Richard Lloyd

The proposed acquisition of Unwired Planet, which is due to close later this month or in early July, is set to make the acquirer, Optis UP and its affiliated business PanOptis Patent Management, far more familiar names on the NPE scene. Although it was formed in 2009 by Texan lawyer Leslie Ware and has just under 50 employees, PanOptis has thus far enjoyed a relatively low profile in the wider monetisation market.

If the Unwired deal, which was announced in April, goes through then PanOptis’s portfolio of worldwide assets will grow to more than 8,000 patents. It has already been monetising some of those which it previously acquired from Panasonic, LG and Ericsson, showing just how willing some operating companies are to turn to NPEs - be they public or private - to increase revenues from their IP assets. 

Unwired Planet benefited from that trend when it entered into a privateering deal with Ericsson in January 2013, taking control of just over 2000 assets from the Swedish telecoms giant in one of the largest deals of its type. Since that transaction, apart from a $100 million patent disposal and licensing deal with Lenovo, the NPE has failed to deliver meaningful revenues which made PanOptis’s offer of $40 million with an additional, undisclosed payment to Ericsson, attractive to Unwired shareholders.  

Recently this blog spoke to Ware, the PanOptis CEO, about the deal and his company’s monetisation plans. Talking about the drivers behind the transaction Ware was quick to point out the benefits of consolidation. “We’re trying to bring some efficiency to the market and combine areas of common technology,” he insisted. “Portfolios need to be aggregated and if we can bring value to our customers then there won’t be as much need to litigate. It’s easier to deal with us than with Unwired Planet and us - it’s better if these assets can be combined and condensed.”

That last point is perhaps the simplest justification for consolidation among NPEs but, despite the tough market conditions of recent years which have made tie-ups appear more likely, agreements have been slow to materialise. That, in part, is due to the fact that for many public IP companies (PIPCOs) the tough conditions have meant that survival has been foremost on most executives’ minds rather than dealmaking.

That has led many to suggest that NPEs are particularly ill suited to the public markets given the greater transparency that comes with a listing. An alleged infringer in litigation with a PIPCO, for instance, can drag out a court case for years while keeping a close eye on the NPE’s cash levels and stock price. Unwired Planet was one of several PIPCOs to suffer from those tactics as, despite a number of recent court victories, potential licensees continued to resist taking a licence.     

As a private company, however, PanOptis is not subject to those same pressures. “Public companies are bound by SEC rules, they’re forced to make announcements on such things as new licensing deals which we don’t have to do,” said Ware. “A public company’s balance sheet is transparent and it’s easier to run them out of cash.”

He claimed that his monetisation strategy was more sophisticated than a simple, litigation-led approach although he refused to disclose details of the other tactics he liked to use. That said, PanOptis has not been afraid to turn to the courts when necessary including, at the start of the year, filing a handful of cases against Blackberry, Kyocera and ZTE. Ware also revealed that the firm had brought lawsuits in Germany and prepared cases in other European jurisdictions which hadn’t been filed.

Here’s what he was prepared to say about the firm’s strategy: “Our model has evolved but I believe the cooperative management of assets is what we need and where we’re heading. Our licensing approach is different because we’re not seeking litigation or to disrupt an ecosystem. We want to get a fair return on our technology and thus far we’ve been able to do that. We’re involved in some litigation which is necessary when people don’t respond.”

Those comments would sound familiar to many NPE executives who have pursued what they consider to be a reasonable licensing strategy only to run into recalcitrant licensees. In PanOptis’s favour is the sheer size of its portfolio, making a global licence to a broad swath of assets a potentially more persuasive proposition.

When the acquisition was announced there was still a chance that another buyer might emerge for Unwired Planet but as the process has gone on no other bidders have stepped forward. According to Ware, it now looks like the transaction will happen. “I’m pretty confident that we’ll have the deal closed this month,” he remarked. “I think there was other interest but I don’t know how serious it was and we’re now too far down the road for others to come in.”