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IP, IP Asset, Patent

Coller Capital Pulls Plug On IP Fund, Reneges On Billion Dollar Patent Deal According To A Lawsuit

According to a lawsuit filed in a New York County Supreme Court, Coller Capital‘s IP fund, in the process of winding down, stands accused of backing out on a deal to sell three patent portfolios worth, according to the Plaintiff’s account of Coller’s representations, “well in excess of $1 Billion.”  Collectively, three British Virgin Islands companies–Lavingy Holdings, Ludi Finannce and Cellore Investments–claim they contracted with certain Coller LP’s and holding companies to acquire three specific patent portfolios for a total of $25 M. The Lavingy group, represented by McKool Smith‘s Gayle Klein, claim Coller prematurely backed out of the deal and ask the court for $300 M.

According to the complaint, the parties drew up three purchase agreements, dividing the purchase price more or less evenly between them, and executed agreements allegedly locking the portfolios up for 3 years while the buyers raised the necessary funds.  But there was a catch.  One of the three portfolios required consent of a previous owner in order to be transferred to the Lavingy group–an undertaking for which Coller was responsible.  Coller’s failure to produce the required signature in time triggered a buyer option in which Lavingy group could move forward by funding the other two purchase agreements, while Coller continued to obtain the necessary consent on the third.

Lavingy claims it declined this option, which Coller interpreted as a repudiation of the deal entirely.  According to the lawsuit, Coller “stated that the Patent Assignment Agreements were ‘null and void’.”  Lavingy disagrees, claiming that their preference all along was to proceed with all three purchases simultaneously and that their decision not to exercise the immediate purchase option on the remaining portfolios nonetheless keeps Coller’s duty–to not attempt to sell the portfolios to anyone else–intact for the remainder of the three-year period.

Lavingy explains Coller’s possible motivation, alleging they were told by Coller’s Peter Holden that “they were under extraordinary pressure from Coller’s Investment Committee, who wanted to wind down” the patent holding companies.  This statement tends to confirm rumors that Coller has been looking to exit the IP monetization business.  Not agreeing to be locked in for three years, and expressing a desire to “just … move on,” Coller–according to Lavingy’s complaint–“invited the Purchasers [Lavingy] to let [Coller] know ‘if you need to sue.'”  Both the “extraordinary pressure” from the Investment Committee, and Peter Holden’s alleged admission that, “there are a lot of people interested in these portfolios” prompted Coller to renege on the alleged three-year obligation and sell the portfolios at a higher price to someone else.

Although neither side appears to be talking to the press (yet), Coller likely responds, among other things, by suggesting that Lavingy never had the money to consummate the deal in the first place.  Further, it seems unreasonable that Coller, with several years of experience in IP transactions, would enter into a purchase agreement that provided no funding for three yearswithout having some clause enabling Coller to walk away.  Particularly if, as the lawsuit suggests, the team was under “extraordinary pressure” to wind down the IP business.

Since March 2012, when Lavingy alleges the breach occurred, buyers have recorded three assignments related to IPG Electronics 503–one of the two holding companies involved in the suit.  Two assignments transferred patents to holding companies likely controlled by Acacia claiming an execution date of February 3, 2012, and, for that reason, would not appear to be the same portfolio Lavingy targeted.  The second, assigning one patent to Pendragon Wireless, LLC claims to have been executed on April 10, 2012.  No recorded assignments from the lawsuit’s other holding company, IPG Healthcare 501, appear on record past February of this year.  Readers may recall that Facebook acquired patents from IPG Electronics 503 in late 2011, a transaction apparently unrelated to the Lavingy lawsuit.

According to USPTO assignment records, IPG Electronics 503 has received over 400 more patents and patent applications than it has assigned out.  IPG Healthcare 501 records indicate a net balance of over 100 patents and applications, while IPG Electronics 502 (mentioned, but not named in the lawsuit) shows a balance of more than 250.  Combined with the news that Coller is winding down the patent monetization business, a very likely scenario is that Lavingy sought to purchase the balance of Coller’s patent assets.

The lawsuit is filed in New York County’s Supreme Court, styled as Lavingy Holdings Limited et al. v. Coller International Partners V-A, LP et al., Index No. 651818/2012

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