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Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 1
The Patent Monetization Cookbook
The Who, What, Where, When, Why and How…
Why Patent Monetization?
Board
member
“We need to monetize our IP”
CFO “Cut your budget”
CEO “Generate some cash”
You “This is a good idea”
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 2
Patents: Analogies to South Park
Step 1:
Gather
Patents
Step 2: X
Step 3:
Make
Money
Step 1:
Gather
Underwear
Step 2: X
Step 3:
Make
Money
South Park Business Model
Patent Owner Business Model
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 3
Solving for X…
Baseline business
case
• TIM and SIM estimates
• Basic ROI for
monetization
Identify and
understand
patents of interest
• Needs analysis
• Diligence drives value
Understand and
select alternative
uses
• Defend
• License
• Sell
• Drop
Execute
• Authority
• Commitment
• Resources
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 4
Business Case
Estimate
the
Number of
Patents to
Markets
Assume the patents are good enough to license, can you
still make the business case?
Out of all of your patents, how many do you think will be
useful in what markets?
TIM and
SIM
Total Impacted Market & Serviceable Impacted Market
define the limits of the valuation?
Where in the value chain are the patents most
applicable?
What price are you likely to be achieve in what time?
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 5
Example Simplified Licensing Model ($M)
Company 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Co1 0 0 0 33.2 0 0 0 0 0 0 0
Co2 0 0 0 16.6 0 0 0 0 0 0 0
Co3 0 0 0 0 0 0 1.66 0 0 0 0
Co4 0 0 0 0 0 0 1.66 0 0 0 0
Co5 0 0 0 0 9.96 0 0 0 0 0 0
Co6 0 0 0 0 16.6 0 0 0 0 0 0
Co7 0 0 0 0 19.92 0 0 0 0 0 0
Co8 0 0 0 0 0 0 0 0 0 0 0
Co9 0 0 0 0 0 0 0 0 0 0 0
Co10 0 0 0 0 0 0 0 0 0 0 0
Revenue Total 0 0 0 49.8 46.48 0 3.32 0 0 0 0
Cost 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Prosecution 1 1 1 0.5 0.5 0.2 0.2 0.2 0.2 0.1 0.1
Market Analysis 0.25 0.25 0.25 0.25 0.25 0.25 0 0 0 0 0
Reverse Engineering 0.25 0.5 0.5 0.25 0.25 0 0 0 0 0 0
Litigation 0 1 2 4 2 0 0 0 0 0 0
Corporate Marketing 0.1 0.1 0.4 0.2 0.2 0 0 0 0 0 0
Sales & Management 0.75 0.75 0.75 2.5 2.5 0.5 0.25 0 0 0 0
Cost Total 2.35 3.6 4.9 7.7 5.7 0.95 0.45 0.2 0.2 0.1 0.1
Net Income -2.35 -3.6 -4.9 42.1 40.78 -0.95 2.87 -0.2 -0.2 -0.1 -0.1
Discount Rate 17%
NPV $33.81
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 6
Solving for X…
Baseline business
case
• TIM and SIM estimates
• Basic ROI for
monetization
Identify and
understand
patents of interest
• Needs analysis
• Diligence drives value
Understand and
select alternative
uses
• Defend
• License
• Sell
• Drop
Execute
• Authority
• Commitment
• Resources
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 7
Opportunity
RiskOK
OK
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 8
Identifying Patents - Patent Needs Analysis
Own
Need
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 9
Portfolio Analysis
Mapping and Ranking Your Assets
Asset
diligence
drives
value
Testing creates Very
Important Patents
(VIPs)
All monetization
options require testing
Volume - market size, impacted
products
Infringement - claim charts
Prosecution – including prior art
Build it
into your
process
Initial invention review Ranking drives budgets and focus
Continuously update Office actions
Foreign filing decisions
Maintenance decisions
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 10
Patent Quality/Value Indicators
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 11
Scorecard examples courtesy of Jeremiah Chan, JDS Uniphase
Solving for X…
Baseline business
case
• TIM and SIM estimates
• Basic ROI for
monetization
Identify and
understand
patents of interest
• Needs analysis
• Diligence drives value
Understand and
select alternative
uses
• Defend
• License
• Sell
• Drop
Execute
• Authority
• Commitment
• Resources
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 12
Understanding Your Options
Steps Update your business case
Evaluate your options
Test “go to market” theory
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 13
Option ROI Time to Money Cost Risk
License $$$$ 3-5 years $3-20M High
Defend $$$ 8 years $5-20M High
Sell $$ 6 months $250-500K Low
Drop $ 2 years $0 Low
Solving for X…
Baseline business
case
• TIM and SIM estimates
• Basic ROI for
monetization
Identify and
understand
patents of interest
• Needs analysis
• Diligence drives value
Understand and
select alternative
uses
• Defend
• License
• Sell
• Drop
Execute
• Authority
• Commitment
• Resources
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 14
Successful Monetization
Commitment
• Business case and
scenarios define the
needed commitment
• Time to money?
• Risk aversion?
Resources
• Support in marketing, legal,
engineering, sales, finance
• Business case defines your
resource needs
Authority
• Different options require
different support and
authority
• Cross functional buy in?
Finance, marketing,
engineering, sales, execs?
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 15
Monetize Your Patents!
Baseline business
case
• TIM and SIM estimates
• Basic ROI for
monetization
Identify and
understand
patents of interest
• Needs analysis
• Diligence drives value
Understand and
select alternative
uses
• Defend
• License
• Sell
• Drop
Execute
• Authority
• Commitment
• Resources
Rupert Mayer
Craig Opperman
Kent Richardson
Patent Monetization
Page 16

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The Patent Monetization Cookbook: The Who, What, Where, When, Why and How...

  • 1. Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 1 The Patent Monetization Cookbook The Who, What, Where, When, Why and How…
  • 2. Why Patent Monetization? Board member “We need to monetize our IP” CFO “Cut your budget” CEO “Generate some cash” You “This is a good idea” Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 2
  • 3. Patents: Analogies to South Park Step 1: Gather Patents Step 2: X Step 3: Make Money Step 1: Gather Underwear Step 2: X Step 3: Make Money South Park Business Model Patent Owner Business Model Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 3
  • 4. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 4
  • 5. Business Case Estimate the Number of Patents to Markets Assume the patents are good enough to license, can you still make the business case? Out of all of your patents, how many do you think will be useful in what markets? TIM and SIM Total Impacted Market & Serviceable Impacted Market define the limits of the valuation? Where in the value chain are the patents most applicable? What price are you likely to be achieve in what time? Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 5
  • 6. Example Simplified Licensing Model ($M) Company 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Co1 0 0 0 33.2 0 0 0 0 0 0 0 Co2 0 0 0 16.6 0 0 0 0 0 0 0 Co3 0 0 0 0 0 0 1.66 0 0 0 0 Co4 0 0 0 0 0 0 1.66 0 0 0 0 Co5 0 0 0 0 9.96 0 0 0 0 0 0 Co6 0 0 0 0 16.6 0 0 0 0 0 0 Co7 0 0 0 0 19.92 0 0 0 0 0 0 Co8 0 0 0 0 0 0 0 0 0 0 0 Co9 0 0 0 0 0 0 0 0 0 0 0 Co10 0 0 0 0 0 0 0 0 0 0 0 Revenue Total 0 0 0 49.8 46.48 0 3.32 0 0 0 0 Cost 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Prosecution 1 1 1 0.5 0.5 0.2 0.2 0.2 0.2 0.1 0.1 Market Analysis 0.25 0.25 0.25 0.25 0.25 0.25 0 0 0 0 0 Reverse Engineering 0.25 0.5 0.5 0.25 0.25 0 0 0 0 0 0 Litigation 0 1 2 4 2 0 0 0 0 0 0 Corporate Marketing 0.1 0.1 0.4 0.2 0.2 0 0 0 0 0 0 Sales & Management 0.75 0.75 0.75 2.5 2.5 0.5 0.25 0 0 0 0 Cost Total 2.35 3.6 4.9 7.7 5.7 0.95 0.45 0.2 0.2 0.1 0.1 Net Income -2.35 -3.6 -4.9 42.1 40.78 -0.95 2.87 -0.2 -0.2 -0.1 -0.1 Discount Rate 17% NPV $33.81 Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 6
  • 7. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 7
  • 8. Opportunity RiskOK OK Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 8 Identifying Patents - Patent Needs Analysis Own Need
  • 9. Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 9 Portfolio Analysis
  • 10. Mapping and Ranking Your Assets Asset diligence drives value Testing creates Very Important Patents (VIPs) All monetization options require testing Volume - market size, impacted products Infringement - claim charts Prosecution – including prior art Build it into your process Initial invention review Ranking drives budgets and focus Continuously update Office actions Foreign filing decisions Maintenance decisions Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 10
  • 11. Patent Quality/Value Indicators Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 11 Scorecard examples courtesy of Jeremiah Chan, JDS Uniphase
  • 12. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 12
  • 13. Understanding Your Options Steps Update your business case Evaluate your options Test “go to market” theory Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 13 Option ROI Time to Money Cost Risk License $$$$ 3-5 years $3-20M High Defend $$$ 8 years $5-20M High Sell $$ 6 months $250-500K Low Drop $ 2 years $0 Low
  • 14. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 14
  • 15. Successful Monetization Commitment • Business case and scenarios define the needed commitment • Time to money? • Risk aversion? Resources • Support in marketing, legal, engineering, sales, finance • Business case defines your resource needs Authority • Different options require different support and authority • Cross functional buy in? Finance, marketing, engineering, sales, execs? Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 15
  • 16. Monetize Your Patents! Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 16