Het belang van IP voor Venture Capital Backed bedrijven
Marc Lambrechts, Capricorn Venture Partners
24 april 2018 Arnold & Siedsma – IP Congress 2018
Your speaker today : Marc Lambrechts
• R&D in microsystems and PhD on biosensors @ KU Leuven
• industrial R&D experience @ Terumo Europe
• RTD programme management experience @ IWT
• + 20 years experience in venture capital
@ Capricorn Venture Partners
• technology fusion as special area of interest
digital healthcare, big data, IoT as current focus
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Capricorn Venture Partners
• Founded in 1993, independent • + € 450 million under
management • 20 people organisation, based
in Leuven, Belgium • Licensed asset manager –
AIFMD compliant • Consistent strategy : focus on
global, innovative technology companies with European roots
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My first “patent” experience as PhD student
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The Venture Capital model
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IP knowledge experience
+ proof of concept
business plan +
market customers ..
entrepreneurs team
investors
€ € € € € € € € € € € € € € € €
€
IP strategy includes more than patents
• Trademarks
• Website
• Trade Secrets
• Contractual IP
• Employment and assignment of invention agreements
• Consultancy contracts
• Contracts with suppliers and customers
• License agreements
• Your network
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Some question on IP and patents
• Define and challenge your IP strategy!
• Protection or freedom to operate?
• Does a patent has value without the associated business?
• Are you prepared for a patent due diligence by a US law firm in view of a $ xxx million acquisition?
• Any change of control clauses in your contracts with customers, suppliers, license agreements
• Possibilities to protect software
• Should I apply for patent protection in China
• Is a license model a valid business model?
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Choosing the business model
Leo Baekeland on the IP license business model
"I firmly intended to escape the recurrence of business occupations, as in my Velox days. So I planned, instead of manufacturing myself, to grant licenses to established manufacturing concerns, especially experienced in plastics.
But I soon was confronted with a repetition of my former experience with Velox: that it was very difficult to teach new methods to men who had acquired routine in older processes. The preparation of the new resinoid and its molding compositions, which to me seemed very simple, appeared either very difficult or needlessly complicated to others.
Reluctantly I had to start manufacturing the raw materials in a sufficiently advanced stage so that the users had only to complete the operation of molding and polymerization.“ See also ”The Baekeland story - Lessons for today’s ventures in new materials” http://be.linkedin.com/in/marclambrechts
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Importance of patents
• Patents are important in any phase of a VC investment !
• As an information source for deal selection
• Before making an investment
• During the investment period
• At exit (most likely via M&A transaction)
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Patent database = information source
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Importance of patents
• Patents are important in any phase of a VC investment ! • As an information source for deal selection • Before making an investment
o Strong and clean IP ( co-ownership, right of first refusal, inventor rights, …)
o Full ownership of patent(s) by the company remains the preferred model!
o Exclusive license with transfer rights and right/obligation to defend source IP?
o FTO - Freedom to operate is key
• During the investment period • At exit (most likely via M&A transaction)
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FTO – hybrid drive trains
Source : Ambercite – Griffith Hack http://www.ambercite.com/downloads/ambercite_hybrid_car_report.pdf
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FTO – hybrid drive trains
Source : Ambercite – Griffith Hack http://www.ambercite.com/downloads/ambercite_hybrid_car_report.pdf
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First patent for hybrid
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Importance of patents
• Patents are important in any phase of a VC investment ! • As an information source for deal selection • Before making an investment • During the investment period
o Expand and strengthen the IP position by own R&D, partnerships, …
o Create a unique IP fingerprint addressing a sizeable market o Patent maps and landscapes as tool o IP bundling opportunities o IP agreements with R&D centre(s)
• At exit (most likely via M&A transaction)
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Patent mapping
IP Congress 2018 Source : www.patanalyse.com
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Patents as information source – metal foams
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Source : Simon Dewulf http://www.innovationmanagement.se/2014/04/03/for-all-departments-how-can-ip-help-hr-rd-sales-and-marketing-production-finance-purchase-ceo-or-owner/
The competitors of my clients can be prospects!
Patents as information source – DIY???
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Example Punch Powertrain
• In 2010 due diligence conclusion => IP position requires strengthening • A few own patent applications
• License on ZF knowhow and patents
• Focus on FTO via old patents
• IP strategy defined in cooperation with consultant + first IP harvesting session
• External IP service provider contracted
• License deal with Drivetrain Innovations BV for a next generation transmission
• Acquisitions of Drivetrain Innovations BV in 2013 for talent and patent portfolio
• Acquired in 2016 by YinYi group for $ 1 billion providing a 17x multiple for the 2010 investors
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Activity and location tracking of non powered assets
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Sensolus : granted European patent in < 3 years
• EP3032771 (B1) ― 2017-10-25
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Importance of patents
• Patents are important in any phase of a VC investment ! • As an information source for deal selection • Before making an investment • During the investment period • At exit (most likely via M&A transaction)
o Beware of “Change of Control” clauses o Tough IP due diligence (patents, trademarks, use of open
source, ..) o Reps and warranties o Not the most interesting moment to receive patent infringement
claims o Value of patents at exit?
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Value of IP at exit : FillFactory Case
Source : SEC files Cypress
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14 million pixels full frame sensor
in September 2002
After the exit
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After the exit …
ON Semiconductor Sues CMOSIS Over Image Sensor Patents Law360, Los Angeles (January 02, 2014, 6:18 PM ET) -- ON Semiconductor Corp. on Thursday sued Belgian firm CMOSIS N.V. and others for allegedly infringing four of its patents covering image sensor technology, including two patents for systems invented by one of CMOSIS's co-founders, according to court documents. In its complaint, Phoenix, Ariz.-based ON Semiconductor accused CMOSIS of infringing its U.S. Patent numbers 5,933,190, 6,011,251, 7,408,195 and 7,608,516, by making and selling complementary metal-oxide semiconductor, or CMOS, image sensors for use in digital cameras. The '195 and '516 patents list CMOSIS co-founder Guy Meynants as the sole inventor, according to the suit. The suit also names as defendants San Diego-based AlliedSens LLC, which sells CMOSIS image sensors on its website, and German camera company Leica Camera AG, which has incorporated CMOSIS sensors into one of its digital camera lines.
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Source : http://www.law360.com/articles/498346/on-semiconductor-sues-cmosis-over-image-sensor-patents
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Value of patents at exit
• Strong patent portfolio with several granted patents • In case of a failed business that received + € 7 M from
investors, clients, subsidies, … • … all assets have been acquired for +/- € 50k
Source : final report of the receiver
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Questions
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For more information
Contact:
Marc Lambrechts
Capricorn Venture Partners
Lei 19/1, B-3000 Leuven, Belgium
Tel. +32 16 28.41.00 Fax +32 16 28.41.08
http://www.capricorn.be
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http://creativecommons.org/licenses/by-nc-sa/3.0/
Back-up slides
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For further discussion
• Most of the patents are about a unique feature not a sellable (whole) product • a valuable patent is only part of a valuable business
• Patent cost versus patent value : • taking a patent
• maintaining a patent + translations
• defend yourself in case of litigation
• follow-up in case of infringement of your patent portfolio
• IP protection in open innovation models
• IP litigation as a business model – what about NPE’s? – impact of patent troll restrictions
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