With the recent news of Microsoft acquiring Nokia’s devices and services business, the key role played by patent portfolio in the market valuation of a company has once again come to limelight.
As reported by World IP Review here, the license fee for the vast patent portfolio of approximately 30000 patents including some key wireless technology patents and several design patents accounted for more than 30% of the agreed buyout amount of a whopping $7.16 billion!
What more! The entire patent portfolio has been licensed non-exclusively for ten years as part of the deal and also covers certain key wireless technology patents that were in-licensed by Nokia from IBM, Motorola and others.
While in the recent past, we have seen a lot of Indian high tech companies getting global attention by acquisition deals such as EMC-Aveska, Cisco-Meraki, Facebook-Tagtile and more, one can see that inclusion of a strong patent portfolio in the account books would have definitely raised the stakes.
Time and again patent portfolios have proved to be very valuable intangible assets in raising the valuation of a company such as here, here and here; an interesting deal of this kind certainly makes a strong point to the rapidly growing high tech industry in India. We list out a few interesting takeaways here:
- Patent portfolio is one of the primary factors in deciding valuation of the company; large share of a company’s market value is locked in its intangible assets like patent portfolio
- Apart from the acquisition piece, one can always license out the patent portfolio in a non-exclusive manner. Thus, opening up yet another means for generating revenues through patents even after acquisition!
- Tech companies should focus on building a portfolio of patents around its area of core competency, adding more value to its assets
- For top leadership in tech startups, this definitely opens up a worthy exit opportunity