Monday, 13 June 2016

Fireworks or fire sale? Getting a grip on Excalibur

In the legends of King Arthur, Excalibur was the name of the Sword in the Stone -- a weapon with special qualities and which could only be wielded by its rightful owner.  A new Excalibur is currently much discussed in patent circles. This is a special purpose vehicle that has been set up for the purpose of selling the portfolio of Yahoo patents [the likely sale price of these patents is discussed in a critical Aistemos blogpost here].

Aistemos has taken a look at the prospects facing anyone planning to purchase these patents, following a recent report by the Wall Street Journal (WSJ).  This is what Aistemos CEO Nigel Swycher writes:

Yahoo patents: understanding Excalibur with Cipher analytics 
The WSJ reported this week on the progress of Yahoo’s proposed divestment of 3,000 patents. There have only been a handful of portfolios of this size that have ever been sold on a stand-alone basis. The best known of these are the Nortel portfolio (subsequently known as Rockstar) and Kodak.
 
In these situations the two big questions are always the same: who will buy the patents and how much are they worth? The precursor to both these questions are what are they? This is the question we focus on here.
 
 
Competitive Intelligence  
This is a Cipher Competitive Intelligence Report on the Yahoo portfolio for sale (now assigned to a special purpose vehicle, Excalibur). This immediately reveals that  
  • the portfolio covers a broad range of search and web technologies  
  • the rights are largely confined to the US  
  • 25% of the families are still pending  
  • Yahoo has spent over $60m building the portfolio over the last 10 years  
  • the companies who own similar portfolios include Facebook, Google, Amazon and Microsoft
Due diligence and the role of analytics 

Of more interest for those taking a serious look at Excalibur is the full Cipher report, which you can access here
This report enables you to analyse the Excalibur portfolio, and the various clusters within it. Cipher analytics allow bidders to focus on assets of interest and bypass others [message for do-it-yourself enthusiasts: if you had a team of two people working full time it would take somewhere in the region of 125 days to review the portfolio].
 

Surveying the overall landscape, it is not obvious that Microsoft and Google will be buyers, as they respectively already have over 8,000 and 4,500 patent families in the area. The emerging Asian companies are more likely buyers: Baidu, Alibaba and Tencent all have fewer than 1,000 families. 
It's also worth analysing the holdings of RPX and Intellectual Ventures, both of which have substantial portfolios. One thing is for sure, with this many patents in play, no one is asking Yahoo to identify their best one! The Yahoo transaction comes at a testing time. The patent pendulum has swung against patent value, and the PIPCOs (publicly traded IP companies) and NPEs (non-practising entities) are generally licking their wounds. So while the portfolio will sell, don’t expect fireworks.

2 comments:

  1. Curious to know13 June 2016 at 08:12

    Can you tell me how you come up with the figure of 125 days for the length of time it would take two full-timers to analyze the portfolio?

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  2. My back of an envelope calculation. 1 hour per patent = 3000 hours. Working 12 hours a day would take 2 people 125 days. The reality is more complicated - Cipher analyses similar patents and that would take much longer!

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