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“IP Business Outlook” to Explore Opportunities & Potential Impact of European Unitary Patent

Morning briefing to be held in NY’s financial district at One Broadway and cost just $99 to attend.

The European unitary patent and the unified patent court system are well on their way to creation. A briefing to be held near Wall Street in NY on November 13 and open to the public will feature the perspective of leading U.S. and European intellectual property experts regarding this and other IP business developments.

IP Business Outlook will also explore before an audience of IP professionals views about the benefits and risks of doing business in Europe under the protection of the future European unified patent system.

UPCC 2014 - carre web_2_250x250_141015-1700The briefing will be held at Kenyon & Kenyon’s offices at 1 Broadway. Reception and welcome coffee is at 8:00-8:30. For those wishing to register click here. For further information about IP Business Outlook, including topics, go here.

Approximately 100 attendees will include IP professionals, General Counsels, chief IP officers, government officials, IP associations and NPEs. Their primary interest will be opportunities associated with the future of the European patent system.

Confirmed Speakers

Philip Strassburger, Vice President, General Counsel, Purdue Pharma; Ivan Chperot, Finjan Holdings; John C. Lindgren, President & CEO, Conversant IP; Betty Ryberg, Novartis AG; James Baillargeon, Senior Corporate IP Counsel, Intellectual Property and Standards, Alcatel-Lucent; David Pridham, Chairman and CEO, Dominion Harbor Group; Aaron Slan, Vice President, Fortress Investment Group.

Closing remarks will be delivered by Priya Ayer, Chairman & Chief Executive Officer, Anaqua.

Clear Advantages

“The advantages of the unitary patent are clear,” says Alan Johnson, a partner at UK law firm Bristows. “It will be a single right which is more administratively simple to deal with.  It will cover the three largest economies in Europe (France, Germany and the UK), plus at least another nine and maybe up to 22 European countries.  It will be a cheaper option than obtaining and maintaining a series of ‘bundle’ patents covering the same geographic area.  Furthermore, it will be enforceable in a single court (the UPC).”

Image source: premiercercle.com

Leading Brands Increasingly have the Most Valuable Patents

Patent portfolios associated with strong positive reputation appear to enjoy better performance, or so it seems.

It is no coincidence that many of the world’s best known and most valuable brands have other IP traits in common: Their reputation for quality, innovation, and consistency not only facilitates product sales and shareholder interest, but to enhance the value of their patents, trade secrets and authored content.

At the same time known expertise in securing and managing intellectual property rights and handling patent disputes (e.g. Microsoft (5), IBM (3), Intel (8) and Philips (41)) can add value to overall brand reputation. Good patents held by high-profile brands often appear to be worth more.

It is clear that the reputation of high-value brands for quality and reliability can help to a good patent portfolio to perform even better.

Interbrand’s “best brands” survey for 2012 includes many of the usual world-class names. Note how many of these brand giants are also patent powerhouses in their own right. Nine of the top ten have significant portfolios, and at least five out of the top ten very large ones. For 2012’s top 36 brands see the chart below. For the 100 best with an explanation of each, click here.

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In an article for Managing Intellectual Property that I wrote in 1998 with Dr. James E. Woods, an economist, we suggested that associating patents and patent strategy with positive reputation frequently results in enhanced value both for the patents and trademark. A well-known business brand that does not hold least some relevant patents and a strategy to generate return on them, is likely leaving value on the table.

Smart companies are learning how to use brand equity and reputation to leverage their reputation for innovation and importance of their invention rights. Perceived value plays a significant role in intellectual asset management, and a strong brand can make a good patent portfolio even better. Valuable IP rights, notably trademarks and patents, feed off of each other.

Intel Inside® was part of an aggressive advertising campaign launched by Intel (8) in 1991 to stimulate demand for its (patented) Pentium® processor. Whether there was a qualitative difference between it and comparable devices was unclear. Heavy branding in 130 countries via a five note, tone-based, jingle, served to provide the Pentium with margins up to three times higher than its competitors’. Without it the patent on the Pentium would have meant far less.

Functionally, Intel’s PC processor was not that different form AMD’s less costly one, but its venerable branding from an aggressive retail advertising campaign, paved the way to ubiquity. It’s no accident that a semiconductor maker is the eighth most valuable brand in the world, ahead of BMW (12) and Tiffany (70). Does anyone outside of a small circle of techies, lawyers and investors know who Micron is?

Of the Interbrand’s top ten, the only company that I am aware of that is without a respected patent portfolio is McDonald’s (7). Coincidence or intelligence?

Businesses with extensive patent holdings and reputation for generating return on innovation, benefit from branding their IP success. Nortel and Hitachi  are a examples of patent-rich businesses whose IP success and value may have been somewhat undervalued because of their clear brand identify. IP without brand recognition, I believe, leaves money on the table for well-known companies that fail to take advantage of leveraging their intangible assets.

Consumer products companies Disney (13), Nestle (57), L’Oreal (42), and Gillette (16), all have significant numbers of meaningful patents. (Global cosmetics maker L’Oreal, for example, has received 500 to 700 patents per year for the past decade, or about 6,000 patents.) Iconic eBay (36) has very few patents and seem to be uncertain what to do with those they hold. Google (4), until its purchase of Motorola (unrated), and rival Facebook (69) were in a similar boat. Both have yet to leverage their IP rights and strategy in context of their name recognition. Recently, AOL did leverage its reputation for early Internet success with a billion dollar sale to Microsoft. How these transactions are perceived publicly has become increasingly important.

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Apple (2), second only to “low tech” Coca-Cola (1), which supports it renowned trade secret with numerous patents, also has not done enough to leverage its highly valuable brand in context of its small patent portfolio. Spending a fortune to defeat Samsung (9) in a very public suit helped to enhance its perceived patent value and validate its strategy.

Large public companies with complex assets have the ability to leverage them in innovative ways: Patents certainly can benefit from the glow provided by a top brand, even those that are essentially geared to consumer products, like P&G’s (41,000 global patents).

At the same time, even the most highly regarded trademarks (brands) can enhance their importance though association with other valuable intangibles, such as patents. Branding patents is a win-win; so are brands with patents.

Illustration source: BrandMagazine.com

Valuations Soar on Smartphone Patents and Stocks

Speculation is Boosting Some Companies for Now; The Shortsighted are Paying a Premium to Compete –

What hath the Nortel auction wrought? Never before has it been so apparent that the right patents in the right hands (at the right time) are valuable financial assets.

InterDigital’s stock had been up 73% since July 18, a period which saw a better than a 15% across the board market correction. As of this morning InterDigital (IDCC) is stil up an astonishing 57.5% year-to-date.

After bidding $4 billion for Nortel Networks wireless patents and losing to a group let by Apple and Microsoft, Google has purchased more than 1,000 patents from IBM. Most of the patents, I understand, have little to do with Google’s primary businesses. Google continues to be in discussions with InterDigital. Now, apparently Samsung, Apple and others are interested in ID’s portfolio or, possibly, the entire company. This has bid the stock price up considerably.

TechCrunch wrote on August 4 that Google, late to the patent game, is in a tight corner and may be an unwilling buyer. (4G patents are terrific, but wouldn’t Google benefit from acquiring other, somewhat less expensive but strategic patents that read on Microsoft, Apple and others’ products? The IBM purchase were likely castoffs from its vast portfolio. High-performing IBM does not currently appear to need the cash but may be more motivated by Android/Linux success.)

Personalized Media Communications, for example, has 59 self-generated patents than read on many mobile and other display devices. It already has settled suits with Motorola Mobility and Cisco, and a number of patents have successfully survived re-exam. PMC is not the biggest name in technology, but it may have the strategic assets some businesses need to compete on the IP front. (Brody Berman Associates has advised PMC about its portfolio.)

Assuming a 5 percent unit compound annual growth rate and a 10 percent discount rate, the InterDigital portfolio, believes InvestorsHub, could be worth between $3 billion and $10 billion to Apple.

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Icahn Picks Bone with Motorola Management in 13D Filing

Lately significant investors who not ordinarily care about patents or IP strategy have become increasingly vocal about them. This is especially true of investors in companies that operate in the mobility field.

Activist investors are not new. For decades they have been pressuring senior managements about how to best use tangible assets, like real estate and cash. Now, however, the have become more vocal about deploying valuable intangibles, like patents.

Witness billionaire investor Carl Icahn, the biggest owner of Motorola Mobility Holdings (MMI) shares. Icahn recently stated in an amendment to his 13D SEC disclosure that he believes that Mobility should generate more value from its portfolio of some 17,000 patents, especially in wake of the Nortel sale.

“The Reporting Persons believe that the Issuer’s patent portfolio, which is substantially larger than Nortel Networks’ and includes numerous patents concerning 4G technologies, has significant value. In addition, there may be multiple ways to realize such value given the current heightened market demand for intellectual property in the mobile telecommunications industry.”

Over a two-day period ending July 21 Mobility’s share price shot up 12.4% to $25.19. It was as high as $27.68 after the Icahn comments, marking an approximately 23% move.

In a formal response, Motorola management defended itself vaguely saying “Motorola Mobility’s Board of Directors and management team continuously reviews the Company’s strategic direction and opportunities that it believes are in the best interests of the Company and all of its stockholders.”

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In fairness to Mobility’s management, monetizing a complex IP portfolio is not as simple as calling for an auction and recording bids. Also, it is not merely a numbers game: “My 4G portfolio is bigger than yours.”

Still, former TWA, Marvel, and Clorox investor Icahn is well-aware, entrenched value is dangerous to shareholders and wasteful to all. (Full disclosure: an Icahn-led group retained my firm Brody Berman Associates, to conduct investor relations for Marvel Entertainment after its bankruptcy filing.) He is also aware of the power of perception and supply and demand.

The high cost of R&D and freedom to operate are motivating the current market. So is the pain of litigation. Companies humbled by patents they do not own are a healthy sign. Without significant damage awards and the occasional injunction this would unlikely be the case. Despite what some economists might think, recognizing the value of invention rights is a plus for innovation, business and even consumers.

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Eventually the mobility patent speculation will come back down to earth, as will the recent panic selling in the broad market. Remaining will be the machinery for intensely competitive (and sometimes collaborative) patent acquisitions that has been set in motion. Companies holding the right assets are enjoying the ride.

Image sources: ipfrontline.com, endgaget.com, pulse2.com 

The Intangible Investor

From Frames to Claims

Many of you are aware that since 2002 I have been writing a regular column for IAM magazine, IP Investor. We recently changed the title to The Intangible Investor, to reflect the more complex nature of IP assets and new

ways they are being measured and monetized. In IAM 39 I also provide some insight into how my career in film scholarship (I was teaching at Columbia) morphed into a serious regard for IP rights. The piece is called “A Curious  Journey:pdf


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