Perpetual Innovation

Category: patent commercialization

  • Readying a Patent Portfolio for Sale

    In years gone by, companies with extensive patent portfolios were loathe to sell these assets, strongly preferring to license them.  These Patent Licensing Agreements (PLA) came in several flavors, most had some form of royalty payments for the licensor and the fundamental was that ownership of the patents remained with the original owner, i.e., the company granted the patent(s).
    While not totally different today, much has changed in the disposition of thousands of US patents.  Patents are now sold in much greater numbers than in decades past.  Some of the reasons for this are:
    ·         Corporate decision to shut down or sell of an operating division
    ·         Near term need to financially rescue another part of the corporation
    ·         Shift in corporate direction/strategy
    ·         Pay a court imposed penalty
    Patent sales are now so commonplace that online IP reporter sites like www.IAM.comrecently devoted a webinarto the patent selling process.  This process, as one can see, includes seven steps.  The assumption here is that the seller completed a validity check to the extent possible on each patent offered for sale. 
    It is noteworthy under Step 6 that the biggest buyers of patents review around 1,000 seller packages per year.  This clearly puts the onus on the seller to develop a first class patent package.  It also suggests that this is a buyers’ market putting more of a burden on the seller to find ways to get the most value for its assets.

    Keywords: patent, patent portfolio, licensing, PLA, Patent Licensing Agreement, commercialization. 

  • ARM Holdings is giving up their "holding" to Sprint/SoftBank

    ARM Holdings, the maker of chips and chip making technology has week a favorite here at IPZine. They are basically an IP company holding lots of patents on lots of stuff. They specialize in energy-efficient, reduced instruction set (RISC) chip technology; build it and then license it out to chip makers.
    They have really taken off into the work of the Internet of Things.
    Today SoftBank (parent of Sprint) has offered to by ARMH in an all cash bid. The stock is up 50% today. Even at this elevated price, the price-to-earnings ratio is 70!. Compare that to Intel (INTC) with a paltry PE of 15. Profit margin of 35% vs 20% for INTC.
    ARM has remained independent and resisted the various take-over pressures. Until now. This changes somewhat the ARM dynamic of licensing tech to multiple players and making lots of money from licensing revenues (nearly pure profit). ARM has focused on tools and R&D and left the heavy work of manufacturing, distribution, etc. to their clients.
    This is probably a good time to start getting out of the stock; SoftBand (Sprint) is not nearly the same type of investment. Sprint is more of a utility play, not R&D.
    The drop in British Pound has made ARMH a far better deal to acquire. (ARMH is UK based.)
    On a separate note, SoftBank’s interests in buying up chip makers might become more complicated with ARM Holdings, in the company’s holdings.
    In the end, the independence of ARM Holdings didn’t hold.

  • Supreme Court Brings back Treble Damages – WSJ

    Supreme Court Makes It Easier for Patent Holders to Win More in Damages – WSJ:

    The unanimous ruling by the Supreme Court brings back the serious damages — up to 3 times — for willful patent infringement. Recent lower court rulings were making it virtually impossible to go after big, treble-the-losses, damages. That is the BIG STICK in patent infringement cases. Some companies strategy is to just keep infringing and simply let the lawyers do the heavy lifting. Smaller companies often do not have the resources to fight, especially if it becomes long and protracted.

    The threat of treble damages, kind of keeps every honest, usually. Take that away and infringement becomes much less risky.

    One of the first options for a patent holder is to enjoin the infringer from producing and selling. This can take some time; the patent claims are always contested, etc., etc. Fortunately, the USPTO has improved this process of patent review so that the strength and quality of the patent can be established early on.

    Of course, one end result of infringement is a licencing agreement. However, someone who will infringe your patent, might also go to great lengths to avoid giving an accurate count of the units sold and the royalties payable.

    During all this time, the infringing company is trying to develop a work-around so that they can continue selling the products but avoid the infringement. Market build, product established.

    If the patent has not yet been issued, the game is even more convoluted.

    On the flip side of treble damages is the patent troll (NPE). One would hope that judges would evaluate the case of a troll company that simply sits on a pile of patents with no intentions of producing any actual products and takes a toll off of any and all commerce in the industries/products where their patented technologies apply.

    *** Update below on June 17, 2016. ***

    An excellent Legal-centric focus of this ruling comes form Dennis Crouch at Patently-O. He also discusses “willful” and suggests that “egregious infringement” might be the new standard going forward.

    From a more business perspective, Joff Wild at IAM-media offered some interesting insights about the Halo ruling. He noted that Justice Roberts gave us the first official definition of “Patent Trolls”, there s also a discussion of “efficient infringer”, and this ruling obviously is a great step forward for patent owners, but a small, first-step.

    ‘via Blog this’

  • Revenue Per Patent A Longstanding Question of Value for Many

    In the world of IP, there is a list of questions that never seem to be answered to the satisfaction of all particularly when there is generational change in who is running the corporation.  Foremost among the questions is what is the revenue per patent and is it worth the time, energy and resources that must be applied not only for a patent but protect in the marketplace from infringement that may result in costly litigation.  IAM presents 20 corporations with extensive patent portfolios and the revenues per patent at  http://www.iam-media.com/blog/detail.aspx?g=d37195bc-4870-406d-81cc-f9e74c6e17b8.  Among the points worth noting is that Apple has the least number of patents among the 20, but blows all away in the revenue it realizes for each patent.

    All of those listed make sizable revenues.  It is clear that the effort to patent from beginning to end is of demonstrable value to the corporation.

  • IP Monetization Yearbook from IAMmagazine.

    Intellectual Asset Management magazine (http://www.iam-magazine.com/Intelligence/IP-Monetisation-Yearbook/2013) publishes a set of reports each year.  One is the “IP Monetization Yearbook.”  The 2014 issue has 11 articles- one of which is Monetization of Royalties and Revenue Streams.  As the techniques for monetization of the enterprise’s asset leader, IP, mature, the ways in which to monetize it should evolve to keep pace.  Here, the subject is the multiple ways in which to monetize royalties and other revenue sources from the IP portfolio.

    As with most things, there are risks as well as benefits.  This makes due diligence and risk assessment mandatory.  A sample of the risk factors:
    –  Revenue stream sensitivity to changes in consumer preferences
    –  Technological, product or market obsolescence
    –  Infringement risks
    –  Risk of invalid IP

    These factors potentially impact royalty interest purchases, IP securitization, multiple licenses, etc.

    The article summarizes the basic structure of the licensing techniques, the pros and cons, the advantages and disadvantages.  What the article does not explore are the internal demands on the enterprise to develop the business strategies and revenue potentials against other internal revenue sources. (Product Management)  These licensing techniques  have much in common with a financial line of business requiring sophisticated financial plans.  This is not your IP Father’s Patent Licensing Agreement from decades ago.

    Already, IP Law and corporate finance are seated at the table.  Business Development and Strategic Planning need to join along with IP business managers.  And, once the royalty agreements are implemented, someone will have to manage the royalty collection and certification processes.

    What organization in the enterprise owns these license agreements?