"Where money issues meet IP rights". This weblog looks at financial issues for intellectual property rights: securitisation and collateral, IP valuation for acquisition and balance sheet purposes, tax and R&D breaks, film and product finance, calculating quantum of damages--anything that happens where IP meets money.
Wednesday, 29 May 2013
Best Practices in IP 2013: conference keynote on monetisation
Jonathan compared the phenomenon of a country with a small number of mega-corporations enjoying a large international market share with that of the start-up economy of a country such as Israel, with a large number of smaller IP-laden companies but initially a very low international market share. How does such a country monetise its patents and grow its businesses -- by licensing or by selling its patents? A good case can be made for each path. Royalty income appears on the profit-and-loss account rather than as an asset disposal, and therefore does not affect the valuation of the licensing company, though it may not satisfy the immediate need for cash infusion which only a sale can achieve. Typically, large and successful companies make more money by licensing their IP portfolio than by selling.
Jonathan recommended licensing over sale as being less disruptive of the patent holder's business and as exposing it to lower risk, while offering the opportunity for the licensee to enrich the licensor through its own experience and technology skills. Licensing can lead to ongoing relationships, which in turn lead to greater trust and further cooperation. Another consideration is that, when a patent is seen to be offered for sale for a long time, potential purchasers wonder what's wrong with it and can be reluctant to buy it.
Jonathan then spoke of the advantages of seeking a deal through an intermediary, the tendency of licensor and licensee to gravitate towards one another and the need for good due diligence. What about IP auctions? Do they still make sense? Enigmatically, he indicated that there may be situations in which they do, but he did not adumbrate on when they might.
Earlier sessions of this conference have been noted on the IPKat here, here and here.
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