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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
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
Why Monetization?
3
Revenue from Nortel business unit sales at
auction ($US billions)
Company’s strategy determines the monetization need
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
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
Intellectual Ventures
Expanding the View of Monetization
6
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.
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.
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.
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
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
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
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.
Copyright © 2014 Intellectual Ventures Management, LLC (IV).
All rights reserved.
14
The Monetization
Organization
GE Licensing
15
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
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
…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
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
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
Program Launch & Deal Approvals
Licensing One Level Up Special Boards
• Discussion Point • Discussion Point • Discussion Point
GE Ventures Licensing
21
March 2014
Other Business & Legal Approvals
Operating
Businesses
Corporate Approvals IP Litigation COE
• Discussion Point • Discussion Point • Discussion Point
GE Ventures Licensing
22
March 2014
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
More of the How
24
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
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

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Patent Monetization

  • 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. 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. Why Monetization? 3 Revenue from Nortel business unit sales at auction ($US billions) Company’s strategy determines the monetization need
  • 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. 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. Intellectual Ventures Expanding the View of Monetization 6
  • 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. 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. 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. 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. 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. 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. 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. Copyright © 2014 Intellectual Ventures Management, LLC (IV). All rights reserved. 14
  • 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. 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. …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. 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. 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. Program Launch & Deal Approvals Licensing One Level Up Special Boards • Discussion Point • Discussion Point • Discussion Point GE Ventures Licensing 21 March 2014
  • 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. 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. More of the How 24
  • 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. 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

Editor's Notes

  1. Key Takeaway: We are an invention capital company. Talking Points: Our goal is to reinvent invention by providing the capital and expertise to energize and streamline an invention economy, drive innovation and accelerate progress around the world. Intellectual Ventures is an invention capital company. We are creating an active market for invention that connects buyers, sellers and inventors. Like a VC, part of our business is focused on funding the creation of new ideas. Similar to private equity, part of our model is focused on investing in existing ideas that may be trapped in distressed companies or no longer be valuable to their current company. In all cases, our focus is on investing in invention as a stand-alone asset. With more than $6 billion in committed capital and more than 40,000 IP assets in active monetization programs, Intellectual Ventures provide the world’s most innovative companies with access to the invention rights they need and helps inventors monetize their patents.
  2. Key Takeaways: We have smart inventors who are contributing to the inventions the world needs to solve big problems. Those inventions are starting to find their way into the market (like TerraPower). Talking Points: Let’s start with the process of invention. We’ve been actively inventing on our own since 2003 and have filed 3,500 patents since that time. We have about 60 or so internal employees focused purely on invention. We have about 100 external inventors – these are elite, hand-picked inventors that are the best in their fields. We bring them together in a multi-disciplinary approach to address tough problems. Our filing and invention rate for this part of the business alone would put is in the top 50 of US active filers. How do our inventions manifest externally? One of those examples is TerraPower – a new generation of nuclear reactors. This has become a company that we’ve spun-out and is funded separately by investors including Charles River Ventures, Khosla Ventures and Bill Gates. This is just one example of the kinds of things we’re bringing about.
  3. Talking Points: The next line of business we’ll talk about is patent acquisition. As I spoke about before, this is where IV helps inventors get their inventions into the market. We acquire existing patents – an inventor or university comes up with the idea, and files a patent (issued or not), but they are not sure how to monetize it. So we acquire the IP from them and create bundles of IP that we take out and license – typically non-exclusive basis – to companies. For instance, we we buy a lot of wireless IP and put it together and bundle it and license to wireless companies. We’ve done more than 1,500 acquisitions deals. Injected more than $2 billion dollars into the invention economy through patent acquisition; almost half a billion of that to individual investors One example of a recent deal is Avistar – they had a variety of lines of business and had done great invention work in one area, but decided not to focus on that area. The rest of their business was under-capitalized, so they sold us the IP from the area they weren’t focusing on and used that money to capitalize their business.
  4. Talking Points: The third part of the business is collaborative invention. We have gone out and build a large network of terrific inventors – academics, research labs, garage inventors, etc. We create problem statements based on where we think the future role of tech is. We send these out and they send us ideas. They’re not committed to participate, but if they’re interested they send back ideas, we vet them, we select them, we pay them and they get a royalty and we take on the patenting process and licensing process. Have signed on more than 4,000 inventors from more than 400 institutions An example of one of the inventors that we partner with is Dr. Ezekiel Kruglick, a MEMS specialist who has worked at the Jet Propulsion Laboratory, various universities and several start-ups. In addition to more than 35 technical papers, Kruglick holds dozens of issued and pending patents. According to Kruglick, IV “offers a way to offset development cost by rolling technology out to many interested parties.”
  5. Key Takeaway: IV bridges the gap for technology companies between the IP they have and the IP they need to stay successful Talking Points: Then there’s the licensing group. This is how we take these inventions and get them into the hands of technology companies. Technology companies today face such pressure to innovate and add new capabilities, and products are becoming so complicated that there is almost no way for one company to come up w/all those inventions. So there’s a gap between what they want to put in products and what they can invents. We want to bridge that gap for them. We have a portfolio of IP that we can license to them. If we can’t bridge entire gap we can provide IP for defensive use in litigation. We have a variety of products and services in licensing to meet our customers needs. Some of those products include gaining access to particular IP for defensive purposes. One example of this is Verizon – they were being sued by another company over patent infringement. They wanted IP to defend themselves in that case so we provided them with some IP they could use to help defend themselves. Another example is Vlingo, a company that does voice-to-text software. We provided them with patents they were able to use in defense of litigation. It’s worth noting that despite some press to the contrary, litigation isn't an objective of our business – our objective is to license – but just like anyone else whose products are being stolen – music, software, etc – it’s an option for us. Our monetization strategy also includes divestitures. We review the overall content of our large patent portfolio and sell assets that are no longer critical for our business. And finally, we launch spin-out companies to commercialize our inventions. To date, we have launched TerraPower (nuclear energy), Kymeta (satellite communications), and Evolv (security imaging).
  6. Talking Points: Here are some basic facts about us… (highlight a few of the most relevant to the audience).
  7. Talking Points: We benefit our investors in several ways. One way is that this is a new and unique opportunity for them – a chance to fund next generation technologies, but also to invest in a new asset class which is uncorrelated to most traditional equity like VC and private equity. Because of the size of the portfolio, we can also reduce risk through diversification. We make a lot of bets. There will be inventions that are huge wins and some that won't. So you need diversification to be successful. Our investors have a unique profile and understand this is a long-term play.