Tag Archives: patent performance

Five New Stocks added to IP Close Up 30 Patent Licensing Index

Finjan, Inventergy, Network-1, Straight Talk and Universal Display have been added to the IP licensing company (PIPCO) stock index, IP Close Up 30.

To remain relevant a stock index must change. Companies added to the IP CloseUp® 30, a conveniently configured, real-time listing of company stock performance, financials and news include those that can be described as operating companies.

These companies are otherwise known as PIPCOs, a term coined by this writer in September 2013.

Companies removed include ARM and Qualcomm, because of their much larger relative size, as well as Murgatroyd and RWS, which are more of an IP services play and less an IP licensing one. AxoGen, a medical technologies company that focuses on nerve repair, was removed because of a lack of IP information.

Inventergy (INVT), which began trading on June 9, says that it will have a market cap of about $150M once its merger with eOn Communications Corporation is completed. According to analysts close to IP Close Up who have examined the public filings this would establish the value of the company’s patent portfolio at approximately $130M.

Network-1 (NTIP) won a rare Patent Trials and Appeals Board (PTAB) ruling on May 23 affirming all claims in its Remote Power Plant patent, and defeating an Inter Partes Review (IPR) challenge (U.S Patent No. 6,218,930). ipcu30-blurb2-21

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As stated previously, the IP CloseUp® 30 is a stock index in progress. It is informally represents small, micro and nano-cap companies engaged in significant patent licensing whose market value hovers in the range of under $1 billion, $50 million to $350 million, and under $50 million.

The goal of the index is to make it easier to follow and understand companies who license their IP actively relative to each other by providing real-time trading data, news and charts. IPCU 30 hopes to include all companies whose stock price and shareholder value are significantly affected by IP performance. This could include direct income generation, such as in out-licensing, as well as strategic or defensive use of patents to secure and maintain market share and profit margins, and to manage risk.

In the future we plan to include more IP Close Up 30 group data, including how the group’s performance compares with other indices, like the S&P 500. Image source: IP CloseUp® 30

PIPCO Monitoring Made Easier:

The IPCU 30 can be conveniently followed on your PC or Mac. Click here, highlight the URL, and drag it to your desktop. Scroll down the page for recent company news.

To access the IPCU 30 on your smart phone: click here, tap the arrow at the bottom (iPhone), and select “Add to Home Screen.” You’re good to go.

Be sure check-in with IP Close Up (the blog) periodically to see if the list has been updated.

Bold IP Moves Enable Microsoft to Lead in Patent Performance

The inability to dominate in its product lines has not prevented Microsoft from crafting a purposeful IP strategy that has generated billions in patent licensing and enables it to participate other technology businesses’ success.

Microsoft is not you typical technology company. The software business has taken more heat over the past 20 years for what it has not achieved than practically anyone.

While missteps in product development and market strategy have slowed Microsoft’s once meteoric growth and hampered its shares, the time and research spent developing new ideas and protecting them are not without a silver lining.

Microsoft has emerged as a study in smart IP management, and what an evolved business can achieve when it understands the power of selected IP rights and how to deploy it. Not only has MSFT (NASDQ), a laggard with just 300 patents and applications a decade ago, established a formidable portfolio of more than 40,000 patents and a successful licensing program generating about $2 billion annually and likely to generate more, it has displayed a marked ability to move swiftly and deploy its huge cash position when the IP opportunity arises.

“Microsoft: Bold Moves and Intriguing Results,”  will appear as the next Intangible Investor in the January IAM Magazine, out this week. The piece looks at how Microsoft, which has failed to dominate in games (Xbox), operating systems (Windows) or search (Bing) has managed to carve out a formidable niche in IP asset management. A few of the more notable Microsoft IP moves are listed below.

Notable Microsoft IP deals, disputes and investments:

– Purchase/License:
From AOL 925 patents and applications, plus 300 licenses for $1.056M (2012)

– Sale:
To Facebook, 650 patents from the AOL deal for $550M (2012)

– License:
For Adaptix patents from Acacia with Samsung (2012)

– License:
74 smartphone patents from Acacia (2010)

021109_2115_PercentofPa1– License:
To majority of Android smartphone manufacturers for up to $10 per unit (2007-2013)

– Acquisition/License:
From Nokia for $7.2B for its mobile phone and services business. Includes, all of some 30,000 Nokia patents for $2.17B over ten years and licensing income from some Nokia licensees (2013)

– Purchase:
Paid approximately $800M for its participation in Rockstar Consortium’s 6,000
patent Nortel portfolio: with Apple, RIM, Sony, Ericsson and EMC. (2011.)

– Suit Filed re: Above:
Rockstar Consortium US LP and Netstar Technologies LLC vs. Google, 13-893. (November)

– MS has been involved in five of the ten largest patent damages suits (see PwC Patent Litigation Study, figure 2c). It has prevailed in three, settled one, and lost at the United States Supreme Court in another.

– Successful Defense:
Eolas (U. of California) v. MSFT; in a decade-long quest for $500 plus in patent damages.

– Successful Defense:
Alcatel-Lucent v. MSFT, reversed $1.53 billion verdict on appeal (2008)

– Unsuccessful Defense:
i4i v. MSFT, $290 loss at Supreme Court (2011)

– Successful Suit:
Won $14.5M in a case against Motorola Mobility/Google for violating FRAND (2013)

– Plaintiff (settled):
Against Barnes & Noble, Foxconn, and Inventec for patent infringement over the retailer’s
Android-based Nook e-readers and tablets manufactured by Foxconn and Inventec (2010)

– Investment:
In 2011, Microsoft announced that it would invest $300M in B&N’s Nook business for a 17.6
percent stake, which ended their patent litigation

– Investment:
Approximately $1B into Intellectual Ventures fund giving it access to IV’s patents (2002)

– Investment:
1.6% of Facebook (2009)

Transactions compiled by Brody Berman Associates

Image source: reuters.com; patentlyo.com

Patent Holders Learn to Adapt to More Investor Scrutiny

With a greater role in more businesses’ performance, patent assets and strategy are going under the microscope.

The required disclosure and hyper-scrutiny that small public patent licensing companies are subject to may be starting to affect larger, more defensive IP holders, including Apple, Intel and Sony. The increased interest is more likely to benefit those that perform.

In “Reveal Thyself,” the latest Intangible Investor in IAM Magazine, out next week, I look at how the heightened awareness of some tiny IP-centric companies, many of them NPEs with an out-licensing model, is likely to affect larger patent holders with diverse business models. Here is an excerpt:

IP success is no longer a “trust me” proposition for the terminally confused. Value and performance must be explained, and respect earned. For smaller patent holders looking to make a mark with licensing revenue, as well as for larger ones protecting profit margins, the first rule IP reporting is the same: under-promise and over-deliver. 

Not all public IP companies (PIPCOs) are driven by a simple out-licensing or assertion model.  Some are operating companies that sell products and conduct 0tightrope walker1R&D. (Colleen Chien may choose to believe otherwise, but not all small patent-rich businesses have assertion covenant written into their charter. “Patent assertion entity” (PAE), as a term, presumes a business’ raison d’être is litigation. It is disturbing that some anti-patent forces are trying to make it the defacto term for “licensing businesses.” Private and public licensing companies are not “suing machines” by nature. Enforcement is rarely their first choice. Some learn how to do it really well because they have to to succeed. All operating companies are to some extent non-practicing ones, too. It would be impossible to practice all of the patents they hold.)

The Genie is Out of the Bottle

Like biotech and entertainment industry stocks before them, PIPCOs are complex, typically speculative business models that fascinate many, even though their returns may eventually only satisfy a few. Their survival is inevitably market-based, and subject to a harsh eco-system. (It’s difficult avoiding that term.)  Ultimately, competition will determine who survives — and, as evolution has proved, the strongest typically do. PIPCOs success, failure and cross-breeding will create more valuable assets and  durable business models for ideas and innovation. They also will help provide a greater understanding of innovation rights and how they can be deployed.

In today’s legal and legislative environment the key to business model success for patents may not be the “elephant hunter” hoping to bag the biggest prey. Lofty damages awards paid by Research in Motion, Microsoft, J&J and others, are a currently a relic of the past. Many large awards are reduced, retried and thrown out, and the economics and risk of patent litigation are less amenable to big game hunting.

If history is any indication, IP business model competition will be bloody but ultimately positive. Quality assets, good management and clear performance usually win out in the end not only in spite off the carcasses along the way, but also because of them.

Institutional investors, banks, pension funds and others are slowly becoming more familiar with the language and movements of IP performance. Their positions in smaller entities are among the driving forces, but so are is M&A, like Motorola’s sale to Google. Because PIPCOs are more directly affected by licensing and enforcement, and closely monitored for strengths and weaknesses, they may provide a better worthwhile, if more painful, learning experience.

Some investors may choose to look at larger patent holders through a similar lens. If it is inappropriate to do so then more relevant performance measures will have to be identified, such as market share maintained, profit margins protected and the number and cost of suits settled (or avoided). 

While not all patent-rich businesses or business models, small or large, are likely to succeed, focusing systematically on their performance is likely to lead to more robust survivors, and fewer disillusioned investors.

Image source: economictimes.com; marktomarket.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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