IP Regime in China
IP Monetization in China
The Story Behind Top Innovators in China
Valuation of IP (especially patents) has been a challenge to IP monetization deals, such as patent pledge or patent securitization. Some Chinese companies are adopting AI and big data to deal with this issue. This approach has already brought some results. SpringIP conducted an independent survey and analyzed the current leading players in this sector and their approaches.
Adopting AI Technology to Ascertain IP’s value
AI technologies can, in many aspects, facilitate finding the inherent values of IPs, and thus foster the IP pledge and patent securitization deals. AI supervised learning (a machine learning algorithm) can assist professional appraisers to determine the value of a patent more objectively and consistently. These improvements are increasing the confidence of parties in IP monetization deals which, in turn, increases deal flows in the financial system. With this new tool, an important trend is emerging in business ventures: leveraging AI applications in patent pledges and, more broadly, in IP monetization. About a dozen startups in China are now seeking to establish sustainable business models involving such new services.
In October 2019, Spring IP Group, a company dedicated to enterprise innovation through AI and data mining tools, conducted a survey on the top ten leading Chinese companies in this area.
The Current Players
The survey provided the following interesting results:
Is such adoption of AI for IP valuation a potential business? Probably not. Our analysis in chapter 1 does not consider AI-enhanced IP search service to be one of the potential business models in the coming years. The ongoing development of this area in China is likely to help ease the difficulties in IP valuation, and thus facilitate IP monetization in this market, although, the potential of such AI ventures seems limited. Business norms suggest that the use scenarios, not the tool alone, will determine the value of a tool. Just like the individuals who sold shovels during the California Gold Rush – if they were not selling this particular item in that specific time and particular region, the sale of the shovels would have not been nearly as profitable, no matter how efficient or advanced they were. Likewise, the same applies to the profits made by miners in the recent bitcoin rush. The tools being sold need to be placed within a particular context where users have a burning need for it.
Similar to AlphaGo, Go Game’s current AI application does well in replacing human brain functions under a preset rule and in a limited area. AI-enhanced IP search service now well-supports a narrow technical function in the IP-related work of a company. However, for AI application to help with business decisions more generally, it will need to cover interactive rules and integrate information from multiple aspects that may impact business judgment.
Satisfying a Burning Need
Under the current economic circumstances, most companies have a burning need to upgrade and transform, to meet the new global economic orders. An AI-enhanced IP search tool could indeed save money and increase efficiency, but it still leaves gaps to meet that burning need, leaving the solution incomplete. The recent shutdown of a US$75 million LegalTech startup in March 2020 exemplifies this mismatch between the needs of the market and the products available.
A more complete solution calls for an exercise to integrate big data in market trends, IP strategies, and intelligence of the technology or industry supply chain. As such cross-border thinking and interdisciplinary training are required for this exercise, the startup teams aimed at this solution are still very rare in the market.
Dr. Jili Chung is currently working in Greater China. Jili is the founder of SpringIP Group, dedicated to foster enterprises’ innovation through AI and Big Data tools. Carlo Geremia at Nctm has contributed to this article.
The Top 10 Leading Companies in China Using AI Tools to Find Value for Patents
(Not in a particular order)