In an interview with Managing IP, Mitomo (right) says that licensing practices change over time in response in part to increasingly complex technological eco-systems and that his company has been trying to come up with new frameworks to adjust to market developments.
Development of licensing
He explains that in the 1960s, GE held all the patents needed to manufacture televisions, meaning that getting the rights to build a TV was largely a one-stop affair. At that time, Japanese companies were smaller and the Japanese government actually gathered them together so they could negotiate to license those patents as one single entity.
In the 1970s, Sony and JVC each held patents covering the VHS videotape standard, and potential licensees had to negotiate with both companies separately in order to implement the technology. Mitomo says that due to complaints about the burden of multiple negotiations, Sony, along with Philips, later offered its patents for the compact disc (CD) format through a joint licensing scheme. In the 1990s, Sony and several other companies took the next logical step, putting the patents for the MPEG-2 encoding standard together in the MPEG-LA patent pool.
The challenge, as Mitomo sees it, is that products are covered by an increasing amount of patents so that even a patent pool like MPEG-LA may cover just one aspect of the product. Citing smartphones as an example, he says that many products are now covered by multiple standards. To this end, he suggests that “product licences”, that is, a patent pool that can cover a type of product rather than just the patents essential to a technical standard, may be the key.
Furthermore, he says that there may be no single answer to the patent licensing challenge. Instead, there needs to be multiple approaches and ways to encourage IP transactions, like “defensive” patent funds such as RPX as well as IP exchanges like IPXI, which Sony is a member of.
“Even if not all these models are successful, having more ways to buy or license patents I think is a good thing,” he says.
" The IP monetisation business can be a bit like marketing"
The patent portfolio as trade mark
Mitomo says that for Sony, the point of a patent portfolio isn’t to monetise it as much as possible. Instead, making sure that the technology is commercialised and that it is widely used is more important to Sony than deriving licensing fees. In many instances, the company may benefit more to have its technology adopted by others and used widely.
He also suggests that despite increasing talk about the importance of accurately placing a value on patents, the value of a patent is extremely subjective. When managing Sony’s portfolio, he tries to take the perspective of an outside buyer and try to judge the value from that perspective.
Along the same lines, he suggests that the value of a patent sometimes lies less with the underlying technology and more with the marketing value. For example, Mitomo notes that Intel is one of the largest computer chip companies in the world, and though it does license out its technologies, licensing revenue is not a large part of the company’s revenue stream. Instead, he suggests that the big part of Intel’s patent portfolio and licensing programme is that it allows Intel to hold itself out as a technology leader and market its products as leading edge.
“The IP monetisation business can be a bit like marketing,” he says.
Both sides of the argument
Mitomo also weighed in on the recent patent reforms in the US. He says that despite being a large generator of patents (third most in the US in 2013), Sony is more often on the defence side in patent disputes. From this perspective, he says that many of the changes stemming from the America Invents Act (AIA) are good ones.
“From a purely business perspective for Sony, some of the changes are quite good, such as inter partes review (IPR),” says Mitomo. “It can cost a couple of thousand dollars to challenge a patent using inter partes review, and while that is not cheap, it is less expensive than going to court.”
He notes that Sony has used IPR a few times to challenge patents.
When asked about some of the changes to the patent system proposed over the past year, Mitomo declined to support or oppose any of the specific proposals though he is following the debate. However, he says that as a company of inventors, Sony stresses the need for a balance. He notes that he believes that there are still some patents in the system where the claims are not clearly defined and that bad patents, especially if they are overvalued, can be a detriment to businesses.
Mitomo spoke with Managing IP at the Business of IP Asia forum, which took place December 4 to 5 in Hong Kong.