Market Driven Pricing
The price of each license in the store is shown next to the license in a fixed Dollar amount. It changes from COST PRICE, to REGULAR PRICE, to VALIDATED PRICE, depending on the time of acquisition.
A license COST PRICE is determined during the acquisition of the portfolio by SynPat, and is equal to the patents purchase price divided by the number of licenses acquired by customers who participate in crowdfunding its acquisition.
The more attractive the patents are, the fewer companies needed to crowdfund its acquisition, and the higher the license COST PRICE.
The license REGULAR PRICE is automatically set at 50% above the COST PRICE, and is available during the first four months from the patent acquisition.
The VALIDATED PRICE is equal to twice the regular price and is available for as long as the patents are owned by SynPat.
= 1.5 x COST PRICE
= 2 x REGULAR PRICE
Plug in your numbers below and see how the Cost, the Regular, and the Validated prices at the store are all automatically calculated:
How much does a Enforcement Right cost, who can buy it, and when?
The price of a Enforcement Right always equals to a Regular Price of a non-exclusive license.
Whether you buy a Enforcement Right as a Participant, a Regular licensee, or a Late licensee, you will pay the same price for the Enforcement Right. Indeed, Participants have a significant advantage over others since they can buy Enforcement Rights as early as the syndication period, while others may buy them only when the Regular Licensing begins.
Does SynPat’s pricing mechanism raise anti-trust issues?
The Sherman Act forbids the restriction of competition by large companies that co-cooperate to fix prices, either through pools or trusts. Such a risk doesn't exist with SynPat. When SynPat acquires a portfolio of patents, it first negotiates and agrees on the price with the seller, and only then does it try to raise the seller's asking price from operating companies in the addressable market. The pool is created after the price is determined, and not the reverse. Restriction of competition can happen when the collaboration is created prior to the negotiation with the seller, resulting in the creation of "buying power".
Why SynPat’s licenses are sold under FRAND terms?
SynPat offers all its licenses under Fair, Reasonable, and Non-Discriminatory (FRAND) terms.
Why Fair? The license fee increases with time as risk goes down due to the license being validated by an increasing amount of licensee diligence. This way, early adopter companies that fund the acquisition and thereby make licenses under the acquired patents available to others are compensated for their risk and efforts. It’s also fair, because at any time any company believing it does not need a license may submit the issue in confidence to FedArb, a neutral dispute resolution entity comprised of 52 retired Federal judges whose decision is binding on SynPat but not on the prospective licensee.
Why Reasonable? The prices are determined by the “invisible hand” of the free market: the seller’s asking price is validated (or not) when willing licensees participate and collectively fund each acquisition.
Why Non-Discriminatory? Participation in each ad-hoc syndicate is open and available to all, at the same price; and since licenses are offered at any stage of the Program, it's up to each company to choose whether and when to acquire a license under a particular portfolio.
Might SynPat’s pricing mechanism create an “Established Royalties” problem?
Probably not, for several reasons. Here are the first eight:
- Most likely that if any of the patents be enforced at some point - it won't be done by SynPat, but rather by someone who would buy the infringed patents from SynPat and enforce them. Such a buyer of the patents is not associated with SynPat licensing activities and therefore isn't subject to them.
- SynPat sells its licenses in exchange for fixed prices, not for "rates". The prices are a function of demand and supply and are in any way related to our customers activities. For royalties to be deemed Established Royalties they must be for comparable activity under the patent. (See Mobil Oil Corp. v. Amoco Chemicals Corp., 915 F. Supp. 1333, 1342 (D. Del. 1994))
- Any operating company can enter the store and buy a license it needs. Generally, a company needs a license when it either currently uses the protected invention or intend to do so in the future. We assume that some of our customers are motivated to buy our licenses because they currently infringe the patents, but we don't ask and we don't care. For royalties to be deemed Established Royalties they must be paid or secured before the infringement began. (See Mobil Oil Corp. v. Amoco Chemicals Corp., 915 F. Supp. 1333, 1342 (D. Del. 1994))
- We hear arguments that it looks unfair that big customers pay the same price as small customers do. Our answer is that: the same way Macy's sells a pair of shoes size 12 at the same price as size 9, we sell a license at the same price, regardless of the size of our customers. For royalties to be deemed Established Royalties, they must indicate the reasonableness of the rate. (See Mobil Oil Corp. v. Amoco Chemicals Corp., 915 F. Supp. 1333, 1342 (D. Del. 1994))
- Our customers may buy a license at the SynPat store at three prices: Cost Price (= Seller's Upfront Price ÷ Number of Participants), Regular (= 1.5 x Cost Price), or Validated Price (= 2 x Regular Price). Same license at three different prices, depending on the time of purchase. For royalties to be deemed Established Royalties, they must be uniform in amount. (See Mobil Oil Corp. v. Amoco Chemicals Corp., 915 F. Supp. 1333, 1342 (D. Del. 1994)).
- SynPat tries to demonstrate for its customers their need for specific licenses, as to help make informed decisions which licenses to buy and which not to buy. We do so by showing evidence of use. Even when we find evidence that a customer uses a protected invention, it does not affect the license price for that customer. That price is of course "unreasonable" according to 35 U.S. Code § 284, which requires "damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer". For royalties to be deemed Established Royalties, they must be reasonable! (See Philips Petroleum Co. v. Rexene Corp., No. Civ.A. 90-208-LON, 1997 WL 781856 (D. Del. Sept. 4, 1997))
- SynPat's pricing mechanism has nothing to do with damages. A license Cost Price is based on a formula that completely ignores infringement. Moreover, since Participants pay their participation fee (=Cost Price) partially, or mainly, because they see it as an investment that is likely to produce them a financial return of 50%, we assume that some of them buy participate just for the financial return and completely unrelated to their need for a license under the patent portfolio they assist in funding.
- "As a final matter, we do not hold that LaserDynamics' past licenses create an absolute ceiling on the amount of damages to which it may be entitled, see 35 U.S.C. § 284, or that its history of lump sum licenses precludes LaserDynamics from obtaining damages in the form of a running royalty. Full consideration of all the Georgia-Pacific factors might well justify a departure from the amount or even the form of LaserDynamics' past licensing practices, given the appropriate evidence and reasoning." LASERDYNAMICS, INC. v. QUANTA COMPUTER, INC. 694 F.3d 51 (2012)