“A Kodak Moment” or “Rembrandts in the Attic”: The Valuation for the BlackBerry Patent Portfolio

On the heels of the announcement that BlackBerry would start looking “at strategic alternatives,” the web has lit up with commentary and speculation on the value of the BlackBerry patent portfolio—a whopping 5,000 plus patents and almost 4,000 patent applications! (here, here, here and here) And, the value is – well, $2 billion.  Or, maybe $3 billion.  But, well, under some circumstances could be $5 billion.  Wow.  A $2 to $5 billion range?  To be fair, these valuations are being made “on the fly.”  I do hope that this time the folks doing the valuing are taking into account, at least, how extensive the licensing of the critical patents in the portfolio has been (apparently a mistake with the Kodak portfolio valuation), the existence of noninfringing substitutes, the relevant markets, the construction of the claims and potential prior art not considered by the relevant patent offices. (How much is that analysis going to cost?) 

Could the portfolio be a "Rembrandt in the Attic" (or a lot of them)?  Again, how extensive has the licensing of the patents been?  At least one analysis has pointed out that there is quite a bit of term left on some of the BlackBerry patents.  And, in early 2013, Intellectual Asset Management reportedly gave the BlackBerry Patent Portfolio a relatively high rating based on quality and quantity of patents and BlackBerry supposedly has been spending "$1.5 billion to $2 billion" on R&D a year. Here is the Envision IP analysis (and update) of the BlackBerry Patent Portfolio.  ThinkFire will release its analysis of the present BlackBerry Patent Portfolio soon.    Anyone need a shield or something to trade?    

Besides the valuation issue, it will be interesting to see if the BlackBerry patents are eventually used by so called “patent trolls” to hold up other entities since BlackBerry (Research in Motion) was such a famous “victim” of NTP and has been an outspoken critic of "patent trolls."  (the sword).  Again, anyone need a shield?  We shall see how the game plays out. 

IPscore, a new patent valuation toy

Here's an interesting toy for those who want to do their own patent valuations, drawn to my attention by David Nelms of Potter Clarkson. Last week the European Patent Office announced IPscore, its new free-to-use patent portfolio management tool, which can be downloaded from the EPO website here (together with 30-minute video and training manual). 

Right: a good score on IPscore -- will it be music to the patent owner's ears?

You're supposed to register for it here, though, enabling the EPO do do its data capture exercise. According to the EPO:

"You can use IPscore to:

examine your company's patent portfolio
analyse the value of individual patents
align your company's patent strategy with your overall business strategy
make the best use of patents as a business tool
identify opportunities and risks.

The tool uses 40 factors to assess each patent and visualises the input in spider and portfolio diagrams. The results of the evaluation are stored in a database.

IPscore was originally developed by the Danish Patent and Trademark Office, but was later bought by the EPO.

Training
Accompanying the release of IPscore, we have also posted a short introductory video called "Patent portfolio management with IPscore".

Other training opportunities include an online "virtual classroom" session and a two-day training course at the EPO, which provides a thorough introduction to patent valuation and how to use IPscore. The course includes hands-on exercises to help you get to know how to use the many features".

E-learning site here. There's also a users' forum here

If you have any interesting experiences arising from the use of IPscore, please let IP Finance know.

Ocean pours oil on troubled waters

IP auction company Ocean Tomo has sent a circular to interested parties, to calm their nerves over the US Federal Court's recent en banc decision in re Bilski (noted here on Patently-O). According to Ocean Tomo this decision

"... is unlikely to substantially change the scope of subject matter eligible for so-called business method patents or to alter the value of business method portfolios. The Court, relying on ... Supreme Court precedent, articulated a “machine or transformation test” for patentability. Under this test “an applicant may show that a process claim satisfies §101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article.” However, because the claim at issue in Bilski was admitted to be “not limited to operation on a computer,” or to carrying out the process by “any specific machine or apparatus,” the Court expressly declined to consider the contours of the machine implementation alternative. “[I]ssues specific to the machine implementation part of the test are not before us today. We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.” (Emphasis added).

The ... “transformation” test is broad. For example, ... a claim direct to the “transformation” of the depiction of a physical object on a visual display meets that test. ... the Court overruled the “useful, concrete and tangible result” test established in State Street, holding that it was “insufficient to determine whether a claim is patentable subject matter under §101.” But while this test is no longer the law, the new test will likely not alter the ultimate answer to the question as applied to particular business methods.

“Business method patents” commonly claim implementation by computer. Accordingly, the Court’s refusal to consider “whether or when recitation of a computer” is sufficient to render a process claim patentable means that the practical impact of Bilski should be limited. Absent development of further case law which squarely addresses this point, Bilski does not appear to materially change the business method patent landscape, or alter valuations of these patents".

There may be an element of wishful thinking or self-interest here but, to me at least, OT's position seems about right. Any comments?

Patent valuation through frequency of citations

Eva Lehnert (IFPI) has drawn our attention to this piece in Business Week on assessing the value of a patent by the frequency of its citation in patent filings: it's "A Powerful New Tool for Patent Valuation", by Chi-an Chang. While this is a good idea, she says, it depends on the details of the patent filings and the willingness of the applicant deliberately to attract attention to prior art which might get into the way (one of the comments posted regarding this article refers to this stumbling block).

Valuing Patents

German Patent Attorney Malte Köllner has written an interesting piece in February/March's Intellectual Asset Management Magazine entitled "The Journey is the Reward" (page 59). Malte - who also co-founded the Triangle Venture Capital Group - is a member of the Geramn Standard's Institute's committee working on a standard for patent valuation (see previous posting here).

Malte points out that much of the thinking and work done on patent valuation to date has been by those with accounting backgrounds who have merely considered the economic aspects in valuing the patents - the technical and legal aspects have often been ignored. He's quite correct in pointing out that there is no such a thing as a "perfect patent" and that there is always a risk that the patent will be revoked (for reasons like prior art not discovered by the patent office, lack of enablement, lack of entitlement, etc).

One problem that he fails to mention in his article is the source of the data on which much patent valuation is based. The licence rates usually come from the information contained in company accounts filed with the US SEC or from publicised damages awards. Particularly in court cases, the validity of the patents has often been challenged and their strength upheld (even if in an amended manner). In a sense there is little or no "risk" element in the value of the royalty rate. Once the validity of the patent has been challenged once, then the chances that it will be later revoked are much smaller.

On the other hand the validity of most patents has never been challenged. There is a much higher risk that, for example, the patent office has found no relevant prior art which means that the scope of patent protection is much narrower than that granted by the patent office. The royalty rates derived from damage awards or licensing negotiations for such patents need to be discounted - the question is to what extent.

Deutsche Patentbewertungstage = German Patent Valuation Days

The German company ratingwissen.de is organising its second patent valuation days at the European Patent Office in Munich on 19-20 February. An action-packed programme - mostly in German - is promised with contributions from Triumph-Adler on financing a company using IP, Andrew Rayner from the Ocean Tomo auction house, Christian Klawitter (Freshfields) on legal problems, Alexander Wurzer of Patev on patent evaluation as a service, as well as many others.

Registration of the conference - which is mostly in German - can be done here.