Preparing a Patent Package for Sale
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This document provides an overview of best practices for preparing a patent package for sale. It discusses identifying "value driver" patents that are central to the package's value proposition. An effective package should include evidence of these patents' relevance to major products/markets, as well as details on the patents, applicable technology, pricing information, and seller contacts. Buyer diligence on issues like patent ownership and encumbrances is also important. Overall the document outlines key components and strategy for maximizing a patent package's marketability and sales potential.
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Preparing a Patent Package for Sale
- 2. www.IAM-Market.com www.richardsonoliver.com Housekeeping With so many attendees, we have a few housekeeping rules to make this event a pleasant experience for all: • If you are on the phone for event audio, we are muting all attendees for the complete duration of the webinar. • There will be time at the end of the webinar for Q&A. If you wish to ask a question, please use the ‘Chat’ functionality and send it to ‘Staff’. • We will be running 4 polls during the webinar. Results will be shared at the end of the presentation in aggregated form only. • The webinar will be recorded, and the recording will be made available to you within the next week. 2
- 3. www.IAM-Market.com www.richardsonoliver.com Today’s Speakers • Moderator: Joff Wild, Editor in Chief, IAM • Been a journalist covering IP since 1992 • Has reported on IP for The Times, The Financial Times, The Wall Street Journal etc. • Developed the idea for IAM and has been its editor since it launched in 2003. • Editor in chief of the IP Division, part of Globe Business Media Group • Speaker: Kent Richardson, Partner, ROL Group • Advises on patent strategy, patent buying and selling. • Helped clients close on more than $70M in patent purchases/sales • Former VP IP at Rambus, part of the team that helped grow revenue from $100-200M over 4 years • Part of the IAM Strategy 300 for 7 years 3
- 6. www.IAM-Market.com www.richardsonoliver.com Patent Sales as a Patent Monetization Option •Definition: Private or semiprivate sale of groups of related patents and applications •Considerations •Fastest, but not fast, time to money •Good for smaller groups of patents, smaller deal sizes •Best and only monetization option for many organizations •Minimal cost Sales •Definition: 3rd party takes ownership of the patents. Company receives a portion of any proceeds after costs are removed •Considerations •Minimal costs to engage •Proceeds are net of costs… See Hollywood movie financials •Legal environment continues to make this model more difficult. Acacia Research stock is down nearly 50% YoY •Example partners include Acacia, Longitude Licensing, Conversant 3rd party licensing •Definition: Company directly licenses the portfolio. Company builds licensing plan, value proposition, closes the licenses. Company takes the risk of any litigation •Considerations •Easily the highest return and expected value •Longest time to money •Highest costs (litigation, building team, impact on current products) Direct licensing •There are a number of other structures including partnering and debt financing Other Structures 6
- 7. www.IAM-Market.com www.richardsonoliver.com What is in a Brokered Patent Package? • Contents • List of patents for sale, applicable market, infringement analysis (claim chart), background on the seller • Additional information • Asking price, bid dates, special circumstances (license back, specific encumbrances) Typical package • Confluence Patent Portfolio • Single family (15 US Patents and 7 open applications) relating to social network data aggregation. • 2006 priority date. • Received July 2013 • Sold October 2014 • Asking prices: “7 figures” • Multiple claim charts presented for • Apple • Google • Facebook • Purchased by an operating company • Fingerprint Cards AB Example package from Patent Profit (Will Plut) 7 Copyright 2012-2016 ROL
- 8. www.IAM-Market.com www.richardsonoliver.com Why care about the Patent Package? 8 • The market is opaque • Who is buying, what type of patents are hot, what is the price, what are selling best practices? • 70% of the patent packages do not sell • Some of the success factors relate directly to the sales package What are the challenges in selling patents • Buyers receive 1000 packages per year, about 5 per working day • “If I don’t like this package, there will be another one tomorrow” • How do your patents stand out…in a good way? Buyers are busy “When I’m selling my car on Craig’s List, I don’t list it as ‘CAR’.” Michael Pierantozzi, HPe
- 9. www.IAM-Market.com www.richardsonoliver.com How Big Is the Patent Market? 9 $0.00 $1,000.00 $2,000.00 $3,000.00 $4,000.00 $5,000.00 $6,000.00 $7,000.00 $8,000.00 $9,000.00 $10,000.00 $11,000.00 $12,000.00 Total Asking Prices ($M) - Brokered and Private Market Total Asking Price (Entire Market) Total Asking Price (Sold) •Since 2011, we have tracked $7.2B of brokered patent packages + $3.7B of non-brokered •Over 3,600 packages with over 87,000 patent assets •108 technology categories represented from LEDs, Displays, Social Networks, Automotive Robust market – More than $11B of patent deals tracked •780 brokered packages received containing nearly 14832 patent assets •Big uptick in listed packages from IAM Market and other sources •Sales from the newly listed packaged are expected to be visible in 2017 2016 market remains robust Source Richardson Oliver Law Group LLP, August 2016
- 10. www.IAM-Market.com www.richardsonoliver.com Patent Market Transaction Ecosystem Patent Market Buyers • Apple, Amazon, Facebook, Google, Intel, Microsoft, Qualcomm • Intellectual Ventures, Acacia • RPX, OIN, AST, Unified Patents Sellers • SMEs, Cisco, Yahoo!, ATT, Verizon • Intellectual Ventures, AST, RPX Deal Makers & Brokers • Richardson Oliver Law Group • Patent Profit, Quinn, ICAP • Bankers, law firms, IAM managers 10
- 13. www.IAM-Market.com www.richardsonoliver.com Identifying Value Driver Patents? • Patents with claim charts against high volume, high revenue products/services • Claim charts may include assumptions • Often referred to “Evidence of Use” or “Indications of Use” (EOU and IOU) Value drivers • Relates to why buyers buy • Focus your bundles around value drivers • Focus the marketing materials • Pricing and chance of sale improve Why value drivers 13
- 15. www.IAM-Market.com www.richardsonoliver.com More Than 1,000 EOUs Tell Us What’s Hot 15 Who and what gets targeted? Over 1,000 EOUs reviewed 5 years of data Hot companies Apple Google Microsoft Samsung Hot technologies Communications and smartphones Social Wearable, storage, RFID, mail Hot products iPhone, Galaxy Bing YouTube Xbox, TiVo Source: Richardson Oliver Law Group, LLP
- 17. www.IAM-Market.com www.richardsonoliver.com Contents of a Package • What is being offered • “5 issued US patents in 2 patent families are offered for sale” • Applicable market and technology description • “$4B annual market for white light LED light bulbs” • Patent list • Complete patent list including full patent families • Status of patents in the list • Bonus: patent family indicator, priority date, INPADOC ID, expiration date, key patent highlighted • Excel spreadsheet – 1 asset per row • Contact information • Who is the contact person for more information • Who is the seller • Sale process • Bid due date, explanation of the process • Disclaimers ** Minimum viable package 17
- 18. www.IAM-Market.com www.richardsonoliver.com Contents of a Package • EOU available or provided • Providing EOUs can be tricky – be prepared to provide EOU outlines, track NDAs, representations regarding notice and damages • Use a data room if necessary • Pricing information • History of the seller/inventors/commercialization • Additional marketing and technical material • What problem is present in the market and how does the invention address that problem • Companies identified as potentially infringing • Technical references Best practices package • Citation and ranking analysis Can be included 18
- 19. www.IAM-Market.com www.richardsonoliver.com What Else Do You Need? •OCR’d copies of the patents and file wrappers •Consider including prosecution of any international patents and any unissued applications Patents and file wrappers •Exact asking prices, ranges, “mid seven figures” Pricing •Licenses and other encumbrances – not all will be listed at the PTO •Covered in NDA •Use whitelists and blacklists •Whitelist – these companies are not licensed •Blacklist – none of these companies can be licensed •Triple check this – after failed EOUs, it’s the next most common impact to your credibility Encumbrances •Check them ahead of time Assignments 19
- 24. www.IAM-Market.com www.richardsonoliver.com 2016 Market Pricing 24 Asking Price $K Top and bottom 5 data points from each set removed Per Asset Per US Patent Average $197.32 $271.44 Min $16.67 $36.11 Max $750.00 $1,000.00 StdDev $177.44 $217.53 NumData 431 416 • Prices are down stabilizing • Prices vary substantially by package size Market pricing Copyright 2015 ROL
- 25. www.IAM-Market.com www.richardsonoliver.com Value Life of a Patent • Mark Lemley litigation research • Jonathan Retsky, Motorola internal study • Kent Richardson, Rambus portfolio analysis Most valuable patents are ~12 years old • 4-5 years Patents take a long time to obtain • 8 years before volume production of products using the inventions • $XB markets take time to develop But volume production takes longer 22
- 26. www.IAM-Market.com www.richardsonoliver.com Characteristics of More Valuable Patents • > 8 years old Age • >$1B • Many companies • Few patents • Demonstrated use in the market Market • Open continuations • Many cited patents • Clear demonstration of further patent development in the family • International coverage • Clear claims • Varying scope of claims Prosecution • Ability to quickly see if someone is using the patented technology Visibility 26
- 28. www.IAM-Market.com www.richardsonoliver.com OurCo’s Ecosystem of Patent Risk 28 Patent threats come from OurCo’s near ecosystem What is OurCo’s business ecosystem? Competitors CustomersSuppliers Partners OurCo Corporate asserters OurCo’s potential patent risk Copyright 2015 ROL
- 29. www.IAM-Market.com www.richardsonoliver.com OurCo’s Ecosystem of Patent Risk - Filtered 29 OurCo’s potential patent risk ?? ? ?? ? ? OurC o Which risks is OurCo going to address? Copyright 2015 ROL
- 30. www.IAM-Market.com www.richardsonoliver.com Contact us 30 IAM Market IAM Market – Asia: Daniel Cole Business Development Director, Asia dcole@GlobeBMG.com +852 3956 1600 IAM Market – Rest of the world: Gavin Stewart Managing Director, IP Division gstewart@GlobeBMG.com +44 20 7940 4863 Kent Richardson Partner kent@richardsonoliver.com +1 650 967 6555 ROL Group