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Mergers and acquisitions can provide valuable opportunities for organising and monetising a patent portfolio. Chris Murphy of TechInsights explains how.
It was a banner year for technology-based merger and acquisition activities in 2015. The technology sector recorded some of the largest deals in history:
Dell’s acquisition of EMC ($67 billion)
Avago’s acquisition of Broadcom ($37 billion)
Intel’s acquisition of Altera ($17 billion)
NXP’s acquisition of Freescale ($12 billion)
These deals are expected to provide an increase to shareholder value by providing improved market coverage and cost efficiencies through economies of scale. They are also expected to create some of the largest and most diversified patent portfolios on the planet.
It is a massive undertaking to assimilate these large patent portfolios into an existing IP management programme. It requires applying a set of best practices, processes and tools to analyse and organise the portfolio with respect to corporate objectives. To maximise the effectiveness of the programme, the end results need to be determined for each patent in the portfolio. Namely, should a given asset be kept, sold or abandoned?
A client of ours has gone through a similar merger that involved a large influx of patents. It quickly recognised the need to implement a programme that would allow it to organise and analyse its newly constituted portfolio. The client understood that to maximise the benefit of any initiatives, it needed each patent to be reviewed and assessed by a subject matter expert.
Those reviews then needed to be assessed against the corporate business strategy in order to make a final decision on how it should be handled. However, the client believed that the likely cost of implementing such a programme would make it difficult to get internal approval, as it was counter to the corporate mandate for reducing costs.
This is a common perception, but in fact a well thought out portfolio management programme can be tailored to mitigate the costs of implementing it. The key is to take a phased approach to assessing the portfolio, with a focus on targeting patents with maintenance fees due. The cost savings associated with avoiding paying maintenance fees for patents dropped during the process can help offset the cost of implementing the programme. The saving is also cumulative, as some abandoned patents result in avoiding what would be multiple maintenance fees over their lifetime in multiple jurisdictions.
With this change in approach, the programme was no longer viewed as an additional cost, but instead considered a focused way to reduce long-term expenses. The client was able to get approval and implement a systematic approach to organising and analysing the portfolio. Once the programme kicked off, some patents that were ‘unlikely to be used’ or ‘unsupportable’ were soon identified and deemed suitable for abandonment.
Our client’s portfolio manager was able to show a direct correlation between the programme’s implementation and a reduction in maintenance expenses. There were additional savings from the reduction in administrative fees associated with looking after the maintenance fees themselves. In the meantime, the same activities that aided the identification of patents suitable for abandonment helped to identify valuable assets for monetisation through corporate licensing and sale.
Over time, the client has been able to complete a full analysis of the portfolio. The result is a detailed understanding of the patents, enabling the company to make informed decisions on how best they can be used.
Chris Murphy is a principal in the IP services department of TechInsights. A specialist in patent portfolio management and licensing support, he provides custom solutions and technical and strategic advice to patent owners across North America. He can be contacted at: email@example.com
Chris Murphy, TechInsights, patent, post merger,