IP Market Updates
Read by over 12,000 IP and business professionals worldwide
April 30, 2017
Donald Trump’s supporters often mention that he should be taken seriously, but not always literally… Well it appears I might want to invoke Trump's First Rule of Interpretation for myself, as my comments last week regarding WiLAN’s announcement that it was “calling it quits” on its traditional patent monetization model apparently created concerns with some of their constituents - despite having provided a direct link to the company’s own announcement in this column. Therefore, and as promised, I am adding this quote provided by WiLan’s CEO for further clarity: “WiLAN wishes to confirm that it is in no way exiting or “quitting” its patent licensing business and will continue to operate as it has in the past. However, it has decided to diversify its business model as described in its recent press releases, and is utilizing part of its large cash balance to foster further corporate growth in areas outside of patent licensing. The WiLAN licensing company will now operate as one of several divisions of a new holding company Quarterhill Inc., which recently announced the acquisition of International Road Dynamics, an Industrial Internet of Things company.”
As announcements go, we saw an intriguing one this week when InterTrust and Google announced they would team up to launch a new start-up focused on an initiative called PatentShield, apparently to protect said start-ups against law suits from “patent trolls”. The start-ups who participate in the program will receive protection from a selection of patents from the Google and InterTrust portfolios. In exchange, Google and InterTrust will receive equity in the company. Yes, equity, as in partial ownership.
This is interesting for a variety of reasons; first, InterTrust is known for its past success enforcing its own patent portfolio as its main line of business and has often been referred to as a patent troll itself. It wasn’t afraid to sue Microsoft in 2001, TiVO in 2006 and, more recently, Apple in 2013, according to the RPX database. Second, Google (like several other large US tech companies) is not exactly known in the IP community for having been a strong supporter of patent rights as of late. It is also among the top 5 companies that have filed the most petitions to invalidate issued patents, with 86 petitions in just the last 3 years (See Table - in all fairness, these challenges are often in response of a lawsuit filed against the party filing the petition). Third and more important, offering selected patents in your portfolio to start-ups in exchange for some degree of equity can easily lead to an uneven exchange of value, as a vast percentage of ANY company’s patents is generally considered to be of very little value and the entity offering those can easily select the lower grade assets.
In other words, all patents are not created equal. For instance, SNAP paid $7.7 million dollars for only one patent, as we reported last week. However, they also paid about the same price a few months earlier ($9.45M to be precise) for roughly 245 IBM patents, according to SNAP’s own SEC filing. That amounts to a mere $23,000 per IBM asset. Therefore, there is a great disparity amongst patents and one can only hope that the PatentShield program will provide quality assets to companies in exchange for start-up company equity. Ultimately though, one must also remember that there is very little incentive these days for an NPE -which is only interested in monetization - to sue a start-up for patent infringement, as it requires millions of dollars to make it to a final court decision and it would take sales of one or two orders of magnitude greater to have enough recoupable damages to break even assuming the owner is successful, which it rarely is. In other words, from the start-up perspective, this program strikes me more as a solution in search of a problem. Time only will tell.
In other news, we saw an important announcement from the Singapore government revealing a new national $1B dollar fund to invest in IP-rich technology companies. One of the main players behind this new Makara Innovation Fund (MIF) is none other than the Intellectual Property Office of Singapore (IPOS), thus the government itself. This is an intriguing model and something other countries will probably look at very seriously when defining their own national IP strategy.
Finally, I could not resist sharing the latest in the USPTO director saga. While we discussed a few weeks ago that the US Secretary of Commerce was interviewing a few well respected (and more pro-patentees) candidates, “BigTech” is now lobbying the government to keep Michelle Lee in her current job. If we needed any more proof that the USPTO has become politicized, there you have it. This is the last thing we need at this juncture and so disheartening!
Other relevant news below. Happy reading!
Midwest Energy Emissions (MEEC) acquires SEA Technology patents from EERCF
In a milestone event, Midwest Energy Emissions (MEEC) closed on the acquisition of patents rights and patents pending related to the Sorbent … (more…)
Qualcomm cuts financial outlook as Apple blocks more patent payments
The San Diego Union-Tribune
Qualcomm has reduced its third quarter financial outlook after learning Apple will withhold patent royalty payment until a legal dispute between the two ... (more…)
Inventor with 400 patents gives millions to Cambridge
John C Taylor, who has 400 patents to his name, has donated £2.5 million to Cambridge to pay for the position, 55 years after he graduated from the ... (more…)
Why the Unified Patents Model Would Not Work in China
China compass I have received a number of inquiries from friends and readers recently regarding Unified Patents and whether their model of attacking ... (more…)
Clean energy patent slump in U.S. stirs concern
The number of patents issued in fields related to cutting carbon emissions climbed from 15,970 in 2009 to approximately 35,000 in 2014 and 2015, ... (more…)
Report: Ping purchases five Nike club and ball patents
The latest development with Nike's exit from the club business is the sale of its club and ball patents to Ping's parent company Karsten Manufacturing ... (more…)
Google, Intertrust launch program to defend startups from patent lawsuits — in exchange for equity
Silicon Valley Business Journal
Google and Intertrust on Tuesday launched a program to help startups protect themselves against patent litigation. In exchange, the startups will give ... (more…)