The value of patents the executives' perspective v3

UNLOCKING THE VALUE OF YOUR IPUNLOCKING THE VALUE OF YOUR
The Value of Patents
Perspectives of Business Executives
Fas Mosleh
Senior VP
Kanzatec IP M&A
1

UNLOCKING THE VALUE OF YOUR IP
Agenda
• Introduction
• The Stakeholders and their Views
• Conclusions
2
• Patent strategy to
•Strengthen the business and its core capabilities
•Access to cash when needed
•Enhance the value for investors

Introduction

What Kanzatec Does – R&R
4
Patent Sales

Big Deals
5
Nokia Sells 2,000 Patents
Mosaid Technologies Will Share
in Revenue Wrung From
Wireless Know-How
$4.5B

• Why invest?
• How much will it cost?
• What do I get from it?
• Small vs. large business
– Resources to leverage patents to keep out
competition
– Need to protect or defend from competitors
• The NPE question
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CEO - Questions

CEO/Founder/COO

• Questions
• Need
• Risk
• Value
• Actions
8
CxO Considerations

Big Company CEO
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•Protect my products
•Prevent competitive incursion
•Use Legal Team to battle
•Perspective: I have the resources
and want to be the market leader
Example Option Pro Con
Litigate Win for products Cost
License Utilize IP/Revenues Organize/invest
Do nothing No initial cost High risk of attack/lose IP value

• Situation
– Entering new market
• Challenges
– Very contentious space
• Action
– Proactively protect by buying patents
• Results
– Bought $5M worth patents to protect
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Big Co. CEO View – Acquire IP to Protect
IP
Protect:
Aggressively
Proactively
Reactively

Patent Monetization Benefits
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Monetization
Save costs
Sharpen
Win focus
High
margin
revenues
Strategic
alignment

Small Company CEO
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•Few resources
•Optimize value from Patents/IP
•Raise funds
•Let NPEs go after Competition
•Perspective: Can I use my patents
to expand my resources? I want to
survive/exit/IPO

• Situation
– Seeking Funding/IPO
• Challenges
– Must maximize $$s
• Action
– Explore high return IP acquisition to boost valuation
• Results
– Bought ~$2M of patents = valuation boost of additional $3-5M
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Small Co. CEO View – IP Boosts Value
Equalizer

• Average Application $10K
• Average Patent $75K
• Good Patent $150-200K
• Great Patent $250-$500K?
• Litigation class patent >$500K
• Portfolios are worth more than single patents
• Patents with Apps are worth more than patents alone
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How Much Are They Worth?
Getting the Max

CTO
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•Invent
•Describe/protect our products
•Innate Value of Invention
•Perspective: I want to keep my
patents and develop my own
patents – no need to acquire
Divest Reinvest in relevant IP ‘Lose’ Patents
Develop More cool inventions Less resource on development

CTO View to Defend Protects
Time
Revenues/Impact
Product business trajectory
Current product business
Business #1
e.g. Cameras
Business #2
e.g. Enterprise Printers
Business #3
e.g. Digital Frames
Types of defense:
Aggressive
Proactive
Reactive
Source: Juldee, 2011

GC/Chief IP Counsel
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•Perspective: Follow business
priorities and execute the plan –
litigate, license, monetize, develop
Offensive Defensive

• Observability/method of detection
• Industry demand
• Industry actions/trends – who is suing whom
• Technology area
• Quality of patent; strength of claims
• Health of patents and apps (due diligence health check)
• Who is a licensee? What cross licensing if any?
• Expiration
• Work arounds
• Applicability (today and future)
What affects the value of your patents?

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Value by Mix of Apps and Patents
0
1
2
3
4
5
6
7
8
9
Low Moderate High Higher Highest
"Tested" Patents
Patents
Pre-grant Apps
Apps

How Hot or Cold?
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Mobile/Wireless
Social
Internet video
E-Commerce
Memory
Analytics
Manufacturing

Business Strategy Questions
• Do we intend to be offensive or defensive with our IP?
• Will we assert these patents against other companies?
• Do we need these patents strategically?
– Do they align to our future direction?
• How old are these patents and how close are they to
expiration?
– What value remains – is it best to extract the maximum value
now or later?
– What are the costs of maintenance?
• What return would we get if we were to sell the patents?
• What are the risks and downsides of selling?
• What does the cost benefit analysis indicate?
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In Conclusion...

My Business Needs
• Protecting My Products
• Repelling My Competition
• Enhancing the Value of My Business
• Optimize the return on my IP Assets
– Identify, divest non-strategic assets; redeploy $$s
– Understand their business value and buyers’ needs
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Backup

• Example of Terms:
• We are prepared to move forward with an offer of X$ on your complete Patent
portfolio, including U.S. Patents A, B, C, plus any pending U.S. applications, and any
foreign patents and foreign applications, pending our final diligence and analysis.
• It is expected we will complete our final analysis by October 12th. The offer would
also include either a license back or an adjustment in the offer price.
• Please respond to this offer with your acceptance by October 8, 2011.
• This offer is contingent upon proof of ownership and authority to transfer all rights
to this patent along with favorable results of our diligence and analysis. This offer
will be open until Monday, October 12, 2011.
• Your acceptance will be accepted from an authorized person to me via email or
facsimile transmission to 650 468 0401.
• Closing date, exclusivity may be included
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What an IP Deal Offer Looks Like

The value of patents the executives' perspective v3

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