Tag Archives: IP Insider

Wall Street to Patents: "We Love You, Man"

IP Cash is King Right Now –

JP Morgan analyst Paul Coster takes a long look at Acacia Research Corporation (NASDAQ: ACTG), a company that barely survived 2003 that Wall Street currently values at $1.5 billion. He generally likes what he sees.

My look at Coster’s 44-page report in the upcoming IAM magazine, out June 1, regards an equity analyst who specializes in computers and peripherals trying to get his arms around a nascent industry built on uncertainty, lumpy returns and unaccustomed to public scrutiny.

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Wall Street’s love-hate relationship with IP rights is heating up. It remains to be seen whether this is an enduring marriage, momentary fixation or potentially dangerous obsession.

Is public ownership of patent licensing (or patent defense) an oxymoron? While they are unproven business models, there is good reason to believe that public patent companies will enjoy a symbiotic relationship with each other and can serve as an alternative to some high cost litigation.

For better or worse, some of the smartest underwriting money is bullish on the patent business.

By racking up a critical mass of patent settlements and some forward-looking licenses Acacia has caught the attention of mainstream investors. With the help of Barclays Capital (RPX co-underwriter), the company recently raised another $175 million in a stock offering. (Goldman Sachs and Allen & Co are other RPX backers.)

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In an industry that prides itself on the ability to discount almost any type of risk, Wall Street currently finds IP-centric companies such as Microsoft and IBM interesting; those that license patent rights as their primary source of income it finds tantalizing.

The difference is in the financials, especially operating margins, which can be double or higher than those of the average S&P 500 company.

For the JP Morgan report on Acacia, click here. You will have to wait a few weeks for IAM 48 and The Intangible Investor column addressing public ownership of patent licensing.

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Acacia CEO Ryan to Speak to Investors

FYI: Acacia Research Corporation Chairman and CEO, Paul Ryan, will discuss the growth of Acacia’s patent licensing business at the JP Morgan 39th Annual Technology, Media and Telecom Conference being held at the Westin Copley Place in Boston. Ryan’s presentation will take place on Wednesday, May 18, 2011 at 9:20 AM (EDT). It will be webcast live at http://www.acaciaresearchgroup.com/events.htm.

Image source: zonebourse.com-Thomson Reuters

The Great Patent Debate Will Kick-Off Day Two of World IP Business Congress in San Francisco

Do Patents Help or Hurt Innovation?

Skepticism about the patent system is growing even as more businesses and people benefit from IP rights.

Recent passage of the biggest overall of U.S. patents since the 1950s does not seem to have meant much, and cries of “too much” patenting are still being heard. A recent story in  The Economist (“The spluttering invention machine”) underscores the issue.

 Are patents net positive for innovation and commerce, or are they merely a drain on them that fills the pockets of special interests? Why do many IP-rich companies want to see weaker not stronger patents?

Is the playing field for patents leveler today or does it still favor some holders over others?

“The Great Patent Debate” taking place at the Intellectual Property Business Congress at San Francisco’s Palace Hotel on June 21 will attempt to find out.

Participating in what is expected to be a heated discussion:  Michael Meurer, author of Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, a controversial book which details a complex system run wild; Peter Menell, co-founder and director of The Berkeley Center for Law & Technology, and a leading authority on patent law and practice who opposes the Property Rights Movement; and Mark Blaxill and Ralph Eckardt, authors of The Invisible Edge, proponents of patent strategy for businesses and investors.

Blaxill and Eckardt are Managing Partners of 3LP Advisors, which advises Tessera (NASDAQ: TRSA), among the growing number of patent holders who actively monetize their R&D through patent licensing and litigation.

Moderating the debate will be your humble IP Insider, Bruce Berman.

States the IPBC program: “Some see [the patent system] as a crucial facilitator of innovation that underpins business success. Others are not so sure and regard it as an expensive hindrance to innovative companies.”

• Head-to-head debate

• Key assets or an expensive waste of time?

• Encouraging innovation or a brake on it taking place?

• Tweaking the system or fundamental reform

I hope some of you can make the IPBC in SF.  Held previously in Munich, Chicago and Amsterdam, and hosted by UK-based IAM, the IP Business Congress is the most auspicious gathering for patent strategy and monetitzation.

This year’s Bay-area inspired presentations, discussions and networking are sure to entertain as well as enlighten.


Illustration source: IPBC


New Wealth of Nations is Focus of Int’l IP Gathering

550+ to Participate in 2011 CIP Forum –

The New Wealth of Nations is the focus of a gathering to be hosted May 29-June by the Center for Intellectual Property Studies in Sweden.

It’s the tenth anniversary of the bi-annual event. If past experience is any indication, CIP Forum will be one of the more outstanding IP gatherings to be held in Europe or the U.S.

Co-organizers Ulf Petrusson and Bo Heidenhave their collective finger on the IP pulse. They know how to create a unique chemistry that attracts impassioned iPeople from far and wide. This year they are inviting executives and investors to talk about capturing and managing innovation and the role of open innovation. Among the goals is to help nations understand the impact of their new intangible wealth.

At CIP Forum it is not uncommon to hear conversations among international IP holders, valuation experts, patent brokers, investors, academics, business executives, entrepreneurs, advisors, NPEs, inventors and students. [Click here for more information about the 2011 CIP Forum.]

Seldom do (V)IP figures like this year’s chair, Ruud Peters of CEO of Philips IP and Standards, and Marshall Phelps, former Microsoft and IBM head of IP business and strategy, mix with business, engineering and IP management students, government policy makers and private equity investors in an unabashedly international setting.

Discussion and feisty debate at CIP Forum often carry over to the festivities and private dinners around Gothenburg. It starts with a welcome cocktail reception on Sunday evening, May 29, just after the my workshop.

Yes, your intrepid IP Insider has been asked to chair the 2011 Valuation & Finance Mini-Track on Sunday afternoon. I look forward to seeing some of my loyal readers there as well as a few who would rather throw tomatoes. Bring your difficult questions to The New Wealth of Nations CIP FORUM 2011- ENG in Gothenburg in May, and don’t be afraid to challenge current IP practices.

After all , IP management has a short history — a few decades, at most — and, more than anything, CIP Forum is about breaking new ground for innovation and IP capital everywhere.

Illustration source: cipforum.org

IBM Files Patent on Patenting Process

Is Big Blue Co-Opting Innovation?

It was reported in early 2011 that an application has been published for an IBM patent that apparently attempts to secure rights on the patent process.

As best I can determine the original source of the story is Wolfgang Gruener in Conceivably Tech.  Douglas Perry of Tom’s Hardware amplified it.

Aside from the audacity of such a broad patent, what I find interesting is the timing of the publication. Was the application filed in late June of 2009 (June 24 to be precise) so it would publish 18 months later, post-Christmas 2010, when business news and browsing are way down?

Click here for the published application, Intellectual Property Component Business Model for Client Services.

If IBM’s process patent issues, it will have symbolic if not literal value for a while. That it should issue at all is another matter. Can the company be faulted for trying?

Below is a reply from an IBM employee to Gruener’s post:

Chris@IBM says:

Wolfgang, I work for IBM and I’m glad you see some ingenious ideas in this patent application. We have thousands of inventors who file for and receive patents every year, backed by a $6 billion investment in R&D. Of course, you can’t receive a patent on filing for a patent because there’s obviously nothing new or novel about that. What this application is for is an IP management system, and how a company goes about making strategic decisions that may or may not lead to an application for a patent being filed, as well as for managing an IP portfolio. We’ve had many clients ask us for this kind of service, and since IBM actually practices its inventions, it is only natural that we’d file for patent protection so no one can prevent us from serving our clients.

Reply this comment (to Conceivably Tech).
To reply to this IP Insider post, see below.

Illustration source: kara.allthingsd.com

Another "IP Insider" Speaks Out

 

What Patent People Are Saying

Apparently IP Insider readers can’t keep their ears to themselves. This time a reader is offering the top ten things that people are overheard saying at patent conferences. (Her apologies to David Letterman and The Late Show.)

10. The patent is fine. It’s a few of the claims that I’m having a problem with.

9. Of course we’re litigating in Texas. The patent holder does business there.

8. Ray Niro is taking the case and, let me tell you, there is no way he’s settling.

7. Overheard at the sponsored cocktail reception: “Patents don’t kill innovation, people do.”

6. Yes, of course the damages are accurate. We have an expert who will attest to it.

5. Their firm is willing to take our case on contingency. The head of litigation told me they’re putting their best people on it.

4. Jury foreman to defense counsel following deliberations: “Damn, I thought that invention was for the an electric rodeo. What’s an RFID radio?”

3. The inventor told me that knows the patent is infringed. He says  it should generate $100m or more, but that he would take only $80m if he could get a check this month.  He also said that Intellectual Ventures is still interested.

2. We really do want to license the patent, but we would prefer not to have to sue anyone, especially if it’s a big company or someone who works in our industry.

1. The company called him a “troll” until  they bought-out his patent. Now they’re calling him a hero for saving their quarter.

Image source: Bittersweet Coffee

Part II of Patent Performance Discussion is Out

Better Measures

The conclusion of my chat with Apple, IBM, Microsoft and H-P heads of IP business about how they measure success (the Intangible Investor 43), “Measures of Success, II,” is running in the Sept-Oct IAM. Below is the executive, executive summary:

Understanding patents starts with a business’ ability to identify needs, establish expectations and measure performance. It’s easier said than done, say three experts.

Berman: Many high-tech companies believe that improving their patent portfolio through acquisition, in-license or sale is like admitting defeat. This would seem counter to IAM best-practices?

[Irving] Rappaport [Apple, Medtronic, National Semiconductor]: That’s a very narrow view of ROI. If the acquired rights help the company’s overall business strategy, it should be seen as a win-win, particularly if it would take a long period of time for the company to develop its own rights in the acquired technologies. The terms of the deal also are important.

[Joe] Beyers [H-P]: Defeat may not be the proper term. It is more like “anger” that they now have to pay a third-party, perhaps, a competitor, to execute their business strategy. Compounding the problem is that this cost was likely not forecasted in the financial model/budget. Surprise expenses are the worst kind of costs to an operating company or division.

[Marshall] Phelps [IBM, Microsoft]: Forward-thinking companies don’t believe that in-licensing or patent acquisitions are weaknesses.

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Companies have different IP needs at different points in their evolution. It’s nice for an operating company to say “No thank you. We have all of the IP we need.” But that level of self-sufficiency would be rare for most innovation dependent businesses, ever mindful of R&D costs, filing fees and litigation risk.

Image sources: baltimoresun.com, gottabemobile.com

Former Chief Patent Execs Speak Out

Defining Performance: No Simple Matter

Former heads of intellectual property at Apple, IBM, H-P and Microsoft agree that using patents successfully is more elusive than many business executives and investors think.

In my latest Intangible Investor column, Measure of Success, currently running in IAM, I asked three esteemed former heads of IP at Fortune 500 companies, Joe Beyers, Irv Rappaport and Marshall Phelps, how they measured patent performance, and also how they communicated it to non-IP professional.  The answers were both predictable and surprising.

Excerpts from the column:

Peter Drucker, the great management consultant and writer, said that “What you can’t measure you can’t manage.”

One of IP’s greatest challenges revolves around measuring what many believe can not be reliably counted, patent performance. Patent performance is so frustrating a challenge that otherwise courageous companies avoid doing it or simply say that it can not be done.

IP value means different things to different holders at a given point in time. Patents, especially, are informed by context, and context changes over time.

For some businesses patent performance is about royalties, for others, freedom to sell a product unencumbered by law suits or the ability to mitigate risk, for still others, performance is tied to establishing and maintaining market share for a particular products or profit margin.

“Everyone understands the importance of revenues,” said Marshall Phelps, former IP business and strategy head of IBM and Microsoft. “If you build financial expectations for IP into the business unit plans (or licensing targets or whatever), then you have allies in reaching those targets.

“If you have the CEO in line with the IP goals and targets, it helps persuade management in general as well as those lower down in the organization.”

For the complete column and additional comments from Phelps of IBM and Microsoft,  H-P’s Beyers and Apple’s Rappaport visit IAM. Part-two will appear in the Sept-Oct issue.

Photo: IP Review


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