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Jun 13, 2013
There's A LOT to learn about how to best monetize patents. How do you decide between either selling or licensing patents? How should a patent owner think about this important decision? What are the most current strategies for this issue?
Peter Kim is an expert in monetizing patents. He's is a principal at Irvine Pointe and former Director of IP Strategy at Rambus. In this installment of the IP Matters web series, he'll provide 20-minute coverage of key issues in patent monetization.
1Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved.6/13/2013“But even though we may understand on some level that loss isa catalyst for growth, most people still believe it to be theopposite of gain and to be avoided at all costs. If I’ve learnedanything in my years of practicing Zen and coaching basketball,it’s that what we resists persists. Sometimes the letting gohappens quickly; other times it may take several sleeplessnights. Or weeks.”- Phil Jackson (11-Time NBA Championship Coach),“Eleven Rings: The Soul of Success”“He who works his land will have abundant food, but the onewho chases fantasies will have his fill of poverty.”- Proverbs 28:19Source:Barnes&NoblePatexia Webinar Series“Deciding Between Either Selling or Licensing Patents”Peter Kim, Principal, Irvine Pointe Advisory, LLCpeter@irvinepointe.com
How to Seek Advice6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 2“Never ask abarber if youneed a haircut”- Warren BuffettImage Source:http://www.biography.com/people/warren-buffett-9230729
Question:Why is patentlicensing so hard?6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 3
Frequently Heard from CEOs/Owners• My idea/patent is being used by entireindustry• The target licensees are dragging their feet• Their technical/legal arguments don’t makesense• Dealing with their lawyers is frustrating• I just want to sit down and reason with them• I’m being very reasonable; numbers areconservative• Don’t they know I’ll sue them if they don’tpay?• The amount I’ll settle for is so tiny• Another inventor (with worse idea) mademoney6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 4http://www.imdb.com/title/tt1054588/
Question:Is selling mypatent same as“selling out”?6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 5
Patent Owners (Particularly Inventors) AreDifferent From Owners of Other Assets• The idea/patent is “my baby”• I want to see my idea adopted in marketplace• I just want to be made whole for them stealingidea• I’ve worked so hard and waited so long already• I’ve spent so much money, need to break-even• No one else knows my invention as well as me• No one else could work as hard on this as me• I don’t trust other people to maximize value• If I sell it, they’ll low-ball me6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 6http://news.discovery.com/human/life/inventors-killed-by-inventions-101001.htm
Question:How do I evaluateselling vs.licensing?6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 7
This is My Decision …• … but am I stuck on these factors?– How much of my money spent so far (“sunk cost”)– How much of my time spent so far (“sunk time”)– How frustrated I feel about the experience (“revenge”)– How reasonable I am vs. what I deserve (“discount”)– How brilliant and innovative my idea was (“attachment”)• Why is this important? B/C no one pays for these.• Is it possible to look forward, rather than look back?• Most inventors cannot, which impairs their outcomes6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 8
6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 9Sell My Patent to a “Big Guy in Trouble”1 Patent 1 Patent 5 Patents$100M$400M$500M$300M$100MCross-Licensing: f(A, B) = -$300; f(A, C) = $0Here is why mypatent is morevaluable tosomeone else
Trust My PartnerDo These Lead to Trust?• Investment Cash• Operating Capital• Expertise• Track-Record• Credibility to Licensees• ReputationHave I Considered?• Ideal Client Profile Fit• Personal Chemistry• Client Management• Confusing Expenses• Conflict-Resolution• Partner’s Encumbrances6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 10
Which decisionwill make mehappier?6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 11
6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 12"And thats why sometimes a birdin the hand is better than twobirds in the bush and sometimestwo in the bush are better thanone in the hand."- Warren Buffett“The Snowball: Warren Buffett and the Business of Life”Presented at Allen & Company Sun Valley Conference (1999)http://en.wikipedia.org/wiki/The_Snowball:_Warren_Buffett_and_the_Business_of_Life
Looking for Resources• Understand the nature of conflicted advice• Trusted Advisor:– Another owner who licensed patents– Owner who sold patent (ask for broker refs)– Licensing person, not currently in business• Visit LES conferences– Ask lots of questions– Usually people try to help6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 13
6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 14“I would rank Peter’s presentationas one of our best ever.”*“Peter leveraged his extensiveindustry contacts, deep expertiseand experience to guide us throughdifferent licensing and IPmanagement options.”*“The client feedback from thatmeeting was excellent.”“His background is unique, whichgives him a unique perspective onpatent trends.”*“… intimate knowledge of the waysthat non-practicing entities thinkand operate is an invaluable asset”.*“… his ability to … take the chaosand make sense of it -- and providea comprehensive analysis.”Further Details @ http://www.irvinepointe.comIrvine Pointe Advisory, LLC:Sample Testimonial Excerpts
For further information:firstname.lastname@example.orgPeter KimPrincipalIrvine Pointe Advisory, LLCwww.irvinepointe.comQ&ACopyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 156/13/2013
6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 16Industry Perspective from Leaders in IP Licensing & Patent MonetizationTrusted Intellectual Property Advisor
6/13/2013 Copyright © 2013. Irvine Pointe Advisory, LLC. All Rights Reserved. 17Broad Range of ExperiencesAcquisition• Deal Negotiation• Patent Broker Relationships• Terms & Conditions “Pitfalls”Mining• Portfolio Segmentation• Subject Matter Expert Recruiting• Searching (keywords, class codes)Licensing• Claim Chart Development• Royalty Forecast and Valuation• Market and Value Chain ResearchInvention• Co-Inventor: 17 U.S. issued patents• Brainstorming and Ideation• Claim Drafting Strategy