Case Studies in
Identifying and Marketing IP:
The Good, the Bad, and the Ugly
Presented by:
Weston Anson
CONSOR 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
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Identify IP / IA Bundles for Value
Stratify IP / IA

Core v. Periphery
Peripheral portfolios may be monetized
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Vertical and horizontal
Out-licensing / Spin-off
Analyze quality of IP

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Relevancy to current / future business
Relative strength analysis
Potential infringement assessment
Intangible Asset Bundles
1. Trademarks
6. Corporate Identity
Assets
11. Real-Estate Related
Assets
2. Other Brand-Related
Assets
7. IP Contracts
12. CommunicationsRelated Assets
3. Patent-Related
Bundles of Value
8. IT/Software
13. People-Related
Assets
4. Internet-Related
Assets
9. Data/InformationRelated Assets
14. Other Technology
Assets
5. Product-Related
Assets
10. Research-Related
Assets
15. Miscellaneous
Assets
2
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
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Press releases

Eblasts

Viral marketing
Target successful and unsuccessful
competitors, related professionals
Vetting process for potential bidders
3
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:
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Financial Buyers
Strategic Buyers
Franchise Portals
Entertainment Law Firms
Intellectual Property Industry Resources
4
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 eCommerce Segment
Domain Names and
Perpetual License to use
Trademarks in eCommerce
$ 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, eCommerce 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
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Case Study – AstroTurf
 Possible Strategies

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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
6
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
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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
8
Case Study – Linens ‘N Things
Key assets:
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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
9
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:
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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
10
Case Study – Fortunoff
Marketing efforts and sale method
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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:
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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
11
Case Study – Fortunoff
Lessons:
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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
12
Case Study – KB Toys
Lessons:
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
Size matters
Main street stores can’t compete with big
boxes
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