Ocean TomoAn Intellectual Capital Merchant Banc™ Firm
History• Established on 2003 by Malackowski, a management consultant and a forensic accountant specialize in intangible assets, with a co- founder, Andrew Carter, an adjunct-Professor teaching courses on intellectual property management.• By the end of 2007, Ocean Tomo had 100 employees and generated 22.9 million US dollars in annual revenue.• In 2008, one of the IP lots auctioned by the Ocean Tomo has reached $6 million, making it the largest IP transaction ever conducted through a live public auction.• As the strong development of IP industry, Ocean Tomo expected its business departments summing up to generate about $160 million by 2012.
Mission• Ocean Tomo dedicate to building the market of IP by adding liquidity of the industry. It acts more than typical “patent licensing and enforcement companies ” (P-LECs) since it not only obtain patents and offer legal services but also provide customers with various way of IP transactions and financial products.Why so?• IP activities grow fast among companies. For example, in 1990 Microsoft received 5 patents, but by 2005 the company was filing over 3,000 patent applications each year.• This phenomenon is quite correlated with the situation: in 1975, more than 80% of the market value of S&P 500 companies was composed of tangible assets. By 2005, many of these companies hold their tangible assets only to 20% of their market value. What became the main components are those intangible assets, especially IP.
IP types Name Patent Copyright Trademarks Trade Secret Definition and Patent is a right provided by Right protects authors The right is given to Means of protecting Usage government to the inventor from unlicensed prevent others use the confidential items such for excluding others from duplication and same or similar words, as price lists, making, using, or selling the distribution of their sentence, symbols or prototypes, drawings invention, including product creative expressions. even slogan to identify or formulas. claims, method claims, and one’s own item. product-by-process claim. Legal New, useful, non-obvious and Original, non- trivial, Distinctive and used for Security measures Requirement fully- disclosed. and recorded in or identification. must be taken for expressed through protecting secrets. tangible medium.Protecting Period 20 years. Full term needs Endured for author’s Won’t expire as long as Endured as measures annual renewal, costing $930 life plus 70 years after the item exist. keep taken. after 3.5 years, $2,360 after death. 7.5 years and $3,910 after 11.5 years. Establishment Filing application is needed. Established once the Filing application is No applications needed. creative expressions needed. finished.
Service & Product (1) Category Opinion Service Name Expert Testimony Valuation Data Offer Feature Providing financial opinion as Providing appraisal , and Selling analytical data to Expert Testimony in legal analytical report for a company companies, which is disputes, and survey analyzing about its IP portfolio. The developed as Intellectual the quality of IP or IP portfolio estimation is often base on the Property Quotient (IPQ- score) (a group of related patents). comparable transaction in indicating the quality ratings. comparable markets. Charge The Expert Testimony fee Base on the appraisal project size, A simple data report cost often calculated on an hourly frequently coming up with a 30-50 $125-$200. Subscription to the basis. page report costing $50,000 to database costs $200,000 each $300,000 per portfolio. year.Performance In early 2008, it was projected $3.6 million projected in 2008. $2 million projected in 2008. to be the largest contribution $4.6 million expected to be $4.7 million expected in to company’s revenue about generated by 2012 with steady revenue with 40% operating $12 million. It is expected to 40% operating margin. margin by 2012. be $15 million by 2012 with an 35% operating margin.
Service & Product (2)Category Agency Services-1 Name Investment Risk Management Feature Using ratings of IP, Ocean Tomo build three equity indices(e.g. Patent Royalty Trust helps OT300) priced and listed on the American Stock Exchange. With companies transfer the risk of a outside firm’s assistant, it created two investable exchange infringements to third party, namely traded funds (ETFs) base on OT300. In addition, the ratings of IP the Ocean Tomo. The third party will help Ocean Tomo work on several public and private equities handle the payments to other funds. The rating system serves as a information provider claimant, which prevents the cost of helping fund managers make their decisions. conflict , and work like insurance. Charge About equity funds, 2% of the value of the assets under 2%-4% of total revenue of a company. management is charged, as well as an incentive fee of 20% of This portion will be accrued in trust profits. and managed by trustee Ocean Tomo.Performance In early 2008, the assets of ETFs were about $30million. OT300 In 2008 revenues were projected to Patent index serves as a more accurate predictor of value be $200,000, growing to $5.3 million among S&P 500 than traditional ways. Totally, $2.7 million was by 2012. Malackowski even expected to be generated in 2008. $80 million was anticipated predicted it will become one of the by 2012 with 80% operating margin. biggest sector in future.
Service & Product (3)Category Agency Service-2 Name Transactions Type The Private IP Brokerage The Live Multi-Lot Auctions takes The Patent Bid/Ask The Dean’s List serves service provided to those place among multiple parties platform work by phone as a bulletin board with complex IP portfolio through an auction format. The or Internet. Every primary for but only want to sell some seller need to give Ocean Tomo all potential buyer can see universities to post IP of them. Transaction will available data in a secured way for patents from 81 for sale or licensing. It take half or even one year buyers to review. All buyers on countries or issuing enables buyers to since extensive due the auction occasion needn’t to authority. Buyers need contact the IP owner diligence is required. wear name card in order not to to put some fund in an directly. There will be extensive disclose the company plan. Ocean escrow account(with negotiation between the Tomo hired a company “Gooding high interest) in order to two parties. and Company ” to manage each initiate the transaction. auction. Confidential manners take place. Charge Most revenue come from Listing fee for sellers is from $250 for each initial bid, Need to be charged to transaction fee up to 15%- $1,000-$6,000 and a 15% and $50 for each post, and 10% 20% of the total price if a commission on each sale. Buyers subsequent offer. $495 commission from deal consummated. pay a 10% commission for each per patent for using the successful transaction. sale, too. data room examining transaction records. 15% commission split evenly between seller and buyer.Performance In 2008, projected to be $15million with a 49% operating margin. It is expected to generate $35 million by 2012, with a 76% operating margin in transactions.
The Key to Business model: PatentRatings System• In 2005, Ocean Tomo expanded by acquiring an IP tech company called PantentRatings, which used proprietary algorithms to calculate relative value of a patent.• This software of PantentRating system also uses various inputs to assesse whether or not the patent is going to be renewed, which is a proxy for the quality or value for a patent.• It also provides a “relevance engine” that determine which patents were linked to others.• Right now this system has been patented by Ocean Tomo.
Related Business:Intellectual Property Exchange International(IPXI) The first global exchange focus focused on IP. Items Equity Listing Trading Technology Unit License Right Basket (TTB) Content IPXI plans to offer IP rich Each Basket consists of a Unit license help companies companies trading group of $50-$5,000 US saving their time making equity that would co- list patents covering particular cross- licensing. The Unit in addition to NASDAQ or technology (e.g. Blue- Ray Licenses right work like NYSE. Disc). Using the rating system, stock, can be separated into IPXI issue 12-36 month different units which can be futures contracts base on the sold back in the secondary basket. market. Charge At least to pay $25,0000 IPXI plans to make money by IPXI charge 15% to be listed in IPXI charging small transaction commission to company exchange. fees base on many which launches the public perspectives of each exchange offering through it’s of TTB. exchange. Performance By 2008, IPXI sold its first seats on exchange for 100,000. IPXI planned to sell about 200 seats in the future. Malackowski projected $170 million from exchange, with operating margin 50% by 2012.
Conclusion• It will be an inevitable trend that companies rely more and more on intangible assets. Malackowski believes the value Ocean Tomo creates will comes largely from adding liquidity in IP industry.• Three main profession requirements for establishing Ocean Tomo are law , finance and accounting.• Comparing to other companies, Ocean Tomo is the first one which provides comprehensive services from valuation, transaction to financial assets management.
3LL• In Taiwan, though the IP liquidity still need promoted, there is already some organizations handling licensing affairs which is potential to be the Ocean Tomo (despite the financial sector) in Taiwan, e.g. Music Copyright Society of Chinese Taipei.• It maybe hard for Ocean Tomo to continue its advantage by using PatentRating system. Though the proprietary algorithm is patented, other competitors can still develop their own one, which with a different algorithm structure but can reach similar effect of the system. Ocean Tomo will need to make efforts differentiating it’s service from others.• However, it’s still a smart move establishing IPXI. It serves as an exchange for IP rich company. The exchange can reach the effect of an open platform. As more companies join, the more difficult for other competitors to create similar exchange since more companies attract more users. It will have a first mover advantage.