BlackBerry has made maximising its IP value much harder than it could have been 19 Jul 13
BlackBerry’s CEO has suggested that the company is ready to explore IP licensing as a strategy to create shareholder value and turn its fortunes around. But the Canadian company may have already stunted the value of what it owns by adopting an explicit position on certain monetisation practices.
At BlackBerry’s shareholder meeting last week, CEO Thorsten Heins said that the company would consider licensing or even outright sales in order to create value for investors. While there has been much talk of the licensing potential of the BlackBerry OS software, Heins indicated to shareholders that no option should be left off the table: “Don’t think just narrowly in terms of licensing… It could go into cars, so think broad.”
Beyond its operating system software, BlackBerry – formerly Research In Motion – possesses an extensive patent portfolio that may have very significant monetisation potential. The US Patent 100 listing published in issue 58 of IAM identified the company’s portfolio as one of the 14 largest, fastest-growing and most industry-recognised in the world. This encouraged Scotiabank – one of Canada’s leading banks – to more than double its valuation of BlackBerry’s patent holdings.
Nokia – another giant of the mobile device world that has seen its market position erode in recent years – has looked to its intellectual property as a way of creating value and revitalising its business. While previously it appeared to be low down the list of priorities, IP monetisation has moved towards the top of the C-suite agenda at the Finnish company; and at an earnings call in April, CFO Timo Ihamuotila stated that patent licensing is expected to bring in €500 million (US$653 million) this year. While there is still a long way to go before the full impact of Nokia’s proactive licensing strategy becomes clear (and not forgetting that the company’s long term fortunes ride on its success in terms of products and services), there is a feeling that its renewed focus on leveraging its IP assets is having positive results.
Nokia’s extensive patent portfolio does not appear alongside BlackBerry’s among the US Patent 100’s 14 standout portfolios, despite containing more than twice as many granted US patents as that of its Canadian competitor. But that may well be because Nokia has assigned many of its prize assets to third party monetisation entities that are capable of maximising their value. In the recent past it has struck high-profile deals with MobileMedia, Mosaid, Pendrell, Sisvel and Vringo; with the possibility that it has entered into other, less publicised , partnerships. It is not clear how much of Nokia’s licensing and sale revenue comes from, or is expected to come from, its privateering relationships; or how such income is reflected in the projections provided by Ihamoutila, if at all. The point is that entities that have patent monetisation as their core business are able to dedicate time, money and expertise to licensing programmes that operating companies – particularly ones experiencing difficult times such as Nokia and BlackBerry –may not wish to devote resources to. Nokia CIPO Paul Melin told delegates at last month’s IPBC in Boston that “IP is an asset like any other… When we view that we are best placed to do so, we will license that asset… But if we recognise that someone else is better placed to realise its value, we will divest it”. Furthermore, monetising patents via a third party keeps the original patent owner at arm’s length from litigation and counterattacks, and reduces the risk that it may become caught up in a dispute with a current or prospective business partner.
As Nokia and others have shown, privateering is, at the very least, an option worth considering. However, BlackBerry looks to have ruled itself out of pursuing such a strategy. It has become increasingly vocal in its opposition to the activities of NPEs/PAEs and, in particular, cooperation between NPEs and operating companies. In April, it submitted comments jointly with Earthlink, Google and Red Hat to the US Department of Justice and the Federal Trade Commission, stating that “[so-called] ‘privateering’ amplifies the threat to innovation and competition already posed by PAEs … Privateering poses numerous perils to competition, consumers and innovation”.
There have been whispers, too, that BlackBerry is looking to offload its stake in Rockstar – the NPE monetising what are purportedly some of the wireless and telecoms industries’ most valuable patents – something it would surely have to do to save face if it really does share the views outlined in the joint submission to the US antitrust regulators. Furthermore, given what BlackBerry has said about NPEs and PAEs it is hard to see how it could justify any kind of straight sale to such a business, even if it had nothing to do with privateering. If that is the case, the company’s range of buyers becomes much more limited, as does its chances of getting top dollar for what it owns.
BlackBerry potentially has a patent treasure trove – even more so if you count its Rockstar stake – but it could well fail to extract optimal value from its assets. Thus, the company’s high-profile rejection of the NPE business model – which its CEO must surely be aware of – could well mean that despite Heins’ words many of its shareholders will be left feeling that they have been let down by the company’s senior management.
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