Bigger than BlackBerry

In IP monetisation there appeared few other jobs as big. With a portfolio of around 40,000 patents, a CEO committed to seeing a return from the company’s assets and a vast sea of untapped opportunities across a range of sectors waiting to be licensed, running BlackBerry’s IP function looked to have an almost unlimited upside.

So it came as something of a shock when Mark Kokes – the Canadian tech giant’s vice president in charge of intellectual property, licensing and standards – left abruptly last summer. A few months later he resurfaced at NantWorks, a sprawling conglomerate founded by a billionaire who has been described as the wealthiest man in Los Angeles (no mean feat) and labelled by Forbes as “the richest doctor in the history of the world”.

Kokes has known the billionaire medic, Dr Patrick Soon-Shiong, for the best part of a decade and even pitched him on a possible partnership while in a previous role at InterTrust. Soon-Shiong made his fortune, which Forbes estimates at $7.6 billion, through the development and eventual sale of two drugs companies.

For the last seven years Soon-Shiong’s focus has been on investing his vast wealth to radically overhaul large parts of medical care and, in particular, the way that cancer is treated – an effort that he hopes will ultimately lead to a cure. And he has been buying companies, lots of them, with many focused on the intersection where medicine meets high tech. His sprawling business interests, held under the umbrella company NantWorks, have produced a patent portfolio of around 6,000 assets, which touch on a myriad of technologies from healthcare to the cloud to wireless.

Kokes says that his boss’s hopes for the portfolio are relatively straightforward. “He wants people to respect his intellectual property,” he argues. “He’s built up a very substantial portfolio that rivals some of the medium to larger-sized portfolios globally and it has significant breadth, spanning multiple verticals.”

However, respect for his patents is not the only thing that Soon-Shiong wants: he also wants them to bring in revenue.

Ditching the BlackBerry habit

To Kokes, the answer as to why he would swap one of the prime IP jobs in mobile communications for a little-known – albeit well-funded – healthtech business is obvious. “I think this job is bigger,” he insists.

BlackBerry’s evolution from mobile pioneer to the ranks of companies eclipsed by the likes of Apple and Samsung in the smartphone era has been well documented. Its withdrawal from the handset sector means that CEO John Chen has committed the company to turning its patent stockpile of around 40,000 worldwide assets into a significant profit generator.

Kokes, who was hired in 2014 from InterTrust, was a key part of that transition. An electronics engineer by background – he has a PhD in electrical engineering from Southern Methodist University – Kokes began his career as an engineer for Nokia before taking a series of roles with ever-expanding IP responsibilities for Sony and Ericsson’s mobile joint venture, for HTC and then, between 2012 and 2014 as vice president, corporate development and IP licensing at InterTrust.

His time at BlackBerry started promisingly with a series of licensing deals – including one with Cisco in 2015 and then others with Canon and International Game Technology early the following year. Under Kokes’s watch, BlackBerry also sold a portfolio to private investment firm Centerbridge Partners in a deal estimated to be worth as much as $50 million.

However, despite making progress on their monetisation efforts it was clear to Kokes and his team that the hard yards still lay ahead. While other former handset makers with similarly large patent portfolios, such as Nokia and Ericsson, had been busy monetising their intellectual property for several years and generating hundreds of millions of dollars in annual revenues, BlackBerry was relatively new to the game. It seemed inevitable that it would have to turn to the courts to prove the value in its portfolio but its early assertion efforts in the United States were limited to district court actions against Avaya and BLU Products.

Kokes is reluctant to go into too much detail on the reasons for his departure, but he says that he knew that “it was going to be a hard slog in litigation”. Aside from bringing the cases against Avaya and BLU it was not immediately apparent to outside observers whether the company had the stomach for long, drawn out courtroom spats.

However, despite his sudden departure and the exit of several other key members of the licensing team, BlackBerry’s monetisation efforts have hardly slowed. In late November 2017, it announced that it had given Teletry, a new licensing programme headed by former Ericsson chief IP officer Kasim Alfalahi and administered by the Marconi Group, “the right to sub-license a broad range of BlackBerry patents to a majority of global smartphone manufacturers”.

The Canadian company also indicated that it would continue to operate its own licensing programme. In a sign that it is fully prepared to go to court to do so, it brought lawsuits earlier this year against Facebook and Snap, accusing them of infringing several of its messaging patents.

While Kokes did not stick around to bring that kind of high-profile litigation, he did at least play a leading role in helping BlackBerry to grow its licensing revenue. This hit $200 million in the last financial year.

Mark Kokes

“I wouldn’t have stepped away from one of the largest patent portfolios in the world, one of the last great bastions of telecoms intellectual property, to do something lesser.”

Opportunity knocks

Kokes’s claim that his new role represents a bigger opportunity than that provided by his mandate at BlackBerry may seem to be stretching things, but it is as much about the sectors that he is now focused on licensing into as the intellectual property itself.

“I just think there’s a bigger world on the biotech and pharma side,” he asserts. It’s one where patent owners can earn higher royalties than in mobile, where licensors may fight over rates which amount to a few dollars and cents on the price of a phone. “If the guys in telecoms want to battle it out for those marginal points, then that’s fantastic for them.”

So having turned his back on BlackBerry, what sort of opportunity now faces him at NantWorks? To begin with, there is the urgent need to build a licensing team comprising lawyers and technical experts. Unlike in his previous role – where there was an existing IP function which he had to restructure, letting go of people in the process – NantWorks is an almost completely greenfield site.

The tiny IP operation Kokes inherited is in large part a reflection of Soon-Shiong’s priorities. “Patrick has accumulated a broad array of assets and intellectual property through M&A and through organic endeavours,” Kokes comments.

Since he joined, the former BlackBerry man has been hiring aggressively. Having built a team of about a dozen by the first quarter of this year, he predicts that it will reach 22 by early September and then “probably double next year”.

In terms of the patent portfolio at his disposal, Kokes admits that he is still getting up to speed on what it contains but offers a brief overview. “This is like a holding company, so we have wholly owned assets, we have minority owned assets and we have majority-owned assets. So I would say in the core, there’s about 6,000 grants and applications, across probably about 15 to 20 geographies.”

Who is Dr Patrick Soon-Shiong?

Read the media around Mark Kokes’s new boss and it is clear that he divides opinion. To some, he is a medical pioneer who is upsetting accepted norms in his quest to revolutionise healthcare and, ultimately, to try to find a cure for cancer. To others, he is more hype than substance – a physician with a head for marketing rather than for ground-breaking innovation.

Having qualified as a doctor in his native South Africa, Soon-Shiong moved to Los Angeles where he started to make a name for himself as a surgeon through the 1980s. Then in the early 1990s he developed Abraxane, the cancer treatment that would help to make his fortune. He commercialised his discovery through American Pharmaceutical Partners, a company which he then split in two and sold in separate deals to Fresenius for $4.6 billion in 2008 and to Celgene for $4.8 billion in 2010.

These deals gave him the means to start building out the NantWorks family of companies through a mix of organic growth and aggressive deal making, all based from a modern headquarters in Los Angeles’s Culver City.

Some of his investments have boosted his profile considerably. These include the LA Times, which he bought along with the San Diego Union-Tribune earlier this year, and a stake in the National Basketball Association’s LA Lakers. The 60-something billionaire medic is a self-confessed basketball nut and a courtside regular at Lakers games.

Mark Kokes describes his boss’s appetite for buying new businesses as “voracious”, which certainly seems apt: between two interviews for this article, Soon-Shiong announced his acquisition of the LA Times, having previously invested in the paper’s parent company.

And with the seemingly never-ending deal making, the portfolio is constantly growing. “We’ve added 500 assets in just the last three weeks through acquisition,” Kokes stated when he first spoke to IAM in March.

As at BlackBerry – where Kokes identified 40 different sectors in which the company’s intellectual property was being used – NantWorks’ patents touch on a broad range of sectors.

“There’s a lot of technology here,” he explains. “As a consequence of our cancer research we have stumbled on things that can be applied to the treatment of infectious diseases, anti-ageing technologies, cosmetics and various other therapeutics that are out of the mainstream all because of the level of understanding that we’ve developed at the proteomic and genomic level. Because of our super-computing capabilities, because of our network capabilities, because of the sheer amount of data that we can process, we have amazing insights that I think even some of the big pharma companies would appreciate.”

Beyond high tech

Soon-Shiong’s transactions have not been solely in life sciences. However, it is in the world of personalised medicine and, in particular, the treatment of cancer that his attention is perhaps most closely focused.

Kokes has his own personal connection to fighting cancer, having recently lost relatives to the disease; he cites that experience as another powerful motivator for taking the NantWorks job.

In his ultimate quest to find a cure, Soon-Shiong has promoted a regime of personalised treatment through a test, which he has branded GPS Cancer. It is a part of NantHealth, one of NantWorks’ umbrella companies. ‘GPS’ stands for “genomic, proteomic, spectrometry” and offers patients tumour-normal sequencing of their entire genome in order to offer highly personalised treatments, which are not always considered by more traditional approaches.

To crunch the vast amounts of data that each genetic analysis produces, Soon-Shiong has built the kind of super-computing power normally associated with the largest denizens of Silicon Valley.

This approach to treating cancer has won Soon-Shiong plenty of media attention (he has featured in CBS’s flagship news programme 60 Minutes) and also generated a fair amount of scepticism from other physicians, who snipe that his marketing often gets ahead of the reality. However, not all of his goals are as lofty as his cancer treatment. He also wants to bring a tech-focused approach to everyday patient care – including connecting hospital devices to computer networks more efficiently to ensure that doctors have every possible data point at their fingertips. To this end, he has acquired a company that enables CAT scans and MRIs to be viewed on a mobile device.

But when it comes to monetising his companies’ intellectual property, Soon-Shiong’s motivations always come back to his primary goal. “He wants a revenue stream that will fund his R&D so he can continue to move toward finding the cure for cancer,” Kokes explains.

Generating a return

Thanks to his boss’s appetite for deal making, Kokes’s new position means that he is now charged with generating that revenue stream from a patent portfolio owned by a sprawling collection of companies covering a wide range of technologies, which increasingly overlap and are being practised in sectors where they would not have been relevant even a decade ago.

It is a familiar story of convergence. However, monetising all of that intellectual property may appear a tall order, even for someone with the former BlackBerry man’s experience. So where does he start?

“Just like at BlackBerry there’s low-hanging fruit,” Kokes points out. For NantWorks that means the bioinformatic patents it owns around tumour-normal testing.

“We see the whole world coming to us in that regard,” he says, clearly eager to put healthcare providers and other parts of the oncology universe on watch that they will need to pay up. “They’re going to have to use our intellectual property if they’re going to perform the tumour-normal testing, as we have the original patents in that regard.”

Kokes started making approaches to potential licensees in December last year and he says that he has been pleased by the responses received so far. Although the licensing programme is still in its early stages, he reveals that he has seen some marked differences with the sectors he has previously licensed into.

“I will say that I was pleasantly surprised that people seem more willing to listen in the biotech sector; up to this point it has not been as contentious as some of the more high-tech conversations that I’ve been part of in the past,” he remarks.

But there are also parts of the NantWorks universe that will bring him closer to his previous roles. For instance, the conglomerate owns wireless chip company Tensorcom; while one of its subisdiaries NantMobile is focused on highly immersive augmented reality and claims to have “extensive IP and technology solutions for a variety of industries”. Then there is NantCloud, a company which is developing a healthcare-focused cloud platform.

Kokes is keen to point out that monetising all of this is not just about licensing; there are also opportunities for tech transfer deals or broader-based agreements where intellectual property might be just one part of the transaction.

He is reluctant to put numbers on the kind of revenue he might be able to generate, but he offers the example of a cancer diagnostic test developed by the business, which is less invasive than traditional methods and therefore able to reach some cancers which cannot be biopsied (eg, brain tumors). “In the United States alone there are 13 million cancer patients a year,” Kokes argues. “And if you’re going to be treating these people at a molecular level, you’re going to be running these diagnostic tests multiple times.” A test may cost anywhere between $4,000 and $7,000 (sums which will likely drop over time), which means that for anyone looking to license relevant patents and technology (as well as to offer the tests themselves) “the numbers get big pretty quickly”.

And that is just one aspect of what Kokes is trying to do. “I wouldn’t have stepped away from one of the largest patent portfolios in the world, one of the last great bastions of telecoms intellectual property, to do something lesser,” he insists. “The Ericssons and the Nokias of the world have made a fair amount of money, but I think that there’s a bigger opportunity in the biotech space and it’s all happening now.”

Kokes refuses to be drawn on numbers. However, it seems fair to conclude that if NantWorks’ technology is as revolutionary as Soon-Shiong believes, a licensing return stretching into the tens or even hundreds of millions is not out of the question.

The road ahead

There is little doubt that Kokes’s hire and his willingness to talk about his new role mean that NantWorks and its family of companies intend to become a much more significant player in the patent market. Despite Soon-Shiong’s personal wealth and investments in the likes of the LA Lakers and LA Times, he has, according to Kokes, been operating in stealth mode until relatively recently when it comes to intellectual property.

Clearly he has made a name for himself in the life sciences and medical worlds, which may help Kokes get a foot in the door when it comes to licensing discussions. But away from those core sectors, NantWorks’ name recognition is far lower in the world of high tech. It will be up to the former BlackBerry IP head to generate openings.

Kokes is under no illusions that in today’s licensing environment that might mean turning to litigation. “We certainly anticipate this and we are building toward it already,” he warns, revealing that he has already been approached by a host of law firms in the United States and Europe offering their services.

Speaking about his new role, Kokes appears to have retained an almost boyish wonder at the range of technologies that his employer owns and the fact that he has been given responsibility for generating revenue from them. He peppers his comments with anecdotes marvelling at the various patent-backed innovations on which his R&D colleagues have been working.

That will certainly help to keep him motivated during what could well be an arduous slate of licensing negotiations, district court litigations and trips to the Patent Trial and Appeal Board to prove the value of the NantWorks patent families and put deals in place. Soon-Shiong certainly has pockets deep enough to support such efforts, even in the United States; but the issue might be whether he has the will to stay in the game. Even the best-run corporate licensing programmes take time to start generating significant returns, with setbacks and long delays all part of the game.

For Kokes and his rapidly growing team, if this opportunity is going to turn out to be bigger than BlackBerry, most of the major challenges lie ahead. In the meantime, expect to hear a lot more about NantWorks’ rapidly expanding portfolio and Soon-Shiong’s never-ending quest to cure cancer.