When it comes to monetising Japanese patents............When it comes to monetising Japanese patents, WiLAN seems to have the special sauce 23 Jun 15 Canada’s Globe and Mail reported last week that Ottawa-based publicly traded NPE WiLAN “continues to underwhelm investors” who “have mostly given up on waiting for a big windfall” from their shares in the company. IAM has written before regarding WiLAN’s apparent underachievement on the stock markets. The fact is that things are tough not just for the Canadian NPE, but for the public patent pure-play industry as a whole. However, a glance through the acquisitions and licence deals that WiLAN has been involved in of late suggests that, regardless of what stock prices can tell us about such businesses, it is among the most secure and solid performers in the space. Its $33 million purchase of over 7,000 patents from Infineon earlier this month – patents that had previously belonged to bankrupt Qimonda – is one such example; the deal led almost immediately to a broad licence agreement with Samsung Electronics, with WiLAN CEO Jim Skippen telling IAM that he expects the acquired portfolio to bring in around $100 million in licensing revenue during its remaining lifetime. This month WiLAN also added original equipment manufacturer Funai to the fairly impressive roster of Japanese operating companies that have outsourced licensing of patent portfolios to the NPE. Its alliance with Funai – which involves the acquisition of patents relating to microphone technology – follows on from two similar ‘privateering’-style deals with Panasonic and another two with Kyoto-based electronics manufacturer Rohm; the first of these four agreements was signed in December 2013. Funai itself is no stranger to the IP transactions market, having been active on both the sell and the buy sides, and therefore standing out somewhat among its Japanese peers. In 2013, it purchased 1,500 patents from its contractor, US printing company Lexmark; the preceding year, it bought 360 patents from IPG Electronics that had previously belonged to another client, Philips. Funai has also experienced the harsher aspects of the patent market, having been sued in a US federal court last year for allegedly infringing patents that Taiwan’s Foxconn had acquired from fellow Japanese company NEC. What this all goes to show is that traditionally conservative and conflict-averse Japanese companies – often whether they like it or not – are being drawn further and further into the global marketplace in IP assets. All of this exposure is increasing their realisation that patents can be used not just to cross-license and protect product lines, but also to enter new markets and drive additional revenue streams. It is certainly the case that Japanese corporates are looking more closely at partnering with NPEs in order to monetise their patents; nevertheless, for many it is a galling prospect. Businesses from Japan have been on the receiving end of plenty of NPE litigation and those that do decide to team up with what many still consider to be ‘the old enemy’ are often derided. The upshot is that a large number of the country's operating companies remain apprehensive about partnering with NPEs. So what is WiLAN doing differently to its competitors that has enabled it to sign up three big-name partners? Quoted in a press release announcing the Funai deal, the Japanese company’s associate director Joji Okada stated that “WiLAN's strong licensing track record, financial stability, and ongoing investment in research and development were important factors in selecting them”. Similar reasons were given by Rohm when it entered into its first licensing partnership with WiLAN. Bearing in mind the almost toxic reputation that NPEs have in Japan, another factor that has likely attracted these corporates to deal with WiLAN is the level of transparency it is required to abide by as a publicly traded company. Speaking to IAM back in February last year, Joe Beyers, CEO at Inventergy, said that his NPE’s decision to go public was in part dictated by the desires of the two Asian companies from which it acquired its first portfolios – Panasonic and Huawei. “As a public company you are forced to be more transparent,” he said. “[Huawei and Panasonic] didn’t want to work with a company that might use shell entities and similar tactics they’ve seen other patent monetisation companies use.” As with other smaller players in the NPE sector, times seem to be particularly tough for Inventergy at the moment. Moreover, its securing of over $11 million (here; here) in patent-backed finance from Fortress Investment Group, which is concurrently financing Andrea Electronics’ patent assertion campaigns against a number of Asian corporates, may not sit too well with its two initial clients – particularly if there is a chance that Fortress could get any say in how the patents in question are monetised. WiLAN, on the other hand, benefits from its established presence in the marketplace, its large and diverse IP holdings and its existing relationships. It has certainly faced a number of setbacks of its own, and at one point not too long ago even looked like it might disappear from the scene altogether. But the fact that it it is making significant inroads into the hard-to-crack Japanese market indicates that the Canadian NPE is doing a good job of ensuring it has plenty of irons in the fire.