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
Case Study – AstroTurf
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
Case Study – AstroTurf
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
Case Study – Circuit City
Outcome: Multiple sales
Multiple auctions
Poor marketing leads to lack of interest, canceled auctions
Overlooked assets
Case Study – Circuit City
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
Case Study – Circuit City
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
Case Study – Linens ‘N Things
Outcome: Hilco and Gordon Brothers acquire brand for
$1 million in joint venture
Relaunch as global licensed brand
Case Study – Linens ‘N Things
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
Case Study – Fortunoff
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
Case Study – Fortunoff
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
Case Study – Fortunoff
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
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