Speaking at the CIP Forum in Sweden last month, Eric Shih, a new partner at private equity secondaries giant Coller Capital, laid the groundwork for Coller’s newly launched intellectualy property investment platform.
Coller Capital will seek to invest $200 million per year in IP assets, looking at a seven- to ten-year time span. The programme is tied to Coller’s 5th fund, a $4.5 billion private equity vehicle.
The new programme, founded by Jeremy Coller, will be overseen by Shih and Peter Ho, two former executives from IPValue, an intellectual property commercialisation specialist that is backed by General Atlantic and the private equity arm of Goldman Sachs.
Coller Capital’s IP arm will acquire patents, copyrights and trademarks in all areas except life sciences and biotech, which is not an area of expertise for the partners at present.
Shih said the firm’s initial return goals are under 3x, but the focus will be on gaining the trust of its partners. He said Coller wants to develop incentives for sellers of IP. These incentives may include sharing a significant amount of the licensing or spin-out revenue with them. He said the firm will prefer proprietary transactions with repeated sellers, and ideally they’d like to work with large companies with many IP assets. He said that they recently spoke with one company which has 20,000 patents.
Shih was quick to point out that Coller’s programme is not “trolling,” the often derided practice by which firms acqure loads of IP, look for possible infringers and sue. He insisted revenue will not be based on litigation. but rather the firm will seek out opportunities for licensing and sales, and hopefully even spin-outs which can then be funded from the larger Coller vehicle. Areas of monetization will include patent sales, technology transfer, licensing, soft assertion, high assertion and, when necessary, enforcement. Calling it a “portfolio mutual fund” Shih said the key will be spending relatively small amounts on acquiring a huge number of patents.
As regards a recent US Supreme Court decisions which may make it difficult for a non-industry firm to enforce a patent, Shih said, “it’s somewhat troubling but we’re monitoring that.”
Some recent press coverage has taken a sceptical view of the intentions of Coller and other firms, such as Altitude Capital Partners, speculating that they’re hoping to strike it rich with big litigation pushes. But Shih insists litigation will not be the driving force behind the commercialization of these assets. And judging by the recent supreme court rulings and legislation floating on capital hill, trolling may not be the most forward-looking strategies these days anyway.