Today, Alibaba will finish taking orders for a $13.4 billion secondary listing on the Stock Exchange of Hong Kong. The Chinese company is closing the books early due to strong demand, it says. The plan is for Alibaba shares to trade in Hong Kong from November 26th.
The Hong Kong float comes five years after the e-commerce company’s debut on the New York Stock Exchange. Though it is not Alibaba’s public markets debut, the transaction is getting attention as a test of the Special Administrative Region’s continued appeal as a financial centre amidst months of civil unrest. It also gives us occasion to look at how far the company has come from an IP perspective since 2014.
The most immediate observation is that Alibaba is much more of a technology company than it was five years ago. In its IPO prospectus, the company told investors that it owned just 512 issued patents globally (323 of those in China), and had less than two thousand published applications in the pipeline.
Since then, according to its Hong Kong prospectus, Alibaba has doubled its portfolio of active patents four times over. The company told potential investors that its key proprietary technologies are around: “technology infrastructure, distributed cloud architecture, big data analytics, AI, IoT, communications, fulfillment and logistics systems, middleware and security”.
Alibaba patent holdings, June 30, 2019
Rest of world
An exclusive analysis published by IAM two months ago gives much more insight into the Alibaba portfolio, including how it stacks up against competitors and how those non-China patent holdings are distributed around the world.
Another significant change over the past half-decade is how Alibaba is seen in the brand owner community. The New York listing may have been intended to show the company’s good-faith effort to be a responsible global player, but it also invited high-profile legal actions from prominent brands concerned about the proliferation of counterfeits on various Alibaba-owned platforms. At the government level, the company is still identifying negative publicity generated by bodies like the US Trade Representative as a material risk.
Alibaba still has many sceptics in the trademark world. But this time around, the company was able to point to an active anti-counterfeiting alliance with industry heavyweights including 3M, Johnson & Johnson and Procter & Gamble. The company’s brand protection team was also recently voted as WTR’s Asia trademark team of the year, a sure sign of improving industry reputation.
The company’s Hong Kong prospectus also sheds light on the role of IP in the relationship between Alibaba and the Jack Ma-owned payments firm Ant Financial, which operates Alipay.
Alibaba set up Alipay as a payment tool in 2004. In 2011, Alibaba determined that it had to divest all interest and control in Alipay as a result of Chinese regulations around foreign ownership of payments companies. Alibaba founder Jack Ma became the majority owner of the new Ant Financial, which provided payment processing services to Alibaba. After objections were raised by major Alibaba investors Yahoo and Softbank, profit-sharing and royalty schemes were put in place.
In September, Alibaba acquired 33% of Ant Financial outright. Significantly, Alibaba says that its acquisition of the stake was “fully funded by payments from Ant Financial and its subsidiaries to us in consideration for certain intellectual property and assets that we transferred”. Under the new structure, Ant will no longer pay royalty fees and software technology services fees to Alibaba.
The two sides have also concluded a cross-licensing agreement covering patents, trademarks, software and other technology assets. The corporate cousins also stated their intent to coordinate and cooperate on IP prosecution, enforcement, acquisitions and joint defense. Of course, relationships in those areas have likely been strong for some time.
Observers see the restructuring as a prelude to an Ant Financial IPO, which is sure to bring interesting IP revelations of its own. It could see Alibaba’s IP-funded bet on its payments partner win big.
This article first appeared in IAM. For further information please visit https://www.iam-media.com/corporate/subscribe