Intellectual Property Business Models

Here’s something that you really should read if you’re interested in the business of intellectual property.

Raymond Millien (CEO of PCT Capital, LLC) and Ron Laurie (Co-founder and Managing Director of Inflexion Point Strategy, LLC) have put together an impressive summary of current and emerging intellectual property business models over at VCExperts – A summary of established and emerging IP business models

As you can see from the quick summary below (and I really do recommend you read the entire article which has much more depth), it is very patent-focussed. 

What business models would you add to more fully take into account business models focussed on other types of IP?

Emerging

  1. IP Transaction Exchanges/Trading Platforms – plans have been announced to create traded exchanges (whether physical or online locations) similar to the NYSE and NASDAQ where yet-to-be created IP-based financial instruments would be listed and traded much like stocks are today.
  2. Defensive Patent Pools – seek to selectively acquire portfolios of patents for defensive reasons.
  3. Technology/IP Spinout Financing - organized as a traditional venture capital (VC) or private equity firm, but specializing in spinning out promising non-core IP which has become "stranded" within larger technology companies, or creating joint ventures between large technology companies to commercialize the technology and monetize the associated IP.
  4. Patent-Based Public Stock Indexes – the creation of formalized stock indexes based on their existing software tools and platforms.

Established

  1. Patent Licensing and Enforcement Companies (PLECs) – entities that own one or more patent portfolios, attempt to license them though targeted letter-writing campaigns, and then file patent infringement suits against those letter recipients who refuse to enter into non-exclusive licenses.
  2. Institutional Patent Aggregators/IP Acquisition Funds – entities that typically operate as general partners of a limited partnership and raise money either from large technology companies or from the capital markers.
  3. IP/Technology Development Companies – entities that engage in R&D activities and produce IP (including both patents and know-how) much like traditional operating companies; however, the developed technology is not used to manufacture products in the form of physical goods.
  4. Licensing Agents - entities that function as intermediaries by attempting to assist patent owners in finding licensees.
  5. Litigation Finance/Investment Firms – entities that are a cross between IP Acquisition Funds and PLECs.
  6. Patent Brokers – entities that function essentially the same as Licensing Agent model discussed above, but that they seek to assist patent owners in finding buyers rather than licensees.
  7. IP-Based M&A Advisory – entities that operate in a traditional investment banking model – advising technology companies in their merger and acquisition (M&A) activities and earning fees based on the value of the entire deal (or apportioned according to the value of the IP within the deal).
  8. IP Auction Houses – entities that are attempting to do for the patent marketplace what famed London auction houses Christie’s and Sotheby’s did for the antique and art marketplace.
  9. On-Line IP/Technology Exchanges/Clearinghouse – entities that function like the business-to-business (B2B) web sites that became the rage during the late 1990’s dot com boom.
  10. IP-Backed Financiers – entities that provide financing for IP owners, either directly or as intermediaries, usually in the form of loans (debt financing), where the security for the loan is either wholly or partially IP assets (i.e., IP collateralization).
  11. Royalty Stream Securitization Firms - entities that counsel, assist and/or provide capital to patent owners performing IP securitization financing transactions (which resemble the more common mortgage-backed securities).
  12. Patent Rating Software and Services - entities that provide advanced patent search and analytics software tools that allow patent owners, attorneys, investors and other players in the IP marketplace to obtain various intelligence and data points about a single patent or patent portfolio.
  13. University Technology Transfer Intermediaries - entities that function as IP Development Companies, IP Acquisition Funds, Licensing Agents and/or Patent Brokers, but focusing on the niche university technology transfer (i.e., licensing) market.

 

5 Comments on “Intellectual Property Business Models

  1. Hi Duncan
    I’m visiting IP Think Tank for the first time. Some super topics to post on.
    I liked this one. I know Ray from his days as General Counsel at Ocean Tomo and met Ron at the IPBC this year when we were on the same speaker platform. I like the passion and knowledge of both.
    I’ll add one to the list. IP hedge funds. I’m aware of at least one that is taking the correlation between patent quality and stock performance to identify stocks that are over-rated or under-rated.
    Andrew

    Like

  2. I recently came across your post and have been reading along. I thought I would leave my first comment. I don’t know what to say except that it caught my interest and you’ve provided informative points.  I will visit this blog often.
    Thank you,
    Elden
    http://www.ezbusinessloans.com

    Like

  3. Aggressive Patent Pools anyone?.. Strategic joint ownership of a pool to go after an infringer.

    Like

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