Siemens may have turned its NPE headache into a bottom line benefit 21 Jun 13
(9 July 2013: For an important update on this story, please see our follow-up blog post - 'Further details on Marathon's acquisition of former Siemens portfolio'.)
Publicly-traded NPE Marathon Patent Group recently acquired a portfolio of patents from Siemens. News of this deal emerged a matter of months after Marathon’s Sampo IP subsidiary had filed suit against the German electrics and engineering company. The sequence of events indicates that operating companies and NPEs can and do work together, even in the midst of litigation between them.
According to a press release from Marathon, it acquired three US patents and 10 patents covering other jurisdictions from Siemens as part of a “previous agreement”. The assets relate to “performance enhancement features and enabling technology within switching communication terminal equipment, and in Private Branch Exchanges (PBXs) in a communication network”. The technology covered by the patents supports telecoms service features including ‘call waiting’ and ‘call forwarding’ functions.
An example of the ‘reverse merger’ phenomenon (of which you can read more in the latest issue of IAM, here), Marathon was formed in November 2012 when NPE Sampo IP merged with defunct publicly-traded mining company American Strategic Minerals Corporation. In February this year Marathon entered into a strategic partnership with patent monetisation specialist IPNav. The following month it launched patent infringement litigation in the Eastern District of Texas against companies including Siemens, Sony and Juniper Networks, among others.
There is no indication that Marathon and Siemens have reached a settlement in their Texan lawsuit or, if they have, whether the patent transfer is part of that settlement. However, there is a good chance that the deal between the two was struck in the context of out-of-court negotiations taking place simultaneously to their litigation. In the most recent issue of IAM, we looked at the IP value creation opportunities made possible by alternative methods of dispute resolution, including mediation and head-to-head negotiations. Compared to litigation and arbitration, such processes give parties far more control over the outcome of their dispute and allow them to craft a business-focused resolution that can be beneficial to all involved.
Perhaps that is what has happened between Marathon and Siemens – brought together by their dispute, both parties realised that there could be mutual benefit to transferring patents. Because of the deal, Marathon gets to diversify its continually growing patent holdings; while Siemens gets to realise value from assets that are not core to its business. There is also the possibility that Siemens has a continued interest in the patents and will get some cut of any licensing proceeds that Marathon manages to raise from them. If that is the case, then Siemens may have transformed its Eastern Texas NPE headache into a potentially profitable privateering arrangement.
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