It's been two decades since Intellectual Property (IP) and its development became a defining element in investment strategies for parties on both sides of the negotiation table. In the late 1990's, investors wanted their dot-com startup companies to have patents, as it would help the company appear innovative. Even after the dot-coms went bust, investors regarded IP as upside protection; meaning, if the company went under, the IP portion of the portfolio could keep the deal from being a complete loss. Investors, like Venture Capitalists (VCs), who got burned by multiple failed investment efforts, turned their interest towards start-up companies with a strong balance sheet versus those with no revenue potential. For example, if pre-investment research showed that the start-up had a Freedom to Operate (FTO), then IP became a more important consideration on an investor's check list.
POSTED BY John Cronin AT 12:20 P.M. Nov 20, 2018TAGS: John Cronin | Regulation and Legislation | Strategy | Trade Secrets | Valuation | Mergers and Acquisitions | Licensing | Patent Sales
For many years, those working at licensing and patent sales for hundreds of buyers and sellers have always realized that "telling the story" was essential. An industry standard, if not the industry standard, was a 2-pager flyer with sections on Business, Market, Technology, Valuation, and Claims Charting, etc. to create interest and then leads. Buyers or licensees had their own information requirements, but it always came down to the overlap of interest and good patents. New in the industry is a video of the IP to be sold or licensed. Seems like most people will open a 3-4 minute video but will not read a 2 page or longer package to get interest. But what is the formula for the marketing video: actors, sets, music; what do IP brokers now have to do?
POSTED BY John Cronin AT 11:58 A.M. Oct 5, 2018TAGS: Commercialization | John Cronin | Licensing | Patent Sales
In our October 15th blog post Don't Forget About the "Rembrandt in the Attic"?, we discussed how a failure to think strategically about IP may have been a overlooked factor in the financial collapse of Digital Domain Media Group (DDMG). DDMG as debtor in possession has now sought court approval to sell the 3D patents along with the company’s remaining assets. The assets will be auctioned in separate groups, with the six granted 3D patents and two applications sold as one group. For any parties considering making a bid for the 3D patents, one essential question must be asked: how much are these patents worth?
The 25% rule is a rule of thumb used to estimate royalty rates for intellectual property (IP) licensing transactions by approximating the risk/reward relationship between a licensee and licensor. A licensee only pays a portion of profits to the licensor, because of the additional costs and uncertainties that it incurs to convert the technology in to revenue.
The value of any IP is dependent on the context. Valuation of the IP in context and targeted marketing is important to gain returns on the licensing effort.
If you are attending, be sure and stop by one of the workshops in which ipCG is partnering to speak at LES with other companies.
IP valuation is complicated by a host of factors, such as accessing market comparables, determining IP risk, handicapping potential licensees, and calculating the uncertain economic benefits to be generated by IP assets. While many sources enumerate methods of IP valuation, few provide real-life applications or guidelines.
A valuation of a company's patent portfolio or of a specific group of patents is important in helping the company to determine the value of its portfolio in a licensing transaction or in the sale of the company. It is important for companies to understand the drivers of value within their portfolios and to understand the strengths and weaknesses of the portfolios.