BHN”W Patent valuation and commercialisation: Making the most … · 2014-03-27 · European...

Management of technology, portfolio consulting, and businessManagement of technology, portfolio consulting, and business--strategy services in all aspects of intellectual property, patenstrategy services in all aspects of intellectual property, patent & t & trademark protection, asset management, technology transfer, trademark protection, asset management, technology transfer,

and licensing and licensing –– enhancing your innovation value chainenhancing your innovation value chain

BHNBHN””WW

Copyright Copyright ©© 2014 FlashPoint IP Ltd.2014 FlashPoint IP Ltd.

w w w . F l a s h P o i n t I P . c o mw w w . F l a s h P o i n t I P . c o m

Risk assessment for different types of IP assetsRisk assessment for different types of IP assetsin various technology areasin various technology areas

(electronics, software, pharmaceuticals, mechanics, and medical (electronics, software, pharmaceuticals, mechanics, and medical devices)devices)

Patent valuation and commercialisation:Patent valuation and commercialisation:Making the most of patents for businessMaking the most of patents for business

European Patent Academy European Patent Academy Conference Conference ––Athens, Greece, March 2014, Session 2Athens, Greece, March 2014, Session 2

Dr. Reuven K. Mouallem, LL.M. Dr. Reuven K. Mouallem, LL.M. –– FlashPoint IP Ltd.FlashPoint IP Ltd.IP Management Consultant, Strategic Advisor, Patent Attorney & FIP Management Consultant, Strategic Advisor, Patent Attorney & Founderounder

The Challenge of Creating a Consistent, Quantitative, Widely-Adopted Valuation

Framework: Fundamental Issues

The Challenge of Creating a Consistent, The Challenge of Creating a Consistent, Quantitative, WidelyQuantitative, Widely--Adopted Valuation Adopted Valuation

Framework: Framework: Fundamental IssuesFundamental Issues

�“Creating a Financial Market for IPR,” prepared by the University of St. Gallen and the Fraunhofer Institute for the Directorate General Enterprise of the European Commission, December 2011:� “Our quantitative survey showed that, currently, the market actors

consider the problem of evaluating [IP] as the greatest barrier to IP transactions. The lack of commonly accepted valuation methods has adverse effects on buyers’ and investors’ confidence, because the value of the asset is highly uncertain. A liquid market is driven by the actors’confidence. Furthermore, experts find the applicability of [IP] valuation methods highly debatable.”

��““Creating a Financial Market for IPRCreating a Financial Market for IPR,,”” prepared by the prepared by the University of St. University of St. GallenGallen and the Fraunhofer Institute for the and the Fraunhofer Institute for the Directorate General Enterprise of the European Commission, Directorate General Enterprise of the European Commission, December 2011December 2011::�� ““Our quantitative survey showed that, currently, the market actorOur quantitative survey showed that, currently, the market actors s

consider the problem of evaluating [IP] as the greatest barrier consider the problem of evaluating [IP] as the greatest barrier to IP to IP transactions. The lack of commonly accepted valuation methods hatransactions. The lack of commonly accepted valuation methods has s adverse effects on buyersadverse effects on buyers’’ and investorsand investors’’ confidence, because the value confidence, because the value of the asset is highly uncertain. A liquid market is driven by tof the asset is highly uncertain. A liquid market is driven by the actorshe actors’’confidence. Furthermore, experts find the applicability of [IP] confidence. Furthermore, experts find the applicability of [IP] valuation methods highly debatable.valuation methods highly debatable.””

Copyright Copyright ©© 20102010--2011 FlashPoint IP2011 FlashPoint IP

��

BHNBHN””WW



The Challenge of Creating a Consistent, Quantitative, Widely-Adopted Valuation

Framework: Underlying Factors

The Challenge of Creating a Consistent, The Challenge of Creating a Consistent, Quantitative, WidelyQuantitative, Widely--Adopted Valuation Adopted Valuation

Framework: Framework: Underlying FactorsUnderlying Factors

�“Intellectual Property Valuation,” Final Report of the European Expert Group for the Directorate General for Research and Innovation, European Commission, October 2013:� “As IP is, by its nature, innovative and therefore different, each case

for valuation requires investigation, rather than a valuation being calculated automatically. As a result, IP valuation of a company’s assets is an opinion, at a particular point in time – similar in many respects to the way that a legal opinion is given. Although an informed layman might proffer a good guess, it is important to note that in the same way that one cannot automate the judgement on a law suit, one cannot automate judgement on an independent IP valuation. There are many factors involved and evidence can have a large impact.”

��““Intellectual Property ValuationIntellectual Property Valuation,,”” Final Report of the Final Report of the European Expert Group for the Directorate General for Research European Expert Group for the Directorate General for Research and Innovation, European Commission, October 2013:and Innovation, European Commission, October 2013:�� ““As IP is, by its nature, innovative and therefore different, eacAs IP is, by its nature, innovative and therefore different, each case h case

for valuation requires investigation, rather than a valuation befor valuation requires investigation, rather than a valuation being ing calculated automatically. As a result, IP valuation of a companycalculated automatically. As a result, IP valuation of a company’’s s assets is an opinion, at a particular point in time assets is an opinion, at a particular point in time –– similar in many similar in many respects to the way that a legal opinion is given. Although an irespects to the way that a legal opinion is given. Although an informed nformed layman might proffer a good guess, it is important to note that layman might proffer a good guess, it is important to note that in the in the same way that one cannot automate the judgement on a law suit, osame way that one cannot automate the judgement on a law suit, one ne cannot automate judgement on an independent IP valuation. There cannot automate judgement on an independent IP valuation. There are are many factors involved and evidence can have a large impact.many factors involved and evidence can have a large impact.””


��

BHNBHN””WW



Incomplete Model Without Proper RiskAssessment: Reduces value of valuation

Incomplete Model Without Proper RiskIncomplete Model Without Proper RiskAssessment: Assessment: Reduces value of valuationReduces value of valuation

� Jeffrey Matsuura, “An Overview of Intellectual Property and Intangible Asset Valuation Models,” Research Management Review, Vol. 14, No. 1, Spring 2004:� “One of the apparent weaknesses of the most commonly used valuation

models is the failure to incorporate legal rights into their calculations. Creation, maintenance, and enforcement of legal rights of ownership and control for intangible assets form a critical component of the total economic value of those assets. The failure to account for the value of those rights undermines the accuracy and the utility of the overall asset valuation process. This paper advocates a concerted effort by professionals involved in intellectual property law and intangible asset development and management to integrate more effectively the legal aspects of intangible asset creation, protection, and transfer into asset valuation models. Absent such integration, all intangible asset valuation models will continue to be incomplete.”

�� Jeffrey Matsuura, Jeffrey Matsuura, ““An Overview of Intellectual Property and An Overview of Intellectual Property and Intangible Asset Valuation Models,Intangible Asset Valuation Models,”” Research Management Research Management ReviewReview, Vol. 14, No. 1, Spring 2004:, Vol. 14, No. 1, Spring 2004:�� ““One of the apparent weaknesses of the most commonly used valuatiOne of the apparent weaknesses of the most commonly used valuation on

models is the failure to incorporate legal rights into their calmodels is the failure to incorporate legal rights into their calculations. culations. Creation, maintenance, and enforcement of legal rights of ownersCreation, maintenance, and enforcement of legal rights of ownership and hip and control for intangible assets form a critical component of the tcontrol for intangible assets form a critical component of the total economic otal economic value of those assets. The failure to account for the value of tvalue of those assets. The failure to account for the value of those rights hose rights undermines the accuracy and the utility of the overall asset valundermines the accuracy and the utility of the overall asset valuation process. uation process. This paper advocates a concerted effort by professionals involveThis paper advocates a concerted effort by professionals involved in d in intellectual property law and intangible asset development and mintellectual property law and intangible asset development and management to anagement to integrate more effectively the legal aspects of intangible assetintegrate more effectively the legal aspects of intangible asset creation, creation, protection, and transfer into asset valuation models. Absent sucprotection, and transfer into asset valuation models. Absent such integration, h integration, all intangible asset valuation models will continue to be incompall intangible asset valuation models will continue to be incomplete.lete.””


��

BHNBHN””WW



�Jeffrey Matsuura, “An Overview of Intellectual Property and Intangible Asset Valuation Models,” Research Management Review, Vol. 14, No. 1, Spring 2004:� “. . . even if the projections of the impact of these legal factors on

asset valuation are very rough, the process of evaluating that impact and the introduction of some estimate for their value will improve the accuracy of the overall valuation effort.”

��Jeffrey Matsuura, Jeffrey Matsuura, ““An Overview of Intellectual Property An Overview of Intellectual Property and Intangible Asset Valuation Models,and Intangible Asset Valuation Models,”” Research Research Management ReviewManagement Review, Vol. 14, No. 1, Spring 2004:, Vol. 14, No. 1, Spring 2004:�� ““. . . even if the projections of the impact of these legal facto. . . even if the projections of the impact of these legal factors on rs on

asset valuation are very rough, the process of evaluating that asset valuation are very rough, the process of evaluating that impact and the introduction of some estimate for their value wilimpact and the introduction of some estimate for their value will l improve the accuracy of the overall valuation effort.improve the accuracy of the overall valuation effort.””


��

BHNBHN””WW



Incomplete Model Without Proper RiskAssessment: Anything is better than nothingIncomplete Model Without Proper RiskIncomplete Model Without Proper RiskAssessment: Assessment: Anything is better than nothingAnything is better than nothing

Legal Opinions are Foundational Elements of Every Aspect of Risk Assessment

Legal Opinions are Foundational Elements Legal Opinions are Foundational Elements of Every Aspect of Risk Assessmentof Every Aspect of Risk Assessment

�For intellectual property, opinions are the mother of all IP transactions

�Opinions clarify what exactly the asset is, what is its scope, who is its owner, and what restrictions apply to it

� IP assets in particular are strengthened by such clarification due to the fact that intellectual property as an intangible asset leaves a lot of room for interpretation

�Such legal clarification is referred to as due diligence�Lack of clarification creates uncertainty�Uncertainty requires valuations to be discounted appropriately

�� For intellectual property, opinions are the For intellectual property, opinions are the mother of all IP mother of all IP transactionstransactions

��Opinions clarify what exactly the asset is, what is its scope, wOpinions clarify what exactly the asset is, what is its scope, who is ho is its owner, and what restrictions apply to itits owner, and what restrictions apply to it

�� IP assets in particular are strengthened by such clarification dIP assets in particular are strengthened by such clarification due ue to the fact that intellectual property as an intangible asset leto the fact that intellectual property as an intangible asset leaves a aves a lot of room for interpretationlot of room for interpretation

�� Such legal clarification is referred to as due diligenceSuch legal clarification is referred to as due diligence�� Lack of clarification creates uncertaintyLack of clarification creates uncertainty��Uncertainty requires valuations to be discounted appropriatelyUncertainty requires valuations to be discounted appropriately


��

BHNBHN””WW



A Legal Risk-AdjustedValuation Framework

A Legal RiskA Legal Risk--AdjustedAdjustedValuation FrameworkValuation Framework

�The impact an event can have on a business transaction, and in particular an IP transaction, is a matter of assessing the risk associated with the event� Relative “force” that an event can exert is its impact factor� Not all risks are equal in importance� Not all risks are equal in their cost to clarify� Determining a quantitative or qualitative value of risk related to a

situation or holding and a potential threat (or hazard) is the domain of risk assessment

��The impact an event can have on a business transaction, and The impact an event can have on a business transaction, and in particular an IP transaction, is a matter of assessing the in particular an IP transaction, is a matter of assessing the risk associated with the eventrisk associated with the event�� Relative Relative ““forceforce”” that an event can exert is its impact factorthat an event can exert is its impact factor�� Not all risks are equal in importanceNot all risks are equal in importance�� Not all risks are equal in their cost to clarifyNot all risks are equal in their cost to clarify�� Determining a quantitative or qualitative value of risk related Determining a quantitative or qualitative value of risk related to a to a

situation or holding and a potential threat (or hazard) is the dsituation or holding and a potential threat (or hazard) is the domain omain of risk assessmentof risk assessment


��

BHNBHN””WW



Applying Risk Premiums to Patent Valuation: Considerations

Applying Risk Premiums to Applying Risk Premiums to Patent Valuation: Patent Valuation: ConsiderationsConsiderations

�The risk-free patent value minus legal risks equals the resulting patent value with a risk premium expressed as a probability for each legal risk factor or aspect� Patent value = (risk-free patent value)*(1 – (discount)*(impact)) . . .

�Synergistic portfolio discounts can also amplify or compress valuations due to a combination of IP threats

�Information asymmetry factors into the equation as well�Concealment, deceit, incomplete communication, or

information too difficult or too costly to obtain are all hazards that can shift the economic analysis

��The riskThe risk--free patent value minus legal risks equals the free patent value minus legal risks equals the resulting patent value with a risk premium expressed as a resulting patent value with a risk premium expressed as a probability for each legal risk factor or aspectprobability for each legal risk factor or aspect�� Patent value = (riskPatent value = (risk--free patent value)*(1 free patent value)*(1 –– (discount)*(impact)) . . .(discount)*(impact)) . . .

��Synergistic portfolio discounts can also amplify or compress Synergistic portfolio discounts can also amplify or compress valuations due to a combination of IP threatsvaluations due to a combination of IP threats

�� Information asymmetry factors into the equation as wellInformation asymmetry factors into the equation as well��Concealment, deceit, incomplete communication, or Concealment, deceit, incomplete communication, or

information too difficult or too costly to obtain are all information too difficult or too costly to obtain are all hazards that can shift the economic analysishazards that can shift the economic analysis


��

BHNBHN””WW



�Besides obtaining a valuation that more accurately reflects a true value, risk assessment also initiates a new type of dialogue on which concerns need to be focused on the most

�Can be used to budget due diligence efforts�Determining the discount rates becomes the secret sauce of

every risk-assessment engagement – each chef has his own recipe

�Value of a patent depends on the knowledge of the evaluator and the implicit legal assumptions made

�Choice of legal/technical aspects to consider and weight to give them affects the analysis dramatically

��Besides obtaining a valuation that more accurately reflects a Besides obtaining a valuation that more accurately reflects a true value, risk assessment also initiates a new type of true value, risk assessment also initiates a new type of dialogue on which concerns need to be focused on the mostdialogue on which concerns need to be focused on the most

��Can be used to budget due diligence effortsCan be used to budget due diligence efforts��Determining the discount rates becomes the secret sauce of Determining the discount rates becomes the secret sauce of

every riskevery risk--assessment engagement assessment engagement –– each chef has his own each chef has his own reciperecipe

��Value of a patent depends on the knowledge of the evaluator Value of a patent depends on the knowledge of the evaluator and the implicit legal assumptions madeand the implicit legal assumptions made

��Choice of legal/technical aspects to consider and weight to Choice of legal/technical aspects to consider and weight to give them affects the analysis dramaticallygive them affects the analysis dramatically


��

BHNBHN””WW



Applying Risk Premiums to Patent Valuation: Considerations

Applying Risk Premiums to Applying Risk Premiums to Patent Valuation: Patent Valuation: ConsiderationsConsiderations

�Status of the patent – In force? Maintenance? Jurisdictions? Life?

�Ownership/contracts – Real material owner? Contractual obligation?

�Patentability/invalidity – Granted? Opposed? Valid? Attacked?

�Freedom to operate (FTO) – Relies on third-party IP?

�Scope – Appropriate coverage of commercial product line or processes?

�Circumvention/breadth – Third-party coverage? Work-arounds?

�Detectability/enforceability – Is infringement detectable? Courts?

��Status of the patent Status of the patent –– In force? Maintenance? Jurisdictions? Life?In force? Maintenance? Jurisdictions? Life?

��Ownership/contracts Ownership/contracts –– Real material owner? Contractual obligation?Real material owner? Contractual obligation?

��Patentability/invalidity Patentability/invalidity –– Granted? Opposed? Valid? Attacked? Granted? Opposed? Valid? Attacked?

��Freedom to operate (FTO) Freedom to operate (FTO) –– Relies on thirdRelies on third--party IP?party IP?

��Scope Scope –– Appropriate coverage of commercial product line or processes? Appropriate coverage of commercial product line or processes?

��Circumvention/breadth Circumvention/breadth –– ThirdThird--party coverage? Workparty coverage? Work--aroundsarounds? ?

��DetectabilityDetectability/enforceability /enforceability –– Is infringement detectable? Courts?Is infringement detectable? Courts?


��

BHNBHN””WW



Applying Risk Premiums to Patent Valuation: Legal Risk Factors or Aspects

Applying Risk Premiums to Patent Applying Risk Premiums to Patent Valuation: Valuation: Legal Risk Factors or AspectsLegal Risk Factors or Aspects

–– based on presentation of Dr. based on presentation of Dr. MalteMalte KKööllnerllner

�Consider impact of each legal risk factor of the patent� Is risk factor worth the expense to conduct due diligence for valuation?

�Efficiency – cheapest/most accurate first, discount others� Ownership, Status, Scope – relatively easy and inexpensive (??)� Patentability, Circumvention, Detectability, FTO – more difficult/costly

�Calculate legal risk-adjusted valuation from model�Case study deals with high-impact examples of difficult risk

factors – Scope, Patentability, Circumvention, Detectability, FTO

��Consider impact of each legal risk factor of the patentConsider impact of each legal risk factor of the patent�� Is risk factor worth the expense to conduct due diligence for vaIs risk factor worth the expense to conduct due diligence for valuation?luation?

��Efficiency Efficiency –– cheapest/most accurate first, discount otherscheapest/most accurate first, discount others�� Ownership, Status, Scope Ownership, Status, Scope –– relatively easy and inexpensive (??)relatively easy and inexpensive (??)�� Patentability, Circumvention, Detectability, FTO Patentability, Circumvention, Detectability, FTO –– more difficult/costlymore difficult/costly

��Calculate legal riskCalculate legal risk--adjusted valuation from modeladjusted valuation from model��Case study deals with highCase study deals with high--impact examples of difficult risk impact examples of difficult risk

factors factors –– Scope,Scope, Patentability, Circumvention, Detectability, FTO Patentability, Circumvention, Detectability, FTO


��

BHNBHN””WW



Applying Risk Premiums to Patent Valuation: Conducting Due Diligence Wisely

Applying Risk Premiums to Patent Applying Risk Premiums to Patent Valuation: Valuation: Conducting Due Diligence WiselyConducting Due Diligence Wisely

–– based on presentation of Dr. based on presentation of Dr. MalteMalte KKööllnerllner

� Case study involves “watershed” patents in each technical category� Watershed in the figurative sense as being correlated to a time when an

important change occurred (i.e., investment, licensing, or acquisition)� Watershed in the geographical sense of a divide which drains any area into a

basin (i.e., a true market barrier that excludes others from draining profits)� All companies in case study were startups� Change of law firm/attorney and claim redrafting serves as proxy for

due diligence in case study� 7 out of 11 patents in the case study were drafted by large IP law firms,

then claims were redrafted by our firm� One of the patents in the case study was drafted by our firm, then

claims were redrafted by a large IP law firm – includes portfolio effect

�� Case study involves Case study involves ““watershedwatershed”” patents in each technical categorypatents in each technical category�� Watershed in the figurative sense as being correlated to a time Watershed in the figurative sense as being correlated to a time when an when an

important change occurred (i.e., investment, licensing, or acquimportant change occurred (i.e., investment, licensing, or acquisition)isition)�� Watershed in the geographical sense of a divide which drains anyWatershed in the geographical sense of a divide which drains any area into a area into a

basin (i.e., a true market barrier that excludes others from drabasin (i.e., a true market barrier that excludes others from draining profits)ining profits)�� All companies in case study were startupsAll companies in case study were startups�� Change of law firm/attorney and claim redrafting serves as proxyChange of law firm/attorney and claim redrafting serves as proxy for for

due diligence in case studydue diligence in case study�� 7 out of 11 patents in the case study were drafted by 7 out of 11 patents in the case study were drafted by largelarge IP law firms, IP law firms,

then claims were redrafted by our firmthen claims were redrafted by our firm�� One of the patents in the case study was drafted by our firm, One of the patents in the case study was drafted by our firm, thenthen

claims were redrafted by a large IP law firm claims were redrafted by a large IP law firm –– includesincludes portfolio effectportfolio effect

BHNBHN””WW



Case Study of High-Impact, Risk-Adjusted Valuations Based on Legal Due Diligence

“The name of the game is the claim”

Case Study of HighCase Study of High--Impact, RiskImpact, Risk--Adjusted Adjusted Valuations Based on Legal Due DiligenceValuations Based on Legal Due Diligence

““The name of the game is the claimThe name of the game is the claim””

Case Study of High-Impact, Risk-Adjusted Valuations Based on Legal Due Diligence

“The name of the game is the claim”

Case Study of HighCase Study of High--Impact, RiskImpact, Risk--Adjusted Adjusted Valuations Based on Legal Due DiligenceValuations Based on Legal Due Diligence

““The name of the game is the claimThe name of the game is the claim””

BHNBHN””WW



�How can legal risk of patents strongly impact valuations?�Is discounting always the right choice for costly risk factors?�Does costly due diligence justify its expense?

(patent claims in presentation only)

��How can legal risk of patents strongly impact valuations?How can legal risk of patents strongly impact valuations?�� Is discounting always the right choice for costly risk factors?Is discounting always the right choice for costly risk factors?��Does costly due diligence justify its expense?Does costly due diligence justify its expense?

(patent claims in presentation only)(patent claims in presentation only)

BHNBHN””WW



�Resolution of issue reduced doubt of IP protection�Product marketing & manufacturing expanded greatly�Differentiated features drained market share from competitor

��Resolution of issue reduced doubt of IP protectionResolution of issue reduced doubt of IP protection��Product marketing & manufacturing expanded greatlyProduct marketing & manufacturing expanded greatly��Differentiated features drained market share from competitorDifferentiated features drained market share from competitor

Technology area: electronics“meaningfully connect the parts”

Issue: Patentability – Valuation Impact

Technology area: electronicsTechnology area: electronics““meaningfully connect the partsmeaningfully connect the parts””

Issue: Patentability Issue: Patentability –– Valuation ImpactValuation Impact

BHNBHN””WW



�Resolution of issue opened the road to securing investment�Partner interest in project increased due to greater certainty �Reduced criticism during grant-funding process

��Resolution of issue opened the road to securing investmentResolution of issue opened the road to securing investment��Partner interest in project increased due to greater certainty Partner interest in project increased due to greater certainty ��Reduced criticism during grantReduced criticism during grant--funding processfunding process

Technology area: software“clearly define the process”

Issue: Proper coverage – Valuation Impact

Technology area: softwareTechnology area: software““clearly define the processclearly define the process””

Issue: Proper coverage Issue: Proper coverage –– Valuation ImpactValuation Impact

BHNBHN””WW



�Issue caused university TTO to release patent/inventor contract�Resolution of issue resulted in multi-million dollar investment�International team assembled based on investor confidence

�� Issue caused university TTO to release patent/inventor contractIssue caused university TTO to release patent/inventor contract��Resolution of issue resulted in multiResolution of issue resulted in multi--million dollar investmentmillion dollar investment�� International team assembled based on investor confidenceInternational team assembled based on investor confidence

Technology area: software“man and a pair of scissors”

Issue: Abstract coverage – Valuation Impact

Technology area: softwareTechnology area: software““man and a pair of scissorsman and a pair of scissors””

Issue: Abstract coverage Issue: Abstract coverage –– Valuation ImpactValuation Impact

BHNBHN””WW



�Issue blocked investor negotiations from progressing�Expensive and protracted prosecution weighed down project�Resolution of issue opened the road to securing investment

�� Issue blocked investor negotiations from progressingIssue blocked investor negotiations from progressing��Expensive and protracted prosecution weighed down projectExpensive and protracted prosecution weighed down project��Resolution of issue opened the road to securing investmentResolution of issue opened the road to securing investment

Technology area: pharmaceuticals“amend where it counts”

Issue: Breadth, scope, support – Valuation Impact

Technology area: pharmaceuticalsTechnology area: pharmaceuticals““amend where it countsamend where it counts””

Issue: Breadth, scope, support Issue: Breadth, scope, support –– Valuation ImpactValuation Impact

BHNBHN””WW



�Issue created confusion for investors in assessing IP strategy�Resolution of issue opened the road to securing investment�Proof of concept affirmed choice of strategy, venture progress

�� Issue created confusion for investors in assessing IP strategyIssue created confusion for investors in assessing IP strategy��Resolution of issue opened the road to securing investmentResolution of issue opened the road to securing investment��Proof of concept affirmed choice of strategy, venture progressProof of concept affirmed choice of strategy, venture progress

Technology area: pharma, s/w“personalized medicine = lone infringer”

Issue: Enforcement & support – Valuation Impact

Technology area: Technology area: pharmapharma, , s/ws/w““personalized medicine = lone infringerpersonalized medicine = lone infringer””

Issue: Enforcement & support Issue: Enforcement & support –– Valuation ImpactValuation Impact

BHNBHN””WW



�Expensive and protracted prosecution weighed down project�Issue blocked large capital expenditure for equipment �Resolution of issue opened the road to securing investment

��Expensive and protracted prosecution weighed down projectExpensive and protracted prosecution weighed down project�� Issue blocked large capital expenditure for equipment Issue blocked large capital expenditure for equipment ��Resolution of issue opened the road to securing investmentResolution of issue opened the road to securing investment

Technology area: mechanics“how does the flow go”

Issue: Clarity & support – Valuation Impact

Technology area: mechanicsTechnology area: mechanics““how does the flow gohow does the flow go””

Issue: Clarity & support Issue: Clarity & support –– Valuation ImpactValuation Impact

BHNBHN””WW



�Issue previously undetected – “self-launched torpedo”�Raising of issue clarified sensitivity of patent, greater certainty�Resolution of issue yielded additional investment for patents

�� Issue previously undetected Issue previously undetected –– ““selfself--launched torpedolaunched torpedo””��Raising of issue clarified sensitivity of patent, greater certaiRaising of issue clarified sensitivity of patent, greater certaintynty��Resolution of issue yielded additional investment for patentsResolution of issue yielded additional investment for patents

Technology area: medical devices“careful what you say is what you mean”

Issue: Clarity & scope – Valuation Impact

Technology area: medical devicesTechnology area: medical devices““careful what you say is what you meancareful what you say is what you mean””

Issue: Clarity & scope Issue: Clarity & scope –– Valuation ImpactValuation Impact

BHNBHN””WW



�Expensive and protracted prosecution weighed down project�Resolution of issue opened the road to securing investment�Resolution of issue expanded IP efforts into related area

��Expensive and protracted prosecution weighed down projectExpensive and protracted prosecution weighed down project��Resolution of issue opened the road to securing investmentResolution of issue opened the road to securing investment��Resolution of issue expanded IP efforts into related areaResolution of issue expanded IP efforts into related area

Technology area: software“overstepping the bounds”

Issue: Detectability & support – Valuation Impact

Technology area: softwareTechnology area: software““overstepping the boundsoverstepping the bounds””

Issue: Detectability & supportIssue: Detectability & support –– Valuation ImpactValuation Impact

BHNBHN””WW



�Expensive and protracted prosecution weighed down project�Doubt in real IP raised speculation by investors & competitors�Resolution of issue resulted in very large licensing agreements

��Expensive and protracted prosecution weighed down projectExpensive and protracted prosecution weighed down project��Doubt in real IP raised speculation by investors & competitorsDoubt in real IP raised speculation by investors & competitors��Resolution of issue resulted in very large licensing agreementsResolution of issue resulted in very large licensing agreements

Technology area: chemistry“enabling unpredictable arts”

Issue: Patentability & validity – Valuation Impact

Technology area: chemistryTechnology area: chemistry““enabling unpredictable artsenabling unpredictable arts””

Issue: Patentability & validity Issue: Patentability & validity –– Valuation ImpactValuation Impact

BHNBHN””WW



�1st patent and market interest resulted in acquisition�New owner worried about threats, wanted large global IP firm�2nd patent strongly reduced in value, lost greater opportunity

��11stst patent and market interest resulted in acquisitionpatent and market interest resulted in acquisition��New owner worried about threats, wanted large global IP firmNew owner worried about threats, wanted large global IP firm��22ndnd patent strongly reduced in value, lost greater opportunitypatent strongly reduced in value, lost greater opportunity

Technology area: software“portfolio effect”

Issue: Coverage & scope – Valuation Impact

Technology area: softwareTechnology area: software““portfolio effectportfolio effect””

Issue: Coverage & scope Issue: Coverage & scope –– Valuation ImpactValuation Impact

BHNBHN””WW



�Endorsements by government agencies contradicted examiner�Original patent claim unpatentable�Resolution of issue resulted in ramped up manufacturing

��Endorsements by government agencies contradicted examinerEndorsements by government agencies contradicted examiner��Original patent claim Original patent claim unpatentableunpatentable��Resolution of issue resulted in ramped up manufacturingResolution of issue resulted in ramped up manufacturing

Technology area: mechanics“the flashlight and the candle”

Issue: Enforcement & support – Valuation Impact

Technology area: mechanicsTechnology area: mechanics““the flashlight and the candlethe flashlight and the candle””

Issue: Enforcement & support Issue: Enforcement & support –– Valuation ImpactValuation Impact

BHNBHN””WW



�Legal risk strongly impacts patent valuations in complex ways�Discounting is not always right choice for costly risk factors�Costly due diligence certainly justifies expense in some cases

��Legal risk strongly impacts patent valuations in complex waysLegal risk strongly impacts patent valuations in complex ways��Discounting is not always right choice for costly risk factorsDiscounting is not always right choice for costly risk factors��Costly due diligence certainly justifies expense in some casesCostly due diligence certainly justifies expense in some cases

Legal Risk Can Tip the Balance of Patent Valuations Dramatically

Legal Risk Can Tip the Balance of Patent Legal Risk Can Tip the Balance of Patent Valuations DramaticallyValuations Dramatically


�� Dalia Mouallem, Esq.Dalia Mouallem, Esq.Senior Legal Counsel Senior Legal Counsel

Licensing, Litigation, & Trademark AttorneyLicensing, Litigation, & Trademark Attorneye: e: [email protected]@FlashPointIP.com

t: 972t: 972--33--936936--3199 IL line3199 IL linet: 1t: 1--516516--301301--1649 US line1649 US line

m: 972m: 972--5252--761761--5671 IL5671 IL

�� Dr. Reuven K. Mouallem, LL.M.Dr. Reuven K. Mouallem, LL.M.IP Management Consultant/Strategic AdvisorIP Management Consultant/Strategic AdvisorRegistered Israeli Patent AttorneyRegistered Israeli Patent AttorneyRegistered U.S. Patent AgentRegistered U.S. Patent Agente: [email protected]: [email protected]: 972t: 972--33--936936--3199 IL line3199 IL linet: 1t: 1--516516--301301--1649 US line1649 US linem: 972m: 972--5252--761761--8220 IL8220 IL

..

……Where Volatile Ideas IgniteWhere Volatile Ideas Ignite……

��

��

��

BHNBHN””WW


BHN”W Patent valuation and commercialisation: Making the most … · 2014-03-27 · European...

Documents

Transcript of BHN”W Patent valuation and commercialisation: Making the most … · 2014-03-27 · European...