IPO Candidate Tudou Is Building Its Patent Portfolio For Future Growth, Promoting Chinese Creativity

With 90.1 million registered users, 

Tudou 土豆, which means potato, 

is no small potato. 

The site for investors 'Seeking Alpha' gives an analysis of the Chinese online video site Tudou.com 土豆网 (for which they use the symbol TUDO) in relation to its competitors, before it is going for an Initial Public Offering (IPO) at NASDAQ Stock Exchange in the US. The IPO was planned last November, but because of a quarrel between the founder and his ex-wife it was delayed. 

For the valuation of what a company is worth, and to valuate the price per share, one should take into account the IP portfolio of a firm. In case of technology firms such as this online video company patents play an extremely important role. They can be used for defensive or offensive purposes. Seeking Alpha took a  look at the intellectual property of the IPO candidate: "INTELLECTUAL PROPERTY -- TUDO owns one utility model patent in China relating to a unique search engine system, and is in the process of applying for 32 additional patents to protect core technologies with respect to online video distribution and search."

Read the analysis here.

Effective measure against copyright infringement: create copyrighted works
Huang Ying has an interesting China Daily article about how Tudou is supporting the creation of Chinese films and TV drama, read it here.

UPDATE: August 19, 2011 Can NASDAQ Fund Chinese Piracy?

Tom Cheredar of Venture Beat gives the update on the Tudou IPO: they raised 174 million US dollar at the NASDAQ, read more here.
Greg Pilarowski wrote on July 27, 2011 also for Venture Beat about how a possible Xunlei IPO could lead that Chinese piracy would be funded via NASDAQ, read here.

continue reading ...

Professor Llewelyn: "Leverage Your IP Rights"

This Morning IP Dragon attended a breakfast seminar by Professor David Llewelyn (IP Academy of Singapore and Of Counsel at White & Case in Singapore). Even though it was quite early, many people interested in how to maximise the use of IP did show up at the office of White & Case in Central, Hong Kong. Professor Llewelyn's presentation was about Intellectual Property Rights as a Balance Sheet Asset. In other words how to commercialise your intellectual property rights. Below is a brief impression:

Professor Llewelyn rightly made the point that IP is not just a legal tool. That the IP assets are fast becoming a focus of the investment world. The securitization of intellecutal property rights is in Asia nascent. Article 26 Copyright Law 2010 even mentions this possibility explicitly: "Where a copyright is used as a pledge, both the pledgor and pledgee shall register the pledge with the copyright administrative authorities of the State Council."

China's leadership understands that it has to climb the value chain in order to continue its economic growth. And IP is protecting this added value. Professor Llewelyn covered the different kinds of intellectual property rights (he can cover all IPR in one hour, see here) and explained the origin of patent (to disclose the information in exchange for a temporary monopoly) as the opposite of latent (which one could apply to trade secrets).

Llewelyn described how Li Ning (athletic shoes and sporting goods) used a combination of the swoosh of Nike, the stripes of Adidas and the wave of Puma and using the slogan "Everything is possible" (while Adidas uses the slogan "Impossible is nothing", read an article by Drog Poleg on Danwei here) and still gets away with it.

About trademarks Professor Llewelyn said that many companies did not pick a very good name. He illustrated this by drawing the travails of China's computer manufacturer Lenovo, who used be called Legend. But this laudatory name was very hard to trademark in other countries. So it had to rename itself to Lenovo (Legend + Novo), which must have been a costly operation.

He made the distinction between copyrights which give the copyright holder the right to exclude others from copying their work, but is not giving a monopoly to the holder as is the case with patents.

In China most companies have utility patents which are not examined, therefore cheap, but really do not tell competitors anything about whether they are valid or not. Professor Llewelyn told about the IP game, of patent trolls (non-practising entities), licensing and sub licensing etc. which, of course, is a serious game, because a lot can be at stake. Valuation of IP can be very difficult. But it is getting more important, since many companies start to park their IP assets in "tax neutral" jurisdictions such as the Cayman Islands, Guernsey, Jersey etc.

You should know first what you have. Then use what you have. Leverage your IP rights.

Professor Llewelyn made a case for using IP strategically. And to bring IP out of the marketing and legal departments into the boardroom. One of the board should own the IP issue internally and deal with the IP challenges.

I am looking forward to read his book: 'Invisible Gold in Asia', which deals about the same crucial subject matter that only becomes more important for each and every company: Creating wealth through intellectual property.

continue reading ...

BCG Report Beyond the Great Wall: Intellectual Property Strategies for Chinese Companies

January 2007, Vladislav Boutenko, David C. Michael and Collins Qian of the Boston Consulting Group published the report: Beyond the Great Wall: Intellectual Property Strategies for Chinese compenies. Head tip to Brian Schwarz' China Challenges.

The report distinguishes five phases of IP development and compares China's development with the developmental phases Japan, Taiwan and South Korea have been through.

First phase: Driving growth through export
Second phase: Climbing the value ladder
Third phase: Paying the price
Fourth phase: Getting serious about IP
Fifth phase: Profiting from IP

The report asserts that China's focus on protecting their inventions only domestically may result in exclusion from international markets, and that they have to pay onerous royalties, or are forced to take on disadvantageous partnerships.

The report gives the example of the DVD player industry in China that had to pay 20 US dollars in royalties for each DVD player they manufactured, so that China in the case of DVD players is not a low-cost location after all.

The Boston Consulting Group famous for its BCG Matrix (remember dog, cow, star and question mark) has come up with the 'BCG IP Strategy Matrix': using the symbols of shark, minnow, target and superpower, to show how companies with IPR grow strong and how those without become vulnerable.

Read the BCG 26 pp. report here (pdf).

continue reading ...