Octopz, a Toronto-based and venture-funded software development company, created a unique online collaboration technology that enables users to synchronously view, manipulate and markup 3D, video and other rich media files. With top-tier clients in advertising, publishing and education, the company generated numerous awards – and attention from larger technology companies.
Funded in part by GrowthWorks, the company recognized the need to protect its intellectual property. Working closely with legal counsel at Bereskin Parr, Octopz filed an initial patent application with USPTO in 2004, and by 2012 the company had 4 issued U.S patents.
Unfortunately, the company ran out of runway and a decision was made by the company’s original founders, and their venture capital partners, to explore the sale or licensing of its patent portfolio. Tim Lee (Chief Investment Officer, GrowthWorks), noted “We knew that the portfolio was valuable, but we also knew that this was an area where we had little directly relevant experience and we therefore needed expert level guidance”. Patent Monetization Inc. was retained to provide this guidance.
While the existence of the granted patents was evidence that the company had unique and proprietary intellectual property, PMI identified three primary areas that needed to be explored before the value of the portfolio – and the company’s strategic options – could be determined:
- validity and strength of the patents
- existence and nature of any infringement
- how the portfolio could be enhanced and expanded
Working closely with the company’s founders (Barry Fogarty and Paul Nykamp), PMI proposed and then subsequently led a process that had two distinct phases. The first phase was a Strategic Review, and, amongst other activities, involved:
- development of a detailed chronology that included the history of the invention, and the company’s interactions with other individuals and firms
- a prior art review led by independent third parties
- an analysis of the patent landscape closely related to the core technology
- recommendations regarding the filing of continuations and additional applications
In the second, Brokering, phase, PMI took a lead role in coordinating:
- identification of potential acquirers
- development of evidence of use/claim charts
- communication with interested parties
- management of offers, and coordination of due diligence
- negotiation and final close
The process generated significant interest from multiple parties, and the company chose to engage with one of those firms. PMI was subsequently able to negotiate the price upwards from the original offer it had produced, to land on terms (including a license-back to Octopz) acceptable to all parties, and to close the transaction 4 months from the initial brokerage engagement. . Paul Nykamp, Octopz’s CTO and the named inventor on the patents, notes “We’re extremely pleased with the services PMI provided to us. They helped us to understand what we had, how to maximize the value and they then helped us to realize this value.”
Note: Due to confidentiality restrictions the identity of the acquirer, and the details of the transaction, cannot be disclosed.