Sanan Optoelectronics failed to take over Osram after having its bold $8.2 billion bid rebuffed late last year. But the Chinese LED maker has turned to the patent market to shore up its IP position, most recently buying a pair of portfolios from Sony. As increased scrutiny from regulators in both Europe and the United States threatens to scuttle Chinese firms’ more audacious M&A endeavours, there is still significant scope for them to acquire IP in smaller-scale deals.

USPTO assignment records show two transactions between Sony and Sanan (sometimes styled San’an) Opto, both executed on August 8th. The most recent was recorded last week. The first portfolio contains 11 USPTO grants and 32 assets in total, including counterparts in China, Japan, Korea and European jurisdictions. Most of these cover either a “Light emitting device” or “Device transferring method”. The second adds just seven Sony patents titled “Semiconductor device” – two from the US, two from China and three from Japan. For Sanan, the Sony patent acquisition is its biggest since it bought a portfolio including 44 granted US patents from Sharp back in 2014.

A USPTO database search turned up just one previous example of Sony transferring patents to a Chinese entity. In 2015, it assigned six imaging-related assets to Hikvision, a video surveillance company whose controlling shareholder is a state-owned enterprise. So it appears to be a relatively rare occurance. Throughout this year and going back to 2015, Sony has steadily transferred LED-related assets to JOLED, an entity which was formed to combine the OLED functions of Sony, Panasonic and Japan Display in 2014. The Sanan sale perhaps shows that Sony has identified assets in the technology area which are not needed by its spun-out business but can find willing buyers on the open market.

While notable, this transaction pales in comparison to the major IP move Sanan would have liked to make this year – the buyout of German LED lighting firm Osram. In October 2016, the Xiamen-based company made a $8.2 billion bid to acquire Osram, and its US patent portfolio of nearly 4,000 grants and applications. While the deal included the entire business – which itself was spun out of Siemens in 2013 – it is clear that IP was a major driving factor. A Barclays analyst at the time observed that Sanan needs assets that allow it to ink crucial cross-licence deals, adding: “These IP rights will allow Sanan to sell its chips legally outside of China, something which it has not been able to do thus far.”

But Sanan had chosen the worst possible time to float the trial balloon of its interest in Osram. Another Chinese corporate, Midea, was close to completing its takeover of Kuka, one of Germany’s premier robotics firms. That acquisition went through, but it brought alarm over the loss of key national technology firms to the forefront in Germany just in time to scuttle Sanan’s talks with Osram. The Chinese company evidently walked away from the deal in December.

But a smaller chunk of Osram IP did manage to find its way into Chinese ownership earlier this year. The company hived off its light bulb division to focus on higher-tech LED applications, and it successfully sold that unit – named Ledvance – to a Chinese-led consortium in March. Shenzhen-listed LED manufacturer MLS partnered with two Chinese investment firms to close that $425 million deal. USPTO records show that as it prepared to sell the Ledvance unit, Osram assigned it over 200 US patent assets.

It may be an uphill battle for Chinese firms to acquire the truly high-end foreign technology they want most. The Trump administration’s intervention to block the sale of Lattice Semiconductor to Chinese investors is just the latest sign. But so far, pure patent sales haven’t generated any similar reaction. Companies like Sanan Opto have taken notice of that.