Why Patent Attorneys should talk to Corporate Finance (and why Finance should listen)

Attention patent attorneys- if you could show your clients an extra $5 or $10 million in ‘found money’, would that be helpful? It’s easy to find and odds are that you helped your client in making it. I’m talking about patents of course. The question is- now that you’ve found it how do you get to the cash that’s in it? There are a few ways to go about it- most of them are hard but one is fairly easy. You are probably familiar with hard paths to patent cash- out-licensing, selling non essential assets or litigation. These ways are hard because finding the parties to complete the deals is hard or in the case of litigation expensive to initiate. Plus these deals are not a sure thing as to whether you can net out the cash after all your hard work and that can make clients very unhappy.

The easier way is monetization. Monetization is recapitalizing patents based on how useful they are in making money for the client. Your clients understand where they use patents for their own businesses, so there is good and reliable information that is easy to obtain and calculates the patent cash value. The counterparties to monetization deals are banks or investors that are eager to invest in your clients’ continuing successful use of those same patents. They are on your client’s side which can’t always be said about prospective licensees and certainly is never the case with infringers.

With monetization, each patent can easily represent US $1-5 million in cash value to the client’s business so even a portfolio of four or five patents can have US$ 4-25 million in ‘found money’ value. Decisions to monetize most often depend on decision makers in your client’s corporate finance department. This is where Carthage Intellectual Capital can help patent lawyers and their firms to close the deal with corporate finance on the ‘found money’ opportunities in patent portfolios. We know the translation values of invention claims and cash. And corporate finance can control the timing and quantity of patent monetization transactions to their maximum benefit. As patent attorneys, you will know where the future transactions will come from. I’m talking about the future patent estate of course. It’s a lot easier to get paid on new patent dockets with the found money of previous patents. Learn more at www.carthageic.com.

With the Facebook disaster will the wait for IPO be longer?

FACEBOOK FALLOUT: Y Combinator’s Paul Graham Just Emailed Portfolio Companies Warning Of ‘Bad Times’ In Silicon Valley

In the article, Graham warns that the Facebook disaster means extended waits for all companies thinking of going public until  the market is attractive to IPOs again.

So what about the mezzanine-stage tech company with products, revenues, and a need for capital to grow? Consider the new concept developed by Carthage Intellectual Capital Management: a sale/license-back of its patent portfolio. Monetize your patents by selling them for needed capital and, in return for an annual fee, get a license back to use them just as before.

The concept is similar to a sale/leaseback of real estate, equipment, or software. The cost of capital is less than equity and the capital more available with less onerous terms than with a bank loan. There are tax advantages for the company–use the NOL that’s probably on your balance sheet and pay fully tax expensed license fees. And, should the company be willing, there is potential upside to company and investor through out-licensing in non-competitive fields of use of geographical area.