ZTE and IBM discuss their international patent strategies

Shen Jianfeng, director of the IP department at telecoms equipment provider ZTE, described his company’s multi-pronged approach to overseas patent portfolio management.

Patents are the tools we use to penetrate new markets, Shen explained. He stressed however, that ZTE carefully evaluates each potential market before deciding how and whether to develop its IP portfolio there.

We don’t have unlimited funds, so we have to be strategic in which countries we want to enter, he said.

Shen said that when looking at new markets, ZTE considers not only the level of competition there, but also the level of IP protection.

“We classify each country’s legal environment and level of protection as high, medium, and low,” said Shen, to determine what this means for each patent.

Not only do patents provide ZTE with the means to enter and compete in new markets, he said, they are also a stepping stone to ratifying the company’s reputation with customers.

As the company has become bigger, customers look at ZTE’s patent portfolio to evaluate whether it has the technical knowledge to deal with their problems, Shen explained. Having a strong overseas patent portfolio is a sign of the company’s capabilities.

Other rights owners agreed with the need for a selective and carefully considered IP strategy.

“You should not file all of your patents”, said Yang Xuri, IPR director for Peking University Founder Group. He pointed out that only 10% of his organisation’s IP portfolio is filed in the United States.

Companies need to not only understand the technical specifications of their patents, Yang said, but they also need to have a good sense of the commercialisation capabilities. If a piece of technology is not very good, he explained, then the rights owner should weigh the value of the technology against the cost of registering the patent.

Liu Xiaoyu, IP Manager for IBM, said she sees patents as an integral part of the company’s long-term strategy. She said that as one of the largest patent filers worldwide, IBM sees a number of advantages in having a broad patent portfolio.

Patents are an important tool for IBM to maintain its competitive advantage, she said, and are also a source of revenue through licensing.

Another advantage she emphasised was the flexibility that a large portfolio gives the company. Not only can IBM lessen the likelihood of accidental infringement, but it can also use its own patents to enter into cross-licensing agreements with other companies.

A broad portfolio ensures IBM’s freedom of action, so that it can manufacture what it wants and provide the services it wants, she said. “We don’t want to be restrained in our actions.”

The China – International IP Forum took place June 20 and 21 in Beijing.