Given the myriad of ways companies use to monetize their intellectual property how can you decide which approach you should take? ROL Group delves into this question by looking at the different types of monetization strategies available, and substantiates the monetization plan using real-world case studies.
1. Patent Monetization
USC Gould School of Law
2014 Intellectual Property Institute
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The views expressed are solely those of the individuals, and are not to be associated or ascribed to any other entity, including
their employer or former employer
2. Agenda
• What, Why, How
• Kirk Daily, Head of Patent Transactions, Google
Patent Monetization – Overview
• Melissa Finocchio, VP, Chief Litigation Counsel, Intellectual
Ventures
Expanding the View of Monetization
• Sang Young Brodie, Senior Counsel, Licensing, GE Ventures
The Monetization Organization
• All – discussion on the requirements for success
More of the How
2
3. Why Monetization?
3
Revenue from Nortel business unit sales at
auction ($US billions)
Company’s strategy determines the monetization need
4. What Monetization Options?
• Direct/Brokered
• Privateering
• Back-end Revenue Sharing
Patent Sales
• Selective Licensing
• Cross Licensing
Direct Licensing
• Pools
• License on Transfer
• OIN
Group Licensing
Litigation
4
Monetization is deriving value from your portfolio
5. How to Monetize - Mechanisms
• Selecting non-strategic assets
• Strategic assets retained for x-
licensing
Sales
• Selective one-way vs. cross
licensing
• Group Licensing (Pools: MPEG,
VP8, OIN..)
• Community Based (LOT, OPN)
Licensing
• RPX
• AST
Partner with others in the
industry
Litigation
• Experience required?
• Internal versus external teams
• Internal team members
• Contingent agencies
• Firms
• Funding requirements
Capability, commitment
& resources
5
16. GE by the numbers
Energy Mgmt 5% / $7B Healthcare 12% / $18B
Aviation 14% / $20BOil & Gas 10% / $15B
GE Capital 31% / $46B
Home & Business 5% / $8BTransportation 4% / $6B
Power & Water 19% / $28B
$147B
2012 revenue
$16B
operating
income
GE Ventures Licensing
16
March 2014
17. Investing in innovation
6% of industrial revenue invested
to develop intellectual content$5.4B
1,000 technical disclosures are published each year on
new technologies in development.
Development dollars also fuel our ecomagination and
healthymagination efforts and Imagination Breakthroughs
that stimulate growth across GE businesses.
1,660 patents were generated by this content in the U.S. alone.
March 2014
GE Ventures Licensing
17
18. …Closely integrated with GE Global
Research
1
4
76
5
3
2
Global Software
Center
San Ramon, CA
1
Brazil
Technology
Center
Rio de Janeiro,
Brazil
4
China
Technology
Center
Shanghai, China
7
India Technology
Center
Bangalore, India
6
Global Research
Europe
Munich, Germany
5
Global Research
Headquarters
Niskayuna, NY
3
AMSTC
Van Buren, MI
2
GE Ventures Licensing
18
March 2014
19. What we do
GE Licensing focuses on
three primary business models:
leveraging fan technology
developed by GE Aviation
for use in portable, personal
electronic devices
Enables innovation by building on GE’s R&D investments
Extends reach of GE technology around the world
Supports the protection, development & marketing of GE’s
IP
Builds the GE brand in consumer and adjacent business
spaces
Meets localized solution needs in global markets
Focuses on ecomagination and healthymagination platforms
Drives open innovation and helps GE move at market speed
Builds partnerships to establish new markets & disrupt old
ones.
TECHNOLOGY
TRANSFER &
IP LICENSING
TRADEMARK
LICENSING
INNOVATION
ACCELERATI
ON
GE Ventures Licensing
19
March 2014
20. Business Governance Principles
• Simplification
• Fast Works model
• Keep it simple: general guidance, then pivot or
persevere
• Minimize number and complexity of reviews
• Manage risk: financial, strategic, and reputation
• Lower risk decisions would remain with lower leadership
teams
• Greater risk would have higher oversight
GE Ventures Licensing
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March 2014
21. Program Launch & Deal Approvals
Licensing One Level Up Special Boards
• Discussion Point • Discussion Point • Discussion Point
GE Ventures Licensing
21
March 2014
22. Other Business & Legal Approvals
Operating
Businesses
Corporate Approvals IP Litigation COE
• Discussion Point • Discussion Point • Discussion Point
GE Ventures Licensing
22
March 2014
23. Summary
• GE Ventures Licensing brings value to GE IP
• Technology & IP Licensing
• Brand
• Innovation Acceleration
• GE intends to move at the speed of a startup
• Simplification
• Fast works
• But corporate approval process must still be observed to
manage risk
GE Ventures Licensing
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March 2014
25. How to Monetize…
Formulate
the IP plan
•Financials
•Quantify the
market
opportunity
•Build scenarios
Qualify the
patent
portfolio
•Which are the
exact assets
you are going to
use?
Identify the
resources
needed to be
successful
•Funds/other
resources
•Monetization
team members
•Exec sponsors
Sell the plan
internally
•Management
buy-in
•Other
stakeholders
Build the
infrastructure
Execute to
the plan
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26. About the ROL Group
• With over 40 years of IP strategy and execution experience,
the ROL Group successfully aligns IP with business strategy.
From initial patent programs to billion dollar licensing
campaigns, from strategy options development to specific
counter assertion patent buying programs, the ROL Group has
the necessary skill and experience to achieve IP focused
business goals.
Passionate about the intersection of business,
technology, and the law
• Our attorneys have sat where you sit. With three former
General Counsels, and decades of in-house IP experience, we
understand that counseling needs to be actionable. When we
match a client’s needs with an IP strategy, we articulate the
steps needed to execute that strategy, and we help our client
implement those steps.
Experience into action – We have been there
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Hinweis der Redaktion
Key Takeaway:
We are an invention capital company.
Talking Points:
Our goal is to reinvent invention by providing the capital and expertise to energize and streamline an invention economy, drive innovation and accelerate progress around the world.
Intellectual Ventures is an invention capital company. We are creating an active market for invention that connects buyers, sellers and inventors.
Like a VC, part of our business is focused on funding the creation of new ideas.
Similar to private equity, part of our model is focused on investing in existing ideas that may be trapped in distressed companies or no longer be valuable to their current company. In all cases, our focus is on investing in invention as a stand-alone asset.
With more than $6 billion in committed capital and more than 40,000 IP assets in active monetization programs, Intellectual Ventures provide the world’s most innovative companies with access to the invention rights they need and helps inventors monetize their patents.
Key Takeaways:
We have smart inventors who are contributing to the inventions the world needs to solve big problems.
Those inventions are starting to find their way into the market (like TerraPower).
Talking Points:
Let’s start with the process of invention.
We’ve been actively inventing on our own since 2003 and have filed 3,500 patents since that time.
We have about 60 or so internal employees focused purely on invention.
We have about 100 external inventors – these are elite, hand-picked inventors that are the best in their fields. We bring them together in a multi-disciplinary approach to address tough problems.
Our filing and invention rate for this part of the business alone would put is in the top 50 of US active filers.
How do our inventions manifest externally? One of those examples is TerraPower – a new generation of nuclear reactors.
This has become a company that we’ve spun-out and is funded separately by investors including Charles River Ventures, Khosla Ventures and Bill Gates.
This is just one example of the kinds of things we’re bringing about.
Talking Points:
The next line of business we’ll talk about is patent acquisition.
As I spoke about before, this is where IV helps inventors get their inventions into the market.
We acquire existing patents – an inventor or university comes up with the idea, and files a patent (issued or not), but they are not sure how to monetize it.
So we acquire the IP from them and create bundles of IP that we take out and license – typically non-exclusive basis – to companies.
For instance, we we buy a lot of wireless IP and put it together and bundle it and license to wireless companies.
We’ve done more than 1,500 acquisitions deals.
Injected more than $2 billion dollars into the invention economy through patent acquisition; almost half a billion of that to individual investors
One example of a recent deal is Avistar – they had a variety of lines of business and had done great invention work in one area, but decided not to focus on that area. The rest of their business was under-capitalized, so they sold us the IP from the area they weren’t focusing on and used that money to capitalize their business.
Talking Points:
The third part of the business is collaborative invention.
We have gone out and build a large network of terrific inventors – academics, research labs, garage inventors, etc.
We create problem statements based on where we think the future role of tech is.
We send these out and they send us ideas. They’re not committed to participate, but if they’re interested they send back ideas, we vet them, we select them, we pay them and they get a royalty and we take on the patenting process and licensing process. Have signed on more than 4,000 inventors from more than 400 institutions
An example of one of the inventors that we partner with is Dr. Ezekiel Kruglick, a MEMS specialist who has worked at the Jet Propulsion Laboratory, various universities and several start-ups. In addition to more than 35 technical papers, Kruglick holds dozens of issued and pending patents. According to Kruglick, IV “offers a way to offset development cost by rolling technology out to many interested parties.”
Key Takeaway:
IV bridges the gap for technology companies between the IP they have and the IP they need to stay successful
Talking Points:
Then there’s the licensing group. This is how we take these inventions and get them into the hands of technology companies.
Technology companies today face such pressure to innovate and add new capabilities, and products are becoming so complicated that there is almost no way for one company to come up w/all those inventions. So there’s a gap between what they want to put in products and what they can invents. We want to bridge that gap for them.
We have a portfolio of IP that we can license to them.
If we can’t bridge entire gap we can provide IP for defensive use in litigation.
We have a variety of products and services in licensing to meet our customers needs.
Some of those products include gaining access to particular IP for defensive purposes. One example of this is Verizon – they were being sued by another company over patent infringement. They wanted IP to defend themselves in that case so we provided them with some IP they could use to help defend themselves.
Another example is Vlingo, a company that does voice-to-text software. We provided them with patents they were able to use in defense of litigation.
It’s worth noting that despite some press to the contrary, litigation isn't an objective of our business – our objective is to license – but just like anyone else whose products are being stolen – music, software, etc – it’s an option for us.
Our monetization strategy also includes divestitures. We review the overall content of our large patent portfolio and sell assets that are no longer critical for our business.
And finally, we launch spin-out companies to commercialize our inventions. To date, we have launched TerraPower (nuclear energy), Kymeta (satellite communications), and Evolv (security imaging).
Talking Points:
Here are some basic facts about us… (highlight a few of the most relevant to the audience).
Talking Points:
We benefit our investors in several ways.
One way is that this is a new and unique opportunity for them – a chance to fund next generation technologies, but also to invest in a new asset class which is uncorrelated to most traditional equity like VC and private equity.
Because of the size of the portfolio, we can also reduce risk through diversification. We make a lot of bets. There will be inventions that are huge wins and some that won't. So you need diversification to be successful.
Our investors have a unique profile and understand this is a long-term play.