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IP, IP Asset, Patent

German Patent Fund Acquires Substantial Portfolio From British Telecom

Cross-posted from Patent Connections.

According to a press release issued yesterday, the German patent fund Patentportfolio 2 S.a.r.l. acquired 400 patent assets from publicly held BT Group PLC. The group is funded by the German investment fund Alpha Patentfronds 2, and strategic IP advisory services will be provided by IP Navigation Group (Europe). IPNav’s American counterparts have been providing strategic advisory services to Walker Digital since earlier this year, generating $25 MM in its first 90 days in that role.

The funds have been controversial since their inception, described in 2008 by an IAM Magazine correspondent as “little more than a triumph of hype over reality” with “very little chance of ever being successful.” The funding for patent purchases, such as the one from BT, comes from a group of German investors that buy into a trust much in the same way that investors today buy in to mutual funds. The trust invests in Alpha Patentfronds2, managed by Alpha Patentfronds Management Gmbh. Both the trust and Alpha Patentfronds Management participate as limited partners of Alpha Patentfronds2 along with general partner Euram Bank which reportedly does not contribute any capital. Euram Bank’s slogan, Creative Financial Solutions, becomes all the more evident when this investment structure is laid out visually.

The fund was developed by Vevis Gesellschaft für Vermögenswerte mbH & Co. KG, described by Alpha Patentfronds Management’s Managing Director Heinz Leipe as “a distribution and service company for closed-end fund shareholdings and private placements, focusing on advisory and research, product and development coordination, placement of issued capital and fund management.” While past performance of patent funds such as Alpha Patentfronds has been mixed, performance is critical to their survival. In 2010, a similar patent fund created by Deutsche Bank filed for bankruptcy, and is now under new management. Malte Köllner claimed that “Grandparents are literally putting money into these funds to finance the future of their grandchildren.” Joff Wild of IAM Magazine looked into the insolvency and concluded that “the difficulty it apparently had was in putting together licensing deals. This does chime with what quite a few people are saying generally about the IP market at the moment: licensing deals are hard to do, especially at what licensors would consider to be decent rates.” Fortunately for Alpha Patentfronds’ investors, the Walker Digital experience demonstrates IP licensing as one area in which IPNav’s team excels. The only question is, will IPNav Europe’s team outperform its American counterparts?

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