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Selling Your Patent

Selling Your Patent. 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

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Selling Your Patent

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  1. Selling Your Patent

  2. 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

  3. 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!

  4. Why Patents are Sold

  5. Most Patents are Unused

  6. 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

  7. Channel Barrier for Startups

  8. One Technology—Many Applications • One technology • Multiple applications • Different markets • New routes to market

  9. 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

  10. Why Patents are Acquired

  11. 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.

  12. 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

  13. Information Required in the Patent Sale Process

  14. 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?

  15. Due Diligence Information • Patent office File Wrappers. • Correspondence with patent office. • Prior art research.

  16. Documents Needed to Sell • Brokering/representation agreement. • Anti-circumvention. • NDA for Buyers. • Patent Purchase Agreement. • USPTO Assignment.

  17. Selecting Patents to Acquire or Sell ..Including Patent Analysis, Portfolio Strategy and the Role of Patent Attorneys. Andre Marais, SLW

  18. Valuation—What’s a Patent Worth?

  19. 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.

  20. 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.

  21. 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”

  22. Patent Licensing

  23. 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

  24. Solutions Model

  25. Solution Solving Model

  26. 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”

  27. 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!

  28. 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.

  29. Opening Up their Portfolios • IBM • Microsoft • Hewlett Packard • NEC • Xerox • Delphi • Nortel • Honeywell • Dupont

  30. 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

  31. 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.

  32. Role of Intermediaries

  33. 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?

  34. 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.

  35. 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.

  36. Market Before Tynax

  37. Tynax Exchange

  38. Unique Trading System

  39. Active Lead Generation

  40. Timeline—Patent Sale

  41. Q & A

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