- Many startups and unicorns do not develop extensive patent portfolios, despite the importance of intellectual property protection. Failure to align IP strategy with long-term business objectives can cost companies millions in litigation and licensing fees later on.
- While some unicorns have grown their patent portfolios as they approach exits like IPOs or expand into new markets, many unicorns still own few or no patents. This leaves them vulnerable to litigation from assertive patent owners.
- Experts recommend that startups focus on obtaining baseline patent protection of core technologies early on. However, companies often overlook opportunities to further strengthen their portfolios through activities like patent monitoring and freedom-to-operate analyses that provide competitive advantages.
In September 2014, Alibaba shattered global records with a US$25 billion IPO on the New York
Stock Exchange. The event capped a year in which 50% of venture capital investment in China was
in the TMT (technology, media, and telecom) and internet space. Michel Brekelmans, Co-head of
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shifts within the Chinese tech industry and what those shifts could mean for investors.
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In September 2014, Alibaba shattered global records with a US$25 billion IPO on the New York
Stock Exchange. The event capped a year in which 50% of venture capital investment in China was
in the TMT (technology, media, and telecom) and internet space. Michel Brekelmans, Co-head of
L.E.K. Consulting ’s China practice, shares insights from recent strategy work on the investment
shifts within the Chinese tech industry and what those shifts could mean for investors.
Insurance companies looking to differentiate themselves must be aware of 5 technology trends that will characterize the post-digital future. Read more.
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How to be a business fit
In a time of 4IR AI Blockchain Fintech
The future of all businesses and related industries is all about disruption – and that’s a good thing
Disruption across all industries is inevitable, but rather than bracing for the change, businesses should be confident to accept and embrace it.
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by Dinis Guarda,
author, CEO founder ztudium - openbusinesscouncil.org - fashionabc.org - intelligenthq.com
The Chinese government has set ambitious goals in its big data industry development to foster new economic drivers. One of these goals is e.g. to increase the annual sales of China’s big data industry (including related goods and services) to RMB 1 trillion by 2020 from an estimated RMB 280 billion in 2015. This report examines the Chinese big data industry and its innovators along with possible future opportunities and implications that China's expanding big data industry could entail for Finland.
I delivered a talk on application of Artificial Intelligence in Fintech to the visiting students of University of Applied Sciences, Wurzburg-Schweinfurt, Germany at Christ University
3 Steps To Tackle The Problem Of Bias In Artificial IntelligenceBernard Marr
Artificial intelligence (AI) is facing a problem: Bias. As more and more decisions are being made by AIs, this is an issue that is important to us all. In this article we look at some key steps you can take to ensure AIs of the future are not biased against, e.g., race, gender, sexuality, etc.
How should startups embrace the trend of IoT and Big DataRuvento Ventures
This presentation prepared by Ruvento Ventures gives comprehensive coverage of the state of IoT, Big Data and AI industries. It covers the latest trends and most successful investments in Consumer Hardware. Moreover, we tried to give pieces of advice to startups working in the intersection of IoT, Big Data and AI.
BootstrapLabs - Tracxn Report - artificial intelligence for the Applied Arti...BootstrapLabs
This report covers companies that provide the infrastructure for creating Artificial Intelligence. These Infrastructure companies include those working on Machine Learning, Deep Learning based platforms, libraries. Some of theses companies also provide platforms for Natural Language Processing and Visual Recognition. In the Applications section, the report covers companies leveraging AI techniques to build applications tailored for end use in Enterprise, Industry & Consumer sectors.
Over $1B has been invested in AI-Infrastructure startups since 2010 with ¬$340M being invested in 2015. Over $7.5B has been invested in AI-Applications startups since 2010 with $2.3B being invested in 2015.
IoT Implementation Technology Regulation and Business Perspective.pptxSatriyo Dharmanto
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The Amazing Ways Telecom Companies Use Artificial Intelligence And Machine Le...Bernard Marr
The telecommunications industry uses artificial intelligence (AI) and machine learning to benefit many aspects of their business from improving customer service to predictive maintenance. The most common applications used by telecoms make it clear that adopting AI and machine learning was essential for each company’s survival and ability to stay competitive.
Data has always played a central role in the insurance industry, and today, insurance carriers have access to more of it than ever before. We have created more data in the past two years than the human race has ever created. Insurers—like organisations in most industries—are overwhelmed by the explosion in data from a host of sources, including telematics, online and social media activity, voice analytics, connected sensors and wearable devices. They need machines to process this information and unearth analytical insights. But most insurers are struggling to maximise the benefits of machine learning.
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Digital Transformation Strategy - 4IR AI Blockchain Fintech by Dinis GuardaDinis Guarda
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How to be a business fit
In a time of 4IR AI Blockchain Fintech
The future of all businesses and related industries is all about disruption – and that’s a good thing
Disruption across all industries is inevitable, but rather than bracing for the change, businesses should be confident to accept and embrace it.
This is the only way to be fit in a digital transformation 4IR time.
by Dinis Guarda,
author, CEO founder ztudium - openbusinesscouncil.org - fashionabc.org - intelligenthq.com
The Chinese government has set ambitious goals in its big data industry development to foster new economic drivers. One of these goals is e.g. to increase the annual sales of China’s big data industry (including related goods and services) to RMB 1 trillion by 2020 from an estimated RMB 280 billion in 2015. This report examines the Chinese big data industry and its innovators along with possible future opportunities and implications that China's expanding big data industry could entail for Finland.
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Which country provided the strongest patent system in 2015/16? What are the key challenges SMEs need to address when implementing patents? How can you make joint development success? In anticipation to the 10th anniversary of the Global Patent Congress, Legal IQ have spoken to 10 industry leaders to provide you with insights and solutions to these questions and more in the 2nd edition of the GPC eBook.
Download your complimentary copy here to find out what experts from Draexlmaier Group, Genovis, Munich Regional Court, Stryker Corporation, among many others, are doing to stay ahead in the patent industry.
http://www.patentcongress.com/mediacenter?utm_source=slideshare&utm_medium=social&utm_campaign=-external-social&utm_term=resourcecenter&utm_content=text&mac=19724.006_slideshare&disc=19724.006_slideshare
Just how much device makers are on the hook for in patent licensing payouts is one of the most debated questions in the IP community. While a complete answer may remain elusive, an analytical approach can help manufacturers assess their risk.
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The British Chamber and Australian Chamber of
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SMEs (small and medium-sized enterprises) invest most of their resources in R&D to produce new technologies. They take higher risks than larger companies, who in contrast focus their R&D efforts on incremental innovations.
Yet, SMEs mostly fail to protect the value they create with patents. When they do, these patents have in general very poor quality and do not adequately protect their core markets. Lastly, SMEs are underserved in terms of legal representation and understandably so: outside law firms tend to find it difficult to work with SMEs, let alone getting paid for their services.
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Building a solid financial model and determining pre-money valuations for fundraising, are some of the most challenging activities for entrepreneurs. Creating a set of realistic financial projections is critical for founders to effectively communicate valuation expectations to investors and potential partners, while at the same time use as an important framework for prioritizing spending and maximizing the return on scarce resources.
Based on her experiences as a valuation expert, Stanford Lecturer, Silicon-Valley entrepreneur and startup advisor, Efrat will provide practical, hands-on advice on how you can:
• Build a robust business and financial model, based upon realistic expectations and sound assumptions
• Analyze and select the appropriate revenue models and cost structures for your emerging venture
• Understand the User Metrics and key performance indicators (KPI) benchmarks in your industry, and how they impact your funding and valuation
• Determine your valuation trajectory throughout the funding cycle, from seed funding to an exit event
• Successfully communicate your financial vision and expectations to investors
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Telling your story with numbers, building a solid financial model and determining pre-money valuations for fundraising, are some of the most challenging activities for entrepreneurs.
Creating a set of realistic financial projections is critical to effectively communicating valuation expectations to investors and potential partners, while at the same time serving as an important tool to help articulate how you will prioritize spending and maximize the return on investment for an investor.
Based on her experiences as a valuation expert, CFO, start-up advisor and Stanford Lecturer, Efrat Kasznik will provide practical, hands-on tools on how you can :
• Build a robust business and financial model, based upon realistic expectations and sound assumptions
• Analyze different revenue models and cost structures associated with the formation of an emerging venture
• Implement best practices for structuring short and long term financial projections for your business plan and investor fundraising
• Understand the factors and models that determine startup valuations throughout the funding cycle, from seed funding to an exit event
• Successfully communicate your financial vision and understanding to investors
The Startup Equity Valuation Timeline
Angel Investment & Valuation
Angel Funding: The Valuation “Triangle”
Three Valuation Methods
VC Valuation Approach: Industry Standard Discount Rates
Comparables Valuation Approach: Median/Mean Round Size
Comparables Valuation Approach: Pre-Money Valuation
Range
Angel Valuation Considerations
The Dave McClure Five “Million Dollar Point” Approach*
Crowdfunding, the JOBS Act, and the Future
of Innovation Funding
-Startup Valuation Trends
-Factors Affecting Startup Valuations
-Startup Valuations and Crowdfunding
-Rewards-Based Campaigns
-Equity-Based Fundraising
This presentation was given by Foresight Valuation Group President Efrat Kasznik at the UP Cloud Computing Conference in South San Francisco on December 12, 2012.
What You're Going to Learn
- How These 4 Leaks Force You To Work Longer And Harder in order to grow your income… improve just one of these and the impact could be life changing.
- How to SHUT DOWN the revolving door of Income Stagnation… you know, where new sales come into your magazine while at the same time existing sponsors exit.
- How to transform your magazine business by fixing the 4 “DON’Ts”...
#1 LEADS Don’t Book
#2 PROSPECTS Don’t Show
#3 PROSPECTS Don’t Buy
#4 CLIENTS Don’t Stay
- How to identify which leak to fix first so you get the biggest bang for your income.
- Get actionable strategies you can use right away to improve your bookings, sales and retention.
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Best Crypto Marketing Ideas to Lead Your Project to SuccessIntelisync
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Also Intelisync, our cutting-edge service designed to streamline and optimize your marketing efforts, leveraging data-driven insights and innovative strategies to drive growth and visibility for your project.
With a data-driven approach, transparent communication, and a commitment to excellence, InteliSync is your trusted partner for driving meaningful impact in the fast-paced world of Web3. Contact us today to learn more and embark on a journey to crypto marketing mastery!
Ready to elevate your Web3 project to new heights? Contact InteliSync now and unleash the full potential of your crypto venture!
When listening about building new Ventures, Marketplaces ideas are something very frequent. On this session we will discuss reasons why you should stay away from it :P , by sharing real stories and misconceptions around them. If you still insist to go for it however, you will at least get an idea of the important and critical strategies to optimize for success like Product, Business Development & Marketing, Operations :)
Reflect Festival Limassol May 2024.
Michael Economou is an Entrepreneur, with Business & Technology foundations and a passion for Innovation. He is working with his team to launch a new venture – Exyde, an AI powered booking platform for Activities & Experiences, aspiring to revolutionize the way we travel and experience the world. Michael has extensive entrepreneurial experience as the co-founder of Ideas2life, AtYourService as well as Foody, an online delivery platform and one of the most prominent ventures in Cyprus’ digital landscape, acquired by Delivery Hero group in 2019. This journey & experience marks a vast expertise in building and scaling marketplaces, enhancing everyday life through technology and making meaningful impact on local communities, which is what Michael and his team are pursuing doing once more with Exyde www.goExyde.com
Salma Karina Hayat is Conscious Digital Transformation Leader at Kudos | Empowering SMEs via CRM & Digital Automation | Award-Winning Entrepreneur & Philanthropist | Education & Homelessness Advocate
Create a spend money transaction during bank reconciliation.pdf
Final iam97 unicorns patent strategies
1. 59www.IAM-media.com
Autumn 2019
SMEs in focus | Corporate IP strategy
By Bridget Diakun
Only a small percentage of the world’s tech start-ups develop a patent portfolio of any
depth, but failure to align IP strategy with long-term business objectives could cost
companies millions down the line in litigation and licensing fees
Whystart-upsshouldgetserious
aboutpatentprotection
U
S cloud computing company ServiceNow became
the darling of the venture capital community in
just eight years, raising millions, building a vibrant
user base and setting tongues wagging on Wall Street
over when, not if, it would go public. It was a typical
Silicon Valley story. But – in what has also become
common among the denizens of America’s tech hotbed
– the company owned only a small number of patents.
Data shows that that has become all too familiar among
the world’s headline-grabbing unicorns – the term
coined in 2013 to describe start-ups that tip the scales
at more than $1 billion.Today, over 370 companies have
achieved this status.
Any IP professional will argue that patents are key to
budding businesses, particularly in the pharma and high-
tech sectors. Yet, an overwhelming number of unicorns,
and more broadly smaller and medium-sized enterprises
(SMEs), lack such protection. So what is going on? IAM
has spoken to a range of industry professionals to better
understand the practical difficulties for SMEs as they
grow, the risks that companies face as they reach unicorn
level and how to mitigate these issues. For ServiceNow
that risk was made abundantly clear by infringement
suits brought against it by HP and BMC in the year of
its initial public offering (IPO).The cost to settle was
$270 million.
Picture: MarinaMonroe/
shutterstock.com
2. 60 www.IAM-media.com
Autumn 2019
Corporate IP strategy | SMEs in focus
For companies that are expected to be market
disruptors, strong IP protection is critical to success –
insufficient protection can not only result in the loss of
millions but can even threaten the very survival of the
company. “Being IP ready is not something that is going
to add value to your company per se,” argues Kurt Brasch,
who led Uber’s pre-IPO buy campaign. “But not being
IP ready can definitely subtract from it.”
Short-term gain obscures long-term strategies for
start-ups
The Intellectual Property Office of Singapore (IPOS)
is one entity that is drilling the value of intellectual
property into the minds of local SMEs. “In a future
economy driven by innovation and digitalisation, it is
important to help our SMEs rethink and reshape their
business models so that they can use their intangible
assets to grow,” explains Daren Tang, chief executive
of IPOS.The office has introduced a number of
initiatives and arrangements, such as patent-acceleration
programmes, to help smaller businesses scale up through
the commercialisation of intellectual property.
IPOS’s outreach has gained traction, with almost 700
individuals and companies using its complimentary IP
business and legal clinics to seek preliminary legal advice.
“Growth rates for IP filings in Singapore in the last
decade have generally been above our GDP,” explains
Tang. “Between 2014 and 2018 total IP applications
in Singapore grew by a compound annual growth rate
of 5.4%.”
Private practitioners from key markets agree that their
local SMEs are more tuned in to the patent market.
“In recent years, the trend of Chinese SMEs paying
greater attention to patents has become increasingly
apparent,” observes Xiaofan Chen, head of patents at
IP consultancy firm AWA Asia. “They are gradually
realising that patents can provide them with a favourable
position in an increasingly crowded, fierce and
competitive marketplace.”
The highest level of engagement is within the high-
tech and pharma sectors. Companies operating in these
industries generally understand that patent protection
is a key element of growing their businesses, especially
given the fact that a strong portfolio is one of the first
things that investors will ask about.
Unsurprisingly, these SMEs struggle to build up their
holdings due to budgetary constraints. “In the very early
stages of a start-up, there is generally a vicious circle
that needs to be broken,” says Henri van Kalkeren from
European law firm VO. “Funding is required to file
for intellectual property, while intellectual property is
required to get the funding to file for it.”To counter this,
he suggests an initial filing “wherein the protection of an
invention in broad terms is sought”.
The protection of core technologies is the highest
priority when it comes to SMEs, but there are other
things that start-ups can do to give themselves a
competitive edge.
Manuel Söldenwagner, a partner at German-based law
firm Eisenführ Speiser, often advises SMEs after they
have been approached by potential new investors. In his
experience businesses tend to obtain sufficient baseline
protection and ensure that rights are transferred to the
business, but many miss out on the bigger picture. “We
have many start-ups that underestimate issues relating
to freedom to operate,” he maintains. SMEs refrain
from this analysis, often due to its higher cost, and
also fail to take advantage of a relatively cheap service:
patent monitoring.
Chen highlights the strategic importance of this
activity. “Patent searches are helpful to understand the
focus and any gaps in the portfolios of competitors in a
sector and adjacent industries,”he explains. Söldenwagner
adds that this forward-thinking strategy is often
employed by large entities but is overlooked by SMEs.
When it comes to patents it seems that SMEs view
these protections as a short-term necessity, rather
than part of a long-term strategy. Managing partner
at JurisAsia, Sheena Jacob, highlights the need to
communicate the ‘why’ factor to management in order
to align these assets with long-term objectives. “Often
SMEs file for protection and then lose their focus or
strategy 12 to 24 months later,” she observes. Others
argue that the conversation around protection is critical
when a start-up is established, as this is the best way to
bring business value and build the portfolio in a way that
works for the start-up as it grows.
The majority of start-ups operate within highly
technical fields and are thus aware of the need for basic
protections of core technologies. However, there is a
Unicorns: Asia Number of grants and applications
ByteDance 327
DiDi** 121
Grab** 14
Bitmain Technologies 143
DJI Innovations 2,156
Unicorns: North America Number of grants and applications
WeWork 0
JUUL Labs 209
Airbnb 142
Stripe 48
SpaceX 0
Unicorns: Europe Number of grants and applications
Global Switch 0
Roivant Sciences 197
Auto1Group 0
Otto Bock Healthcare 1,321
Greensill 0
TABLE 1. Breakdown of unicorns by region
Source: CPA Global’s IP Intelligence Software, Innography, **Anaqua’s AcclaimIP Analytics Software, note: these businesses
may possess other IP rights such as trade secrets or trademarks but these assets were omitted from this search
“The theory we have developed is that unicorns
change their patenting behaviour as they
approach an exit event or enter a new market”
Efrat Kasznik, Foresight Valuation Group
Kurt Brasch
3. 61www.IAM-media.com
Autumn 2019
SMEs in focus | Corporate IP strategy
IAM analysed the top five unicorns from Europe,
Asia and North America to understand how these
potentially high-value businesses have incorporated
patents into their business strategy and at what stage of
their development this happened.
Today’s unicorns reflect the general trend
Just over 65% of the unicorns analysed owned patents,
with Asian companies showing the most consistent
investment in these assets (see Table 1).
Efrat Kasznik, president and founder of Foresight
Valuation Group, an IP valuation, strategy and economic
consulting firm, has extensively researched unicorns
and their patent strategies. “The theory that we have
developed is that unicorns change their patenting
behaviour as they approach an exit event or enter a new
market,” she says. A number of the companies listed
in Table 1 are openly preparing to go public, while
a smaller number have taken tangible steps towards
doing so. WeWork, a US company that provides shared
workspaces, and Global Switch, a data centre, are two
businesses that have pushed to go public, with Global
Switch preparing to file in Hong Kong having selected
its banks. While WeWork does not operate in a high-
tech space, Global Switch is one of the leading market
players for cloud and the Internet of Things storage
technologies, competing with the likes of AT&T and
Dell. Its lack of patent protection is therefore a surprise.
Of the remaining unicorns, ByteDance, a Chinese
internet company, and Airbnb are expected to go public
in the near future and are some of the most highly
anticipated tech IPOs.
ByteDance’s portfolio has grown exponentially in
just the past year, coinciding with its IPO plans. A
majority of its portfolio consists of Chinese patents
but recently there has been an increase in its US
filings. Of its portfolio growth, 73% was filed in 2018,
which means there was an uptick of 808% in activity
throughout 2017; this is likely to increase as more
filings are published. Airbnb has a decent sized portfolio
given its age, and its patenting activity is still on the
rise, up 54% in 2017 according to CPA Global’s IP
Intelligence Software.
The largest patent portfolio is held by DJI
Innovations, a drone manufacturer, with 2,156
patents (grants and applications). According to CPA
Global its filings peaked in 2016, 10 years after the
company was founded. Each of the Asian unicorns
file overwhelmingly in the Asia Pacific region, with
only ByteDance making significant headway in the
United States.
Otto Bock Healthcare has one of the most mature
portfolios, with its average age of patent by publication
date clocking in at 5.18 years according to Anaqua’s
AcclaimIP Analytics Software.The company has been
around since 1919 and its CEO has confirmed that it
will not be filing for an IPO before 2020.
The US unicorns that have built patent portfolios have
opted for geographic diversity, filing more actively across
jurisdictions than the European and Asian businesses
analysed (see Figure 1).
JUUL, an e-cigarette company, has a notable patent
portfolio in terms of both size and diversity. It was spun-
off from Pax Labs in 2017 and in that year its filings
skyrocketed (see Figure 2).
Source:Anaqua’sAcclaimIPAnalyticsSoftware
30%
21%
11%
21%
9%
8%
No assets
1-5 assets
6-10 assets
11-50 assets
51-100 assets
100+ assets
FIGURE 3. US unicorn IP portfolio breakdown
Source: The Naked Truth: 30% of
US Unicorns Have No Patents, Efrat
Kasznik and Lynn Dudinsky
60
Numberofpatents
Publication date
Documents by year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
40
20
0
Other global
JP
US
WO
EP
DE
FIGURE 2. JUUL Labs filing activity by active grants and applications
Anaqua’sAcclaimIPAnalyticsSoftware
100
90
80
70
60
50
40
30
20
10
JUUL Labs
US APAC EU WO
Airbnb Stripe
0
FIGURE 1. US unicorns – geographic coverage
limit to their understanding of the value of intellectual
property, with many trying to fulfil the requirement to
satisfy investors or taking the bare minimum precautions
to avoid litigation. Yet there are far more reasons to seek
IP protection.
4. 62 www.IAM-media.com
Autumn 2019
Stripe has a small but seemingly valuable portfolio,
focusing on digital payment services. According to
Anaqua’s AcclaimIP Analytics Software, the San-
Francisco based company has a much higher level of
citations on average than the other unicorns studied, with
Google and Visa appearing as forward-citing assignees.
The unicorns with the highest volume of patents are
those that experience high-growth levels in the run-up
to an IPO or that have grown beyond start-up level to
have the necessary funds to grow their portfolios. It is
impossible to know whether these businesses developed
an IP strategy from the very beginning, but this data
does indicate that intellectual property is a key part of
their overall business strategy.
While some of today’s top-ranked unicorns are
IP savvy, Kasznik’s research showed that 30% of
US unicorns had no US patent assets, while about
62% had 10 or fewer US patents (see Figure 4).
This is a significant issue, as companies with strong
revenues and a market presence are much more likely
to become targets not only of litigation but also of
corporate asserters.
The dealmaker’s perspective
Elvir Causevic is managing director and co-head of Houlihan Lokey’s
Tech+IP services practice – a role which means that he advises a range of
companies at various stages in their business and patent lifecycles. IAM
spoke with Causevic about why SMEs need to place a greater focus on
developing a patent portfolio and about the potential risks and pay-off of
this approach.
How do companies learn about the best practices for mitigating risk and
increasing opportunities?
Best practices are always derived by looking at peers and what peers are
doing. Most importantly looking at peers across different industries. There
is a lot to be learned – tech start-ups learning from medical device start-ups
who can then learn from hardware companies and others.
Are companies reactionary or proactive when it comes to building out
their portfolios to mitigate risk?
For the most part companies are reactionary but there are some exceptions.
The big difference when it comes to being proactive is the chief intellectual
property officer (CIPO) – when they were hired and how early it was in the
process and how experienced that CIPO is.
What are the most important trends in the market?
There are several important trends. Over time unicorns have certainly grown
wiser to IP risk, as well as IP opportunity. For a long while there was an air
of “patents don’t matter”. The venture capital community would say “don’t
spend too much money on patents, especially if you are in software because
patents are dead, so there is no need to worry about it”. But it turns out
patents are more resilient than anyone thought. People are now paying more
attention to patents than they were five years ago.
The second major trend is that while companies are hiring better CIPOs
there is less awareness of the value of patents at the senior executive level. It
used to be that tech companies were founded by tech people who intrinsically
understood patents. And now a lot of the companies are based on some
marketing approach or some product or some insurance, and tech is really
not the focus of the executive team but is critical to the company’s success.
The start-up is more about customer service or marketing rather than the
underlying technology. So that means there isn’t an intrinsic understanding of
the value of intellectual property at the senior
levels of the firm for some of them.
What are the risks for unicorns that put
patents on the back burner?
From a licensor perspective, they are looking
for sitting ducks. If you are an operating
company as well as a licensor you don’t have
to be a genius to figure out you should go after
companies that are rich but don’t have patents and can’t come back and attack
you. You will go after the big ones that have no patents. So that’s what drives
this. You are inviting trouble by not doing something with patents early on.
What is the most important thing to impart on unicorns who are building
out their portfolios?
One size doesn’t fit all. That’s critical. Each situation is fact dependent. You
can make a strong economic case for acting early based on solid data. I think
people also forget that you need to buy defensive patents in two categories:
category one for the product that you have, and category two for whatever
your licensors are making the most money on. It may have nothing to do with
your own technology areas. A counter-assertion strategy has to be pointed at
the profit margin of the licensor’s best product, and by best it means where
they are making money and what their own growth strategy is. Also, be
prepared going into negotiations, not with litigation posturing or worn out
anti-patent tropes, because everyone does that, instead be prepared with
facts, data and evidence to reduce your exposure.
For unicorns the first thing is to get to market and make sure they reduce
licensing and litigation exposure. However, I would advise them for the
long-term interest of the long-term shareholders to really invest in patenting
if they are blazing new ground. These unicorns can build tremendous
value for their shareholders and themselves by patenting if, for example,
10 years down the road they do not make it. So, in some sense clever
patenting is a smart insurance policy if they’re true innovators. If things
don’t work out so well, those without patents are dead and wiped out.
Those that are clever with patenting their inventions, if they are high-quality
inventions, can benefit though by generating significant returns on these for
their shareholders.
Corporate asserters prey on unicorns, but a
defensive strategy can save millions
Patents do not only serve to protect a company’s core
technologies, they can also be used to defend against,
and prevent, attack from corporate asserters.
Companies with revenues running north of $100
million and reaching $1 billion benefit from paying
attention to risk.This is the point where they are more
vulnerable to corporate asserters, especially if they lack
substantial patent holdings, says Kent Richardson, co-
founder of Richardson Oliver Law Group.
The goal for companies within the high-tech sector
is to achieve freedom of action, rather than freedom to
operate. “In high tech you really cannot get away from
building on the shoulders of giants,” Richardson points
out. “So a viable strategy is to get enough patents so
you have freedom of action to produce the products
you want, within reason.” Generally, the more patents a
company has, the less attractive it becomes to asserters.
Amassing patents acts as a deterrent to corporate
asserters and can allow a business to either eliminate or
reduce payments to these entities.The portfolio can be
Kent Richardson
Elvir Causevic
Corporate IP strategy | SMEs in focus
5. 63www.IAM-media.com
Autumn 2019
built out organically or through acquisitions.The latter is
a relatively recent practice and can significantly boost the
value of a company’s holdings.
Case examples
Even companies that are known to be anti-patent can be seen building out
their portfolios both organically and through acquisitions.
Houlihan Lokey conducted an analysis of enterprise software companies
and their patent positions before IPOs. Although a majority were in possession
of patents pre-IPO, 20% were not – a significant chunk given that this is a
highly technical field. The number of companies which purchased patents is
even fewer, indicating that this strategy is still not a mainstream practice.
Strategic patent acquisitions can be highly beneficial. Below is a
comparison of ServiceNow against Twitter, Snap and Pure Storage to show
the potential pay-off of building out a portfolio through savvy purchases.
ServiceNow
The US cloud computing company went public in 2012, but its earliest
organic patents did not issue until 2015. This meant that it had a constrained
freedom to operate. In 2014 it was sued for infringement by HP and then by
BMC, with the suits settled for a combined total of $270 million in late 2016.
Since then the company has initiated a patent-acquisition programme,
acquiring 600 assets. It is also now in possession of approximately 30 issued
patents and over 100 published applications, which were developed
in-house. ServiceNow has spent $37.9 million on patent acquisitions.
Twitter
Post-IPO Twitter acquired more than 900 patents from IBM, effectively ending
a dispute between the two companies. The cost of this amounted to $36
million. The social media giant was looking to fend off IBM as well as other
companies seeking licensing fees – after the purchase its shares rose by 1.2%.
Snap
Before its IPO Snap acquired 149 patent families from IBM, as well as five
families from Yahoo!. Post-IPO it purchased an additional patent family from
Israeli start-up Mobli and US start-up Drop. While the other transactions were
undisclosed, we know that Snap spent approximately $17 million on the IBM
and Mobli purchases.
Acquired patents account for 80% of Snap’s patent portfolio. The assets
acquired from IBM cover its core existing products and offer freedom to
operate. Its more targeted acquisitions relating to key patents on geotagging
can also serve to block its competitors. Although Mobli closed years ago,
Snap likely purchased these patents to keep them out of the hands of rivals
or an aggressive patent assertion entity.
Since Snap was proactive in its approach it was able to negotiate a
cheaper price. Twitter, which also acquired from IBM, did so after its IPO and
paid $36 million for 945 assets. Snap paid $9.45 million for 453 assets (245
issued patents and 208 applications), which is about a quarter of the price
for half as many patents. While Snap paid much less than Twitter, it is worth
noting that the quality of these assets was not assessed.
Pure Storage (2014)
This data storage company acquired over 100 storage and related patents
from IBM as a defensive strategy. It also acquired a number of other
patents to bolster its position. Pure Storage’s stock rose by 8.4% after
these acquisitions.
These studies show us that it can be much more expensive to
acquire patents during or after a lawsuit rather than through self-
initiated acquisitions.
Sample set: (January 2016-
November 2018)
39 enterprise software IPOs in
the United States
Companies with patents at IPO ~80%
Companies with patent acquisitions
pre-IPO
~30%
Companies with organic portfolios pre-IPO ~70%
Organic/acquired portfolio share 37% acquired assets/ 63%
organic assets
TABLE 2. Enterprise software portfolio strategies pre-IPO
Purchasing patents not only helps a company to grow
its portfolio but is an opportunity for businesses to
disproportionately increase the value of their holdings
in a short period of time. According to Richardson, the
average portfolio is not weighted evenly, with a small part
being much more valuable than the rest. When acquiring
assets, companies can exclusively target high-value patents
and can also purchase assets that they may never have
been able to invent themselves.“We highly recommend
to unicorns that the first purchases are in technology
areas that directly relate to the business and then diversify
out to the areas that are more interesting to corporate
asserters and potentially less interesting from the licensing
point of view to the unicorn itself,”says Richardson.
The question is, how do companies select what assets
to buy? This was an issue that was confronted by Kurt
Brasch, a former Motorola and Google IP executive, who
was hired by Uber in 2016 to build up its patent portfolio.
Brasch undertook a buy campaign leading up to the
company’s recent IPO. While he acknowledges that other
tech companies had run into issues going public because
they were not prepared from an IP standpoint, the exit
of the company was only a secondary consideration for
Brasch and his team.“The first and primary goal was
long-term in nature,”he maintains.“It was getting the
portfolio prepared to protect the business down the road.”
“When you have nothing you are looking at what are
the key technological areas. First you look at market
conditions and what is being litigated in the market.
Then you look at what is on the horizon. What are the
key technologies that will drive the future?”
Kurt Brasch, Uber
“Purchasing campaigns were not an option 10 years
ago because there wasn’t a big enough market,”argues
Richardson.“While more advanced companies may have
been using this strategy 10 years ago, unicorns were much
more focused on growing their business. Going further
back to about 15 years ago buying was a rare strategy.
Intellectual Ventures (IV) was the reason why this
practice has taken off, as IV built the patent market to
the point where the market could operate independently.”
SMEs in focus | Corporate IP strategy
6. 64 www.IAM-media.com
Autumn 2019
look at market conditions and what is being litigated
in the market.Then you look at what is on the horizon.
What are the key technologies that will drive the future?
Those are areas you will want to address.”
“It can be hard to find – especially if you’re really
innovating,” he concedes. “The odds are there are not
a lot of patents to buy and in this situation you would
build organically.That’s what we did for autonomous
because there was not a lot of good stuff available.
Whereas with broad software and mapping we looked
around for support. AT&T had some fundamental ride-
share patents that predated our existence by five years.”
Brasch and his team analysed data to identify portfolio
gaps and patent thickets.This gave them an idea of
what to focus on and whether they should strategise for
a counter-offensive (ie, sue back if they were accused
of infringement by an operating company) or a purely
defensive approach. “Sometimes you have to buy patents
defensively, other times you are stockpiling in the event
that you are attacked,” Brasch explains.
His advice for businesses looking to expand their
holdings is simple: “Building a patent portfolio is a
long-term focused strategy. You won’t see the value
immediately, in fact you will see short-term cost, but in
the long run you are better protected.”
SMEs and start-ups within highly technical fields
understand that they cannot get away with avoiding
patent protection and when the funds are available many
seek counsel to ensure that basic portfolio building is
completed. Yet it appears that many see patents as one
part of the lifecycle of the business rather than part of
its overall long-term strategy.The lack of awareness of
how patents play into future success could ultimately
damage the prospects of the business and effect its
longevity through expensive litigation or late-in-the-day
buy campaigns.
Uber had the option to exclusively pursue organic
growth for its portfolio but that would have been time-
consuming and would have left a gap in the portfolio.
Since the company had the capital available, Uber’s
patent team was given the opportunity to identify areas
that needed more protection.
“When you have nothing you are looking at what are
the key technological areas,” Brasch opines. “First you
A high percentage of unicorns lack any patent protection
and this is reflected more broadly among SMEs
worldwide. While start-ups are seemingly more aware of
the value of obtaining patent protection, more must be
done to educate them against the potential risks that they
face, especially when they reach a high-growth phase.
ŸŸ Businesses must have a conversation about
intellectual property right from the beginning of their
lives, even if it is a choice to put off protections in
order to prioritise other objectives.
ŸŸ The value of patents must be communicated
effectively to business owners, why it is necessary to
obtain protection early on and what the financial risks
are of not doing so.
ŸŸ SMEs especially need to be aware of IP-related risks
when their revenues start growing and they have
established a distinct presence in the market.
ŸŸ Patent data can be an effective tool for companies
looking to understand their rivals’ strategies as well as
to get insight into the greatest technological area risks
in the market.
Action plan
Bridget Diakun is IAM’s data reporter, based in London
What are today’s unicorns up to in terms of acquisitions?
A number of the unicorns analysed in this article have been proactive in building out their
portfolios through acquisitions according to research conducted by Houlihan Lokey.
DiDi and DJI Innovations have done the most shopping around. The former has purchased
the most from France Brevets (27) and MiTAC Holdings Corporation (29), carried out in 2018
and 2016 respectively. It also obtained five assets from Hewlett Packard. DJI Innovations
made one purchase from Microsoft in 2018.
Roivant Sciences and Stripe each carried out one transaction. Roivant bought patents
from Karos Pharmaceuticals (2017) and Stripe from Google (2018).
ByteDance and Airbnb have the highest number of individual transactions (see Table 3).
70
60
50
40
30
20
10
JUUL LabsByteDance DiDi DJI Innovations
US Grants US Applications
Airbnb RoivantStripe
0
FIGURE 4. Unicorn IP transactions
Source: Houlihan Lokey
ByteDance IP transactions
Execution date Seller Number of disclosed US
assets (US grants/US
applications)
19 April 2019 Qijian Software (Beijing) Co, Ltd 0/1
8 April 2019 JukeDeck Ltd 1/0
20 January 2019 Smartisan Digital Co, Ltd 7/7
22 August 2017 Tank Exchange, Inc 0/1
Airbnb IP transactions
Execution date Seller Number of disclosed US
assets (US grants/US
applications)
25 January 2018 Trooley Inc 2/2
7 September 2017 Klink Technologies, Inc 1/0
21 February 2017 Tilt.com, Inc 0/1
9 December 2016 Localmind, Corp 1/1
24 January 2014 Localmind, Corp 0/2
TABLE 3. IP transactions for ByteDance and Airbnb
Source:Houlihan Lokey
Corporate IP strategy | SMEs in focus