and finding that many of their IP rights can work harder and more profitably for them.

Modern IP management is more than just managing documents, deadlines and other formal processes. With increasing digitization and advanced IT platforms, companies can think of it in a broader sense to reflect the substantial benefits of IP and the significant value of those IP assets. IP management today is not limited to a department handling administration of IP rights, tracking renewal deadlines or handling IP disputes; it also includes a number of other areas that have a direct impact on a company and its business development.

Innovating the IP management process

Innovative Asian companies place a huge emphasis on research and development (R&D), which is why they are increasingly looking for IP management systems that can help them manage the entire innovation process end-to-end - from ideas to ongoing protection and commercialization.

With properly managed IP information, R&D departments can, for example, determine very quickly in which areas development work is worthwhile, and in which fields further innovations are difficult to pursue due to competitors’ patents. Heads of business units and senior management can align their IP assets and existing product lines with their broader business objectives, and work with the IP department to determine the IP strategy that is most suitable for the company’s business model going forward. In this way, management decisions about, for example, the renewal or relinquishing of licences and patents are informed by solid data and thoughtful analysis.

This approach can be achieved only with a central IP asset management platform, which allows all participating parties access to shared information and which informs them about changes in real time.

Companies in the automotive industry, such as Honda, have benefited greatly from bringing together a wide range of departments and processes through the implementation of a more centralised system for innovation and IP management.

The Japanese corporation operates globally and generates an annual turnover of more than $100 billion through the manufacture of automobiles, motorcycles, as well as products for energy generation. The company has one of the world’s largest R&D budgets and is a pioneer in many fields of technology, including energy-efficient vehicles and robotics.

In 2014, Honda implemented a fundamental restructuring, which focused on improving the coordination of innovation across its seven geographic regions. The various R&D centres of the group were granted region-based autonomous administration. At the same time, the creation of Honda Patents & Technologies, a central IP team working across all departments and locations, provided holistic management supported by a global platform from Anaqua to manage all IP processes. This strategy was focused on the following key objectives:

  • Consolidating information systems and the processes around the innovation
  • Promoting the mutual exchange of ideas and best practices between the regional research and development centres
  • Facilitating the harmonization and balancing of evaluation criteria across the entire IP portfolio
  • Ensuring better traceability of R&D investments on their way to valuable patents

The practical implementation of the new organizational structure has resulted in IP experts in various locations participating regularly in brainstorming sessions with the R&D departments. In doing so, they are able to identify whether an apparently new idea is a true innovation based on specific questions. They examine in depth all the details which are potentially patentable and assist the developers with their know-how about current patenting trends.

Knowing what will not work is as important to Honda as knowing what will work. Recognizing dead-ends in R&D is as important from a commercial and thus financial perspective as the ability to identify ground-breaking innovations. The auto giant’s founder Soichiro Honda, formulated this notion early on in his now world-renowned guiding principle: ‘Success is 99 percent failure.’

As IP activity increases in Asia, more and more companies across the region are seeking to globalize their IP assets and significantly improve the management of the innovation lifecycle through the deployment of advanced technology platforms. There are three key trends driving this change.

#1. Asian companies are looking to monetize their portfolios. 

Counterfeit consumer products once dominated the conversation about Asian IP.  Before 1985, China had no patent law at all. Asian countries like China were seen as the home of copycats, known for their bootleg DVDs, counterfeit fashion and blatant technology infringement.  But that has all changed. Home-grown IP has increased dramatically in the region and many Asian companies are now more focused on establishing, protecting and monetizing IP rights in order to increase their return on investment.

To encourage innovation, local Chinese authorities went so far as to provide cash subsidies of up to US $4,500 to patent recipients. This undoubtedly helped China become the top patent filer in the world in 2011. It then surpassed all other countries as the top patent issuer in 2015, with over 350,000 patents issued that year alone.

As Asian corporations’ approach to IP management has evolved in the past few years, many companies are embracing global best practices. Previously, they have tended to take a more operational approach to IP management, in particular patent management, but companies are now looking for solutions that offer not only workflow management and process streamlining, but also insights into how best to monetize their portfolios.  IP management teams have the opportunity to move from being seen as operational ‘cost-centers’ to revenue generators through the effective valuation and monetization of IP assets - and this trend will continue.

Licensing and litigation are increasing across the region because companies are aware that having a high-quality IP portfolio is the key to staying competitive worldwide.  This has not gone unnoticed by the Chinese government, which has been increasing the number of IP courts in the country.

We can expect to see more Asian companies taking a genuinely strategic approach to IP portfolio management and becoming truly global in how they evaluate, protect and exploit their assets.

#2. Asia is deploying legal technologies in the corporate space

As many Asian countries continue to develop their home-grown innovations and more advanced technologies, the protection of IP has become a more critical issue.  As patent filing continues to increase in Asia, leading innovation markets such as Japan, China, South Korea, Singapore and Taiwan have become more attuned to deploying legal technology in the corporate space. Many large companies in these markets are using the latest technology to help manage the evaluation and protection of their IP assets. 

They recognise that IP protection strategies need a strategic focus and must form the centerpiece of their global approach.  Demand for ROI on technology investments is just as important for Asian companies as it is in the US and Europe. There is still some hesitancy around SaaS solutions, but this is beginning to change as Asian companies appreciate the efficiency and value for money of hosted solutions – and look to reduce the management overhead and cost burden of custom-built on-premises solutions.

Indeed, many larger Asian companies are already beginning to embrace holistic, multi-lingual solutions as the only effective way to manage their global teams and portfolios. For example, leading Chinese companies, like Alibaba, Xiaomi, Huawei and HTC have sophisticated IP business departments focused on protecting their own advanced R&D across the world.  This trend will continue, as more giant Asian corporations look to fully monetize their IP portfolios.

#3. Globalization is a key driver

Globalization is a key driver of the growing demand for legal technology in the Asia region. High levels of outbound merger & acquisition activity from leading Asian economies mean many companies are now managing IP portfolios across multiple countries. Even within Asia itself, R&D centers and manufacturing teams are often located in several different countries. Managing the activities of these teams and evaluating the commercial potential of their research means all teams, in particular innovation and legal teams need smart, multi-lingual systems where everyone has access to the same information in real time.

Overall patent filing is becoming more international by nature. The 2017 Global Patent & IP Trends Indicator, released by international patent filing service RWS inovia, revealed that more than 41 percent of respondents filed more than half of their patent applications during 2016 in foreign jurisdictions, up from 34 percent foreign filings in 2015.

Globalization brings both commercial opportunity and increased competition. For many companies now, intangible assets such as intellectual property represent around 70-80 percent of the company’s market value. This value needs to be defended, of course, and it also presents a major revenue opportunity.

Asian companies are realizing that embracing holistic legal technology solutions, which combine analytics and workflow tools, enables them to more accurately assess the value of their IP portfolios and identify opportunities to sell, license or partner across the globe.  This commercialization of their IP is a key value driver going forward and many companies in Asia are keen to learn from best practices established in other markets such as Europe and North America. 

Karen Taylor is the General Manager of Asia Pacific of Anaqua. In this role, she leads all business development across Asia Pacific and strengthens Anaqua’s growing portfolio of client accounts. Based in Hong Kong, Karen manages personnel across the region and drives sales and marketing activities and strategic partnerships in Asia Pacific. Karen has over 15 years of experience in the online information and data industry across Europe and Asia. She previously served as an Executive Director with LexisNexis Asia and as a Director with Thomson Reuters.