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Aon Intellectual Property Assets Briefing - October 30, 2020

Thoughts from the Aon Team

In the face of increasing risk and complexity, organizations need more creative and effective ways to access capital. While accessing capital has always been critical for organizations, and the health of economies, ongoing changes, and market forces are expanding the very definition of capital to go beyond the traditional focus on hard assets to now include a focus on the value of intangible assets like intellectual property.

While our goal with the newsletter is to not be overly commercial in our approach, you will extend us this one opportunity to share how very excited we were to announce the launch of our IP Capital Market solutions earlier in the month. And we were also able to, at the same time, announce our first deal that helped secure a significant round of funding for AgTech leader Indigo. You can read the full announcement here.

But to sum up, building upon our IP valuation approach, Aon arranged for the lender an IP Collateral Insurance policy in excess of $100 million. The bespoke policy is believed to be the largest of its kind. By combining proprietary IP valuation tools and a collateral protection insurance policy, this collaboration enabled an IP-backed debt structure that helped Indigo raise additional funds while avoiding equity dilution.

Our CEO Greg Case called this a “watershed moment” - having created a new, alternative financing opportunity for IP-rich companies. Based on the coverage, featured below, the market seems to agree. And we hope you do too. In fact, we’d love to hear what you think.

To find out more, please visit our site and share your thoughts - contact us at intellectualproperty@aon.com. 

Lewis Lee, CEO Aon, IP 

Aon IP in the News

  • Aon announced it was creating the single largest intellectual property collateral insurance policy to allow for Indigo Ag to borrow at least $100M, using their IP as the collateral. "The IP-backed lending transaction marks Aon’s rollout of its intellectual property capital market solution, which features the broker’s proprietary IP valuation tools." 
  • Aon, alongside the research center Ponemon Institute, identified how stock price rallies in companies like Facebook and Alphabet Inc. are key indicators of the value of intellectual property to the S&P 500's stability. As a result of these share price gains, Bloomberg stated that S&P 500 members held more than $21 trillion in intangibles at the end of 2018, more than double 2005. This is thought to be a new phenomenon – much of the index’s $28 trillion value comes from things you can’t see or count, like algorithms, brands and lists. The shift picked up after the financial crisis of 2008 and has been expedited during the COVID-19 lockdown. The Aon report states that there’s a clear correlation between investment in intangible assets and market capitalization. 
  • Aon recently launched  a new solution for greater access to capital based on an organization's IP value. “Aon is committed to helping clients navigate an increasingly complex world. The launch of this solution is a watershed moment, bringing together innovative lenders and insurance markets with Aon’s industry-leading, proprietary valuation technology to create a new alternative financing opportunity for IP-rich companies,” said Greg Case, Chief Executive Officer of Aon. 

Executive Insights

  • A complaint filed Tuesday with the U.S. District Court in Los Angeles claims a former Uber Technologies executive who co-founded a British startup, backed by Jeff Bezos, was allegedly stealing trade secrets from a California shipping and logistics company where he was once a board member. Vanguard Logistics accused Fraser Robinson of conspiring with another former Uber executive to steal algorithms, data, and other intellectual property, Reuters reports. The act took place in 2018 when Fraser Robinson created the “copycat” London-based company.
  • Zapier Inc. filed a complaint against Zoom Video Communication for trademark infringement and unfair competition. The complaint alleges that Zoom is using the name “Zapp” for its third-party app integration within Zoom, infringing on Zapier’s “Zap” third-party app integration businesses, which Zoom has previously partnered with. 
    • Zoom saw a massive surge in popularity and a 600% increase in stock price as a result of the pandemic as businesses transitioned to more online work, and the company is still assessing how to best target smaller consumers. Prior to the pandemic, Zoom was mainly focused on large enterprise customers but has since become a daily tool for businesses of all sizes. 
  • Twitch, a live streaming platform with nearly 40 million users and an estimated valuation of $3B,  received an accusatory letter signed by multiple major U.S. music organizations, industry leaders, and the RIAA. The letter accuses Twitch of failing to secure proper synch and mechanical licenses for its recently launched “soundtrack tool” as well as “allowing and enabling its streamer[s] to use our respective members’ music without authorization, in violation of Twitch’s music guidelines.” Twitch delivered over 5 billion hours of live-streamed content in the second quarter of 2020 as COVID-19 moved concerts, DJ sets, and other live-streamed content to the internet. 
  • This month the Supreme Court seat vacated by the late Justice Ruth Bader Ginsberg was filled by Justice Amy Coney Barrett. The sweeping authority of the court regularly warrants its intervention in matters relating to intellectual property. A series of cases just made it one step closer to the new justice's chambers, with the court's recent decision to grant three petitions for certiorari. The petitioners are collectively challenging  a Federal Circuit Court's ruling that administrative patent judges are appointed through unconstitutional means. The lower court held in Arthrex v. Smith  that the appointment of patent judges violates the constitution's Appointments Clause (Art. II. § 2. Cl. 2) because these positions are “principal” officers and therefore must be appointed by the President.
  • Jack Daniel’s Properties petitioned the Supreme Court for certiorari following an unfavorable ruling in the matter of VIP Products LLC v. Jack Daniel’s Property, Inc. VIP products sued Jack Daniel’s after receiving a cease-and-desist letter concerning its Bad Spaniels Silly Squeaker dog toy. The toy bears resemblance to the iconic Jack Daniel’s Old No.7 whiskey bottle. The district court ruled with Jack Daniel’s, prompting an appeal from VIP Products to the Ninth Circuit. The Ninth Circuit overturned the early ruling, holding that a “work need not be the expressive equal of Anna Karenina or Citizen Kane” to be considered expressive. It recognized that while the Bad Spaniels toy is not “the equivalent of the Mona Lisa,” it is still expressive. 

News of Interest

  • Aon launches potentially game-changing IP financing initiative with $100 million loan to agritech company - IAM-Media - 10/30/2020
    • “This is the first time you have had the financial industry and the insurance industry come together to create this much capital backed solely by IP,” says CEO Lee
  • The Lawless Realm - Foreign Affairs - 10/19/2020
    • Cyberattacks are constantly taking place, and many intrusions go unnoticed and unreported. In democratic countries, only intelligence agencies and private companies can reach a detailed understanding of cyberattacks and the risks they pose. Everyone else must scramble for information about what actually happens below the surface of the digital world. 
  • Therapy Clients Become Targets of Blackmail Campaign - The National Law Review - 10/28/2020
    • Patients of a Finnish psychotherapy centre have become the victims of a blackmail campaign after the centre suffered a data breach. It is reported, the centre’s data was stolen during two attacks, one occurring in November 2018 and the other between the end of November 2018 and March 2019. A cyber criminal (or criminals) has used the stolen data to contact patients demanding the payment of 200 euros in bitcoin, with this amount increasing to 500 euros if the patient refused to pay within 24 hours. If a patient refused to pay the ransom, the cyber criminal threatened to publish their personal information, including notes from therapy sessions. Around 300 records have been published on the dark web, which suggests patients are refusing to pay the ransom.
  • Spoken Giants Offers Royalties for Comedians, Podcasters and Other Spoken-Word Copyright Holders - Variety - 10/28/2020
    • Spoken Giants is a new royalty administration agency that claims to be the first of its kind for copyright holders of spoken-word works including comedians, podcasters, speeches, lectures and the like.
  • Streamers Can Now Turn Music Off In FIFA 21 To Avoid Copyright Problems - TheGamer - 10/27/2020
    • FIFA 21 is giving players the option of turning the game's soundtrack off in order to avoid copyright infringements while streaming. This follows a very controversial cleanup by Twitch. The streaming platform has been deleting videos on the back of pressure from the music industry pertaining to songs being heard during videos that obviously aren't paid for.
  • New Balance Sued for Trademark Infringement Over ‘Vision’ Shoes - Bloomberg Law - 10/26/2020
    • Authentic Brands Group sued New Balance Athletics Inc. in Manhattan federal court Monday for allegedly infringing trademarks associated with its Vision Street Wear brand. ABG owns multiple brands including Nautica, Aéropostale, Brooks Brothers, and Forever 21. It settled a separate lawsuit with New Balance earlier this year in which the shoe company alleged Nautica’s use of a block-letter “N” on footwear infringed its trademarks.

Social Contribution

  • FBI Phoenix @FBIPhoenix 27 Oct U.S. researchers studying #COVID19 must stay vigilant. The FBI and @CISAgov warn that PRC-affiliated cyber actors may try to collect intellectual property and public health data related to vaccines, treatments, and testing. Learn more at https://t.co/bKizJ3Bt0Y. https://t.co/pKRBK1yJGs
  • Kevin Neiser RBC Royal Bank Sr Commercial Manager @RBCKevinNeiser 21 Oct Today's RBC #dailybusinessinsight: Understand your business's most important assets. Is it intellectual property? Data? Brand? Payment systems? Understand the risks associated with what you need to protect so that your business stays viable. https://t.co/uy7AyObLnO
  • Conde @LawyerCount 21 Oct Usually, if a founder does this, Intellectual Property gets messy. Founder’s might be assigning all the IP rights of their startup’s product to their employer, without even knowing it.
  • CSIS @CSIS 28 Oct Last week, the U.S. and Brazil announced a trade deal covering customs and trade facilitation, good regulatory practices, and anti-corruption—but not enforcement provisions nor provisions on digital trade and intellectual property. https://t.co/h6YgRCVMSO.
  • Blake Brittain @blakebrittain 27 Oct The Eleventh Circuit affirmed that Netflix and the makers of "Narcos" didn't infringe Colombian journalist Virginia Vallejo's copyrights in her memoir about her experiences with Pablo Escobar: https://t.co/5yoXzfxh0m
  • WrestleTalk @WrestleTalk_TV 27 Oct #WWE is embroiled in somewhat of a trademark battle with an #NFL player over the term 'Stone Cold': https://t.co/Hv1tBnhgQ0

Aon’s Intellectual Property Solutions team helps clients identify, protect, and maximize value from their most valuable assets in today’s business world, their intellectual property. Aon brings the best minds and strong analytical tools to provide a comprehensive approach to intellectual property strategy, valuation and risk management across a client’s business -- aligning current and future intellectual property assets with a businesses’ overarching strategy.

For more information about Aon’s Intellectual Property Solutions, please contact intellectualproperty@aon.com.  

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