IPR: Bundling, Pooling and Market Liquidity

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IPR Bundling, Poolingand Market Liquidity

• Dr David McBeth
• Director

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Terminology

• Bundling
• Several pieces of IPR
• From one or more owners
• To create added value to someone

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Terminology

• Pooling
• Several pieces of IPR
• From more than one owner
• To create freedom to use
• e.g. MP3, MP4 standards
• e.g. Eco Commons

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Terminology

• the New Liquidity
• A claimed phenomenon
• Markets for trading IPR (patents) growing
• Multi US Billions
• Buyers, sellers, middlemen thronging
• Deal sizes (and bundle sizes) growing
• Intellectual Ventures
• Ocean Tomo auctions

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Bundling

• Always sounds like a good idea
• Nature and stage of academic inventions
• Throw it all in a bucket
• Give it to someone who really knows what to do
  with it
• Value cant help but be added

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University IPR comes with people

• If you separate it from the people
• Tacit know-how stripped out
• A potential developer (in broadest sense) isnt
  there
• A potential champion isnt there
• Policing infringement may actually be harder
• But emotional considerations largely stripped out
  too!
• And easier to buy and sell (assign)

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Bundling general considerations

• Whos doing the bundling?
• What motivates the bundler(s)?
• What knowledge does bundler bring?
• What skills does bundler bring?
• Whos paying for prosecution and maintenance?

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Owner driven bundling

• parties of similar status acting in voluntary
  partnership
• may use a single vehicle
• towards a common goal
• limited market knowledge
• unlikely to be enforcement play

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Owner driven bundling - 2

• (Perhaps) more likely to bring inventors along
• (Perhaps) harder for ultimate customer to
  interact with
• input related reward sharing for owner(s)
• e.g. MVCE (Mobile Virtual Component Exchange)

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Intermediary driven bundling

• May or may not be mandate on owners to
  participate
• All decisions by one party (the bundler)
• Towards the bundlers goals (not always known)
• Without reference to the originators original
  goals

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Intermediary driven bundling - 2

• Without inventors or champions
• May add market knowledge
• Arbitrary reward sharing for owner(s)
• Potentially easy for end user to interact with

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User driven bundling

• Done with a product or service in mind
• Done with bundlers known goals in mind
• May bring owners/inventors along
• Perhaps without reference to the originators
  original goals
• Possibility of informed, negotiated deal
• Reward sharing based on market success
• Royalty stacking onus on owner to get best deal
• Remember to consider exclusivity by Field

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The New Liquidity

• True market size for buying IPR cold US 250m?
• How many people really buy IPR cold?
• Can you bundle cold IPR in the absence of a
  product?
• Unless on an enforcement play?
• Or creating a mega-pool (by stealth)?
• Lots of new and innovative sales channels but
  few big buyers
• Some apparent liquidity may be result of
  speculative buying

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Intellectual Ventures

• Offer prices were in the ballpark
• Cant do much due diligence on business model
• We vetted the people we dealt with
• We got contractual protections
• We chose not to seek downstream reward
• Buyer was thorough
• The buyer paid
• We might see what happens to our IPR

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Ocean Tomo auctions

• US 40m transacted (5 auctions)
• US 120k per lot, c. US 15k per patent family
• We put up one patent family
• Went through due process and sold
• We were a passive seller
• We might see what happens

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Would you sell to a Troll?

• Patent troll is a pejorative term used for a
  person or company that enforces its patents
  against one or more alleged infringers in a
  manner considered unduly aggressive or
  opportunistic. A related, less pejorative
  expression is non-practicing entity (NPE) which
  describes a patent owner who does not manufacture
  or use the patented invention.Wikipedia

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As a Non-Practising Entity

• Can you police your IPR for infringement?
• What do you do when you detect infringers?
• How far would you go in pursuing infringers?
• Have you considered and discounted assertion as
  an income strategy?
• So would you sell to a troll?