As co-founder of RKIP Management, what led you to start your own firm – and what advice do you have for anyone considering doing the same?
One of the best reasons for starting your own firm is that you have the flexibility to take risks and adapt to what is happening in the market. There are many factors driving change in the IP market today and at RKIP we are seeing interesting opportunities that we would not have seen without starting our firm. We are particularly interested in how new innovations in the insurance market can help all types of IP transactions occur more efficiently and at a lower cost.
How have client demands changed over the last decade – and how has this affected your business?
Ten years ago, the intellectual asset market was seen as a new and interesting market for mainstream companies and investors. With the emergence of companies such as Intellectual Ventures, RPX, Ocean Tomo, AST and others the IP market has evolved and become more accepted. Today intellectual property is considered a driving issue for CEOs, private equity firms, governments and other traditionally non-IP institutions. Whereas in the past we had to do quite a bit of explaining and education about IP transactions, today there is a higher level of sophistication among non-IP professionals.
You are recognised as a leader when it comes to negotiating and closing complex IP transactions – what, for you, defines a successful deal?
IP transactions are often perceived to be driven by conflict where one party that owns intellectual property alleges infringement by another. These are often the transactions that make headlines. There are however many deals that people do not know about because opportunities and potential risks are addressed early in the deal-making process and litigation is not required. When there is a public dispute then something has not gone well for one or both of the parties. Public disputes not only alter behaviour, they also limit the ability to bring in third parties that might be able to provide strategic alternatives. The deals you do not know about are generally more successful for both parties.
What are the key skills that a negotiator should possess, and how can these be honed?
There are many different negotiating strategies and they often change based both on circumstances and where you are in the world. In general, communication and trust are the most important elements to reaching an efficient win-win transaction. Without those the ability to reach agreement takes more time and can be more costly, and many deals just fall apart. Both parties need to understand where the other side stands to reach an agreement. It may seem basic but thoughtful communication is key and the more it happens the easier it gets.
If you could make one change to the current IP transactions landscape, what would it be and how likely do you think it is to take place?
Even with the recent positive evolutions in the IP market, transparency around IP ownership and transactions would go a long way to making the deal-making process more efficient. There is a great deal of uncertainty in the market around ownership, encumbrances and valuation, and this adds unnecessary friction. Ideally parties to a transaction would have more information around these issues rather than less. Every transaction presents some type of risk, and the goal should be to have as much information as possible available to mitigate risk. At RKIP we are particularly intrigued by the introduction of the insurance market to the IP space because insurance by its nature is designed to reduce risk and bring comfort to parties in transactions. We would support something similar to the data clearinghouses in other markets (eg, the Depository Trust Clearing Corporation or the Options Clearing Corporation) that allow for efficient pricing and transaction settlements. The IP market is far from that sophisticated today and would require significant efforts around standardisation of contracts. Even if there is reluctance among some market participants, any efforts moving in that direction would be helpful to the industry.
David Ruder is co-founder and principal at RKIP Management LLC. Through its financing partners, RKIP sources capital for companies where financing is tied to intellectual property, and is often backed by insurance. Financing can be structured as loans or as bespoke investments tied to legal judgments in IP cases, or contracts. Mr Ruder has a broad network in the IP industry and has worked closely with individuals in the United States, Europe and Asia.