The Patent Buying Spree of Chinese Tech Companies – Is it alarming?

Chinese tech companies are stocking up on patent purchases, but is it anything more than share price padding?

“The leadership in China knows that innovation is its future, the key to higher living standards and long-term growth…. They are doing everything they can to drive innovation, and Chinaʼs patent strategy is part of that broader plan.”– David Kappos, former Under Secretary of Commerce for Intellectual Property.

Kapposʼ grand statement in a 2011 interview with The New York Times may not have captured the far more practical, and sometimes cynical, driving forces behind Chinese high-tech companies purchasing large amounts of patents and patent families from both partners and competitors. In acquiring vast swaths of patents, so do these Chinese firms acquire the means to inflict debilitating litigation on foreign competitors. 

Lenovo—which acquired IBMʼs personal computer business in 2005—purchased and licensed some 2,500 issued and pending 3G and 4G patents from Unwired Planet in March. This closely followed the purchase of 3,800 patents from NEC  and complements their on-going efforts to purchase Motorola Mobility.

Author
TT Consultants