Posts Tagged: "patent portfolio"

It’s this environment of malaise within which Yahoo is trying to bolster its fortunes with the sale of an intellectual property portfolio involving about 3,000 patents and patent applications which the company recently reassigned to a subsidiary known as Excalibur IP. Some of the patents in this portfolio date back to the company’s initial public offering in 1996 and news reports from The Wall Street Journal indicate that some expect the portfolio to fetch a price in excess of $1 billion… “If this sale had happened before Alice, the valuations would be multiples higher,” said Michael Gulliford of Soryn IP Group. Another factor mentioned by Kent Richardson (ROL Group) was the fact that the so-called smartphone patent wars have largely ended so the patents in related sectors are not as important from a defensive standpoint.

An organization’s overall IP strategy should support business strategies and help increase the value of the company. IP strategy will be different depending on the business and market. Value is not always about how much money can be generated by patents. Companies may want to motivate employees; attract customers, attract business partners or investors; protect existing products and the ability to improve them in the future; block or intimidate the competition; license to improve market penetration, generate income or gain access to third-party technology; improve their return on investment, or generate income or savings through joint-ventures, mergers and acquisitions, or investing in start-ups, among other strategic IP goals. Truly valuable patents are rare. Studies show that fewer than 5% of patents in a typical technology patent portfolio are valuable. Finding these rare valuable patents in a large patent portfolio is a challenging task.

The first patent is typically filed prior to entering the market. This prophetic patent might have several different ways a product may be designed and capture a couple different ways the product may go to market. The purpose of the first patent application is to clear some space so that the company can keep competitors away. This patent application is done with the highest degree of uncertainty about both the technology and the market. It is critical to note that not only is the entrepreneur just beginning the journey at this point, but so is the patent attorney. Neither player knows which elements of the invention will turn out to be important.

Today’s pace of innovation and competitive intensity demand greater protection of new ideas and inventions. Yet intellectual property (IP) management is not a high business priority for many companies. Organizations that fail to recognize IP as a strategic asset put their competitive advantage and profit margins at risk. Companies can circumvent these potentially adverse impacts by maximizing the value of their creativity. Prioritizing and protecting IP assets helps organizations stay in front of competitors and drive greater growth.

The reason it matters as to whether we patent folks can speak non-patent speak is that those who make the decisions about patent value, i.e., corporate C-Level and above, do not speak or grasp patent speak, and instead rely on our guidance to make informed judgments about business and capital commitments. We sadly cannot communicate (think Raj on Big Bang, in the early episodes, around females) and, worse, even if we could, we are not even in the meetings where the decisions are being made. Look at any Org chart: We are often kept at more than arms length by General Counsel or who ever it is that patent counsel report to – solid or dotted line. In short, our fate, and the fate of our life’s work, is being decided by others, without benefit of our thoughts. Tragic, and a real business mistake.

Eagle Harbor Holdings (EHH) had amassed the second-largest portfolio of patents related to self-driving and autonomous cars, only trailing high tech developer Google in that field. Eagle Harbor was formed in 2010 by the father-son engineering team of Dan and Joe Preston. Their work in the field extends at least as far back as 1997, when they formed the vehicle tech development firm which became known as Airbiquity. EHH is now looking for prospective buyers for a portfolio with 74 total assets, including 42 patents issued and 17 patent families.

Business Insider reports that Yahoo’s patent portfolio could generate up to $3B. We disagree and we use data to show why. With an estimated street price of $772M (high of $1.15B, a low of $393M), Yahoo has a valuable asset, just not a $3B asset. We often see patent prices stated without any data to back up the analysis. We think this needs to change. Below, we show how a quick analysis of Yahoo’s portfolio and the patent market leads to some bounds on the street price of the patents.

A well-developed patent portfolio offers you the ability to defend your R&D investments against competitors, creates freedom to move into new markets, deters corporate asserters and can eliminate licensing fees. How do you produce such a portfolio? Start by identifying potential threats, then balancing reasonable patent portfolio investment with revenue retention, and finally calculating your risks. This post presents an approach for modelling the value of a strategic patent portfolio for companies in the high-tech market (eg, cloud computing, semiconductors, mobile and networking). The biotech and chemical models are similar, but require modification for their specific patent risk challenges.

Patent buying is an effective way to solve a patent deficiency challenge. In many technology areas (e.g. high-tech, solar, automotive), you can buy patents on the open market that can substantially improve your patent position. With over $7B worth of patents brought to market in the past five years, the opportunities to purchase patents far exceeds any one company’s needs. By adopting a few best practices, you can design and execute a successful patent buying program for your company.

For hoarders, once an item comes into their possession, such individuals develop an unreasonable emotional attachment to it. As these possessions, many of which are viewed by others as worthless, continue to accumulate, they become both a health and safety hazard to the hoarders and those about them until some concerned party, typically a family member or a governmental authority, intervenes. Much the same problem is found in some managers of patent portfolios.

Patent licensing is becoming increasingly challenging and it requires thorough preparation on the licensor’s part to convince a potential licensee that a license is both required and inevitable and to persuade them into serious negotiations. The steps involved will vary based on whether your patents are already being infringed upon or if they protect a new technology that can extend market value or penetration. In this article, the focus is on the research and preparation for the licensing of patents that may already be in use.

One thing is certain in these tumultuous times, the business of patents has changed. The days of bulk buying at $10,000 per patent have ended; public IP companies are under legislative and shareholder pressure; and, IPR’s have significantly impacted the value of weak patents. These are just some of the examples of significant business changes. So what is a patent owner to do when they want to monetize their patents? There are only three options for patent owners: they can license their patents, they can sell their patents or they can do nothing.

Although the job of developing the patent portfolio never ends, once the assets begin to reach a critical mass it becomes equally important to tactically manage the portfolio. Because if not managed properly, a patent portfolio will not only fail to generate revenue, it will also drain the company coffers. With this in mind it is essential to know thy portfolio, prune thy portfolio and monetize thy portfolio. When many think of patent monetization, patent sales and licensing (in and out of court) are what come to mind, but there have been a slew of anti-patent court decisions that patent owners need to consider before monetizing. Crisis is often said to spawn opportunity and the patent world is no different. Uncertainty in the litigation arena has spawned new, non-litigation offerings to innovators desirous of leveraging the value of their patents.

To compete in our new innovation ecosystem — no matter big or small — there are a handful of competencies that an organization should master when it comes to their patent operations. At the risk of over generalizing, these are (1) sound portfolio development, (2) sound portfolio management, (3) building the right team and (4) smart patent deal-making. Although it is nearly impossible to condense actionable wisdom into a multi-part series on the subject, what follows is my attempt to do just that.

In a survey by IQPC (International Quality and Productivity Center) 52% of corporate respondents cited failure to align business strategy with IP coverage as one of the key risks to their company’s IP assets. It’s especially shocking when you know that the “top patents,” patents that are valuable because they have a commercial value (or will in the near future) are limited to 15% of a company’s patent portfolio.