Transaction Services – Patent Buying
TIP with the clients’ requirements will define its key word strings by technology area and mine the United States patent database using all the research tools at its disposal. These tools include Delphion, Aureka, and Dialog, to group identified patents and align them with specific Client requirements. During this mining process, TIP will eliminate patents which have been expired for more than one year, determine reassignments of the identified patents to the extent that the reassignments have been registered with the US Patent and Trademark Office, perform a quick visual screen of the patents by title, abstract and first claim to eliminate those patents which clearly do not apply, and provide the list of screened patents by technology area, with current known assignments, titles, abstracts, priority dates, and other basic front-page data from each patent. TIP will also recommend a prioritized list of those assignees/companies that may be more receptive to selling patents. Client will review and agree with the identified lists. This phase of the project can be completed in four weeks from client’s authorization to proceed.
TIP will perform a Level I evaluation of the screened patents on a technology-by-technology basis to determine those that are the strongest relative to Clients requirement. Technical Subject Matter Experts (SMEs) analyze a patent using a structured process and methodology to evaluate a patent’s strengths and weaknesses. This process leverages the SME’s experience in product development, design, and forensic engineering of related products over their careers. The result of the TIP Level I analysis will be a score for each of the patents, which is used to prioritize the patents for further investigation and possible acquisition.
In parallel with the patent evaluation activities, TIP will research the assignees/companies, in priority order, and identify the specific contacts within each company who are responsible for patent licensing and sale. TIP has an extensive network of contacts with intellectual property managers in many high-technology companies and can effectively facilitate the Introduction process. The Introduction process is comprised of: 1) identifying and contacting the company’s intellectual property manager to determine the company’s interest in selling their patents, 2) verifying patent ownership, 3) determining patent encumbrances (if any) and the price expectations of the seller, and 4) compiling and presenting this data to Client. Step 3 and Step 4 of the introduction process are normally done after the evaluation of the company’s patents is complete so that the company can focus on the patents that are most likely to be of interest to Client.
TIP will provide the scores for each of the evaluation factors and score results to Client through an appropriate database, and communicate the results of contacting companies in a report or other format as approved by Client. The schedule for completing this phase is dependent on the number of patents and the number of companies that TIP is asked to evaluate. In this phase, TIP typically evaluates an average of 60 patents per week per technology area, and completes Step 1 and Step 2 of the introduction process at the rate of one company per week. During this Phase, TIP will meet with Client via teleconference either weekly or every two weeks.
After determining the best patents from the TIP evaluation screen and determining that the assignee/company is willing to consider selling their patents in Phase 2, TIP will then perform a more in-depth evaluation of the best patents relative to Client’s requirement. This review is comprised of a evaluation analysis, focusing on identifying those patents that can be utilized by Client, and generating a prioritized list of patents for review by Client. The output of this entire process is a list of Target Patents.
In parallel with the above patent evaluation activity, TIP will perform a preliminary determination of the market value of the best patents.
The schedule for completing this phase is dependent on the number of patents and the number of companies that TIP is asked to evaluate. In this phase, TIP typically evaluates an average of 30 patents per week per technology area. Schedules for determining encumbrances and price expectations from the companies of interest are driven by the availability of people within the selected companies. Typically, it requires approximately one month to receive a response from a company, but many companies can be contacted in parallel. TIP will meet with Client via teleconference as needed and keep Client informed of progress on a weekly basis via e-mail.
TIP contacts the owners of the prioritized and targeted patents, many of which are companies, to negotiate their purchase. TIP will research the assignees/companies selected, in priority order, and identify the specific contacts within each company who are responsible for patent licensing and sale. TIP maintains an extensive network of intellectual property managers at companies, who can effectively facilitate the patent purchase process.
Because we maintain relationships with many companies that are likely to own one or more of these patents, the individual contact people within each of the companies will remain confidential to TIP.
For this process to work the best, the Client must exclusively authorize TIP to negotiate patent purchases on their behalf with specific targets. We act as the Client agent in this transaction, and will promote Client’s interests in good faith at all times. The fact that TIP will be working on behalf of Client is not disclosed to any of the patent sellers and remains confidential as long as possible. Maintaining this confidential information from a potential patent seller limits price expectations on behalf of the seller.
The patent purchase process is comprised of the following steps:
Step 3 and Step 4 of the process are normally done after the evaluation of the company’s patents is complete so that the patent owner can focus on the patents that are most likely to be of interest to Client.
Once a potential seller is located, the seller will be contacted by TIP to discuss the offer and to determine existing licensing encumbrances or technical interpretations. The patent seller must disclose encumbrance information to us. Occasionally this encumbrance information is confidential and will only be disclosed in a secure data room. TIP facilitates this data room. TIP will attempt to answer any technical questions presented by Client. For technical questions not able to be answered by us, the patent seller will be contacted for possible answers.
TIP will always negotiate the best purchase price for Client. Client must understand and agree that TIP makes no express or implied representations or warranties about the patents that are targeted. Client is free to hire an investment bank or valuation expert to determine the value of any intellectual property or the fairness of any transaction.
After verifying both parties’ interest in proceeding with a patent purchase/sale, TIP will facilitate the negotiation and development of the terms and conditions of the sale in cooperation with Client’s counsel.
We will negotiate the patent purchase on a reasonable “best efforts” basis. All terms and conditions, including, but not limited to, pricing, duration (in the case of licensing agreements) and field-of-use restrictions, shall be subject to final approval of Client. In transactions where Client is disclosed during the transaction, all final agreements for license or purchase of patents will be between Client and the seller. Client is solely responsible for the terms and conditions of a final transaction.
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