The Evolution of IP Driven M&A


Today’s IP Driven M&A seminar has kicked off live from San Francisco! The day’s first panel was entitled, “The Evolution of IP Driven M&A”, and featured Chairperson Ron Laurie, Jose A. Esteves, Mark F. Radcliffe, and Kira Kimhi. The panelists discussed the differences between tech patents and life science patents in regards to the roles they play in mergers and acquisitions. They also shared their experiences in the changing patent system and the emergence of strong non-practicing entities.

Here are some of the highlights:

*There are more acquisitions when dealing with life science patents because companies that are built on life science patents can’t really be separated from their patents.  What then happens is that when a buyer looks to purchase the life science patent, they often acquire the entire company as a whole. With life science patents, there is a separation between the patent and the ultimate product, but not really between the patent and the company. Hence, the frequency of acquisitions over mergers.

*In regards to tech patents, tech patents are needed with other patents in order to get the final product. As such, when purchasers are looking to buy the patents, they are not interested in acquiring the company as a whole. Mergers tend to occur with tech patents because the purchaser will not just value the specific tech patent they’re looking for, but they will recognize the value of the entire patent portfolio.

*Why isn’t patent value examined during the pricing stage of a merger and acquisition? In the past, investors didn’t know how to view intellectual property. Now, patent portfolios are monetized. People used to see patents as defensive tools – not as assets. The current trend in patent law is such that non-practicing entities are growing stronger every day. The growth of NPEs has helped change the view of patents into a monetization issue.

*In the mobile market, it is very lucrative to have an extensive and broad patent portfolio. The stakes are high and worth spending the large sums of money to merge with other companies to defeat mutual competitors. Companies pulling their patent resources together is not a new trend, however. Strategic buyers will differ from financial buyers when considering whether or not to pool their resources. Strategic buyers are looking for complete control of their market, whereas financial buyers are looking for the mega deals with the high payouts.

*Patent applications are sold at a discount because of the likelihood the USPTO will review the application and award it. U.S. patents have a greater monetary value than foreign patents.

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