Deal with Ford is potentially very good news for IV and also indicates patents are coming to the fore in auto sector 01 Mar 15
To this observer, it’s slightly strange that there has not been more comment on the announcement made by Intellectual Ventures on 27th February that it has entered into a licensing agreement with Ford. Writing on the IV blog, president and COO Adrienne Brown stated: “The deal provides Ford and its affiliates with a license to IV's patent portfolio of approximately 40,000 current IP assets in addition to future IV assets that may be acquired during the license term.”
This looks very similar to deals the firm has previously done with the likes of Samsung, LG, Seiko Epson, Infineon and American Express. Significantly, though, it is the first one with a company in the auto sector. Given that, in the past, IV has tended to end up partnering with a number of players in an industry – either before or after instituting legal proceedings – this may well indicate that we can expect to see further hook-ups with car manufacturers over the next couple of years. Having had a difficult time of it recently, this could be very good news for IV: not only does it signal a new stream of income, but it also provides a very welcome validation of the reach and the quality of the portfolio it has put together.
Many in IP have been waiting (and some have been hoping) for a long time for IV to fall apart, but it is worth remembering that the firm has spent a great deal of money and time assembling its patent horde through acquisition and some creation. This has involved in-depth analysis not only of the rights themselves, but also of the technologies in which they sit, as well as the wider industrial landscape and how it is developing.
IV has a business model that is not about looking for quick pay-days from asserting low-quality assets, but about building long-term relationships that produce sustained royalty streams. That means investing in quality. Its strategy is to position itself to take advantage of developments not only in sectors where patents are currently an important factor, but also to make sure it is set-up when new areas emerge. Indeed, those looking for the patent wars of the future might do a lot worse than to scour the IV portfolio for clues about where these may break out.
Uniquely (I think) among those entities that do own tens of thousands of patents, IV’s portfolio has been assembled almost entirely with monetisation in mind. If it is to be successful, it has to ensure that more often than not it makes the right calls about the right patents reading on the right technologies in the right sectors. Failure on any one of those fronts will be expensive. And because it is all about licensing streams and, to a lesser extent, sales, it is also important that the portfolio is constantly renewed. This is a high, on-going cost – especially when it involves getting into new technologies and industries.
That is what makes the auto sector so potentially exciting for IV: it is developing in areas, such as mobile communications and software, where the firm is already strong. This gives it the opportunity to double dip, with patents that have already been licensed to big players in one sector potentially licensable again to a whole host of deep pocket businesses in a completely different one. As Brown states in big typeface at the top of her blog:
It’s an important time in the transportation industry as the consumer depends on technology to stay connected with their professional and social networks. This dependency is driving consumer electronics, connectivity, and information technologies rapidly to converge in automotive and other transportation industries. Automotive companies are finding the need to maintain access to a wide array of relevant patents, not traditionally available in the automotive space.
Should it turn out that IV is able to sweat its existing assets to do a raft of deals with companies across the transportation sector, it could buy the firm a lot of time and space. For its senior managers and investors alike that would be a very welcome development.
But it’s also worth taking a little time to ponder what is happening more broadly in the auto sector when it comes to patents. Ford’s IV deal came just a few days after the company signed up with RPX. It has already been involved in a number of NPE-related litigations and clearly sees scope for more in the future; and given that firms such as Acacia have been busily acquiring auto assets, that assessment is probably not far wrong. Along with IV, RPX will give Ford additional protection. Others in the sector will surely note that.
But car manufacturers’ engagement with patents goes way beyond that. Over the last year we have seen both Tesla and Toyota make big patent-related moves. While these have been hailed in some parts as a rejection of IP the reality is that opening up a portfolio is as much a legitimate strategy as keeping it closed. By making their portfolios available to others, both companies hope that they will end up reaping significant dividends. Without patents, they would not have the opportunity of trying to shape developments in that way.
On top of all this we have the whole issue of driverless cars. For a long time this was seen solely as a Google initiative. But recently it has emerged that both Apple and Uber are also taking a close look. Given that none of these companies is a manufacturer, at some stage licensing the technology they develop is surely going to have to become a consideration. Once again, that mean patents playing a big role – and that’s before any potential litigation between the three of them and traditional auto-makers as a battle for market supremacy gets underway.
Patents have always been important in the auto sector, but it does seem that they are about to become even more central than they have been up to now. Keep a close eye on developments; they could be about to get very interesting.
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