From the monthly archives:

September 2008

Samsung, SanDisk: M&A and acquiring your licensors

by Andrew Watson on 23 September 2008

Samsung recently made an unsolicited offer of $58.5 billion USD for memory company SanDisk, which the SanDisk board then turned down. It seems Samsung — a major user / manufacturer of memory cards — has as its main reason for the offer is SanDisk’s portfolio of patents. Samsung is a major licensee of SanDisk IP; reportedly close to $400 million a year (400 billion won) in licensing fees to SanDisk (Source).

SanDisk would like to see more money on the table, but Peter Yu (a BNP Paribas analyst) noted for Forbes that if Samsung wants to play hardball and stick close to its original offer:

Samsung can also threaten to withhold intellectual property royalties, a big source of income for SanDisk, and the resulting prolonged litigation process would be a headache for SanDisk

While a deal may not be that likely given both Samsung’s history in US acquisitions and SanDisk’s reluctance to sell (as noted in the FT) this does highlight a few thoughts in terms of IP strategy:

  • Licensees acquiring their licensors as a way to reduce overall costs by direct ownership of the IP;
  • Using a threat of royalty dispute (or an actual dispute) as a way to encourage settlement or acceptance of a deal (the stick to the $58.5 billion carrot); and
  • Given that SanDisk has contracts with Samsung’s competitor Toshiba, acquisition could be a way of depriving a competitor of access to certain IP.

Beyond a royalty dispute, Samsung could also explore (if it is a possibility) acquiring any patents that SanDisk might be infringing and using the threat of patent litigation (as opposed to a royalty dispute) as an additional stick. In addition, the threatened royalty tiff is in relation to upcoming contract talks, and as The Register notes this could all be a ploy on the part of Samsung to gain leverage in these negotiations.

Of course the possibility of these strategies must be matched with their compliance with anti-trust / competition law and other legal boundaries.

It is also worth noting that part of the reason for this takeover offer is the slump in SanDisk’s commercial position and the possibility of pressure by institutional investors attracted to the offer when facing a downward sales forecast. It seems to me that the key way to combat takeover attempts by your licensees is to be in as strong a commercial and intellectual property position as possible in order to resist these offers (or command a higher price).

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IPReader links for 16 September

by Andrew Watson on 16 September 2008

New and noteworthy links from around the web:

IPReader is a collection of relevant links that we select from the news sources and blogs we read. A plugin helps us automate the process, so we’re working out a regular posting schedule and exact format. Any suggestions for improvement, please get in contact.

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SOLO IP event notes

September 12, 2008

On Wednesday I attended the SOLO IP meeting at Olswang to listen to representatives from LexisNexis explain their product offering for solo and small firm IP professionals (though not before the IP Kat mentioned a grand scheme to change the face of legal research). LexisNexis mostly chatted about: Patent optimizer, a service with automated claim […]

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IPReader links for 11 September

September 11, 2008

New and noteworthy links from around the web: The Google Imaginary – Google and anti-trust. Patent Lawyers: IP Attorneys Increasingly Getting Their Own Patents And Suing – More comment on patent lawyers as inventor and litigants. Neal Stephenson, IV, Seattle, World. – Highlighting that one of my favourite SciFi authors and a truly visionary thinker […]

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Solo IP meeting in London | 10 Sept

September 10, 2008

Tonight, I’ll be at the SOLO IP group’s meeting at the (decidedly not a solo) Olswang’s London office. Via Jeremy Phillips at the SOLO IP blog: Don’t forget: this coming Wednesday, 10 September, is the date of the forthcoming SOLO IP group meeting (details here). It’s 5pm to 6.30pm at the London office of Olswang […]

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IAM’s hunt for the top 100 IP strategists

September 10, 2008

Intellectual Asset Magazine (IAM) is on the hunt for the top 100 global IP strategists. In response, the IPEG Blog, from the folks at the Intellectual Property Expert Group, asks the question: How does [strategy as "direction and scope of an organization over the long-term"] work in “intellectual property strategy”, so, in other words, how […]

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UKIPO – new IP guides for doing business abroad

September 8, 2008

Via IMPACT, the UK Intellectual Property Office and UK Trade & Investment are doing a series of guides for UK businesses going abroad. This is in addition to the materials the UK IPO already makes available on its site: Intellectual property abroad. The guides don’t appear to be available yet, but will post an update. […]

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US IP conferences for EU based IP professionals

September 4, 2008

The United States is generally quite a leader in IP – based in large part upon the size and sophistication of the companies located there and on the frequency of litigation (thus making for more decisions to dissect and frequent adjustments to the law around current practice). As a result, it can be quite important […]

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LES Britain and Ireland Open Source event

September 3, 2008

Our UK and Ireland branch of the Licensing Executives Society (LES) is having an event on open source on Wednesday 10th September 2008 at 5:30 PM (speakers starting at 6). From the event description (DOC file): Free and open source software has had a radical impact on how we – both individuals and businesses – […]

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Valuation, investment and IP

September 2, 2008

As I mentioned in my introductory post, I come from a research background, so I’ve been learning more about the business side of IP through both formal and informal training here at ipVA and through just shadowing others and asking questions.  But being the blogger that I am, I’ve also started regularly reading  VC blogs […]

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