Sony Corporation, commonly referred to as Sony, is one of the leading manufacturers of electronic products for consumer and professional markets. Its business is extensively diversified and in addition to electronic products, it also maintains operations in picture entertainment, computer entertainment, music entertainment, online entertainment, etc. Ever since the 1950s, Sony has played a leading role in the development of electronic product industry. It introduced the world’s first semiconductor receivers, first home video recorder, first portable music player, and so on. In 2013, Sony developed one of the world’s first and largest OLED TV that has a 4K resolution. The reason why Sony can play the leading role in the industry is because it always attaches great importance to R&D investment. According to The 2013 EU Industrial R&D Investment Scoreboard, Sony had invested 5.7 billion US dollars on R&D in 2013, increased 9.3% on a year-on-year basis, ranked 20th on the Scoreboard. This is why Sony has 70,000 patents worldwide with great business potential.
In the process of keeping itself innovative, Sony continuously invests a great deal of money on acquisitions; acquiring Konica Minolta to procure its special optical technology, completing full acquisition of Sony Ericsson at a price of 1.05 billion euros and placing the “SONY” logo on its mobile phones ever since, buying CBS Records, film studio Columbia Pictures Corp and more recently leading the acquisition of EMI Music Publishing for 2.2 billion US dollars to possess 30% of the world’s copyright music. Sony’s series of acquisition activities can be reflected in all IP areas, either with the aim of obtaining key technologies or to expand business.
It is said that IP is the core competency for wealth creation. This can be seen from the increase of IP assets compared with enterprise’s capital assets. According to statistics, among 500 US listed companies, the proportion of tangible assets and intangible assets (primarily IP) was 62%:38% in 1980s, while the proportion of tangible assets had been greatly reduced to 13% in 2002. Though there is no such ratio in Sony, the large number of patents with the great potential value they possess, and the series acquisitions it performed can reflect the increase of intangible assets of Sony, and moreover reflect its core competency for wealth creation from the perspective of IP.
On the occasion of the fourth edition of the Business of Intellectual Property Asia Forum (BIP Asia), a China IP journalist got the chance to interview one of the star speakers of the forum—Mr. Toshimoto Mitomo, Senior Vice President, Coporate Executive of Intellectual Property at Sony, to learn more about Sony’s IP strategy and its IP development plan in China. Readers who want to learn more from Mr. Toshimoto Mitomo and other international industry players, please visit BIP Asia Forum on 4-5 December in Hong Kong.
China IP:Business of IP Asia Forum (BIP Asia) which is held every December in Hong Kong has been considered as one of the most influential IP conferences in Asia. The theme of this year’s conference is “Intellectual Proper t y : Powering Business Expansion”. As one of the star speakers, could you briefly describe the main subjects of your speech?
Mr. Toshimoto Mitomo:Sony has been successful in creating a new consumer electronics product market with new technologies by offering its IP widely in the industry and leading the industry as a market enabler. Since internet technologies were integrated into consumer electronics during the late 90s though 2000s, the consumer electronics industry started changing dramatically and rapidly, and most recently cloud technologies have started changing the whole ecosystem of our industry. I would like to share a little bit about how Sony analyses such dynamic changes in the industry and how we are trying to use our IP to empower our business expansion.
China IP:Based on your years of experience in Sony Corporation, to what extend do you think IP can help with empowering business expansion?
Mr. Toshimoto Mitomo:I think IP can help with empowering business expansion if we can package IP licenses in a way which encourages many companies in the industry to adopt new technologies and new business models using these new technologies and enlarging the size of the market and business opportunities. To encourage the industry to adopt new technologies and new business models and enlarge the market, it is important to understand what kind of value we can offer to the industry using IP licenses to motivate people to take a license. I think a friendly IP license to the industry certainly helps to empower business expansion.
China IP:Could you please briefly introduce Sony’s overall IP strategy? What percentages do application, licensing and litigation take respectively?
Mr. Toshimoto Mitomo:Sony’s overall IP strategy is to support its business. We use our IP to protect our business, reduce barriers to enter into new business areas and help expand new business markets by offering IP licenses. We have about 400 people worldwide dedicated to IP business and roughly 30% of people are handling patent filing, 30% handle licensing and 40% cover litigations. Although Sony’s IP group has generated sizable IP licensing revenue, our main objectives are to use IP to support our business. Generating licensing revenue is not our primary objective.
China IP:As you mentioned above there are around 400 people working on IP business. How many of them are working on Chinese businesses?
Mr. Toshimoto Mitomo:Sony has about 400 people specializing in IP globally. In 2013, we established a joint venture (Global IP Partners) with a Chinese business process outsourcing company and started offering high quality IP administrative support work not only for Sony but also for other Japanese companies. In 2014, we established another joint venture (IP Value Serve) with an Indian know-how process outsourcing company and a Japanese patent firm. We started offering high quality Japanese-English translation services as well as US patent filing and prosecution services. Some of our resources have been transferred to those joint ventures, and such transfers are reflected in the total number of people working for IP, but they are offering services continuously for Sony and other customers as well.
Regarding China, we have an IP and Standardization Group (IPSG) in China. The main office is located in Beijing with branch offices in Shanghai and Guangzhou with a total staff of less than 20. They provide all kinds of IP services, such as supporting our engineers, participating in activities for setting technology standards in China, etc.
China IP:There are not many enterprises in China that realize IP’s significance role in enterprise management, especially senior officers who make the development strategy without thinking of IP. Could you give some examples on how IP plays the crucial role at Sony?
Mr. Toshimoto Mitomo:When we introduce new products or services with new technologies, understanding the cost analysis is very important, and in addition to other valuable cost factors, IP costs are also important. Understanding the IP landscape and analysing the value of your own IP portfolio in that space and determining how you use your IP portfolio to meet your business objectives is one of the key strategic factors which senior management needs to have. Especially when the business ecosystem gets bigger and bigger, there are so many moving parts that it will be extremely difficult to analyze the landscape correctly and find the right partners who can help achieve your objectives. It is almost impossible for a single company to provide all of the necessary key technologies from end to end, so you need partner companies who can complement each other. Fortunately, I had a lot of opportunities to work with reputable Chinese companies, and we are working closely with some of them to create a new business model and ecosystem.
China IP:According to statistics, Asia had taken the first place from Europe on overseas patent applications for Sony, and patent applications also increased in China. What is Sony’s IP layout in China?
Mr. Toshimoto Mitomo:We view China as one of the most important countries from an IP viewpoint. That is why we have been filing a lot of patent applications in China. We are hoping Sony can work with Chinese companies who share the same vision and build a new business model from China by using partner companies’ technologies and associated IP assets, including Sony’s, and promote that as a future global business standard, considering the growth of the Chinese economy, the size of market, and highly energized R&D and enterprises.
China IP:What kind of IP problems or challenges does Sony face? Does Sony have IP disputes with Chinese companies? What kind of measures does Sony take to prevent such disputes in the future?
Mr. Toshimoto Mitomo:Selling counterfeits online is a new challenge for us since the counterfeit manufacturers and distributors are hidden behind the scene. We are happy to work with the main Chinese e-commerce platform companies to close down thousands of shops per month that engage in selling counterfeit goods online. However, we still need to find an effective way to catch the infringers behind the scene. We also wish to specially thank the Chinese Customs for their efforts in stopping the exporting of counterfeit goods aboard, and Administration for Industry and Commerce on their efforts in removing counterfeit goods from the domestic market. As our own efforts in order to protect consumers in China and our interests, we do have IP-related legal cases in China, for example, our patent infringement action against counterfeit batteries was chosen as one of the 10 best IP cases by The Supreme People’s Court some time ago. In order to accelerate innovation in China, Sony hopes the IP Court plan will enhance the value of patents in the future.
