Will AI Help Solve IP Valuation Challenges? — Story of Top Innovators in China

Valuation of IP (especially patents) has been a challenge to IP monetization deals, such as patent pledge or patent securitization.  Some Chinese companies are adopting AI and Big Data to deal with this issue. This approach has already brought some results.  SpringIP conducted an independent survey and analyzed the current leading players in this sector and their approaches.

Adopting AI Technology to Ascertain IP’s value

As discussed in our previous article, What have AI and Blockchain to do with IP monetization in China?, AI technologies can in many aspects facilitate finding the inherent values of IPs, and thus foster the IP pledge and patent securitization deals.  AI Supervised Learning (a machine learning algorithm) can assist professional valuers to determine the value of a patent more objectively and consistently. These improvements are increasing the confidence of parties in IP monetization deals which, in turn, increases deal flows in the financial system.  With this new tool, an important trend is emerging in business ventures leveraging AI tools in patent pledge and, more, broadly IP monetization. About a dozen of startups in China are now seeking to establish sustainable business models involving such new services.

On October 2019, Spring IP Group, a company dedicated to enterprise innovation through AI and Data Mining tools, conducted a survey on the top 10 leading Chinese companies in this area.  (See Summary Table below.)

The Current Players

The survey provides the following interesting results:

• Founders of these startups used to be in the business of valuers, translators, legal research providers, or patent research providers.  They used to be in the IP service industry, facing worsening price competition. As such, moving into a new AI business appears a reasonable choice.
  
  

• 2 out of the 10 companies surveyed have their overseas connections. In order to have a jump start, these startups with overseas connections receive either AI technologies or investment from partnerships in more advanced countries. On the other hand, the other 8 startups with no overseas connections appear more savvy in marketing strategies.
  
  

• The services they provide are at different stages of maturity.  Three startups have already started to build an AI/Big Data valuation module in their data base. The rest are still using traditional IP search tools and manually determine the values of IP.  The difference of efficiency and accuracy between these two groups may widen as the AI algorithm is improving.  The market will see “the winner takes it all” and expects to see 2, at most 3, survivals to dominate the markets.
  

Limitation of the Potential

Is such adoption of AI for IP valuation a potential business?  Probably not.  Our previous article Blossom of New IP Business Models in China, does not consider such AI-enhanced IP search service to be one of the potential business models in the coming years.  The ongoing development of this area in China is likely to help ease the difficulties in IP valuation, and thus facilitate IP monetization in this market.  But the potential of such AI ventures seems limited.

The use case, not the tool alone, will determine the value of a tool.  Just like the ones who sold shovels during the California Gold Rush - if it were not in that specific time and in that particular region, the shovels cannot be a hot sale no matter how efficient or advance they are. Likewise, the same applies to the sales of miners in the recent Bitcoin rush. The tools need to be placed in a context where users have a burning need for it.

Like AlphaGo does, in Go Game, currently AI application does well in replacing human’s brain functions under a preset rule and in a limited area. AI-enhanced IP search service now has well supported a narrow technical function in IP-related work of a company. However, for AI application to help with business decisions more generally, it will need to cover interactive rules, and integrate information from multiple aspects that may impact on business judgement.

A Burning Need to Meet

Under the current economic circumstances, most companies have a burning need to upgrade and transform, so as to meet the new global economic orders.  It is true that an AI-enhanced IP search tool could save money and increase efficiency, but it still leaves gaps to meet that burning need, leaving the solution incomplete.  The recent shutdown of $75M LegalTech startup in March has exemplified this mismatch between the market needs and products.

A more complete solution calls for an exercise to integrate Big Data in market trends, IP strategies, and intelligence of technology/industry supply chain. As such cross-border thinking and interdisciplinary trainings are required for this exercise, the startup teams aimed at this solution are still very rare in the market.  (Dr. Jili Chung is currently working in Greater China. Jili is the founder of SpringIP Group, dedicated to foster enterprises’ innovation through AI and Big Data tools.  Carlo Geremia at Nctm has contributed to this article.)

The Top 10 Leading Companies in China Using AI Tools to Find Value for Patents (Not in a particular order)

Source: iprdaily.com

Author：Jili Chung

Editor：Vapor