Former RPX dealmaker steps in to reboot monetisation of legacy Yahoo! patent portfolio
Excalibur IP, the entity which owns a large portfolio of former Yahoo! patents, has appointed Paul Reidy as its new president, as its parent company Altaba looks to refocus efforts on monetising the stockpile of almost 4000 assets.
Reidy spent six years at RPX before leaving the defensive aggregator in early 2016 and setting up his own consulting business. Before RPX he worked for a couple of years at Intellectual Ventures and prior to that had stints at Freescale Semiconductor and Motorola. He will report into Altaba general counsel Arthur Chong and will work alongside former Broadcom IP counsel Anthony Dreux, who also recently joined Excalibur as general counsel.
In an interview with IAM, Reidy admitted that, having been in the job a matter of days, there was still much he needed to learn about the portfolio and the monetisation opportunities it might present. His background at RPX was in putting together some of the defensive aggregator’s largest syndicated deals, such as the 2015 transaction involving former Micron patents owned by Round Rock which RPX secured a licence to on behalf of 20 companies for $100 million.
Reidy suggested that a similar pan-industry approach might be his preferred option at Excalibur. “It’s not a secret to anyone that knows me that I believe a lot in the syndication model,” he commented. “I think you have a portfolio here where there should be wide recognition of its relevance to a big swath of the technology sector and I would hope that we could find an industry-wide solution that delivers real value for Altaba but also minimises transaction costs for everyone.”
While a syndicated deal might be first choice, Reidy didn’t rule out the Excalibur team asserting the patents itself. “It’s too early to say which path we’ll go down but I’ll say that all options are on the table right now,” he said.
The Excalibur portfolio was put up for sale in 2016 as Yahoo! cast around for buyers for its core internet business. That was eventually bought by Verizon (the $4.5 billion deal was finalised in the summer) with the remaining parts of the business including ownership interests in Yahoo! Japan, Chinese ecommerce giant Alibaba and Excalibur retained in a new entity called Altaba.
The IP advisory business Blackstone IP, which was acquired by Houlihan Lokey at the start of this year, was originally retained to oversee the patent sale process, but failed to drum up any firm offers. It is understood that the Houlihan team has been out of the picture for some time.
Although the portfolio has been up for sale for a year now, Reidy insisted that the data breach scandals involving Yahoo! in the run-up to the Verizon deal and then closing the deal itself mean that the assets have not yet been marketed to the fullest extent possible.
“Some people have held out that they’re working on it, but from what I can tell these assets have been kind of sitting on the shelf while the Verizon transaction was front and centre for Yahoo!,” he said. That deal meant that a lot of the expertise that had helped build and license the portfolio has left the business meaning that Reidy and his colleagues are now in catch-up mode. “It’s really kind of a re-start effort from my perspective,” Reidy stated.
Just how much these assets might be worth has been the subject of much speculation. A March SEC filing from Yahoo! disclosed that the company valued them at $740 million, although according to a September filing from Altaba that has since dropped to $675 million. Perhaps more than anything this reflects the difficulty in valuing intangible assets; but there’s no doubt that in the current tough monetisation climate, with validity challenges stemming from inter partes reviews and the Supreme Court’s Alice decision, there’s scepticism in parts of the market over the quality of the legacy Yahoo! grants.
As anyone in the IP value creation business can tell you, patent prices remain depressed (even if there are some signs of an uptick), but Reidy insisted that there are still opportunities for Altaba to generate a healthy return. “Prices may have come down, but that doesn’t mean there isn’t significant value in a portfolio of this size that covers a number of different technologies that cut across all sorts of companies,” he said. “Portfolios like this one stand out because of the size and the pedigree, and so yes the trends and what has happened in the courts and elsewhere haven’t played to its favour - but there’s still a lot of value here.”
As this blog recently reported Provenance Asset Group CEO Dan McCurdy suggested at an event in New York last month that the reason why the Yahoo! assets haven’t sold is that not enough companies are scared of them. Reidy conceded there was some truth in what McCurdy had to say: “If there’s no urgency, if there’s no reason for anyone to do anything, people aren’t going to go to their boss and ask them to pay for a licence if they don’t feel like they need it, so it is incumbent on us to show people that they need it.”
Speaking to people who worked with Reidy at RPX it’s clear that he has a good reputation as a dealmaker. Although questions remain over just how much the Excalibur assets are worth, as one observer pointed out, it’s very unlikely he would have taken the job if he didn’t think he could extract plenty of value. If Reidy and the Excalibur team are successful then it might provide another sign that the deals market is definitely in recovery mode.