Update on IP in China: Who’s Buying, Selling, Asserting, and Update on PAE Litigation

1. Business Sense • IP MattersBusiness Sense • IP Matters 1
So, China
Kent Richardson, Richardson Oliver Law Group
Ray Strimaitis, AST
Contact Information:
+1 (650) 967-6555
info@richardsonoliver.com

2. Business Sense • IP Matters
Agenda
Attorney-Client Privileged & Confidential 2
The really big picture
Secondary market
Litigation
Licensing

3. Business Sense • IP Matters
Context: Jurisprudence Information Access
Attorney-Client Privileged & Confidential 3
46,673,153
OpenLaw.cn
“NGO open organization for lawyers, judges, prosecutors, law teachers, scholars,
students, and law-related staff.”
47,000 court court cases, papers, comments

4. Business Sense • IP Matters
PACER
°$.10 per page …
Attorney-Client Privileged & Confidential 4

5. Business Sense • IP Matters Attorney-Client Privileged & Confidential 5
131K Reddit
upvotes for
Frida

6. Business Sense • IP Matters
Jurisprudence Information Access
Attorney-Client Privileged & Confidential 6
OpenLaw.cn
“NGO open organization for lawyers, judges, prosecutors, law teachers,
scholars, students, and law-related staff”
47M court court cases, papers, comments
Search
3,550 courts
344,869 judges
32,171 law firms
441,703 lawyers

7. Business Sense • IP Matters
Context: Fun Facts
°2017 numbers
°Invention patent applications: 1.38M
°Utility model: domestic 1.7M, foreign 8K
°Are we doing something wrong?
°Where are we
°Software – like the EU, no Alice
°Genes – OK, no Myriad
°Injunctions – OK, no eBay
°*
Attorney-Client Privileged & Confidential 7
Slide content used with permission from Dr. James Zhu, JunWe LLP
When are we?

8. Business Sense • IP Matters
Context: Fun Facts
°2017 numbers
°Invention patents: 1.38M
°Utility model: domestic 1.7M, foreign 8K
°Are we doing something wrong?
°Where are we
°Software – like the EU, no Alice
°Genes – OK, no Myriad
°Injunctions – OK, no eBay
°It’s like 1999
Attorney-Client Privileged & Confidential 8
Slide content used with permission from Dr. James Zhu, JunWe LLP
When are we?

9. Business Sense • IP Matters
Agenda
Attorney-Client Privileged & Confidential 9
The really big picture
Secondary market
Litigation
Licensing

10. Business Sense • IP Matters
What’s the Secondary Patent Market?
10
Seller Buyer
Copyright 2017 ROL

11. Business Sense • IP Matters
What Is in a Brokered Patent Package?
• List of patents for sale, applicable market, infringement analysis (claim chart), background on the
seller
• Asking price, bid dates, special circumstances (license back, specific encumbrances)
Typical package
• Confluence Patent Portfolio
• Single family (15 US Patents and 7 open applications) relating to social network data aggregation.
• 2006 priority date.
• Received July 2013
• Sold October 2014
• Asking prices: “7 figures”
• Multiple claim charts presented for
• Apple
• Google
• Facebook
• Purchased by an operating company
• Fingerprint Cards AB
Example package from Patent Profit (Will Plut)
11Copyright 2017 ROL

12. Business Sense • IP Matters
$0
$2
$4
$6
$8
$10
$12
$14
2011 2012 2013 2014 2015 2016 2017 2018
$12.5B in Patents Offered on the Secondary Market
12
Cumulative sum of asking prices of 110,000 plus patent assets in 119 technology categories
Copyright 2017 ROL
Unsold
Sold
Billions of dollars of unsold patents on the market.
Litigation risks continue to increase
$B

13. Business Sense • IP Matters
Worldwide Distribution of Brokered Assets
Attorney-Client Privileged & Confidential 13
US is still the biggest
market
China is coming up fast

14. 14
38
66
55
42
27
44
80
82
32
62
34
41
33
63
99
103
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017
PATENTDEALS
DEAL RECORD YEAR
PATENT DEALS BY YEAR
Sellers Buyers
82 Sale and 103 Purchases in 2017
by Chinese Companies
AST ConfidentialSource: USPTO Assignment Analysis by AST, 2010-2017

15. 15
254
753
426
222
216
562
609
357
377
629
456
895
298
904
2635
1121
0
500
1000
1500
2000
2500
3000
2010 2011 2012 2013 2014 2015 2016 2017
TRANSACTEDUSASSETS
DEAL RECORD YEAR
TRANSACTED US ASSETS BY YEAR
Sellers Buyers
2016 saw major patent purchases by Chinese
companies
AST ConfidentialSource: USPTO Assignment Analysis by AST, 2010-2017

16. 16
Top Deals involving Chinese and Taiwanese
Companies
No Seller Name
Seller
Country
Buyer Name
Buyer
Country
Deal Year
US
Assets
1 Microsoft USA Xiaomi Technology Co Ltd China 2016 560
2 Seiko Group Japan BOE Technology Group Co Ltd China 2016 425
3 NEC Corp Japan Foxconn Taiwan 2013 356
4 Intel USA Xiaomi Technology Co Ltd China 2016 333
5 Quarterhill Inc Canada TSMC Taiwan 2017 273
6 RPX Corp USA HTC Corp Taiwan 2013 231
7 Formosa Plastics Group Taiwan Intel USA 2015 191
8
Vanguard International
Semiconductor
Taiwan TSMC Taiwan 2011 178
9 Broadcom Ltd USA Pixart Imaging Inc Taiwan 2016 161
10 Hewlett Packard Co USA HTC Corp Taiwan 2012 156
11 Toshiba Corp Japan Alpad Corp China 2017 153
12 Alien Technology LLC USA Ruizhang Technology Ltd Co China 2015 151
13 Xperi Corp USA Shenzhen O-Film Tech Co Ltd China 2015 139
14 ADC Telecommunications Inc USA HTC Corp Taiwan 2011 135
15 GE USA BOE Technology Group Co Ltd China 2016 131
Source: USPTO Assignment Analysis by AST, 2010-2017

17. Business Sense • IP Matters
Agenda
Attorney-Client Privileged & Confidential 17
The really big picture
Secondary market
Litigation
Licensing

18. Business Sense • IP Matters
Interesting Results in Chinese Patent Litigation
Win rates
2014 - 72% win for invention patents
77% for utility models
Chinese government is pushing courts to
protect IP rights
Damages
30K US dollars – mean. 8K US dollars – median
Probably double today
Injunction is 84%
Invention patents 94%
Major reason for not issuing injunction
Patent expired
Plaintiff did not ask one
>95%
Major tech
General - 84%
Electrical - 14%
Chemical - 1.5%
NPEs
Damages are so low, so not a big concern yet
Lots of individual patent holders in China
Attorney-Client Privileged & Confidential 18

19. Business Sense • IP Matters
Research is in and Its Good for Patent Holders
°Prof. Brian Love “Pat. Lit. in China” (Feb. 2016)
°2006-2011 471 pat infringement cases (no UM or design)
°USPTO & UC Berkeley Law School (Nov 2017 & Jan 2018)
°IP Courts are plaintiff-friendly and neutral to foreign
°Beijing IP Court (11/6/2014-6/30/2017 case summary)
°P(domestic) 106 cases 82.2%; P (foreign) 10 cases 76.9%
Attorney-Client Privileged & Confidential 19
Source: Dr. James Zhu, JunWe LLP

20. Business Sense • IP Matters
Privateering Comes to China
Attorney-Client Privileged & Confidential 20

21. Business Sense • IP Matters
Privateering – A Footnote
So, privateering, ultimately not so popular
Treaty abolishing privateering in 1856
“By the end of the 19th century the practice … had
fallen out of favor because of the chaos it caused
and its role in inadvertently encouraging piracy”
Attorney-Client Privileged & Confidential 21

22. Business Sense • IP Matters
Privateering – A Footnote
Attorney-Client Privileged & Confidential 22
… because of the chaos it caused and its role
in inadvertently encouraging piracy

23. Business Sense • IP Matters
Agenda
Attorney-Client Privileged & Confidential 23
The really big picture
Secondary market
Litigation
Licensing

24. Business Sense • IP Matters
Take-Aways
°Be prepared to be surprised
°Our views on intellectual property protection do not always translate – we need to
adapt
°What’s a good deal here may not be a good deal there and vice versa
°Expect more deals, more litigation
Attorney-Client Privileged & Confidential 24

25. Business Sense • IP Matters
Multiple Sellers and Buyers 2016 - 2017
Top Sellers by Package Count
Aaron Emigh
Allied Security Trust (AST)
ATT
Clifford Sweatte
Cypress Semiconductor Corporation
Foxsemicon Integrated Technology, Inc.
Hewlett Packard Enterprise (HPe)
Honeywell International Inc.
Huawei Technologies Co. Ltd.
IBM
Intel Corporation
MITRE Corporation
Panasonic Corporation
Rovi Corporation (Before Tivo acquisition)
RPX
Satyajit Patwardhan
Sergey Mavrody
Siemens
Silent Communication Ltd
Verizon
26
Top Buyers by Package Count
Allied Security Trust (AST)
Apple Inc.
Beijing Xiaomi Mobile Software Co., Ltd.
Belisso Llc
Blackbird Tech Llc
Cria Inc.
Empire IP, LLC
Entit Software Llc
Google Inc.
Huawei Technologies Co., Ltd.
Insight Interfaces Llc
Intellectual Ventures
Knapp Investment Company
Kudelski SA
Marking Object Virtualization Intelligence, Llc
Microsoft Corporation
Mobile Synergy Solutions, LLC (Monument Patent
Holdings subsidiary)
Copyright 2017 ROL
Top Buyers by Package Count
Munitech Ip SARL
Nuance Communications, Inc.
Open Invention Network, Llc
Optimum Communications Services, Inc.
Pathunt Ip Management Limited
Rakuten, Inc.
Regional Resources Limited
RPX
Servicenow, Inc.
Sk Hynix Inc.
Spectrum Patents, Inc.
Taiwan Semiconductor Manufacturing Co., Ltd.
Twitter, Inc.
Uber Technologies, Inc.
Uniloc Luxembourg S.A.
Vector Capital Corporation

26. 27
Top Chinese Sellers by Number of Patent Deals
during 2015-2017
Seller 2017 2016 2015
Total Since
2010
Foxconn 1 5 6 17
Industrial Technology Research Institute 4 2 3 27
Huawei Technologies Co Ltd 1 3 2 8
Lite-On Technology Corp 0 2 2 12
National Tsing Hua University 1 2 1 5
MiTAC-SYNNEX Group 2 1 0 5
Chinese Academy of Sciences 2 1 0 3
Nine Eagles Electronic Technology Co Ltd 2 0 0 2
Shenzhen University 1 1 0 2
GCSOL Tech Co Ltd 1 1 0 2
Delta Electronics Inc 1 1 0 2
Foxsemicon Integrated Technology Inc 0 0 2 2
Zephyr Technology Co Ltd 0 2 0 2
Integrated Digital Technologies Inc 0 2 0 2
Qisda Corp 1 0 0 8
Total Chinese Sellers 82 80 44 434
Source: USPTO Assignment Analysis by AST, 2010-2017

27. 28
Top Chinese Sellers by Number of Transacted Assets
during 2015-2017
Buyer 2017 2016 2015
Total Since
2010
Formosa Plastics Group 0 0 191 191
Foxconn 6 25 119 315
Wistron Corp 0 106 0 106
Hanergy Thin Film Power Group Ltd 0 104 0 104
Ubeeairwalk LLC 0 0 70 70
Industrial Technology Research Institute 42 7 4 199
WALTOP International Corp 0 0 48 48
Chunghwa Picture Tubes Ltd 0 37 0 105
Hwz Intangible Assets Investment Management Ltd 0 37 0 37
Huawei Technologies Co Ltd 4 21 9 70
MiTAC-SYNNEX Group 2 29 0 41
Coolpad Group 31 0 0 31
Lexvu Opto Microelectronics Technology Co Ltd 0 31 0 31
Zhen Ding Technology Co Ltd 27 0 0 27
Grenergy Opto lnc 24 0 0 24
Total Chinese Sellers 357 609 562 3399
Source: USPTO Assignment Analysis by AST, 2010-2017

28. 29
Top Chinese Buyers by Number of Patent Deals
during 2015-2017
Buyer 2017 2016 2015
Total Since
2010
Huawei Technologies Co Ltd 3 8 8 32
TSMC 2 12 5 31
Xiaomi Technology Co Ltd 2 2 4 8
Epistar Corp 3 0 1 8
Pixart Imaging Inc 1 2 0 5
YFY Inc 1 2 0 4
TCL Corp 0 1 2 4
Pathunt IP Management Ltd 2 1 0 3
BOE Technology Group Co Ltd 0 2 1 3
Hikvision Digital Technology Co Ltd 0 2 1 3
Wistron Corp 1 1 0 5
Mediatek Inc 0 0 2 5
Semiconductor Manufacturing International Corp 1 1 0 3
Lite-On Technology Corp 0 2 0 3
Atech Totalsolution Co Ltd 0 2 0 2
Total Chinese Sellers 103 99 63 467
Source: USPTO Assignment Analysis by AST, 2010-2017

29. 30
Top Chinese Buyers by Number of Transacted Assets
during 2015-2017
Buyer 2017 2016 2015
Total Since
2010
Xiaomi Technology Co Ltd 96 893 50 1039
BOE Technology Group Co Ltd 0 556 6 562
TSMC 274 65 40 773
Pixart Imaging Inc 1 164 0 230
Alpad Corp 153 0 0 153
Ruizhang Technology Ltd Co 0 0 151 151
Huawei Technologies Co Ltd 18 71 58 286
Shenzhen O-Film Tech Co Ltd 0 0 139 139
YFY Inc 2 114 0 135
Apollo Ding Rong Solar Technology Co Ltd 0 104 0 104
Epistar Corp 74 0 24 111
Tcl Corp 0 53 42 96
AU Optronics Corp 0 0 76 79
Zhongshan Innocloud Intellectual Property Services Co Ltd 0 0 56 56
Metis IP LLC 0 53 0 53
Total Chinese Sellers 1121 2635 904 7315

30. Business Sense • IP Matters
IAM Blog - ZTE
• Interesting
• Sale of four patents
• Sued HTC in Nanjing Intermediate Court
• Published rate sheet
• Lower rates in China
Attorney-Client Privileged & Confidential 31
Type of sale Volume sold
until Jan
2027
FRAND unit royalty rates (US$)
United States European
Union
China
Standard Any (no limit) 0.10 0.10 0.05
Compliant 0 – 5,000,000 0.08 0.08 0.04
5,000,001 –
20,000,000
0.06 0.06 0.03
20,000,001 –
50,000,000
0.04 0.04 0.02
50,000,000+ $2.50m fully
paid-up
licence
$2.50m fully
paid-up
licence
$1.25m fully
paid-up
licence

31. Business Sense • IP Matters Attorney-Client Privileged & Confidential 32
BUSINESS SENSE • IP MATTERS
ROL Group has over 60 years of IP strategy and execution
experience. We ask the business questions first. We blend in-
house and large law firm experience to create clear steps for
success.
We guide companies through unique IP challenges—like buying
and selling patents, developing licensing programs, defending
against patent assertions, and creating a value-driven IP portfolio.
We give direction to businesses that share our passion for new
ideas, creative problem solving and forward motion.
Contact Information:
+1 (650) 967-6555
info@richardsonoliver.com