Most of the time, only success stories are spoken of during an interview, but Louise Wang, general counsel (China) at BenQ & AUO Group, is one of the few exceptions - willing to share both good and bad. In her office in Suzhou Industrial Park, where BenQ's flagship facility is located, Wang tells us that BenQ's failed acquisition of Siemens' mobile business in 2006 is among her most memorable experiences during the 12 years she's been with the company. Wang was in the USA as a visiting scholar at the time and was recalled to China to facilitate the troubled transaction.

She describes that period as "one of the greatest hurdles this company has had to overcome and one of the most challenging projects for me during my time at BenQ." However, she strongly believes that failure is an important step towards success. "The experience and the lessons learnt from that transaction have made the company much stronger and wiser in the long run," she says. In addition, having gone through difficult times together, the relationship and mutual trust between Wang and her legal team and the group's senior management team has been cemented.

Now with that painful chapter well and truly behind them, the BenQ & AUO Group has extensive business operations in the mainland (90,000 employees in 40 companies and factories). It is still growing at an impressive pace. The company's robust growth has translated into increasing workloads within the legal department, currently consisting of 20 staff, with a significant increase in investment and M&A transactional work.

Deal highlights over the past year include a series of new joint ventures set up by BenQ-AUO Group with leading mainland companies; AU Optronics' investment into solar industry in Tianjin and Suzhou; the investments in Hefei and Kunshan by Briview; and Darwin Precisions' investment in Qingdao, Chengdu and Dongguan. As a number of new projects, investments and M&A transactions are already in the pipeline, the legal department headed by Wang will continue to playing an integral role in taking the group's China business to a new level.

Intellectual protector
As a leading technology-based conglomerate, BenQ & AUO is an inventor and owner of many intellectual property rights (IPR). Its legal department, unsurprisingly, has built up solid expertise in IP to safeguard the group's most valuable and intangible assets over the years. The legal team handles the full range of patent, trademark, copyright, trade secret and licensing matters concerning the group's China companies, with particular strength in drafting and filing patent applications as well as trademark protection.

In 2009, the legal department's patent division internally assessed and filed more than 400 patent applications. Over the first half of this year, about 200 patent applications have further been dealt by the team.

Although there are many patent law firms and agencies in the market, Wang still prefers to take control of the drafting and filing in-house. "Enforcement and protection of patent is essentially determined by the quality of patent application drafting. So we have very high requirements and expectations for the drafting quality. It's difficult to find a firm that can meet this standard and quality and professional standards usually vary widely from firm to firm," she says.

"In-house patent lawyers, on the other hand, usually have R&D backgrounds and understand not only the technology itself, but also the patentability criteria such as novelty, inventive step and industrial application," she added. Another key reason to draft applications in-house is so that the patent legal team can work closely with the R&D team and create synergy in the process of invention and obtaining patent. "Engaging the patent team early in the R&D process can optimise the productivity and efficiency of the process without additional cost," says Wang.

As a strategic change, the company has started to pay more serious attention to the quality, rather than quantity, of patent filings since the beginning of this year. "If we have a large number of patents with low commercial value, the cost of maintaining them will outstrip their actual value. It doesn't make economic sense in the long term," says Wang. She plans to further restrict the patent application numbers and pay more attention to the application quality in coming years.

In addition to patent drafting and prosecution, IPR protection is another critical skillset the team must have, to protect clients in the country's challenging and fast-evolving landscape of IPR enforcement. Last year, Wang's team successfully dealt with three major patent infringement cases, either through administrative or judicial actions. In all three cases, the company achieved favourable outcomes and damages awards made.

The legal team also puts considerable effort into anti-counterfeiting and trademark enforcement. In the first six months of this year, it already initiated six trademark infringement lawsuits and six anti-counterfeiting actions.

Wang sees enforcement action as an effective way not only to protect IPR but also to help realise the commercial potential of rights protection through licensing. "The government has made significant efforts to enhance IP protection and address the enforcement issues. The situation has indeed improved over the past three years.

However, it's worsened again this year. The number and frequency of infringements of our brands are rising, particularly in Shenzhen," says Wang. "It's a tough and long-lasting task, but we will push forward in our fight against counterfeiters."

Concerns over legal service industry
BenQ's legal department structure, combined with a sizable team of inhouse lawyers, means the majority of the group's legal work is handled by the department itself. However, when certain legal issues arise that are beyond the team's capacity or expertise, or when the nature of a project requires legal representation from a private-practice law firm, Wang will engage external counsel.

For IPR-related matters, the group regularly works with Liu Shen & Associates and Kang Xin. For all other legal issues including litigation, Wang chooses to deal with different law firms on an ad-hoc basis. "We don't have a set list of external legal advisors. Our general practice is to involve the most appropriate external counsel according to our clients' specific needs at the time," says Wang.

"I don't believe that using top-tier firms is necessarily the best solution for all issues and projects. I often work with firms that are less known - often regional firms - but who are very capable of solving our problems."

When asked about one area where she would like to see improvements in the legal services that are provided by law firms, Wang points out that there is still a gap in understanding between the goals of external counsel and in-house legal teams. "Sometimes the interests of the client are bypassed. One basic example I have encountered is sometimes patent applications are filed even if they have little chance of success," she says.

Another issue Wang has raised is the professional misconduct currently existing among local law firms - accepting a mandate even when there is a conflict of interest and breach of confidentiality, for example. "Some lawyers have over-emphasised business development as their top priority and have overlooked the paramount duties owed by lawyers to their clients and their duty to help bring justice. The ethical standards and professionalism of the domestic legal industry needs to be improved, before more companies will have more confidence in outsourcing legal work to external counsels," Wang says. ALB