SIM IP (Sauvegarder Investment Management) recently announced that it had acquired 126 patent assets from Alibaba, relating to video coding and data centre technologies and covering key areas such as AV1, AV2 and VCM (machine video coding). Although Alibaba is a member of the LOT Network (Licence-on-Transfer Network), the transaction was successfully completed.

SIM IP is a global intellectual property investment and monetisation firm headquartered in Miami and Paris, specialising primarily in the acquisition, structuring and liquidity creation of IP assets. This acquisition marks SIM IP’s 11th patent asset acquisition in the past 15 months. Previously, SIM IP initiated enforcement proceedings in the Unified Patent Court following its acquisition of FusionLayer patents, and acquired Qord IP’s IoT-related assets.

Under the LOT Network’s mechanism, if a member transfers a patent to a patent monetisation company or a non-practising entity, other LOT members automatically obtain a licence to that patent, thereby shielding them from the risk of litigation. However, this mechanism does not prohibit members from selling patents; it merely provides protection to members within the network, whilst non-member companies may still face licensing requirements or enforcement actions. SIM founder Erich Spangenberg emphasised that the commitment against non-practising entities does not preclude monetisation; LOT members may still utilise structural arrangements to capitalise on non-core patent assets.

The transaction primarily involves AV1, AV2 and VCM technologies. Whilst AV1 video coding technology has been promoted by several tech giants as a royalty-free standard, patent holders not participating in this commitment may still assert rights over the relevant technology and are not bound by FRAND obligations. As the next-generation standard, AV2 is expected to play a greater role in streaming and AI infrastructure.

VCM technology focuses on machine vision compression; unlike the AV series, it typically adopts a FRAND-style licensing framework. Yasser Zaghloul, Managing Director and Chief Technology Officer of SIM IP, pointed out that although AV1 and AV2 represent a generational leap, their licensing landscape remains fragmented and inefficient.

As AI, immersive media and next-generation connectivity drive rising demand for efficient video compression, the risks associated with patent claims surrounding royalty-free standards such as AV1, as well as licensing practices for VCM technology, are likely to become a focal point for the industry. IP Finance will continue to monitor subsequent developments.