How to Make Profit by Free Service When Internet Plus IP Comes
By Doris Li (China IP)
Updated: 2015-09-11

How to Make Profit by Free Service When Internet Plus IP Comes

If you are an INsider IN the circle of intellectual property industry but have no idea of IP service new stars such as Zhiguoguo and IP Master, you must be OUT!

From 2013 to 2014, the Internet thinking swept everything. Despite its almighty power, we, as spectators, had no personal experience during that period. Since Chinese Premier Li Keqiang put forward the Internet Plus action plan in the 2015 government work report, many entrepreneurs have sprung up. Holding high the banner of Internet Plus, they bomb the territory of traditional industries through the exploitation of media, We Media, etc.

Indeed, we believe that the Internet has changed the world and Internet Plus will certainly transform the current world. For IP industry, a service industry with strong professionalism and specialty, what are the models for Internet Plus IP? Can these new stars succeed in finding a stable position and become pioneers in the IP industrial upgrade while holding high the banner of overturning traditional service models? What kind of accomplishments have they made and what are they working on?

Would you please introduce the model and products of your company and talk about your long-term plan under the Internet Plus IP?

Meng Tan: IP Master is a leading online mobile IP service platform for trademark application. It subverts the traditional process for trademark registration, aiming at providing clients with free service for trademark registration and surveillance through mobile Internet technology and web client service platform. By offering lifelong free service for online trademark application, IP Master will completely liberate clients from complex trademark application process. Clients can inquire and retrieve trademarks by one kick anywhere at any time and receive professional consultation and help in respect of trademark for free.

Liu Sisi: Zhiguoguo is the first platform for the provision of professional IP legal services in China. We are committed to provide the most professional, comprehensive and affordable IP legal services in order to help enterprises achieve transformation and upgrading and have the role of wisdom to be played to the best. IP legal services are the major products of zhiguoguo, covering the whole business process including creation, application, protection and management involved in trademark, patent and copyright.

Zhou Mingchen: Biaotianxia is an online IP platform, which aims to help enterprises find local excellent trademark service institutions. We are dedicated to solve two core problems: which institution enterprises should choose for trademark registration and how trademark service institutions expand their business. It is through biaotianxia that enterprises may complete their business close loop: exhibition → deal → service →evaluation → re-exhibition, by way of online service provider selection → order confirmation → online and offline experience & consultation service → online confirmation and evaluation of trade → online and offline after-sale service.

Shen Xiaole: AttyRelationsTM is an interaction platform for cross-border IP business built by Hangzhou Zhiying Information Technology Co., Ltd., which combines offline crossborder IP business opportunities with the Internet and makes the latter a front desk for offline cross-border IP service. Being the world’s first Internet Plus IP O2O cross-border IP law e-commerce platform and with IP field as the basis and cross-border IP business processes as a starting point, AttyRelationsTM develops five functional service plates to provide speedy and efficient service to meet the IP needs of cross-border enterprises across the world by ways of (1) search of global IP partners; (2) release of commission for foreign IP; (3) undertaking of outside-to-inside foreign business; (4) establishment of individual credit brand on the Internet and (5) cross-border payment with immediate arrival to the account without commission charge.

Ling Zixin: Laizhubiao is a platform for everyone to come for trademark registration. It holds the idea that a special registered trademark is a necessity for a successful business in the current fiercely competitive business world.

The traditional trademark registration model has shortcomings such as high charges for registration and opaque process of services. The free application may not guarantee the refund of trademark registration fees paid by the client if the agency was collapsed or its application was rejected. To make up those shortfalls, we have taken the initiative to introduce the mode of third-party enterprise cooperation to monitor the whole process of trademark registration and protect client’s interest in trademark registration application. We create the mode of “free trademark registration plus third party compensation”, according to which the official fee for trademark registration shall be compensated by the third party if trademark registration was rejected because of inaccuracy during blind period. This mode largely reduces the risk and cost of applicants, agents and agent institutions in trademark application and registration, and thus protects clients’ interest to the utmost.

What kind of relation between Internet Plus and IP should be in your eyes? How do you understand Internet Plus in IP industry?

Meng Tan: IP agent industry is a relatively old and closed industry, which has found more and more difficulties to meet the needs of current enterprises and has had a series of problems urgent to be solved because there has been no huge innovation and breakthrough in operation for many years. In fact, Internet Plus in IP industry is to break down information barriers between suppliers and buyers through the latest Internet communication technology, to reduce service costs and expand the coverage of IP rights through the scale effects of the Internet technology, to force the industrial transition to high value service through the free use of Internet infrastructure services, and to provide enterprises and practitioners with all the infrastructures and services by saas technology in order to achieve a speedy match and utilization of resources.

Liu Sisi: There is an inter-positive relationship between the Internet Plus and intellectual property. If they are perfectly combined, our working efficiency will be largely improved. So far, IP industry has adopted the traditional business model with low information transparency and efficiency. Whereas the Internet Plus makes it possible for IP industry to break the limitations on time and geography. Meanwhile, the unique mode of information and resources sharing in the Internet age also makes the information more transparent in the traditional industry, so that IP service can return to its nature, serving clients.

Zhou Mingchen: There should be a reshaping of traditional IP industry through the way of thinking and method of Internet professionals. I think the relationship between the Internet Plus and intellectual property should be that the Internet paves way for a healthier and more benign development of China’s IP industry and it should not be an alienation that only one side can exist at last.

Shen Xiaole: According to my understanding, the Internet Plus in IP industry refers to a new business mode resulting from the dominance of Internet and combination of intellectual property rights. However, I would like to stress that, it is more appropriate to put forward IP Plus Internet at the current stage of the industry. With traditional industries as breakthroughs and the popularity of Internet, the current mode and procedure of IP service will be optimized. The industrial focus will be moved from the traditional IP service to online IP service. Practitioners in IP industry should first be familiar with, then understand and follow the development of the Internet, and finally achieve the Internet Plus IP in the true sense.

Ling Zixin: Intellectual property is a traditional legal category, which is the object of right that has innovation and business value to the utmost of all rights under laws, whereas the Internet is a virtual space of innovation in its breaking of the limitation on geography, time and information, and even in its subversion of people’s traditional life style, and it is, therefore, an unprecedented innovation. In conclusion, the Internet Plus IP subverts the traditional IP service industry, service model, service process, and consumption patterns.

The reporter is informed that a slogan of no charge has been yelled by the current new service institutions with the Internet Plus IP as their major business. Then, how can they make profits as service institutions operated by enterprises? Does it mean that no charge is their advantage in comparison with traditional service institutions?

Meng Tan: Charging or free is just a kind of method selected by the Internet enterprise to fulfill its business purpose. Our core objective in the first phase is to achieve the products’ user experience to the utmost, to solve the pain points encountered by users and to satisfy every user of IP Master, so that our free, professional and speedy service can be recognized and confirmed. As long as we are widely recognized, correspondent gains can be acquired through our value-added services.

Liu Sisi: There is a remark in the Internet age that “the lost wool on sheep can be found on pig”, which is the most appropriate explanation for free services online. Profit must be taken into consideration by every institution. However, to make profit under such model requires a consideration of the closed loop of business model, namely, making profits by indirect methods, benefiting clients without charging from direct business. I have a clear consideration of zhiguoguo’s business model, though it is not convenient to disclose at present.

In fact, it is inaccurate if you think that no charge is the only advantage of the new model of the Internet Plus IP after comparing with traditional industries. The biggest advantage of the Internet age is data sharing, which also makes free services possible. Furthermore, a healthy competition in IP industry has been formed and the nature of service has come back to IP legal service due to the transparency and openness of information. Another thing is that having fun becomes the most important thing at present. Internet makes the IP legal service industry more interesting and attractive. After all, the essential purpose of law is to serve the people.

Zhou Mingchen: Only some online IP application websites adopted the free model. It has not been adopted by all IP platforms on the Internet. Biaotianxia is designed to help clients find local good trademark service agencies in a better way. The price shall be decided by those agencies and there is no compulsory requirement that their services should be free.

Free trademark registration means that no profit can be made from the registration process. However, it can be considerably compensated by complementary products and services, such as free for registration but charging on rejection and reexamination. Trademark application is highly possible to be rejected and then re-examined. Therefore, I think free registration can not be regarded as an advantage under such circumstance because traditional service agency can also provide free trademark registration service. It is just a kind of promotion. There should be more reliance on other advantages, for example lower cost in business acquisition and service, to gain advantage from scale effects for a higher overall profit.

Shen Xiaole: To be honest, I have to confess that I’m not completely clear about how to make profit at present, and I am not sure whether the possible profit from some business can offset the cost. In my opinion, a prerequisite for no charge is that the client who chooses free service has had the ability to make analysis and judgment as a general IP agent so that the part that has been originally provided by IP agent in the form of intellectual labor can be replaced by technology, or the free service provider can actually provide such service offline rather than make verbal promise and can bear the responsibility for the result.

Attracting clients is an advantage of free service in comparison with traditional service institutions. As far as I know, a lot of customers are still willing to choose traditional agent companies though they clearly know the existing websites that provide free service. This indicates that the real advantage for free service lies in attracting clients rather than replacing the traditional service. However, such advantage may become disadvantage after an increase of client quantity. The growing number of clients will force service providers to diversify their services and improve their capacities. When facing clients’ diversified needs, service providers need to continuously improve their service quality and production capacity in order to achieve “customer satisfaction” in correspondence to free service. As far as I know, production capacity and service quality may be a disaster for free service providers. It can not be deemed as emerging service institution if the number of clients is maintained at a certain level. If that is the case, the Internet Plus is just a kind of marketing tool and there is no difference between traditional and emerging services in the true sense.

Ling Zixin: For an enterprise, the operation of intellectual property rights is a cyclic process, including a series of confirmation, change and maintenance of rights. Every process requires professional services provided by professional IP service agencies. However, the threshold for enterprises’ IP operation has always been high due to expensive and non-transparent market prices. Emerging service institutions hold high the banner of no charge to lower such threshold in order to make profit from digging up deeper needs in enterprises’ IP operation. It is too simple to think that providing free services is the only difference between emerging service institutions and their traditional counterparts. In fact, the advantages of emerging service institutions include transparent prices , open processes, and convenient procedures. Internet makes it possible to serve clients from different industries and to recruit professional talents by breaking the geographic boundaries.

What advantages do you have in comparison with those service institutions that have decades of history in the field? And what abilities do you have, as emerging service institutions, to seek for a place and even to achieve subversion in the IP service industry?

Meng Tan: In comparison with traditional agents, we have four main advantages. First, our Internet and innovative spirit. Having been nurtured in the environment of Internet Plus IP, our founding team has rich experiences in wellknown Internet products, and more importantly, we have fully understood and inherited the Internet spirit. Second, our professionalism. The industrial background and expertise of our founding team is as professional as or even more professional than other traditional IP service agencies. Third, comparing with traditional service agencies, we can provide unique products, satisfactory customer experiences, competitive big data processing abilities and higher s e r v ice efficiencies that traditional service agencies dare not guarantee and have difficulties in achieving. Fourth, our business model determines that we must improve service quality and technical strength to support the business.

Liu Sisi: In comparison with those service agencies that have decades of development history, our biggest advantage is that we are more imaginative. With nearly 10 years’ experience in traditional legal service industry, our founding team has a deep understanding of the traditional service model especially its drawbacks. As a new emerging service institution, zhiguoguo has a more thorough understanding of the nature of service. Service must be equally provided. There should be no difference between big cities such as Beijing, Shanghai, Guangzhou, Shenzhen and other places. Clients should not be deprived of the access to service even though they are not located in big cities. The emerging service agencies have broken the limitations of time and space, enabling every place to enjoy our service for free as long as it can access to the Internet. This is, I think, the biggest subversion to the industry.

Zhou Mingchen: There are two groups on the Internet Plus IP platform. The first group has no cross-border experience in terms of IP. Its disadvantages include a lower professionalism and understanding in terms of IP rights in comparison with traditional IP service agencies. However, it is because of their lack of industrial background in IP service that they may have a more active thought that enables them to think beyond the traditional thoughts borne in the minds of pure IP practitioners. The second group is transformed from traditional IP service agencies, which means that the group has already possessed an understanding of the industry. If combining the industrial background and the new thinking, the group can make more innovations.

Shen Xiaole: AttyRelationsTM has no advantage in comparison with those service agencies having decades of experience. This is because we have never wanted to compete with them and on the contrary, we choose to cooperate with them. The founder of AttyRelationsTM is an IP agent with 10 years’ working experience. We can better understand what openness, sharing, cooperation and mutual benefit mean. We decide to explore our own way on the road of the Internet Plus, because there is no precedent for reference and imitation at all.

Different from traditional service agencies, new service agencies take the initiative through the Internet. Although they may be subverted by traditional players, they also have the opportunities to win. Internet is a big trend and in front of such trend, you have to choose or to be chosen. I think the emerging service institutions are brave initiators for their proposal of free service in the current market. Although most of them may become “ashes” in the end, they are also likely to be a “threshold” for late comers to some extent. If the “threshold” is high enough, the traditional service agencies may be subverted. Finally, the vast majority of traditional agencies will die, disappear or be merged. As time goes by, the industry will witness another wave of death, disappearance and merger.

Ling Zixin: Although traditional service agencies have advantages in regional leadership and fixed clients, they are limited in attracting new clients and recruiting talents due to their drawbacks such as limitation on region, personnel structure, non-transparency in service prices and processes, etc. On the contrary, through their exploitation of the Internet, emerging service agencies do not have such limitations. Instead, they can expand their business without limitation, reduce the IP operation threshold for enterprise and use transparent prices and processes to attract clients from different regions. They can quickly take a position in the industry and attract professional talents at different levels. This rapid growth is based on big data. It can guide clients to recognize their needs of IP operation consumptions and subvert the traditional service model.

It is said that online IP service is difficult to replace traditional service because IP industry is very different from others. The ideal model is IP Plus IT, whereas Internet is just a service instrument. If the emerging services cannot find profit points, will they only end up in death?

Meng Tan: The Internet service model can be roughly divided into two types: the large-scale circulation and transaction of standardized products and match-making of resources. The two types are integrated by IP Master according to the features and characteristics of IP industry in order to bring value for every client. We believe that we can find appropriate profit point as long as we can bring value to clients. I don’t think we should worry for this.

Liu Sisi: Indeed, IP service is a knowledge-intensive service industry, and thus can be transformed to any form. However, form is just an aiding and will never be a substitution. Therefore, it is impossible to substitute IP legal service by the Internet. If we misunderstand that the Internet Plus IP service is the end of transformation, there can be nothing but failure. How to face the transformation Internet brings to IP industry becomes our biggest challenge. In facing those changes, we are acting like chess players. It would be very dangerous if we have only one step in mind and have to walk one step on foot. We must have 3, 5 or even 10 steps in minds before we begin to walk on step. That is the close loop of business model as I mentioned above.

Zhou Mingchen: As a kind of intangible product and service, IP also involves professional knowledge. Therefore on most occasions, face-to-face communication is considered to be more effective. Yet combining the Internet with offline services is more worthy to be explored. We do not have to come to a result on whether it is IT Plus IP or IP Plus IT. Nor there is any necessity to make a strict differentiation between them. I believe that companies providing with free service can also find profit point someday.

Shen Xiaole: I agree with the idea that there is a certain degree of particularity in IP service and the nature of service should not be replaced by the Internet, at least for now. But I think we still can find profit points. If the Internet Plus is just used to find or grab the profit point of traditional service model, it is likely to fail or disappear. However, if the Internet Plus is used to provide traditional service model with profit points, how would traditional service providers let it fail or disappear?

Ling Zixin: Of course, the purpose for every business is to make profit, which is the precondition for the survival of enterprise. Internet Plus IP is actually a new profit model. Different from the past model which only focuses on one side, it is a model emphasizing benefits sharing. Under the model of Internet Plus IP, the Internet is not a simple tool for customers to accept online service or make online payment. Instead, their combination is subversive, transforming the previous demand oriented consumption model into the guiding consumption model. Meanwhile, it provides clients and IP service providers with an infinite market on the basis of the endless space on the Internet. They can change their roles under Internet Plus IP at any time. Perhaps, one second earlier, they are clients for trademark registration, and one second later, they will become licensors to right of patent.

(Translated by Yuan Renhui)

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