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
 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

6. Corporate Identity 11. Real-Estate Related

1. Trademarks
Assets Assets
2. Other Brand-Related 12. Communications-
7. IP Contracts
Assets Related Assets

3. Patent-Related 13. People-Related

8. IT/Software
Bundles of Value Assets

4. Internet-Related 9. Data/Information- 14. Other Technology

Assets Related Assets Assets

5. Product-Related 10. Research-Related 15. Miscellaneous

Assets Assets Assets

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 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

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 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

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 Tower Records: Valuation & Auction

Valuation Conclusion Value Comments

'No less than Value' Trademarks and Domain $ 1,650,000 This is, in today's dollars, the net
Names cost of the internally generated
and acquired intellectual property.

Liquidation Value of e- Domain Names and $ 1,320,000 In today's dollars, the net value of
Commerce Segment Perpetual License to use the intellectual property connected
to the e-commerce sites
Trademarks in e-
Commerce

Liquidation Value of Perpetual License to use $ 1,585,000 In today's dollars, the net value of
International Franchise Trademarks in the intellectual property assuming
only the Franchise Contracts run
Segment connection with to their next renewal date.
Franchise Contracts

Auction Outcome: Trademarks, e- $ 4,200,000 Net value of the intellectual

Asset Values Commerce and property sale. After fierce open-cry
bidding war between Caiman
International franchise Holdings and RiverWest Brands.
agreements

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
 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

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 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

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 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

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 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

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 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

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 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

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 Case Study – KB Toys

Lessons:
 Size matters
 Main street stores can’t compete with big
boxes

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