Overcoming IP Challenges for Commercial Success: A Chat with AU Optronics
AU Optronics (AUO) is a world leader in optoelectronic solutions and TFT-LCD manufacturing. Globally, AUO has a portfolio of approximately 18,000 granted patents and has engaged in around 40 patent litigation cases versus large MNCs during the last decade. AUO has a strong intellectual property (IP) management team with deep experience in patenting strategy, portfolio management, licensing and litigation.
Recently, we had the opportunity to interview Dr. Spencer Yu, Senior Director, Head of Intellectual Asset Office of AUO, who generously shared his experience and insights from his 15 years in the business.
For the majority of tech-companies, the creation and utilisation of high-value patents are essential components of effective IP management. For these tech companies, especially large scale enterprises with significant investments in R&D, what are the main challenges they face? How does AUO overcome these challenges?
Spencer: Most organisations’ IP departments face the same key challenge: how to get and keep buy-in from the senior management, to ensure sufficient financial resources and manpower are allocated to create high-value patents. In many companies, top management may not be aware of the importance of IP until the company becomes embroiled in patent infringement litigation, which may well be too late. To deal with this issue, at least two key elements are required to have the right attention of the senior management.
The first and most important element is efficient communication. An IP manager/director must articulate how and why IP and, in particular, high-value patents are important to the company in a simple, direct and effective manner. For instance, while the concept of a patent and its technical nature may deserve detailed description and explanation, for time-poor C-Suite executives, an IP manager/director must be able to explain the underlying concept(s) and their value to the business in a concise manner and layman’s terms. It is important to empathise with the position of the senior decision-makers and focus on how IP could contribute to the strategic developments and enhance the company’s business value.
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Another key aspect is managing the expectations of the senior decision-makers on the time taken for IP or patents to show their values. Often, the top management would like to see an immediate impact or commercial return. However, the creation and utilisation of patents are inherently longer duration processes. Take, for example, patent litigations which are often argued as the best way to ascertain the value associated with a patent, statistics suggest that patent litigations typically take place 5-10 years from the date of filing the applications.
For many cash-strapped start-ups, their priorities are typically centred on product development and minimising the time-to-market. They often do not have sufficient resources to deal with IP. This is a common pain point faced by many small enterprises. Having said that, it is heartening to see that more innovative companies have put an early emphasis on, as well as resource allocation to, their IP creation and protection. This would allow them to reap rewards subsequently, for example, when it comes to company valuation in different investment rounds or even public share offerings.
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Although a high proportion of patents filed globally originate from universities, research institutions and other Institutes of Higher Learning (IHLs), successful technology transfer and commercialisation have always proved much more difficult to achieve. Given AUO’s track record of successful commercialisation collaborations with IHLs, such as ITRI and others, could you share some of the secrets to your success?
Spencer: In our collaboration projects, we focus on establishing research topics based on specific industry needs, while empowering and encouraging the IHLs to take full advantage of the opportunity to develop their research.
As a commercial entity, we are well-versed in the technical demands from industries. At the same time, based on our research background, we are also very familiar with the research ecosystem in which IHLs operate. Therefore, we are able to translate the different industry requirements into separate research topics to IHLs. In this way, our collaborative research projects are closely aligned with market demands, with outcomes that are targeted to solve well-defined industrial problems. By focusing on research activities in this manner, we have been able to achieve higher success rates and come up with higher value innovations.
In our view, enterprises entering collaborations with IHLs should be frank and open in their approach, rather than cautious and reserved, worrying about potential competition from IHLs who would master the core technologies developed. When IHLs are supported through collaboration to develop cutting edge technologies and consistently making future breakthroughs, then those IHLs will in-turn be more willing to collaborate with enterprises to bring additional, innovative products to market.
AUO has also been proactive in sharing our IP management experience with IHLs. Throughout our past collaborations, we have provided IP training and seminars to researchers and graduate students. This better enables IHLs to create high-value patents, and also provides the researchers, and especially students with opportunities to learn beyond the normal confines of the academic environment and understand how science and technology can be transformed into valuable industrial applications.
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In terms of policies that aim to promote successful technology transfer and commercialisation, given your experience in the industry with AUO, what are the most efficient policies, or IP frameworks?
Spencer: The government’s guidance on the valuation of patents, brands, data and other intangible assets (IAs) should maintain sufficient flexibility and freedom. Rather than setting a simplistic and rough set of standards around the valuation methodology of IAs, the government may benefit from giving way to the market in price discovery and valuation. The government can further support innovators by providing flexible tax regimes and policy incentives that work in harmony to promote both the valuation process and trading of IAs while avoiding too great an administrative burden of valuation details.
Singapore’s economy mainly comprises finance, transportation and shipping services as well as the manufacture of electronics, chemicals and biopharmaceuticals. Given Singapore’s economic composition and its location at the heart of South-East Asia, in your opinion what are the greatest opportunities and challenges that the country faces in developing its IP ecosystem?
Spencer: If one looks only at the absolute market size, Singapore may not be the most attractive place for foreign companies to register and seek protection for their IP. The Intellectual Property Office of Singapore (IPOS) has made great efforts to attract foreign filings including the accelerated examinations of patents in specific technology fields, as well as establishing the global Patent Prosecution Highway (PPH) with an extensive list of other countries and regions. These make Singapore a preferred choice of applying for patents.
On the other hand, when we view from the perspective that the value of IP protection is anchored in the ability of companies to effectively and efficiently enforce their IP rights, we can see that Singapore is in an advantageous position given its experience in international trading, financial and legal services. Building on its strong IP regime, which has consistently been rated as one of the best globally, Singapore is well placed to expand its influence as a hub for IP protection, via international arbitration, mediation and so on.
The ongoing US-China trade war has slowed the growth of globalisation, through its impacts on the global supply chain and the wider innovation landscape. How do you think these conditions are affecting (or will affect) the overseas patent filing strategies, and subsequent IP management for technology companies from Taiwan and elsewhere?
Spencer: The US-China trade war has intensified regional protectionism, establishing trade barriers or walls between countries and blocking the import and export of products. While this is a huge challenge for enterprises, it also presents an opportunity, especially for IP departments. These trade barriers and walls focus on blocking products, but not the creation of IPs. To a certain extent, the trade war has, in fact, increased the demand for IP protection in both countries. In this situation, MNCs need to pay more attention to protect their IP actively in the international market to overcome the walls of trade protection. Concurrently, the mechanisms for dispute resolution available to multinational corporations under trade war conditions rely increasingly on third-party arbitration and mediation. This is creating an increased demand for dispute resolutions provided by neutral third parties outside China and the United States. Linking back to the previous question, this is, in my view, a great opportunity for Singapore to develop and expand her international influence on IPs.
Read also: Keeping Your IP Out of Trouble
In the current era of the digital economy where emerging technologies such as AI, big data analytics and cloud computing develop rapidly. What are the new technologies that could be adopted to improve the organisation’s IP management?
Spencer: Around two years ago, my colleagues and I started monitoring AI tools developed by the leading providers of patent databases and IP services. Undoubtedly, AI tools have been developing at an incredible pace and can provide significant advantages in dealing with high volumes of data, helping us improve the quality and efficiency of IP management. With that being said, today’s AI tools are still relatively immature, meaning that patent search and patent analytics projects must still rely on the expertise of our IP professionals and their deep analysis.
At this stage, we cannot yet fully rely on commercially available AI tools, nor can we ignore the power and rapid development of AI tools. IP professionals need to understand both the advantages and the inherent limitations of these AI tools, to ensure that they utilise the right tools appropriately, given specific scenarios requiring IP management.
As the expertise and enterprise engagement arm of IPOS, IPOS International helps enterprises and industries use IP and intangible assets for business growth. To learn how you can leverage on your IP, email us at [email protected] or call +65 6330 8660.
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