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Posts Tagged: "intangible assets"

The Market For IP-Based Financial Offerings Is Finally Maturing

Intangibles, and particularly intellectual property, are curious assets. By some estimates, intangibles comprise a large overall percentage of the S&P 500’s total value. Yet – as most IP-rich companies know – leveraging the value of intellectual property to secure a financing has traditionally been very hard to do. Yes, the litigation finance industry offers capital to intellectual property owners who need to finance the tremendous expense of intellectual property enforcement litigation. And yes, some litigation finance deals provide for operating expenses. But many IP-rich companies have financing needs that do not center around litigation or jive with the litigation finance industry’s cost of capital.

How IP-Protected Innovation is Driving Economic Growth

IP-protected innovation is now the principal driver of corporate value and is driving economic growth nationally. Developing an IP portfolio is now a basic requirement even for tech startups that hope to raise early stage financing… A large portion of the market cap of Silicon Valley companies can be directly attributed to intangible – or in other words intellectual property – assets. IP law is the primary tool used to protect the value of that innovation, and as we see from countries without meaningful IP laws there is simply no way to protect innovation absent a strong intellectual property system.

When Failure Becomes an Asset

Failure is success if we learn. So why shouldn’t failure qualify as a trade secret? Competitors would love to avoid making the effort and taking the risk… Negative information is most commonly put at risk not by theft of the records of R&D, but by departing employees who are familiar with how a particular technical solution was created or optimized. Eager to help their new colleagues, a recent arrival may wince at a suggested development path and blurt out a warning not to go there. Even very general pointers about an engineering direction to try or to avoid can help a competitor reduce risk and shorten development time. That is why hiring someone who has worked on a similar project for a competitor can lead to trouble.

Patent-Based Financings: Unlocking Licensing Revenues While Mitigating IP Monetization Risks

Patent monetization has become nearly impossible for middle-market technology companies without engaging in some level of legal action. Management teams have consequently shied away from pursuing licensing opportunities, even when the revenue potential of a company’s intellectual property is compelling. While traditional debt and equity investors have an aversion to patent monetization stories, there are specialized investors willing to underwrite capital raises aimed at financing licensing revenue initiatives. By structuring these financings in a way that isolates monetization risk to the patent investor, companies can pursue licensing initiatives that have the potential to generate significant residual value for all stakeholders in the capital stack. In addition to capital, patent investors bring monetization expertise that can play a critical role in the success of a licensing revenue strategy… In many contexts, licensing revenues will only persist so long as the underlying patents remain valid. Increasingly, however, licensees and strategic third parties seek to invalidate patents in Inter Partes Review, rather than continue to pay or renew patent licenses. The uncertainty of future revenue streams further justifies financing structures that ameliorate such risk.

Patent Quality Metrics: Finding Reliable Metrics Linked to Patent Value

We need to ask ourselves: what are the defining features of a “filler patent”? At least two things stand out. First, “filler patents” go through more rounds of prosecution than other patents. Secondly, the independent claims of “filler patents” are longer (have higher word counts) than other patents… A “round of prosecution” means an Office action from the USPTO and the applicant’s response. It is typical for “filler patents” to go through multiple rounds of prosecution, such as six or more rounds. At each round of prosecution, the claims are tailored, so that the scope of protection of the resulting patent is whittled down until essentially nothing is left. Then the application is allowed to issue.

Does Your IP Strategy Need a Tune-Up?

While many, if not most, enterprises have instituted, and are executing, an IP strategy of some sort, an important question should be considered: Is the IP strategy optimal, such that its execution extracts maximum value from company technology? Some corporate IP strategies may seem sound in theory, but in practice they are (a) selectively or inconsistently applied within or across projects, (b) incompatible with how teams actually work, (c) relatively narrow in how they perceive innovation, and (d) distracting to innovators and IP practitioners while consuming enormous resources. Ultimately, the return on IP investment of such strategies may be questionable. However, enterprises that periodically take a step back to reflect on their current IP strategies, and recalibrate them if appropriate, are likely to derive the greatest possible value from IP.

Are Patents Getting Their Mojo Back?

After a 13% decrease in patent litigation in 2014, we are currently back to the same level of activity that we saw historically, with 2015 shaping up to have an average of circa 5000 new cases. Now the REALLY interesting data point is that most cases (roughly 70%) were brought this year by an operating company… Although the pendulum has by no way stopped its course and there are still many forces at work that wish to push it to swing even further, its momentum has definitely slowed.

IP Strategies for Changing Times

The vast majority of the assets developed and owned by technology companies are intangible assets, i.e. they reside in their internal information and employees’ brain (Intellectual Capital or “IC”) and the output thereof (Intellectual Property or “IP”). It is estimated that in excess of 85% of the valuation of the NASDAQ Index companies (and of the new global wealth being created) lies in intangible assets. With smaller technology companies, this percentage is sometimes close to 100%. Nowadays, most technology based companies eventually fail or succeed in large part because of the way they handle their intellectual capital assets and convert those into strategic intellectual property assets.

What makes a patent valuable; A patent broker’s perspective

In a recent article Toxic Asset, we explained in detail how much recent court decisions and new rules at the USPTO had negatively impacted the value of US patents. This is not to say that all patents are worthless, far from it. Actually, based on the fact that we have recently received strong offers on several of the portfolio we…

Helping start-ups turn ideas into valuable assets

The first thing we do is we assess the idea. And when we assess the idea we verify that the idea can lead to the creation of intellectual property. Because for me, if that’s not the outcome, then it’s not an idea worth pursuing. The second thing we’re looking for is merit. So we’re checking: is that a good idea? From my experience of 20 years in Silicon Valley, it all really comes down to the connection between the idea and the founder. Some people are trying to sell somebody else’s ideas. That’s not a good idea.

Exclusive Interview with Doug Croxall of Marathon Patent Group

Doug Croxall is Chairman and Chief Executive Officer of Marathon Patent Group, which is a patent acquisition and licensing company. I met Croxall in New York City in November 2014 at the IP Dealmakers Forum. Croxall has been successful in the patent monetization business for years and had a unique prospective on patents as an asset. “If you are going invest your family’s fortune, I don’t think you will put all your money in one equity,” Croxall explained on the panel so it is the same thing with respect to an asset or a portfolio of assets.” He would go on to say that Marathon Patent Group has learned from “what worked in other asset areas and applied it to this one.”

Toxic Asset: The Gradual Demise of the American Patent

Not such a long time ago, owning a US patent was worth something! A patent was often the foundation for new and exciting startups, as well as a source of pride –and hopefully profits- for inventors. These assets promised competitive and strategic advantage in the market; conduits to new investment and deterrence to free riders… If the current trend is not soon reversed, others countries will become flagships for patent protection and the US might very well become the new China; an environment where innovation is no longer rewarded and where it pays more to follow than to lead. This would be a very sad and totally self inflicted demise “Made in America.”

Effectively Sourcing and Diligencing an IP Investment

A practicing entity may want to obtain one or more patents is for potential counter assertion against a competitor that is about to or has already sued the entity. In such a case, the scope of the search and the required due diligence may be very particularized to the competitor’s business, and are likely to require a higher level of analysis which is more particularized to a specific group of products or services. Similarly, an organization may desire to acquire, early-on, patents and applications that may be asserted down the road to avoid future litigation. This type of program seeks to acquire for a smaller value today, what may be asserted against the entity for a larger demand in the future. The diligence in such a circumstance should be focused on the risk of sale to an entity that is likely to assert the patent in the future.

Best Practices for Fostering a Culture of Innovation

Many great companies accomplish innovation objectives under the leadership of household-name visionary leaders such as Bill Gates and Andy Grove. But we all know that people don’t stay with companies forever, and the culture must be prepared to innovate with or without their day-to-day presence. Companies that are overly dependent on the physical presence of their founders cannot be sustained. The marketplace seems to be confident, for example, that Apple® will continue to thrive without the dynamic leadership of Steve Jobs, may he rest in peace, because he established a genuine and sustainable culture of innovation. Team-driven innovation will create leaders at all levels that can sustain, perpetuate, and strengthen the founder’s vision long after he or she steps down from the helm of the company. Investments in training, commitments to empowerment and delegation, and the development of meaningful succession plans are all critical elements of this process.

Using Competitive Intelligence to Enable IP Monetization

In the last 35 years, there has been a shift from a labor economy to a knowledge economy. Consequently, intangible assets (and thus, IP rights) have emerged as the most powerful asset class, overtaking more traditional capital assets such as real property, plant and equipment. Multiple studies have shown that a majority of the value of a U.S. publicly-traded company comes from intangible assets. In fact, one study has even placed the value of U.S. corporations included in the S&P 500 Index as coming 80% from intangibles.