case studies in identifying and marketing ip

Case Studies in Identifying and Marketing IP:

The Good, the Bad, and the Ugly

Presented by:

Weston AnsonCONSOR Intellectual Asset Management

800.454.9091 www.consor.com

IP / IA in a Disposition Environment

Chaotic environment

Diminished staff with limited (if any) understanding of the process

Legal constraints and regulations

Time is of the essence: Overall value is timing dependent

Proper marketing is critical

Identify IP / IA Bundles for Value

Stratify IP / IA Core v. Periphery

Peripheral portfolios may be monetized Vertical and horizontal Out-licensing / Spin-off

Analyze quality of IP Relevancy to current / future business Relative strength analysis

Potential infringement assessment

Intangible Asset Bundles

1. Trademarks6. Corporate Identity

Assets11. Real-Estate Related

Assets

2. Other Brand-Related Assets

7. IP Contracts12. Communications-

Related Assets

3. Patent-Related

Bundles of Value8. IT/Software

13. People-Related Assets

4. Internet-Related

Assets9. Data/Information-

Related Assets14. Other Technology

Assets

5. Product-Related Assets

10. Research-Related Assets

15. Miscellaneous Assets

Uncovering Hidden Value

Interview key personnel to identify all available assets

CFO Director of marketing IT staff

Leveraging past marketing efforts

Legal support for sale or transfer of licenses

Relationship management with vendors, clients, customers, etc.

Finding Buyers: The Marketing Process

Worldwide marketing campaign

Utilize Internet to reach maximum audience

Press releases Eblasts Viral marketing

Target successful and unsuccessful competitors, related professionals

Vetting process for potential bidders

Case Study - Tower Records

Key assets:

Tower Records Global Trademark Portfolio

www.tower.com e-Commerce Operations

International Franchise Agreements

Case Study - Tower Records

Problem:Initial auction failed to identify any serious bidders for the intellectual property

Solution:Creatively package assets for direct marketing to an expanded universe of potential buyers through vast network of resources:

Financial Buyers Strategic Buyers Franchise Portals Entertainment Law Firms Intellectual Property Industry Resources

Tower Records: Valuation & Auction

Valuation Conclusion Value Comments

'No less than Value' Trademarks and Domain Names

$ 1,650,000 This is, in today's dollars, the net cost of the internally generated and acquired intellectual property.

Liquidation Value of e-Commerce Segment

Domain Names and Perpetual License to use Trademarks in e-Commerce

$ 1,320,000 In today's dollars, the net value of the intellectual property connected to the e-commerce sites

Liquidation Value of International Franchise Segment

Perpetual License to use Trademarks in connection with Franchise Contracts

$ 1,585,000 In today's dollars, the net value of the intellectual property assuming only the Franchise Contracts run to their next renewal date.

Auction Outcome:Asset Values

Trademarks, e-Commerce and International franchise agreements

$ 4,200,000 Net value of the intellectual property sale. After fierce open-cry bidding war between Caiman Holdings and RiverWest Brands.

Case Study – AstroTurf

Key assets:

1. Turf trademarks and patents, domestic

2. Turf trademarks and patents, international

3. Track trademarks, international and domestic

4. Flooring trademarks and patents

5. Tennis trademarks, international and domestic

6. General trademarks and patents, international and domestic

7. Outbound Chinese license and associated supply agreement

8. Inbound FIFA license


Possible Strategies Sale in total Sale of trademarks and licenses Signing more licensees prior to sale Selling / licensing patents to competitors Auction / Liquidation

Outcome Immediate liquidation Sale price substantially below maximum value


Lessons:

Interests of the lender can differ from that of the buyer

The effect of time on asset value

Importance of hiring qualified IP professionals

The need for adequate time for the due diligence and triage process

Case Study – Circuit City

Key assets: Trademark bundle

Internet platforms

Domain names

Firedog assets

Secondary website assets


Outcome: Multiple sales

Multiple auctions

Poor marketing leads to lack of interest, canceled auctions

Overlooked assets


Key remaining asset: Litigation rights

Price fixing on flat panel displays DOJ Fine of $400+ million Value of litigation rights: $10+ million

Sales process: Stalking horse bid Valuation Auction


Lessons: Don’t trust management Don’t trusts bankers Don’t trust lawyers Don’t trust anyone

Case Study – Linens ‘N Things

Key assets: Turnkey e-commerce operation Trademarks Domain names Databases Product designs Proprietary brands


Outcome: Hilco and Gordon Brothers acquire brand for

$1 million in joint venture

Relaunch as global licensed brand


Lessons: First offer is not necessarily the best offer Impatience by committee leaves value on the

table Compare $1 million sale price to $1.3 billion

acquisition deal just three years earlier Speed can be the enemy of value

Case Study – Fortunoff

Key assets: Core trademarks and brand assets Third party contracts for development of

interactive websites Bridal registry and customer databases Handheld scanning devices and proprietary

software system Transferable licenses Proprietary jewelry designs


Marketing efforts and sale method Vocus on-demand software to build

relationships with media / journalists PRWeb releases Custom website promoting assets for sale Financial statements per product category


Outcome: Over 25,000 visits to website in 79 countries 24 interested parties under NDA attending the

auction 22 hour auction $2.2 million final bid $1.6 million more than counsel expected


Lessons: Marketing makes a difference: More bidders

drive up final sale price Educating bidders on potential licensing

values increases perceived value of assets Bidder-specific sale terms and carving of

assets can lead to maximum value realization Option to sell certain assets to multiple buyers

Case Study – KB Toys

Key assets: KB Toys trademark and other trademark

assets House brands Logos Domain names

Outcome: Brand assets acquired by competitor Toys ‘R’

Us for $2.1 million

Case Study – KB Toys

Lessons: Size matters Main street stores can’t compete with big

boxes

case studies in identifying and marketing ip

Business