Will Multinational Enterprises and NPE Cooperation Normalize?

Recently, Apple (Apple), Amazon (Amazon) and Verizon (Verizon) were all filed by a company called Data Scape (United States International Trade Commission, United States International Trade Commission) 337 investigation because their products use patents related to cloud synchronization.

It is worth noting that Data Scape is an NPE(Non-Practicing Entity), and the three patents involved are US7720929, US7617537 and US8386581, and the original applicants of these three patents are Sony Corporation of Japan. This inevitably makes people think that traditional Japanese companies like Sony have to use NPE institutions to claim patents from other companies and profit from them?

In the field of intelligent terminals, Sony is not the first company to cooperate with NPE institutions. Ericsson, an established international communications company, has long tried to increase revenue through patent operations. In 2013, Ericsson sold 2500 patents to Unwired Planet and will take a percentage from the revenue of these patents. The strategy of taking a percentage is that if Unwired Planet's net income from these patents is less than US $0.1 billion, Ericsson will take a percentage of 20%, with a net income of US $1-0.5 billion, Ericsson will take a percentage of 50%, with a net income of more than US $0.5 billion, and Ericsson will take a percentage of 70%. This is also a big income for Ericsson. Previously, Ericsson's patent income mainly came from patent cross-licensing agreements, and the difference between patent income and research and development costs was large. Patent income was less than 2% of research and development costs. This may be the reason why Ericsson tried to achieve patent income growth through NPE institutions. In addition to selling the patents to Unwired Planet, Unwired Planet also granted Ericsson some of their patents, covering technologies in many wireless communication fields such as GSM, GPRS, EDGE and WCSMA, as well as invention patents that have been widely used in the mobile industry. Before that, Nokia also sold its 500 patents to Vringo, a patent operating company. Two months after Vringo bought these patents, it launched a patent infringement lawsuit with these patents.

With the precedent of Ericsson and Nokia, there is also a great possibility that Sony may increase its patent revenue through NPE. The infringing products claimed by plaintiff Data Scape in the 337 investigation mainly include Apple's iTunes and iCloud, Amazon's Amazon Music and Verizon Telecom's Verizon Cloud. Most of these products are cloud services, including cloud disk or cloud music services. In addition to the 337 investigation filed by USICT, the plaintiff Data Scape has also filed a number of patent infringement lawsuits in various local courts in the United States. The defendants include Dell and Western Digital and other companies. It can be seen that Data Scape, as the plaintiff, has a very positive claim on patent rights.

Of course, this single incident cannot be used to conclude that Sony operates its patents through the NPE agency, because before that, for traditional Japanese multinationals like Sony, patents were more like a talisman to carry on a counterattack, rather than a powerful weapon to attack other companies. But the current defendants include Apple, Sony's CMOS component customer, and Amazon, one of Sony's product sales channels, which also shows Sony's determination to increase revenue through patent operations. Sony should also have the incentive to hand over the patents to NPE for operation. According to statistics, NPE's litigation compensation amount is generally larger than that of ordinary companies. On the one hand, NPE institutions launch patent lawsuits extensively, and their litigation volume is large; on the other hand, NPE institutions have relatively single demands, that is, they want to obtain compensation, and because NPE institutions have no industry, defendants will not be able to restrict them through cross-licensing or counterclaims. Therefore, NPE companies will receive more compensation than ordinary companies.

As for whether Sony will passNPEinstitutions to operate their current holdings.4More than 10,000 U.S. invention patents have yet to be continuously observed in the future. If Sony really passedNPEinstitutions to operate their patents, which may become a model for multinational companies to operate patents in the future.