Bombardier’s China Licensing Strategery

July 9, 2012

Props to Dan Harris for taking the blogging high road and giving Bombardier the benefit of the doubt on their new licensing deal with Chinese rail behemoth CSR. In a post on China Law blog, Dan pushed back against critics who thought Bombardier was crazy for forking over proprietary technology to a State-owned firm that would eventually end up competing with the Canadian company.

So many assumptions here.

Dan’s response:

The facts in the press are not enough to know whether Bombardier’s China technology licensing deal makes sense for Bombardier or not.  What if Bombardier is being paid $10 billion a year?  It’s a great deal, right?  What if Bombardier is licensing out an existing technology and it knows it is only a year or two away from a next generation technology that will put the existing one to shame?  What if this is an industry where the product is only one small aspect of a buyer’s decision, and Bombardier is rightly confident that no Chinese company will ever be able to compete on the more important aspects of installation of product, maintenance of product, and repair of product?  Or what if Bombardier knows that the product it is licensing is going to be surpassed by various competitors’ products within the next year or so and this deal is a profitable way to unload it? I do not know if any of these things are true, but itsn’t it more likely that Bombardier knows what is best for Bombardier than my friends on Facebook? And anyway, what were Bombardier’s alternatives if it was going to make money in China?  I don’t know, do you?

Excellent. While I’m sure that there are plenty of industry folks who know whether this licensing deal is good or bad, the rest of us schlubs have no idea. Might be brilliant, might be a disaster. Perhaps if Bombardier walked away from the deal, CSR would develop this tech on their own somehow (wink wink), and it was either get paid something now, or get nothing later. So many possibilities, so little information.

I like to give these guys the benefit of the doubt. This is a huge multinational corporation with in-house folks who are expert in technology licensing. Unless I have reason to believe they screwed up, I’ll assume that there’s an upside here. Plenty of time to criticize them later if this thing goes pear-shaped on them.

Now, I’m not so naive to think that multinationals never screw up. I seem to recall being highly critical of a certain bunch of IP lawyers at a big U.S. computer company not so long ago. Even so, if you look back at my first post on the Apple-Proview dispute, I bet you’ll find that I had assumed, until we learned otherwise, that Apple hadn’t made any stupid mistakes. We know how that turned out.

But for the moment, I’ll stick with Dan and be an optimist on this tech license. For all the horror stories we hear about China tech deals gone wrong, there are plenty of others that work out just fine.