Sale or license of patents is good way to squeeze out more funds

Monday 14th November 2011

New Zealand businesses are almost totally ignoring the option of selling and licensing patents overseas, but it is a legitimate way to extract extra value from research and development.

The sale of intellectual property is another means to make money beyond the physical shipping of a tangible product, said Steven Steger, managing partner at Chicago’s Global IP Law Group, at a conference in Wellington.

“Patents should be seen as something separate from the actual business,” he said. “The key is developing the IP, and protecting it. From there you can extract other value.”

Steger said the most recent and best known example is the in-receivership sale of Nortel Network’s 6,000 patents to a Apple, EMC, Ericsson, Microsoft, RIM and Sony consortium for US$4.5 billion.

The separate sale of Nortel’s business units realised $3.2 billion. Strategic patent buyers look to enhance their existing business structures with newly acquired IP, said Steger. Offensive patent aggregators, sometimes known as patent trolls, look to license out the intellectual property.

Defensive aggregators tend to purchase patents on behalf of a number of members to prevent them getting sued for patent infringement, while at the same time selling the IP back to the marketplace, he said.

The past couple of years have seen a consolidation around higher quality patent portfolios, and a higher value for the knowhow embedded in them.

“There is a lot of recognition of a patent as a separate asset,” Steger said.

A company may pursue a particular line of research and development, but if this doesn’t result in a particular product or service, a return can be obtained from selling the patents.

BusinessDesk.co.nz

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