Alibaba taking shine to patents ahead of IPO in the US

Yahoo patents

Alibaba last month said it would begin the process of filing for a US public offering that may be larger than the $16 billion raised by Facebook in 2012. While the Hangzhou-based company hasn't said how much it will seek in the IPO, a person with knowledge of the matter said Alibaba may sell about a 12 percent stake.

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Yahoo owns a 24 percent stake in Alibaba and, according to a recent court filing, holds more than 1,500 patents.

Ashley Zandy, a spokeswoman for Alibaba in San Francisco, declined to comment.

Seven other Chinese Internet companies have filed to raise a total of $2.8 billion in New York this year, none of which has a US patent portfolio that could be found in a search of regulatory filings or patent office databases. Weibo Corp, a micro-blogging service that began trading on the US Nasdaq stock exchange on April 17, said in a regulatory filing that it owns one Chinese patent and has applied for 26 others.

"There are companies in China that are starting to have a sense for the western standards of intellectual property," Altman said. "Alibaba is shipping stuff into the United States on a fairly substantial basis. They want to play in the US market."

Increasing value

Patents can help drive up the proceeds in IPOs for software firms, according to a 2012 study by a researcher at the University of Bordeaux in France. An additional patent obtained prior to the debut may increase proceeds by about 0.9 percent, the study showed.

At the same time, the US Supreme Court is considering possible limits to the scope of the types of e-commerce patents that Alibaba owns. The high court in March heard arguments on standards for allowing patent protection in software, and this week heard arguments about what kind of limits can be placed on broadly worded patents.

Eliminating potential litigation also can be important.

Last October, Twitter warned investors that its lack of a large patent portfolio could make the company vulnerable to litigation. And about 48 hours before its November IPO, the San Francisco-based social-media company disclosed it was the target of infringement claims from IBM. Twitter went on to raise $1.82 billion in its IPO and later settle with IBM in January by agreeing to buy 900 patents from the computer company.

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