Unused or unloved intellectual property assets
We are all familiar with selling unwanted items on eBay, Vinted, Facebook Marketplace…..
Sometimes it is for housecleaning or clearing, and sometimes to get rid of the old and even tired. Surprising who wants to buy that old bike! Gold and Rembrandts are rare finds, yet cash is always handy.
Hard times demand innovative solutions and cash flow from all sorts of new sources. IBM used to share all their IP for free, but cleverly under a license which allowed them to activate a fee when it so suited, they now earn $1bn a year for licensing IP, plus more from ‘deals’.
Picassos in the potting shed, Rembrandts in the attic or Dali’s in the day room are unlikely. Have you properly explored the question: ‘What is the value of our unused intellectual property assets?’
I worked for the world’s largest intellectual property brokerage for 4 years and I can tell you that it is surprising what money does actually change hands in such deals. It is true to say that the biggest deals are generally backed by actual (or the threat of) litigation and usually involve the United States, but this is not always the case.
The world has changed a lot in recent years and whereas patents used to be the main currency of deals, these have now include brands, know-how, trade secrets and copyright. Just think of the swathe of music artists rushing to cash in their recording back catalogues after the collapse of earnings during Covid.
Take the film business where old titles enjoy a merry go round over the years as they are ‘re-invented for different generations’ think Snow-White or even the Netflix purchase of the Roald Dahl catalogue for ‘re-purposing’.
It has been said that old brands never die they just slink away and hibernate for a while to be rediscovered later. Brand equity endures for decades even when they are hibernated for negative associations.
Economic crises lead to failures, cash flow issues and carve-outs. In my view we will see a minor resurgence in such buying and selling over the next year or so as businesses hunt for additional cash flow, and buyers look out for bargains or for a quick start to plug holes in the intellectual property portfolios.
Valuing and monetizing the IP in these instances is not done well and sometimes missed altogether. John Leschi had to ‘beg’ the bankruptcy receivers at Nortel to allow him to sell the patent portfolio separately; they had a $3bn offer for the business and were good to go. Imagine how pleased they were when the patents sold for an additional $3bn!
Please do not be misled, times have changed and assets do not sell quite so readily. The secret is that you can usually work out the likely buyers for yourself, but making the deal happen may require some kind of special alchemy.
We are now entering such times when looking in the attic is not a bad idea. A boost to cash flow is always handy and what if those unused assets could actually be sold or licensed, wouldn’t that be a thing?!
Deciding what to sell is the hardest, because everyone’s babies were created beautiful right? This choice however is not so hard once you do the analysis.
As with most things in life beauty is in the eye of the beholder and sale value is highly contextual and may change quickly depending on the circumstances.
If you are interested I would recommend the following:
- Assess your existing assets and determine what would be safe to sell (do not forget that a back license could be useful)
- Get board approval to sell the assets without (or with minimal) caveats
- Be very realistic about value
- Engage the services of a good broker familiar with the general area of your business assets, also the sector and countries you are targeting
- Allow at least a year (it may happen sooner but these things take time)
Written by John Pryor, Director at Exalt IP Ltd
John Pryor is a Business Intellectual Property adviser. Over the last 20 years John has advised hundreds of businesses of all sizes on how to protect their competitive advantage, and market share using Intellectual Property in the most effective way.
John’s experience includes co-founding the global Intellectual Property Strategy Business of EY and building the European business for ICAP the leading Intellectual Property Brokerage; he also was Senior Vice President at legal business CPA Global during which time the business doubled and sold to PE for £1bn. John started his career at P&G and as a Consultant at Accenture, he has BSc in Biochemistry/Physiology from Kings, London and an MBA from Warwick.