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Patent Monetization


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Given the myriad of ways companies use to monetize their intellectual property how can you decide which approach you should take? ROL Group delves into this question by looking at the different types of monetization strategies available, and substantiates the monetization plan using real-world case studies.

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Patent Monetization

  1. 1. Patent Monetization USC Gould School of Law 2014 Intellectual Property Institute 1 The views expressed are solely those of the individuals, and are not to be associated or ascribed to any other entity, including their employer or former employer
  2. 2. Agenda • What, Why, How • Kirk Daily, Head of Patent Transactions, Google Patent Monetization – Overview • Melissa Finocchio, VP, Chief Litigation Counsel, Intellectual Ventures Expanding the View of Monetization • Sang Young Brodie, Senior Counsel, Licensing, GE Ventures The Monetization Organization • All – discussion on the requirements for success More of the How 2
  3. 3. Why Monetization? 3 Revenue from Nortel business unit sales at auction ($US billions) Company’s strategy determines the monetization need
  4. 4. What Monetization Options? • Direct/Brokered • Privateering • Back-end Revenue Sharing Patent Sales • Selective Licensing • Cross Licensing Direct Licensing • Pools • License on Transfer • OIN Group Licensing Litigation 4 Monetization is deriving value from your portfolio
  5. 5. How to Monetize - Mechanisms • Selecting non-strategic assets • Strategic assets retained for x- licensing Sales • Selective one-way vs. cross licensing • Group Licensing (Pools: MPEG, VP8, OIN..) • Community Based (LOT, OPN) Licensing • RPX • AST Partner with others in the industry Litigation • Experience required? • Internal versus external teams • Internal team members • Contingent agencies • Firms • Funding requirements Capability, commitment & resources 5
  6. 6. Intellectual Ventures Expanding the View of Monetization 6
  7. 7. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 7 Invention Capital We believe that inventing is the critical driver of progress. It is the spark that brings benefits to society, countries, corporations and individuals. Ideas are valuable. Inventors face challenges to develop, protect and commercialize their inventions. Corporations face challenges to acquire the inventions they need to remain competitive. Both need each other to be successful. Invention capital is a new type of market where intellectual property is funded like any other asset. We are building a market for invention by making invention a profitable activity.
  8. 8. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 8 The TerraPower initiative is advancing a comprehensive program to improve nuclear power technology, offering the potential for safe, sustainable emission-free energy. Build: We Invent. Ideas Come First Intellectual Ventures has been actively inventing new technologies and products since 2003. 100 internal invention staff, including 30 PhDs and approximately 120 external senior inventors. 27,500-square-foot facility in Bellevue, Washington, filled with advanced electronics, photonics, and biochemistry equipment. Thousands of patents filed in more than 50 technology areas. Intellectual Ventures currently ranks in the top 50 among companies who file patents worldwide.
  9. 9. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 9 “The transaction with Intellectual Ventures is an important milestone for Avistar. It allows Avistar to focus on what we do best… providing us the capital to more aggressively invest in our business.” - Bob Kirk, CEO of Avistar Buy: We invest in invention Bringing Ideas to Market Intellectual Ventures offers inventors and businesses an avenue to monetize intellectual property through patent acquisition. Our patents come from a wide range of inventors — start- ups, individual inventors, large corporations, research institutions, etc.. Intellectual Ventures provides financing for future projects as well as mergers and acquisitions and to bring ideas to market faster. More than 1500 individual acquisition deals for more than 20,000 patents. $2 billion injected into the invention economy through patent acquisitions, almost half a billion dollars paid to individual inventors.
  10. 10. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 10 Partner: We collaborate to develop inventions Ecosystem of Invention Intellectual Ventures has built a stable and dynamic global inventor community connecting inventors, investors and ideas. Enabling corporations to cost-effectively enhance internal R&D capabilities. Active relationships with more than 400 institutions and more than 4,000 inventors, with more added each week. Global network of 12,000 invention sources. Intellectual Ventures has already awarded more than $20 million worldwide to inventors participating in the collaborative invention program. Dr. Ezekiel Kruglick • Expert in microelectromechanical systems • Dozens of pending or issued patents • Recent recipient of the NASA Space Act Award • Collaborates with IV to monetize IP and offset development costs Inventor Profile
  11. 11. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 11 When Tivo filed suit against Verizon and AT&T over DVR infringement, Intellectual Ventures’ customer Verizon was ready to respond with Intellectual Ventures’ patent “viewer preference programming methods” and bring a counter suit to bear. Monetization: We bridge the Innovation Gap Intellectual Ventures has one of the largest and fastest-growing invention portfolios in the world. We monetize these assets through licensing our IP, divesting patents or developing spin- out companies. Intellectual Ventures licenses custom patent portfolios to partner companies to help them accelerate technology development, maintain an innovative edge or defend against threat of patent infringement. Launch spin-out companies to commercialize our inventions, including TerraPower, Kymeta and Evolv. Verizon TM
  12. 12. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 12 Intellectual Ventures Founded in 2000, Intellectual Ventures has grown to more than 800 dedicated team members worldwide. Privately-held with >$6B committed capital, and >$3B in revenue. 40,000 patents in active monetization programs; plus thousands more added per year. IV Lab launched in 2008; >100 engineers, scientists, and staff work on a variety of projects. Company Fundamentals 12
  13. 13. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 13 Investing in Intellectual Ventures Unique opportunity to fund next generation technology and fuel invention economy. A fledgling market with room for exponential growth. Uncorrelated investment independent of standard market fluctuations. New investment class offers exposure to technology without execution risk of venture capital. Large portfolios provide risk-reducing diversification.
  14. 14. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 14
  15. 15. The Monetization Organization GE Licensing 15
  16. 16. GE by the numbers Energy Mgmt 5% / $7B Healthcare 12% / $18B Aviation 14% / $20BOil & Gas 10% / $15B GE Capital 31% / $46B Home & Business 5% / $8BTransportation 4% / $6B Power & Water 19% / $28B $147B 2012 revenue $16B operating income GE Ventures Licensing 16 March 2014
  17. 17. Investing in innovation 6% of industrial revenue invested to develop intellectual content$5.4B 1,000 technical disclosures are published each year on new technologies in development. Development dollars also fuel our ecomagination and healthymagination efforts and Imagination Breakthroughs that stimulate growth across GE businesses. 1,660 patents were generated by this content in the U.S. alone. March 2014 GE Ventures Licensing 17
  18. 18. …Closely integrated with GE Global Research 1 4 76 5 3 2 Global Software Center San Ramon, CA 1 Brazil Technology Center Rio de Janeiro, Brazil 4 China Technology Center Shanghai, China 7 India Technology Center Bangalore, India 6 Global Research Europe Munich, Germany 5 Global Research Headquarters Niskayuna, NY 3 AMSTC Van Buren, MI 2 GE Ventures Licensing 18 March 2014
  19. 19. What we do GE Licensing focuses on three primary business models: leveraging fan technology developed by GE Aviation for use in portable, personal electronic devices Enables innovation by building on GE’s R&D investments Extends reach of GE technology around the world Supports the protection, development & marketing of GE’s IP Builds the GE brand in consumer and adjacent business spaces Meets localized solution needs in global markets Focuses on ecomagination and healthymagination platforms Drives open innovation and helps GE move at market speed Builds partnerships to establish new markets & disrupt old ones. TECHNOLOGY TRANSFER & IP LICENSING TRADEMARK LICENSING INNOVATION ACCELERATI ON GE Ventures Licensing 19 March 2014
  20. 20. Business Governance Principles • Simplification • Fast Works model • Keep it simple: general guidance, then pivot or persevere • Minimize number and complexity of reviews • Manage risk: financial, strategic, and reputation • Lower risk decisions would remain with lower leadership teams • Greater risk would have higher oversight GE Ventures Licensing 20 March 2014
  21. 21. Program Launch & Deal Approvals Licensing One Level Up Special Boards • Discussion Point • Discussion Point • Discussion Point GE Ventures Licensing 21 March 2014
  22. 22. Other Business & Legal Approvals Operating Businesses Corporate Approvals IP Litigation COE • Discussion Point • Discussion Point • Discussion Point GE Ventures Licensing 22 March 2014
  23. 23. Summary • GE Ventures Licensing brings value to GE IP • Technology & IP Licensing • Brand • Innovation Acceleration • GE intends to move at the speed of a startup • Simplification • Fast works • But corporate approval process must still be observed to manage risk GE Ventures Licensing 23 March 2014
  24. 24. More of the How 24
  25. 25. How to Monetize… Formulate the IP plan •Financials •Quantify the market opportunity •Build scenarios Qualify the patent portfolio •Which are the exact assets you are going to use? Identify the resources needed to be successful •Funds/other resources •Monetization team members •Exec sponsors Sell the plan internally •Management buy-in •Other stakeholders Build the infrastructure Execute to the plan 25
  26. 26. About the ROL Group • With over 40 years of IP strategy and execution experience, the ROL Group successfully aligns IP with business strategy. From initial patent programs to billion dollar licensing campaigns, from strategy options development to specific counter assertion patent buying programs, the ROL Group has the necessary skill and experience to achieve IP focused business goals. Passionate about the intersection of business, technology, and the law • Our attorneys have sat where you sit. With three former General Counsels, and decades of in-house IP experience, we understand that counseling needs to be actionable. When we match a client’s needs with an IP strategy, we articulate the steps needed to execute that strategy, and we help our client implement those steps. Experience into action – We have been there 26