The Patent Monetization Cookbook: The Who, What, Where, When, Why and How...
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The document outlines a comprehensive approach to patent monetization, emphasizing steps such as gathering patents, identifying value through analysis, and selecting strategies like licensing or selling. It includes financial modeling with examples, illustrating potential revenues and costs associated with different monetization strategies over time. Key factors for successful patent monetization are highlighted, including organizational commitment, resource allocation, and cross-functional support.
The Patent Monetization Cookbook: The Who, What, Where, When, Why and How...
- 1. Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 1 The Patent Monetization Cookbook The Who, What, Where, When, Why and How…
- 2. Why Patent Monetization? Board member “We need to monetize our IP” CFO “Cut your budget” CEO “Generate some cash” You “This is a good idea” Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 2
- 3. Patents: Analogies to South Park Step 1: Gather Patents Step 2: X Step 3: Make Money Step 1: Gather Underwear Step 2: X Step 3: Make Money South Park Business Model Patent Owner Business Model Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 3
- 4. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 4
- 5. Business Case Estimate the Number of Patents to Markets Assume the patents are good enough to license, can you still make the business case? Out of all of your patents, how many do you think will be useful in what markets? TIM and SIM Total Impacted Market & Serviceable Impacted Market define the limits of the valuation? Where in the value chain are the patents most applicable? What price are you likely to be achieve in what time? Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 5
- 6. Example Simplified Licensing Model ($M) Company 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Co1 0 0 0 33.2 0 0 0 0 0 0 0 Co2 0 0 0 16.6 0 0 0 0 0 0 0 Co3 0 0 0 0 0 0 1.66 0 0 0 0 Co4 0 0 0 0 0 0 1.66 0 0 0 0 Co5 0 0 0 0 9.96 0 0 0 0 0 0 Co6 0 0 0 0 16.6 0 0 0 0 0 0 Co7 0 0 0 0 19.92 0 0 0 0 0 0 Co8 0 0 0 0 0 0 0 0 0 0 0 Co9 0 0 0 0 0 0 0 0 0 0 0 Co10 0 0 0 0 0 0 0 0 0 0 0 Revenue Total 0 0 0 49.8 46.48 0 3.32 0 0 0 0 Cost 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Prosecution 1 1 1 0.5 0.5 0.2 0.2 0.2 0.2 0.1 0.1 Market Analysis 0.25 0.25 0.25 0.25 0.25 0.25 0 0 0 0 0 Reverse Engineering 0.25 0.5 0.5 0.25 0.25 0 0 0 0 0 0 Litigation 0 1 2 4 2 0 0 0 0 0 0 Corporate Marketing 0.1 0.1 0.4 0.2 0.2 0 0 0 0 0 0 Sales & Management 0.75 0.75 0.75 2.5 2.5 0.5 0.25 0 0 0 0 Cost Total 2.35 3.6 4.9 7.7 5.7 0.95 0.45 0.2 0.2 0.1 0.1 Net Income -2.35 -3.6 -4.9 42.1 40.78 -0.95 2.87 -0.2 -0.2 -0.1 -0.1 Discount Rate 17% NPV $33.81 Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 6
- 7. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 7
- 8. Opportunity RiskOK OK Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 8 Identifying Patents - Patent Needs Analysis Own Need
- 9. Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 9 Portfolio Analysis
- 10. Mapping and Ranking Your Assets Asset diligence drives value Testing creates Very Important Patents (VIPs) All monetization options require testing Volume - market size, impacted products Infringement - claim charts Prosecution – including prior art Build it into your process Initial invention review Ranking drives budgets and focus Continuously update Office actions Foreign filing decisions Maintenance decisions Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 10
- 11. Patent Quality/Value Indicators Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 11 Scorecard examples courtesy of Jeremiah Chan, JDS Uniphase
- 12. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 12
- 13. Understanding Your Options Steps Update your business case Evaluate your options Test “go to market” theory Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 13 Option ROI Time to Money Cost Risk License $$$$ 3-5 years $3-20M High Defend $$$ 8 years $5-20M High Sell $$ 6 months $250-500K Low Drop $ 2 years $0 Low
- 14. Solving for X… Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 14
- 15. Successful Monetization Commitment • Business case and scenarios define the needed commitment • Time to money? • Risk aversion? Resources • Support in marketing, legal, engineering, sales, finance • Business case defines your resource needs Authority • Different options require different support and authority • Cross functional buy in? Finance, marketing, engineering, sales, execs? Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 15
- 16. Monetize Your Patents! Baseline business case • TIM and SIM estimates • Basic ROI for monetization Identify and understand patents of interest • Needs analysis • Diligence drives value Understand and select alternative uses • Defend • License • Sell • Drop Execute • Authority • Commitment • Resources Rupert Mayer Craig Opperman Kent Richardson Patent Monetization Page 16