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Whats Driving the Current Patent Market -- Where Are We and Where Are We Going? Ron Laurie Inflexion Point Strategy IEOR 190G - Patent Engineering U.C.

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Presentation on theme: "Whats Driving the Current Patent Market -- Where Are We and Where Are We Going? Ron Laurie Inflexion Point Strategy IEOR 190G - Patent Engineering U.C."— Presentation transcript:

1 Whats Driving the Current Patent Market -- Where Are We and Where Are We Going? Ron Laurie Inflexion Point Strategy IEOR 190G - Patent Engineering U.C. Berkeley College of Engineering April

2 Core Technology: Patented Inventions & Unpatented Know-How Productization Technology (Patented and/or Unpatented) Royalty Base (Tax Base) – License/Litigation Royalty Payments (Tax) - $$ Product (Cost) Digital Products (Proprietary Design Info) Core Technology Integration Technology Market (Price) Marketing, Sales, Admin, etc. Tangible Products Design $$ b $$ c $$ a Patent on Invention X Invention X X Innovation Whats Driving Patent Markets? Supra-Normal Returns on Enforcement 21

3 Level 1 - Offensive Value Level 2 - Defensive Value Level 3 - Strategic Value Level 4 - Enterprise Value Whats Driving Patent Markets? Transition from Direct Financial Return to Strategic Value 32

4 Non-exclusive patent licensing (stick model) Non-exclusive patent licensing plus tech transfer (carrot model) Exclusive field-of-use licensing in non-core markets - with or without technology transfer Cross-licensing with receipt of balancing payment Sale - with or without grant-back license or reservation of rights Level One - Offensive IP Value Top-Line Revenue Enhancement via Out-Licensing or Sale -- 43

5 > Freedom to Operate - deterrence or settlement of competitor IP Infringement claims > Cross-licensing with zero or lower net balancing payment > Exclusive field-of-use licensing in non-core markets - with or without technology transfer > Participation in defensive aggregation consortia Level Two - Defensive IP Value Bottom-Line Improvement via Cost Reduction In terms of IP Cash Outflows via -- License Fees, Litigation Expense Infringement Damages Design-Around Efforts 54

6 Level Three - Strategic (Market-Related) IP Value Price Premium for Products/Services with Patented Features -- depends on demand for patented feature, i.e., price cross-elasticity Licensing (Level One Revenue Enhancement) vs. Exclusion (Level Three Feature Wars) Market Share Protection/Expansion -- measurement issues 65

7 Level Four - Enterprise IP Value Using patents -- > to increase acquisition value in an M&A transaction e.g., HP Palm, Google Moto > to increase issue price in IPO e.g., Priceline > in lieu of cash as contribution to JV or strategic alliance > to increase/support public company share price 76

8 DateSellerBuyerTechnologyNo. of patentsPricePrice /Patent PendingKodak BK auction delayed by Apple Suit Now back on Digital imaging1100$2-3 B (est)$1.8M - $2.7 M March 2012IBMFacebook Networking, software, etc. 750? Feb. 2012MOSAID Google Optical networking200? Jan. 2012Real NetworksIntel (license back to RN)Media players 190 (+170 apps) + codec dev. team $120M$632K Jan. 2012IBMGoogleMobile phones, etc188 (+ 29 apps)? Oct. 2011MOSAID Sterling Partners (private equity)Trumped hostile bid of $532 M from Wi-LAN Wireless 5385 (M&A -stock sale) $596 M$110 K Sept. 2011MOSAIDGoogle Data compression/ encoding/search/ encryption, flash 18$11 M$610 K Sept Core Wireless, S.a.r.l. (Nokia and Microsoft) MOSAID – M pays all licensing and litigation costs, and receives 30% of TP royalties Wireless (from Nokia) Other (from Microsoft) 2000 (incl. apps) (1200 essential) N/A Aug. 2011Motorola MobilityGoogleWireless, handsets 17,000 plus operating bus $12.5 B$730 K Aug. 2011Glenayre Elect.Wi-LANPager handsets60$8 M$133 K Aug. 2011GoogleHTCMobile phones9? Aug. 2011IBMGoogleStorage & networking1023? Recent High-Visibility Patent Sales & IP-Driven M&A Transactions (cont.) 7

9 Recent High-Visibility Patent Sales & IP-Driven M&A Transactions DateSellerBuyerTechnologyNo. of patentsPrice Price /Patent July 2011IBMGoogle Storage and Networking 1030 ? July 2011S3HTCGraphics235$300 M$1.3 M July 2011Nortel Rockstar Bidco Acq. Syndicate (Apple, EMC, Ericsson, Microsoft, RIM, Sony) Telecom 6000* (>2700 issued US) $4.5 B$750 K May 2011Hynix Mosaid - related to Mosaid license to Hymix on other pats. Semiconductor500? May 2011IBMGoogleData storage1000? April 2011ADC Telecomm.HTCWireless82$75M915 K March 2011KodakOmnivisionImage sensors850$65M76 K Nov. 2010Novell CPTN Holdings Acq. Syndicate MSoft, Apple, EMC, Oracle (DOJ altered some deal terms, open source concerns) Computer system mgmt (Linux-related) 882$450 M$510 K Aug. 2010Friendster (MOL Global)FacebookSocial Networking7 (+ 11 apps)$40M$5.7M April 2010PalmHPMobile>1500 plus Web-OS IP $1.2B$800 K 8


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