evolving marketplace for ip - visiond.com€¦ · evolving marketplace for ip ... • the offering...
TRANSCRIPT
Evolving Marketplace for IP Highlights
AIPLA Mid-Winter Meeting James E. Malackowski
February 2013
2
New Deals
New Players New Models New Numbers New Focus
Agenda
3
• The Deal
• On December 14, 2012, Alcatel-Lucent (ALU) announced a $2.1 bln. debt financing
• The bonds will be secured primarily by ALU’s portfolio of 27,900 IP assets that were originally developed by Bell Labs
• The offering will be underwritten Goldman Sachs and Credit Suisse
• The Consequences
• Since the deal announcement, ALU stock is up 51% • When issued, these bonds, given the size of the offerings and anticipated
underwriter support, should get significant buy-side interest, sell-side coverage and should trade with good liquidity
• It is likely this will become a watershed transaction and will be a catalyst for the recognition of IP as a discreet asset class
• The ability to analyze IP value will be critical to the effective trading of IP-collateralized securities
ALU IP Collateralized Debt (Liquid)
4 4
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011 2012
ALU IP Portfolio
(# patents and Average IPQ Score)
ALU IP Collateralized Debt (Liquid)
5
New Deals New Players
New Models New Numbers New Focus
New Deals
6
Investment banking spin-offs (Jan 24, 2013, Credit Suisse executive to co-lead new $200M litigation fund)
NPE executive departures US DOJ / FTC
New Players
7
DOJ / FTC Public Hearings (Dec 10, 2012)
Some potential “solutions” suggested were:
1. Require PAEs to publically disclose their portfolios (many complained that they negotiate without knowing what patents the PAEs hold and which may be asserted later)
2. Require that anyone holding an interest in a patent to publicly record that interest similar to real estate recorded interests
3. Shift fees so the loser pays the fees and costs of the winner
4. Prohibit PAEs from suing end user customers of alleged patent infringers
5. Encourage stricter enforcement of damages, and
6. Have the FTC review large acquisitions of patents.
8
New Deals New Players New Models New Numbers New Focus
New Models
9
A web-based store of patent rights available for express licensing on a nonexclusive basis
■ Term sheet viewable on-line
■ Transparent, nondiscriminatory, predictable
Licensees select patent rights they need to support
■ Diagnostic test products and services
■ Research tools for biomarker and drug discovery
9
BioTech Licensing Model
10
BioTech Validation Center (BVC)
VALIDATORS: UNIVERSITIES AND CROs
B V C INVESTOR(S)
PHARMA
INNOVATORS: DISCOVERY PARTNERS
Technology
Royalties
R&D Funds
Royalties R
&D
Funds
Roy
altie
s
Serv
ices
Technology
11
BioTech Validation Center (BVC)
12
New Deals New Players New Models New Numbers
New Focus
New Models
13
New Numbers
USA: FASB 141 / 142
EUROPE: IP to fill the “GAAP” in Germany
ASIA: IP public reporting (HKSE Feb 2012 Guidance; draft Singapore plan)
COURTS: Changing damages case law / Daubert matrix
Ø 25% Rule / Nash Bargaining Solution
Ø Use of general industry licensing data
? Smallest saleable unit
? Reasonableness testing
? Renewed focus on “analytical method”
? Use of FASB reporting
14
New Deals New Players New Models New Numbers New Focus
New Models
15
Trade secrets Copyrights China Bottom of the Pyramid
New Focus
16
U.S. / China 200™ Patent Index
The graph at left shows the five year performance of a portfolio comprised of the top 100 companies that own the most valuable US patents relative to their book value and 100 companies that have the most valuable Chinese patents.
The portfolio is composed of stocks representing all market caps and styles and, therefore, does not exhibit those biases
Over the five-years of back testing, the U.S. / China 200™ Patent Index has outperformed its’ benchmark the MSCI World Index by 2922 basis points.
17
James E. Malackowski
200 West Madison, 37th Floor
Chicago, IL 60606
(312) 327-4410 Ph