Business Models for Monetizing IP
Denise Deverelle Crown examines IPWatchdog.com's report on the major players in the IP Marketplace and the top business models for monetizing IP.
It’s interesting to me when I talk to clients, prospects, and industry peers the different market shifts going on in IP licensing. The market is changing, partially to accommodate anticipated legal changes, and partially to enable more effective markets for monetizing innovation.
I’d be lying if I didn’t say that licensing is one of my favorite aspects of our industry. First, I like money. Second, I enjoy business models. Most of our customers run their own, very lucrative, licensing departments; but not everyone has the time, energy or resources to do that. I was practically giddy to find a blog post from ipwatchdog.com highlighting 19 business models for monetizing IP. 19!
As Raymond Millien so eloquently states in his post “Landscape 2013: Who are the Players in the IP Marketplace?”:
“The latest statistics show that the cumulative value of U.S. intellectual property is approximately $5.8 trillion (or 48.4% of GDP), and each year over half a million patent applications are filed, over a quarter million patents are issued, over 4000 patent infringement suits are filed and IP verdicts total over $4.6 billion with a median patent damage award of approximately $4 million.”
From there, Mr. Millien goes on to summarize the different models, and the players in each of those markets. Many will be at least somewhat familiar; a few of them bear discussion here.
The first that caught my eye is Technology / IP Spinout Financing. In this model, PE firms or traditional venture capitalists find islands of technology in larger companies that are, in essence, abandoned within the parent. The VC/PE firm finds a buyer, or provides a match-making service to form a partnership. Everyone can win; the seller monetizes technology they are not using, the buyer has an instant market (possibly even an IPO) and the broker profits on the deal.
Another valuable resource is the IP-based M&A Advisory Firm. IP acquisition is lucrative, but also complex. In a big portfolio, the due diligence represents a lot of billable hours and the chain-of-title needs to be examined for every asset. In this model, you have professionals to perform the due diligence, consult on the integration of the assets, structure the deal and manage the transaction.
Finally, IP Auction Houses are a potential way for truly maximizing the revenue opportunity. They are not for everyone, but those who have access to the right tools could find options to buy into a market.
If licensing is your responsibility, you’d be well-served to study all 19 models to find the ones that most benefit your organization. You can read the blog post and download a list of key players directly from ipwatchdog.com, here.