IP licensing agreements have historically been the core of business strategy for a large fraction of global and domestic companies and universities. These deals are negotiated bilaterally at great expense, taking months or years to complete. Yet these deals are critical – the failure to obtain one key license can bring an entire business or a significant business unit to its knees. The inherent inefficiency of this market exacts a massive toll on the ability of companies to do what they do best – innovate and offer products and services to their customers. Beyond the costs of inefficiency, this market has no open price discovery, precious little transparency, and exists as a patchwork of local markets. Even for those that consummate IP licenses, risks remain that companies can do little to mitigate: licensee auditing soaks up time and money, the threat of contract breach and/or a licensee-initiated suit for patent invalidity is ever-present, and a new breed of IP enforcement specialists poses evolving risks.
The Intellectual Property Exchange International’s (IPXI) Unit License Rights™, or ULRs, fundamentally change this landscape.
How do ULRs work?
ULR issuance replaces the bilateral negotiation process in IP licensing. IPXI acts as the issuer’s master licensing agent, managing an initial sale of ULRs as well as post-sale secondary market activity.
- Upon approval of a candidate deal, IPXI works with the issuer to structure the terms of the issuance
- IPXI, in coordination with the issuer and IPXI affiliates, conducts a road-show with probable buyers seeking indications of interest for the initial sale
- IPXI and its affiliates underwrite the ULR issuance and manage the initial sale
- IPXI and its affiliates manage the secondary market for post-sale ULRs
- IPXI and its affiliates manage the enforcement of the IP on behalf of the issuer against alleged infringers
- IPXI, in coordination with the issuer, determines whether additional issuance is warranted and permissible under the contingencies prescribed in the original ULR issue
How do ULRs benefit me?
- Issuers obtain capital quickly and efficiently, while offloading substantial risk
- IP is monetized predictably, transparently, in size
- Buyers avoid potential infringement and secure freedom to operate easily
- Market participants can monitor prevailing licensing rates globally for improved intelligence
How do I get involved?
Please contact Cameron Gray at (312) 327-4403 or
cgray@ipxi.com for more information.
In the last two decades, at the same time that intangible assets became the engine of growth for the 21st century, financial products have remained largely wed to tangible assets. This imbalance has created an enormous opportunity for financial product development where there are virtually no adequate mechanisms for investors to gain exposure to IP as an asset class and nothing available for IP owners to hedge risk. In the absence of any such products, it has been impossible for leading edge market makers, brokers, traders, algorithmic shops, and hedge funds to tap the IP markets. Tradable Technology Baskets (TTBs) create a new generation of products allowing IP as an asset class to trade.
Imagine the commodities markets before a spot or futures market existed. TTBs will do for the IP markets what the commodities exchanges and futures did for the commodities markets.
What is a Tradable Technology Basket™ (TTB)?
Tradable Technology Baskets™ (TTBs) are financial futures products that allow IP owners, investors, and traders to gain exposure to, or hedge, emerging technologies. TTBs come in a variety of flavors defined by the basket of IP behind the contract. The baskets are groups of related patents covering a particular technology or technologies, and the futures product cash settles to the value of the IP in the basket. Rather than piecing together indirect exposure from a combination of equities and commodities, TTBs give buyers and sellers direct exposure to solar energy or Blu-Ray or glucose monitoring or RFID or bioethanol.
How do TTBs work?
Technology baskets build upon the model developed for patent pools such as MPEG-LA or DVD6(C). Using proprietary tools and in-house IP expertise, IPXI first assesses whether a candidate technology can be effectively fenced in by a pool of 1,000 - 5,000 issued U.S. patents. Following IPXI’s determination of patents to be included in a specific TTB, historical pricing and a product specification sheet are developed. Finally, research tools and data are made available to market participants to drive model development and trading strategies. By focusing product development on the IP, TTBs provide access to emerging technologies that may or may not have resulted in marketable products and services. Further, TTBs may cover patents that are owned by public corporations, private firms, universities, and the public sector.
How do TTBs benefit me?
- TTBs offer investors a “pure play” in emerging technologies
- TTBs offer hedging opportunities for entities with direct or indirect exposure to sunk investments in technology development
- Investment portfolios with partial allocations to TTBs may provide attractive risk-return profiles
- TTBs will create compelling spread trading opportunities against equities, commodities, and other asset classes
How do I get involved?
Please contact Cameron Gray at (312) 327-4403 or
cgray@ipxi.com for more information.
What if you could trade an IP-rich company’s equity versus the IP itself? Are the growth and margin implications of a strong patent portfolio priced in by the equity markets? Are the M&A implications of complementary IP portfolios priced in by M&A arbitrage traders?
IPXI will offer financial futures products tracking IP assets held by qualified public companies, private firms, universities, public sector entities, and those embedded within venture capital and private equity portfolios. These SCIPIs represent a new generation of financial products -- synthetic exposure to the IP driving economic growth in the 21st century.
How do SCIPIs work?
Using proprietary tools and analysis, IPXI can link patents with their proper owners, whether they be public companies, private firms, small businesses, universities, public sector entities, or inventors. Once IPXI has assembled the appropriate patents in one bucket, i.e. all patents owned by Microsoft or all patents owned by MIT or all patents owned by NASA, the same valuation methodology used for TTBs is applied to the patents in each bucket. Similar to the development process for TTBs, historical pricing, research tools, and data for each SCIPI are made available to market participants.
How do SCIPIs benefit me?
- SCIPIs offer investors a “pure play” in IP assets held by different entities
- SCIPIs offer new hedging and spread trading opportunities
- Investment portfolios with partial allocations to SCIPIs may provide attractive risk-return profiles
- Market participants can leverage SCIPI pricing data to mine information about meaningful IP portfolios that would be otherwise impossible to obtain
How do I get involved?
Please contact Cameron Gray at (312) 327-4403 or
cgray@ipxi.com for more information.
