Case Studies in Identifying and Marketing IP


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Case Studies in Identifying and Marketing IP

  1. 1. Case Studies in Identifying and Marketing IP: The Good, the Bad, and the Ugly Presented by: Weston Anson CONSOR Intellectual Asset Management 800.454.9091
  2. 2. IP / IA in a Disposition Environment Chaotic environment Diminished staff with limited (if any) understanding of the process Legal constraints and regulations Time is of the essence: Overall value is timing dependent Proper marketing is critical
  3. 3. Identify IP / IA Bundles for Value Stratify IP / IA Core v. Periphery Peripheral portfolios may be monetized Vertical and horizontal Out-licensing / Spin-off Analyze quality of IP Relevancy to current / future business Relative strength analysis Potential infringement assessment
  4. 4. Intangible Asset Bundles Miscellaneous Assets Research-Related Assets Product-Related Assets Other Technology Assets Data/Information-Related Assets Internet-Related Assets People-Related Assets IT/Software Patent-Related Bundles of Value Communications-Related Assets IP Contracts Other Brand-Related Assets Real-Estate Related Assets Corporate Identity Assets Trademarks
  5. 5. Uncovering Hidden Value Interview key personnel to identify all available assets CFO Director of marketing IT staff Leveraging past marketing efforts Legal support for sale or transfer of licenses Relationship management with vendors, clients, customers, etc.
  6. 6. Finding Buyers: The Marketing Process Worldwide marketing campaign Utilize Internet to reach maximum audience Press releases Eblasts Viral marketing Target successful and unsuccessful competitors, related professionals Vetting process for potential bidders
  7. 7. Case Study - Tower Records Key assets: Tower Records Global Trademark Portfolio e-Commerce Operations International Franchise Agreements
  8. 8. Case Study - Tower Records Problem : Initial auction failed to identify any serious bidders for the intellectual property Solution: Creatively package assets for direct marketing to an expanded universe of potential buyers through vast network of resources: Financial Buyers Strategic Buyers Franchise Portals Entertainment Law Firms Intellectual Property Industry Resources
  9. 9. Tower Records: Valuation & Auction Net value of the intellectual property sale. After fierce open-cry bidding war between Caiman Holdings and RiverWest Brands. $ 4,200,000 Trademarks, e-Commerce and International franchise agreements Auction Outcome: Asset Values In today's dollars, the net value of the intellectual property assuming only the Franchise Contracts run to their next renewal date. $ 1,585,000 Perpetual License to use Trademarks in connection with Franchise Contracts Liquidation Value of International Franchise Segment In today's dollars, the net value of the intellectual property connected to the e-commerce sites $ 1,320,000 Domain Names and Perpetual License to use Trademarks in e-Commerce Liquidation Value of e-Commerce Segment This is, in today's dollars, the net cost of the internally generated and acquired intellectual property. $ 1,650,000 Trademarks and Domain Names 'No less than Value' Comments Value Valuation Conclusion
  10. 10. Case Study – AstroTurf Key assets: 8. Inbound FIFA license 7. Outbound Chinese license and associated supply agreement 6. General trademarks and patents, international and domestic 5. Tennis trademarks, international and domestic 4. Flooring trademarks and patents 3. Track trademarks, international and domestic 2. Turf trademarks and patents, international 1. Turf trademarks and patents, domestic
  11. 11. Case Study – AstroTurf Possible Strategies Sale in total Sale of trademarks and licenses Signing more licensees prior to sale Selling / licensing patents to competitors Auction / Liquidation Outcome Immediate liquidation Sale price substantially below maximum value
  12. 12. Case Study – AstroTurf Lessons: Interests of the lender can differ from that of the buyer The effect of time on asset value Importance of hiring qualified IP professionals The need for adequate time for the due diligence and triage process
  13. 13. Case Study – Circuit City Key assets: Trademark bundle Internet platforms Domain names Firedog assets Secondary website assets
  14. 14. Case Study – Circuit City Outcome: Multiple sales Multiple auctions Poor marketing leads to lack of interest, canceled auctions Overlooked assets
  15. 15. Case Study – Circuit City Key remaining asset: Litigation rights Price fixing on flat panel displays DOJ Fine of $400+ million Value of litigation rights: $10+ million Sales process: Stalking horse bid Valuation Auction
  16. 16. Case Study – Circuit City Lessons: Don’t trust management Don’t trusts bankers Don’t trust lawyers Don’t trust anyone
  17. 17. Case Study – Linens ‘N Things Key assets: Turnkey e-commerce operation Trademarks Domain names Databases Product designs Proprietary brands
  18. 18. Case Study – Linens ‘N Things Outcome: Hilco and Gordon Brothers acquire brand for $1 million in joint venture Relaunch as global licensed brand
  19. 19. Case Study – Linens ‘N Things Lessons: First offer is not necessarily the best offer Impatience by committee leaves value on the table Compare $1 million sale price to $1.3 billion acquisition deal just three years earlier Speed can be the enemy of value
  20. 20. Case Study – Fortunoff Key assets: Core trademarks and brand assets Third party contracts for development of interactive websites Bridal registry and customer databases Handheld scanning devices and proprietary software system Transferable licenses Proprietary jewelry designs
  21. 21. Case Study – Fortunoff Marketing efforts and sale method Vocus on-demand software to build relationships with media / journalists PRWeb releases Custom website promoting assets for sale Financial statements per product category
  22. 22. Case Study – Fortunoff Outcome: Over 25,000 visits to website in 79 countries 24 interested parties under NDA attending the auction 22 hour auction $2.2 million final bid $1.6 million more than counsel expected
  23. 23. Case Study – Fortunoff Lessons: Marketing makes a difference: More bidders drive up final sale price Educating bidders on potential licensing values increases perceived value of assets Bidder-specific sale terms and carving of assets can lead to maximum value realization Option to sell certain assets to multiple buyers
  24. 24. Case Study – KB Toys Key assets: KB Toys trademark and other trademark assets House brands Logos Domain names Outcome: Brand assets acquired by competitor Toys ‘R’ Us for $2.1 million
  25. 25. Case Study – KB Toys Lessons: Size matters Main street stores can’t compete with big boxes