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Discover the ins and outs of selling patents, valuation insights, and licensing strategies. Learn why patents are sold, who sells them, and how to navigate the patent sale process effectively. Expert sessions cover key topics like patent worth, licensing arrangements, and the role of intermediaries. Gain valuable information on selecting patents to sell or acquire, due diligence requirements, and patent-specific country considerations. Whether you are a startup, corporation, or investor, this event equips you with essential knowledge. Don't miss out on this in-depth exploration of the patent marketplace!
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Agenda • Schedule • 9-12:00 noon • 10.30-10.45—Break • Introductions • Why Patents are Sold • Who’s Selling Patents? • Why Patents are Acquired • Why Buy a Patent? • Information Required in the Patent Sale Process • Selecting Patents to Acquire or Sell--Andre Marais • Valuation—What’s a Patent Worth? • Patent Licensing • Typical Tech-License Arrangement • Corporate IP Licensing • Role of Intermediaries in the Patent Sale Process • Alternative Sales Channels/Options • Why Buyers Use Intermediaries • Why Sellers Use Intermediaries • Timeline—Patent Sale • Q & A
What is a Patent? • The right to exclude, not right to use. • You Do not Have the Rights to Use your own patented invention. • As Elements of your invention may infringe other patents. Keep Out!
Entrepreneurs Research Labs Corp. R&D Patents Inventions Universities Why are Patent Unused? • They’re in the hands of individuals and organizations that don’t have the channels to market them. Market Channel
One Technology—Many Applications • One technology • Multiple applications • Different markets • New routes to market
Who’s Selling Patents? • Startup Companies • Funding dried up • Liquidating assets • Unable to build channels • Large Corporations • No longer core to business • Divesting of business/unit • Research Labs and Universities • University Licensing Groups • Unused • Not core • Global phenomenon • U.S. patents being sold from many countries
Why Buy a Patent? • Exclude competitors. • Barriers to entry. • Enter new markets with mitigated risk of infringement litigation. • Enforce against infringers. • Generate licensing revenue. • Accumulate ‘arms’ for potential patent wars.
Patent Buyers • Product manufacturers & marketers • Buy rights to exclude competition from producing similar products • Many manufacturers in Asia • Patent enforcers • Buy patents that are infringed • Corporate defenders • Build portfolio to protect against infringement suits • Buy through third party aggregators • Financial investors • Buy patents with licensing revenue streams
Information Needed to Sell • Patent numbers. • Pricing guidelines. • Information on prior-sales efforts. • Reasons for sale? • Family of international counterparts? • Sell as portfolio or individual patents? • License back required? • Potential infringers? • Current licensees? • Marketing materials? • Additional IP included in sale?
Due Diligence Information • Patent office File Wrappers. • Correspondence with patent office. • Prior art research.
Documents Needed to Sell • Brokering/representation agreement. • Anti-circumvention. • NDA for Buyers. • Patent Purchase Agreement. • USPTO Assignment.
Selecting Patents to Acquire or Sell ..Including Patent Analysis, Portfolio Strategy and the Role of Patent Attorneys. Andre Marais, SLW
What to Expect: Valuation Industry-standard Patent Acquisition Value in US$ Fortune 500 infringers Litigated & won $1m+ F Litigated & won $0.5-1m Known infringers E D Several competing buyers $100k-$0.5m Notlitigated Broad claims Large market C $30k-100k Notlitigated No licensees No broad claims $10k-30k B A Patentinvalidated or expired $0 Pending (unissued) patent applications: value is triggered when patent is approved. Value is contingent on approval.
Which Country? • Patents are country-specific. • U.S. patent is only enforceable in U.S. • Chinese patent only enforceable in China. • U.S. patents are most valuable. • Many buyers only interested in U.S. patents. • Difficult to sell patents from other countries unless they are part of portfolio with U.S. counterparts.
Selling Patent-Pending Applications? • Value highly speculative until patent is approved: • If not approved, then worth nothing. • If approved with weakened claims, then value can be reduced. • Two step sale: • Sell option to buy the patent when approved. • Approval triggers acquisition at pre-set price. “PatentPending”
The ‘IBM Effect” • IBM is reported to have generated over $10bn in licensing royalties in the 10 years from 1993 • More than 90% reaches bottom line
Typical Tech-License Arrangement • License Scope • Field of Use • Non-competitive • Exclusive/Non Exclusive • Term • License Fee • $0.25m-$5m • Paid up-front • Royalty • 3.5% of Revenues • Quarterly/annually • Issues • Enforcement against unlicensed “infringers”
Enforcement-Based Licensing • You’re infringing our patent. Would you like to take a license? • Of course, we could bring a suit for infringement if you don’t license!
eBay Case and Other Trends • Injunctions now less of a threat. • Declaws some of the patent enforcers. • Rapid Changes. • More patent cases reaching U.S. Supreme Court.
Opening Up their Portfolios • IBM • Microsoft • Hewlett Packard • NEC • Xerox • Delphi • Nortel • Honeywell • Dupont
Corporate IP Licensing—Getting Started • Catalog IP • Evaluate and organize patent portfolio • Identify most valuable assets • Prepare listings • Publish Catalog • Release catalog online • Syndicate Listings • Through Tynax & broker network • Respond to Inquiries • Approach Target Buyers
Licensing Enforcement Rights • Universities, Research Labs and others are Selling Title to their Patents • This can impede their ability to maximize licensing revenue from their portfolios. • The following structure allows licensees to take enforcement rights: • Exclusive License. • Right to enforce. • Indemnification.
Alternative Sales Channels/Options • Appoint Broker • Pros: Reach active buyers. • Cons: Reach is usually limited. • Direct sale • Pros: No commissions to pay. • Cons: Difficult to find active buyers. Many won’t deal directly. Litigation fear. • Auction • Pros: Deadline to sale. • Cons: Limited reach. Buyers want time for due diligence. • Broker network/exchange • Pros: Wide reach. • Cons: Paying commissions?
Why Buyers Use Intermediaries • Litigation & anonymity. • Avoid infringement litigation. • “You’re a potential infringer if you’re a potential buyer!” • Pricing. • Avoid price inflation based on the deep pockets of the buyer. • Specialized capabilities. • Patent search tools and analysis techniques. • Extended Reach. • Leverage the broker’s channels and connections.
Why Sellers Use Intermediaries • Litigation. • Avoid declaratory judgment lawsuits. • Potential infringers bring such suits to prevent venue being set in Texas. • Pricing. • Reach a wider audience of potential buyers. • Create an auction-environment. • Facilitating the Transaction. • Expertise in closing these transactions.
