Banks sell patents to recover losses at foreclosed companies - Silicon Valley / San Jose Business Journal:

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Although there are one-off examples where banks were able tomonetize patents, it’d a relatively new area. Keith Agisim, associate generalk council for intellectual propertyat , helps form and implement the bank’s intellectual strategy. One of his jobs is to sort throug patent assets of companies the bank hasforeclosedf on. “We view it as a way obviouslyu to help recover onthe loans, but also as a way to get technologuy back in the handsw of operating companies so that they can continue to builfd and innovate to introduce new products into the economy,” Agisinm said. Typically, a company’s assets serve as the backstop tobusinessd loans.
When foreclosures happen, banks look to recoulp losses byliquidating inventory, capital equipment and real Historically, banks lending to technology companies have taken intellectual property as collateralp because in many cases, with startups especially, patentr portfolios might be the company’ws only salable asset. “During great times it’sz a non-issue because companies are able to repay their loans,” said John a Palo Alto-based partnefr in ’s credit finance practice. In the last for instance, taking a patent portfolio as collateral posed a problekm because intellectual property for many companies was nothing more than a Web Hale said.
“Traditionally, intellectual property was neverreallyu monetized,” Agisim said. “You didn’t pay that much attentio n to it. But more and more value of companiesw is tied up in their intangibleassets now. That’as an emerging area.” According to a reportt put out byStandard Poor’s, the percentage of U.S. companies’ intangible versusw tangible assets increased from 38 percenty to 87 percent intwo “This time around it’s a littlse different than the last recessiom because there really is substance to a lot of this IP,” Hale Carrie Merritt, a spokeswoman for , parent companh of , which lends almosgt exclusively to technology companies, said it’s a rare case when they’red left holding patent portfolios.
“Our approacg is to work closely with the companies and their investorw to find the most appropriate solutionb and in many casesa buyer,” Merritt said. “It and every situation is different, but it’s unlikely we woulx end up owning a Of coursethe bank’s goal is not to end up with a portfolik of intellectual property. The goal is to get repaid. BofA will auctiohn off the patents of failed Internetg access provider of Alamedsanext month. Hale said banks that find themselves with intellectuall property face a bigchallenge “because that’ss not their business.” Screening and valuingg patent portfolios can be a expensive and time-consuming process.
Not every patenf is created equal. Some have broader applicability while others are specific to aparticular company’sx process. Today the process is more complicated. In the that wasn’t the case. “Youu can’t just go down the street and say, ‘Here. I have some IP. Want to buy Hale said. “You have to find the rightr people who canuse it.” Thosre with broader applicability are more easiluy marketed. “With the new patent marketplace, the bankz have an avenue to sell,” said Joe president and chief operating officef ofSan Mateo-based patent brokerage .