China is becoming a "protection money" economy and other Asian countries risk a similar fate

Summary: Now that patent trolls are flocking to China (with its trolls-friendly courts) we worry that Korea is being lured into a self-destructive path while Singapore and India too get indoctrinated by the patent 'industry'

COMING tomorrow we have about half a dozen articles about the USPTO, where there has been positive progress towards the end of software patents and containment of the patent trolls epidemic. Today, however, we wish to speak about the negative, which is China's SIPO (worse than even the EPO when it comes to patent assessment).

"IAM later bemoaned all this, noting that patent trolls are going to China because US courts no longer tolerate them quite as much."China's patent gold rush and bubble is a subject we have spoken about for quite a while and we correctly predicted a wave of patent trolls flocking to China. This isn't a positive development, certainly not for China.

Earlier this week the editor of IAM wrote about their patent maximalism event called IPBC Asia (day one and day two). It was one heck of an echo chamber and the editor of IAM said that the "US as a venue for patent litigation lawsuits has declined greatly" as if that's a bad thing. That is a very good thing. US companies can now focus on development rather than litigation and compliance by removal of products/product features.

"RPX received a special mention because it derives its business from a saturation/abundance of troll activity."IAM later bemoaned all this, noting that patent trolls are going to China because US courts no longer tolerate them quite as much. RPX received a special mention because it derives its business from a saturation/abundance of troll activity. It's like a massive protection racket, which IAM referred to as "sluggish US market" (as if protection rackets are a "market"). Here are some relevant bits:

Where exactly those resources might go is not clear. There is clearly increased interest from NPEs in bringing infringement lawsuits in China. Last year WiLAN brought a case against Sony in one of the first patent suits involving a foreign NPE, while Dominion Harbor and Longhorn IP have both formed partnerships with Beijing East IP as they seek to monetise assets in the country. But the degree to which there is appetite among local Chinese companies for a business offering protection against NPE lawsuits appears open to question - damages are low and there remain serious doubts as to whether domestic companies would ever prove to be fruitful NPE targets. Plus there is always the challenge of turning a profit in what remains a relatively embryonic IP market where businesses are not accustomed to paying for the kind of support services that have developed in the US.

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This is not the first time that RPX has flagged its ambition to expand overseas. In 2015 former CEO John Amster told analysts that the company was keeping close tabs on Europe. At that time the prospect of NPE litigation shifting across the Atlantic, and to Germany in particular, appeared very real; and while that did happen to some extent, it has arguably not occurred at the kind of levels that some predicted. Plus Europe just doesn’t have the same volume of tech businesses that remain the core of RPX’s client base. But at a time when the traditional RPX business of reducing the risk its members face from NPE litigation in the US continues to slow, it is not surprising that the company is still looking overseas for growth.

So recognising that many trolls are moving to China, RPX is moving there too. Good riddance!

"So recognising that many trolls are moving to China, RPX is moving there too. Good riddance!"IAM has, additionally, spoken about Korea, citing old "valuation of just over $600 million" for nothing but a pile of patents. These are, suffice to say, made-up/imaginary numbers (accounting tricks and cost-free lies), putting a value on some firm in the peak of a bubble. Samsung is picking up a bunch of patents and IAM refers to these as "properties" (a ludicrous term). To quote:

With a valuation of just over $600 million, Quixey was not quite a unicorn, but it is one of the biggest Silicon Valley startups to go out of business thus far in 2017. The Mountain View-based developer of mobile search platforms and digital assistants folded in May after raising $165 million in venture money, with Chinese giant Alibaba as its single biggest backer. But according to USPTO records, it is not Alibaba but Samsung Electronics that is poised to come away with most of the company’s patent assets after a series of assignments in October.

Quixey made eight separate assignments to Samsung Electronics on 19th October, totalling 194 properties. An annex attached to each assignment shows that when including applications and non-US patent rights, the total number of assets changing hands is 487. While the large majority of the portfolio is US-based, it also contains PCT, Chinese and South Korean rights. All of the applications were made in 2012 or later.

They probably got these patents reassigned very cheaply. The numbers above are reckless nonsense. Korea has already accumulated a large number of patents which later turned out to be pretty worthless. This venture was known as Intellectual Discovery and IAM has just recalled that too, admitting that the patents are to be given away after a massive failure. Korea will hopefully not be reckless enough to give these patents to patent trolls which start a racket. To quote:

Korean patent fund Intellectual Discovery (ID) is seeking a buyer for its subsidiary ID Ventures, according to the company’s website. IAM understands the fund is weighing multiple offers already, and just one week remains before the bidding deadline closes on November 9th. What the potential sale means for the future of ID is unclear, but it comes as the fund continues to sell patents to third parties.

What a silly bubble and a waste of time/money. Surely the effort could be spent on something else. Nowadays we hear about Korean firms being dragged into Chinese courts over patent allegations, so we assume companies like Samsung strive to gather 'defensive' patents.

Last week we wrote about how the Singaporean High Court was putting patents before common sense -- a subject now tackled by Sheena Jacob of JurisAsia in Singapore. She says this:

In a ground-breaking decision, the Singapore High Court has ruled that it does not have original jurisdiction under the Singapore Patents Act to revoke a patent. Up until this decision, it has been common practice for defendants in patent infringement proceedings to challenge the validity of a patent by means of a counterclaim for revocation of the patent in question. Indeed, prior Court decisions have exercised such jurisdiction under the Singapore Patents Act to revoke granted patents. Thus, both the validity and infringement issues were determined in the same proceedings and heard before the same judge who would also revoke the patent.

Singapore's patent maximalism, as we noted many times earlier this year, has already attracted ruinous patent trolls to the country. If Singapore fails to learn from China's mistake, it too will be overrun by such patent worship, which causes nothing but trouble and enriches only the legal 'profession'.

"If Singapore fails to learn from China's mistake, it too will be overrun by such patent worship, which causes nothing but trouble and enriches only the legal 'profession'."Over in India, which isn't too far from Singapore (a country with many Malays, Chinese and Indians), software patents are banned and patent minimalism is notable worldwide. It's probably most stubborn in opposing US-led lobby groups that try to shame it into patent maximalism (especially in the area of medicine and software). But according to this new article from Outlook India, there's a real concern that the United States gains leverage, e.g. on patents. The article covers the issue of software patents. It says "[t]here is already an evidence prior to the establishment of WG that Indian Patents Office granted patents on isolated genes, the pharmaceutical substance in public domain and software, which is prohibited under the law."

"This is certainly something to keep an eye on, or else India might become another China, i.e. an attractive hotbed for patent trolls; the ramifications would be more severe in India because India has a more software-centric technology industry, whereas in China the focus is on hardware.""However," it adds, "some policymakers viewed that WG is an attempt to provide the way out to the US government to ease the domestic pressure from a coalition of industry associations lead by Pharmaceutical Research Manufacturers of America (PhRMA). Therefore the working group is only talking shop and would not lead to any adverse outcome for India's public interest-oriented Patents Act. After four meetings of WG since its establishment, there is ample signs accommodation of US demands at the cost of India’s socio-economic interest."

This is certainly something to keep an eye on, or else India might become another China, i.e. an attractive hotbed for patent trolls; the ramifications would be more severe in India because India has a more software-centric technology industry, whereas in China the focus is on hardware. ⬆