| An IP holder may be unwilling to relinquish a direct or indirect proprietary interest in its IP in a situation where, for example, the infringement relates to only one application of a technology, which has several commercial applications. In jurisdictions where the funding of litigation is not an issue, the Company may enter into agreements to fund infringement litigation in consideration for an interest in any proceeds of such litigation. Where the Company’s opportunity to participate is limited to acquiring an interest in the IP or in the registered owner of the IP and it is unable to negotiate satisfactory terms, the Company, will not participate in the matter.
Before entering into an agreement with an IP holder, the Company undertakes a substantive review of a potential infringement action, which includes an analysis of the IP and the parties involved. The first stage of review consists of a review by management of the Company of a written summary prepared by the IP holder describing the IP and how it believed it has been infringed. If management believes the case has validity and merits further due diligence, it will retain, where appropriate, an expert to review and render an opinion regarding the IP, the infringement issue or both. The estimated costs of this review process are generally between US$30,000 and US$35,000.
The Company believes that it has assembled a management team with the necessary expertise to initially evaluate the viability of potential IP cases. The Company’s goal over the next two to three years is to acquire interests in 40 to 50 IP rights. This acquisition strategy will be dependent upon the Company having the financial resources necessary to make the acquisitions. Sources of funds for these acquisitions will include cash flow from successful litigation and equity and debt financing. The Company believes that it has sufficient human resources available to administer 40 to 50 IP cases over the next 2 to 3 years.
The Company anticipates that virtually all of these IP rights will involve actions brought in the United States where the courts are more supportive of plaintiff’s rights in infringement lawsuits, and awards by juries are generally higher than in any other part of the world where the Company could acquire a direct proprietary interest. Despite the potentially lengthy process of litigation, the Company estimates that many of the suits will be settled prior to trial, thereby minimizing expenses for all parties.
The Company’s intention is to generate long-term growth through reinvestment of a portion of its revenues into additional IP rights. |
