Thoughts from the Aon Team
IP as a Source of Enterprise Value
Welcome back! For those of our readers in the U.S., we hope you enjoyed your Thanksgiving break and hope everyone is staying healthy and safe.
We’ve said this before, but it’s worth restating. Intangible assets today are nearly 85% of the total asset value in the S&P 500. Yet in most transactions, companies fail to effectively consider and articulate the role of their IP assets as a source of enterprise value, relegating it instead to a confirmatory due diligence item considered in the late stages of the deal, often well after value and terms have been negotiated. This process gap leads to value leakage for companies of all stages and sizes.
But what if a solution existed that could help companies realize higher transaction value by specifically articulating the quality of the seller's IP portfolio in the M&A and capital markets?
Actually, one does exist…
We recently launched what we call our Quality of Intellectual Property solution (QoIP) and resulting report that enables companies to assess, articulate and realize the full value of their IP portfolio for M&A or financing transactions. Deal teams use the tool to catalogue IP with greater precision, describe its connection to the enterprise's revenue streams and strategy, and benchmark it against competing IP portfolios.
The solution was most recently used to support Victory Innovations in its sale of a majority stake to The Carlyle Group.
We think it is a bit of a game changer, but don’t take my word for it. Here’s what Matt Zimmer, Head of Industrials Investment Banking at William Blair had to say:
"Similar to how Quality of Earnings improves visibility into financial performance and cashflow, QoIP paints a game-changing picture of technology innovation and protection relative to traditional IP disclosure."
You can read more about it below via some of the related industry coverage, and if you have any specific questions please reach out to Pete Petitt on our team.
Aon IP in the News
- Aon introduced a new offering that will target the M&A market by precisely articulating the quality of a seller's IP portfolio. The Quality of Intellectual Property (QoIP) Solution produces a report on high-impact themes so that companies can engage in IP discussions in a more tangible way. The solution was most recently used for Victory Innovations in its sale of a majority stake to The Carlyle Group.
- Aon's IP head was quoted by IAM-Media stating, "You can really understand the value and quality of these assets that can be extremely helpful in M&A."
- Aon reported a "rosy" growth spike in the third quarter, reporting revenue levels similar to last year. The company also revealed a new $5B share repurchase program expected to drive long-term growth.
- A new report from the U.S. Patent and Trademark Office found that the number of patent applications for artificial intelligence more than doubled from 2002-08, highlighting the rise of AI across all sectors. T he report indicates that applicants who experienced difficulty receiving an AI patent in the past may now find the USPTO more open to their applications as its interest in that sector grows.
- The majority of legal tech patents filed with the World Intellectual Property Organization in 2019 – many of which concerned AI in contract reviews or predicting lawsuit outcomes – originated in China, according to Thomson Reuters. Out of 1,369 tech patents filed last year, 847 were Chinese, while 271 were from the U.S.
- The White House on Nov. 9 issued a Joint Strategic Plan on Intellectual Property, a four-tiered plan to protect American intellectual property into the next decade. The announcement followed a prolonged presidential election in which publications questioned the effects of a Joe Biden administration on intellectual property. Agency watchers said President-elect Biden will likely maintain a friendly approach to Big Tech as his administration prioritizes patent rights and innovation.
- Even if Biden cools anti-China rhetoric stemming from the White House, legal experts say cases brought against China will likely continue. Many cases, such as trade-secret theft, preceded the Trump administration. A two-year campaign launched in Bejing to improve intellectual property protections is not expected to satisfy U.S. demands because it focuses too heavily on trademark protection rather than copyright and patent rights.
- Apple will pay $502M to the internet security software company VirnetX following decades of legal battles over patents. A jury ruled that Apple should pay the royalties after infringing VirnetX patents for technologies such as FaceTime and iMessage.
- Large tech and telecom companies are amassing 5G patents in a race to implement the new technology. With more demand for connectivity, efforts from companies such as Huawei and Ericsson are causing concern that they could wield too much market power down the road. Nokia announced 3,000 patents in March ahead of comments from its new chief executive that Nokia would do “whatever it takes to win in 5G”.
- Xerox PARC accused Twitter and Facebook of using its patents for the tools the social media companies use to help stop the spread of misinformation. The company filed a lawsuit in California alleging that its patented technology supports many of Twitter’s and Facebook’s core functionalities, stating that Facebook is seen as a "relatively young" company that achieved its success because of patents awarded to Xerox PARC over decades of research.
- Amazon will help small companies safeguard their brands in Europe through the Intellectual Property Accelerator, a program that links entrepreneurs with law firms that have IP rights knowledge. Amazon will also partner with the National Intellectual Property Rights Coordination Center to prevent counterfeit goods from entering the U.S. Operation Fulfilled Action will sideline inventory if the company suspects it may be counterfeit.
- The European Commission is seeking to bypass drug patents in an effort to fast track the production of a generic COVID-19 vaccine in EU countries. The news comes at the same time that the European Commission published its new Action Plan on Intellectual Property, which seeks to strengthen intellectual property rights in coming years.
- Developing nations are pushing for COVID-19 vaccinations to be produced without patents to ensure that they are affordable and accessible in poorer countries. A group of countries led by South Africa and India asked the World Trade Organization to waive patent protections. However, wealthy nations including those in the European Union and the United States oppose the waiver, meaning it will likely fail when it goes before the WTO in December.
News of Interest
- Genetic Gold Rush: How Supreme Court Heard A Case On Patenting Human Genome - NPR - 11/27/2020
- Outbound Virality: Facebook: 23 Interactions; Twitter: 9 Tweets
- So Hansen got to work finding just the right company to strategically sue in order to topple the whole practice of gene patenting, and he settled on a company called Myriad Genetics out of Salt Lake City. Myriad had extracted, isolated and patented the BRCA genes, which, when mutated, are responsible for the majority of inherited breast and ovarian cancer cases.
- Thought Experiment: Is Our Patent System Ready for a Potential Future of Brain Interfacing? - IPWatchdog - 11/29/2020
- Outbound Virality: Facebook: 9 Interactions; Twitter: 14 Tweets
- A thought-melding computer could conceivably handle a much scaled-up version of collaboration. For context, massively multiplayer online games host thousands of players at any one time. There may be few, if any, practical limits on the number of individuals who can share and consume thoughts at once. Thus, should conception be limited to those who contributed “substantially” to a claim?
- One Tech Startup’s Legal Fight With Big Pharma Highlights Challenges Faced By New Companies - Houston Public Media - 11/23/2020
- Outbound Virality: Facebook: 9 Interactions; Twitter: 4 Tweets
- "Rather than entering into the relationship, they said, basically, never mind and then proceeded to use all the information that they gleaned from SensorRx to improve and actually more effectively develop their own, competing, product," SensorRx’s lawyer Marty Geer said.
- To Embed, or Not to Embed, that is the Question - Law Journal Newsletters - 11/1/2020
- Outbound Virality: Facebook: 0 Interactions; Twitter: 0 Tweets
- The practice of wholesale allowance of embedding, however, has recently taken a turn that indicates a change may be coming. For example, Facebook-owned Instagram has recently adjusted its embedding policy, noting that users who wish to embed content must “secure all rights necessary to display, distribute, and deliver all content in [another] app or website.”
- LeBron James Blocks Carnival Cruise Line's Attempt To Trademark 'King James' - ClutchPoints - 11/26/2020
- Outbound Virality: Facebook: 1.1K Interactions; Twitter: 1 Tweet
- Though the “King James” moniker was obviously not originated by LeBron, the Lakers’ forward does retain a trademark license over the nickname, as it pertains to sports related items. With the cruise line planning on hosting “sports activities and events” according to their filing to use the name, it opened a legal avenue for James to contest the use of the moniker.
- 🇺🇸Kyle Bass🇺🇸 @Jkylebass 22 Nov Elon Musk says Tesla’s Chinese rival ‘stole’ Apple’s code - Elon admits the Chinese have stolen Tesla’s intellectual property. What an amazing place to do business. #China #Steal #Tesla #Apple https://t.co/4UUcJYD4VO Retweets: 2.2K Likes: 6.1K
- The White House @WhiteHouse 3 Nov President @realDonaldTrump reversed Washington’s decades-long, bipartisan refusal to confront China—bringing China into an improved Phase One Trade Agreement, acting to protect Americans from intellectual property theft, and restricting access to crucial information networks. https://t.co/lyiAP0whJZ Retweets: 958 Likes: 4.2K
- Human Rights Watch @hrw 16 Nov Waving intellectual property rights that limit the production of and access to safe, effective Covid-19 vaccines is crucial to ensure such medical products can be made widely available quickly at affordable prices. Daily Brief: https://t.co/ePVSCRAOnI https://t.co/C1Hjug2USs Retweets: 24 Likes: 62
- Forbes @Forbes 14 Nov With streaming services battling for content, cherished intellectual property is more valuable than ever before. And in a Grinch-like year, the beloved children’s author made $33 million—serious green with a side of ham https://t.co/hRmcmzgBZK by @MadelinePBerg https://t.co/odo0MABGKS Retweets: 14 Likes: 55
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 firstname.lastname@example.org.
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