Far too many people invent ideas and write patents with no
concept of how it will lead to a return on investment. So
believes Tao Zhang, who was at Hewlett-Packard for 23 years
before joining Huawei in 2012. "When you generate an idea and
when you file patents, you have to keep in mind what it is for
eventually. If you can't use it later on, what is the point of
filing?" she asks, emphasising that she is speaking in a
personal capacity and not reflecting the views of her employer
or past employer.
"A lot of these patent lawyers and inventors don't keep the
end point in mind," she says. "They file like a routine. It's
just their job. For me, it is completely different: you don't
file unless there is something concrete from it. Otherwise you
are just wasting time and money. Why bother? Why don't you
spend your valuable time somewhere else?"
Zhang says regardless of whether a company's IP strategy is
offensive, defensive or IP revenue generation, a portfolio
needs to be built consisting of negotiation grade or litigation
grade quality patents. She examines this subject in depth in a
book she co-authored with Jingui Fang called "Mining Ideas for
Diamonds: Comparing China and US IP Practices from Invention
Selection to Patent Monetization". The book was partly inspired
by feedback received from her presentations on the topic in the
past few years at events such as the Intellectual Property
Office of Singapore's IP Week.
The book is pitched at inventors, patent drafters and
prosecution managers, portfolio managers, IP transaction
practitioners, and IP transaction lawyers – and
includes specific chapters aimed at each of these.
Diamonds are an inventor's best friend
The book's diamond analogy – representing quality
with long-lasting high intrinsic value – came from
Firstly, diamonds are a valuable tool but, depending on the
task at hand, the biggest diamond is not necessarily needed.
Similarly, a patent does not need to be the most innovative
invention or biggest technology breakthrough to have value.
Many patents with narrow-scoped minor improvements have
delivered high value. For example, a patent that has been
successfully used to sue another party and survived litigation
is generally viewed as a high-quality patent.
"On the other hand, if an IP practitioner skilfully uses a
patent to persuade a licensee to pay royalty fees to the patent
owner, this patent should be considered a high-quality patent
as well, even if the parties never litigate in court," Zhang
and Fang note in the book. "In fact, if a party is able to use
a patent to deter third parties from a potential patent suit,
such a patent should also be viewed as a high-quality patent.
Similarly, if a patent seller is able to develop a good
claim-chart and convince the patent purchaser to pay a
reasonably high amount of money for the patent, it is a
high-quality patent. Therefore, quality means high success rate
in IP transactions (or can be referred to as IP motions, since
some are preparatory work without consummating any IP
transactions), regardless of whether the IP motion is offensive
or defensive in nature."
Secondly, the diamonds do not necessarily come from
inventions that initially appear to be blockbusters. The book
notes that often an idea at the time of the patent filing was
not a breakthrough idea, but only presented a small improvement
in a feature. Or maybe it was an alternative approach that was
not necessarily considered the best solution.
Lastly, even after finding a "diamond in the rough", some
patents must be polished to take their roughness away.
"[P]atent drafters are like the alchemists for diamonds," say
Zhang and Fang. "They need to carefully contemplate the
specifications, embodiments, drawings, claim language and
structure to bypass prior arts, minimize potential defects so
to make the patent most effective in litigation and
Put simply, the book argues, a high quality patent is one
that is useful and effective.
"To generate such high quality patents, you need to
recognise the right idea (not necessary the most innovative
one), and motivate skilled patent drafters to work on the case
while constantly keeping your ultimate objective in mind," say
Contrasting China and the US
The authors also share their experiences and knowledge about
the differences between China and US law and procedure. One of
the aims of the book is to help readers to more quickly reach
their IP goals by highlighting potential issues faced in the
two systems. These were two of the top three countries in terms
of the number of international Patent Cooperation Treaty
patents filed in 2015, together making up 40% of the global
share, according to WIPO figures.
The book compares the practices in the two countries side by
side. The authors note a large demand within the US IP
business, legal and technical communities to better understand
China IP practices versus US IP practices. IP is attracting
much more attention in China than before.
When you generate an idea and when you file patents,
you have to keep in mind what it is for eventually. If
you can’t use it later on, what is the
point of filing?
"Companies in China and western companies, who want to
operate in China in the future, will need to figure out how to
manage IP in China," say Zhang and Fang. "Due to the fact that
the IP industry is new to the Chinese market, IP professionals
as well as inventors will face similar situations as the United
States did 10+ years ago." The book includes comprehensive IP
checklists comparing China and US IP practices, from idea
generation to patent monetisation.
The authors identify "a disturbing phenomenon" that is often
detected when exchanging opinions with those in the IP industry
who manage portfolios in the US and China: "Most of the patent
prosecution teams file patents with a 'passive activity'
mentality, i.e. treating patent filing as a mere by-product of
R&D programs rather than part of strategic planning."
Zhang and Fang say 10 years ago most people were conducting
IP licensing deals through trial and error. This meant they
were conducting IP transactions without fully understanding the
purchaser's needs. They say there is an urgent need for
inventors and patent prosecution teams to understand the
ultimate goal of patenting so that their time and effort are
spent on the most critical portion of the process.
"US companies, compared with their Chinese counterparts, are
usually more experienced at utilizing patent portfolios for
offensive purposes in protecting their business market share,"
say Zhang and Fang. "There are various offensive IP motions and
associated behaviours. The more aggressive motion involves
suing competitors for patent infringement and seeking
injunctive relief to prevent competitors from selling products
in the patent protected jurisdiction. As a result, it disrupts
the competitor's business operation and limits its revenue
Chinese companies are more likely to use their patent
portfolios for defensive purposes. This can include:
negotiating cross-licensing patent agreements with other
operating companies to gain design freedom; simply accumulating
patents in target geographies as preparation to enter those
markets; and using portfolios as shields to stop other
operating companies from suing them for fear of
This mindset in China is slowly changing, however.
"More and more Chinese companies are becoming strategic and
proactive in leveraging their patent portfolios," write Zhang
and Fang. "It will soon become a common phenomenon to see
sophisticated IP strategies being practiced by both US and
Speaking to Managing IP, Zhang adds: "China and the US are
very different, and a lot of people don't leverage this part as
much. Everybody is globalised but they don't seem to pay enough
attention to the differences between China and the US."
One example is the utility model in China. "People always
say that is low quality because it doesn't go through
substantial examination, but you don't need to make it low
quality," notes Zhang. "In six months you can get a granted
patent and you can use it in exactly the same way as an
invention patent." Some recent damages awards in China have
been based on the utility model.
In addition, Zhang pushes back on the perception that
foreign companies are disadvantaged in China. "Chinese courts
treat foreigners very fairly but the problem is a lot of
foreign companies don't understand the local procedure very
well. So they miss chances by not following the local
procedure, and missing a certain date or missing some filings,"
says Zhang. She says the situation is the same the other way
round: Chinese companies coming to the US need to understand
how the legal procedure works precisely.
Another indication of the increasing maturity of Chinese IP
enforcement is that non-practising entities are beginning to
look at opportunities there.
A world-class strategy
The book also takes a wider look at companies' business
strategies, and how having a world-class patent portfolio will
be a benefit. "If its goal is to expand globally into most
countries in the world, you should make sure to build a
high-quality worldwide patent portfolio to protect your
company's market share in those countries," the authors advise.
"This is the so-called offensive IP motion … to prevent
others from practicing your invention."
A world-class patent portfolio has three main benefits:
- It enables your company to capture
innovative ideas from research and development investments.
These could be reflected through invention disclosures,
patents, trade marks and trade secrets.
- It protects existing and future product or
business market share. These could be through patent
cross-licensing agreements, defensive assertion or
litigations in response to other's offensive assertion or
- It can contribute company's profits. This
could be realised through technology transfer, licensing
through a standard pool, patent sales, patent licence or
trade mark licence.
Talking to Managing IP, Zhang stresses again the importance
of ensuring a patent maps onto some products. She says without
this, people cannot even talk about value.
"Some of the methods today are like beating round bushes,
looking at whether a patent is valuable today through whether
somebody cited it or whether it was litigated," she says. "It
is almost like looking at the shadow of the object to guess
what the object is. It doesn't look at the object itself."
She adds: "Why are we beating round bushes? Just look at the
patent itself – does the patent read onto some
product? If a patent doesn't read on to a product at this time
it doesn't have value. I don't care how well written it is
– it is not valuable."
"Mining Ideas for Diamonds: Comparing and
US IP Practices from Invention Selection to Patent
Monetization" can be ordered from
World Scientific (the
first chapter is available for free download from World