Vector’s buyout of Longitude Licensing proves investment industry is still interested in patents

When discussing the patent transactions marketplace – including here on the IAM Market blog – it is all too easy to take it for granted that, by and large, we are talking about operating companies.

However, it is not just businesses competing in terms of product or service offerings that have a need to buy, sell and license patents. A major deal agreed last week shows that, even amid the trials and tribulations of today’s US patent market, the investment industry is still interested in picking up portfolios in the appropriate conditions.

On July 28 it emerged July 18 that private equity firm Vector Capital will purchase Longitude Licensing, an Ireland-based entity that owns and monetises around 3,500 active patents and patent applications relating to semiconductor technology. Financial details of the deal were not disclosed.

Longitude was formed in 2013 to acquire and manage a patent portfolio that had previously belonged to Japanese chipmaker Elpida, which entered bankruptcy the previous year.

Vector Capital – which is reportedly one of the bidders for Yahoo – is no stranger to the IP market. Back in 2012, it spent $166 million to acquire a minority stake in French technology company Technicolor. Vector later took on the role of activist investor, becoming embroiled in a dispute with Technicolor’s senior management over the company’s IP licensing strategy, among other things.

More recently, in 2014, Vector acquired IP strategy consultancy IPVALUE. That firm will now provide support to Longitude as it continues to monetise the former Elpida portfolio – a relationship that points to the synergies that can be achieved by investment players willing to take a dive into the patent market. “IPVALUE will be the engine supporting Longitude,” IPVALUE CEO Murali Dharan told IAM last week. “The way that Vector views it is that Longitude and IPVALUE are very complementary. IPVALUE is the platform investment and the two will operate very synergistically with no change in the way that Longitude is working.”

While operating companies are typically going to be looking to buy patents for freedom to operate, defence or cross-licensing purposes, investors are more likely to be interested in acquiring patents in order to license or sell them to generate financial returns. Whatever the acquirer’s motivations and objectives, IAM Market provides them with the opportunity to connect directly with vendors in order to find the best deal for them – whether operating company or investor.

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