Sale of BlackBerry's $600 million patent faces a hitch

Sale of BlackBerry’s $600 million patent faces a hitch

The sale of BB-T patents from BlackBerry Ltd. A US$600 million hitch.

Waterloo, Ont. said. , in Wednesday’s release that it is no longer subject to an exclusivity with Catapult IP Innovations Inc. , a special purpose US entity formed to purchase the assets, “due to the length of time the transaction took” since the deal was announced on January 31.

The seller said the BlackBerry BB-T is “exploring alternative options in parallel” as Catapult continues to work to secure needed funding.

The deal, which passed federal government review in March, has been in the works since 2020. Catapult is leading Baltimore inventor and entrepreneur York Eggleston, who has been collecting patent portfolios to take advantage of licensing potential.

Catapult, registered in Delaware, agreed to pay with a secured loan of $450 million and a promissory note for the remainder. This was to be secured by a second lien on patents payable in five installments beginning three years after the deal was concluded.

BlackBerry said in a regulatory filing in January that Catapult had secured $400 million in conditional commitments from a syndicate led by Toronto’s Third Eye Capital including an unnamed Canadian retirement fund, and that Catapult was required to complete a $90 equity financing. Million to be able to withdraw from debt financing and complete the deal. Third Eye CEO Arif Bahlawani said earlier this year that BlackBerry wanted to ensure there was Canadian participation in the deal.

BlackBerry has the right to withdraw from the unfunded deal since early May, and either party can terminate if it is not closed by August 29. A BlackBerry spokesperson declined to comment.

The catapult did not respond to requests for comment. Pahlwani said in an email on Wednesday that Third Eye Capital “remains committed as the lead lender in the syndicate providing debt financing to Catapult,” and that “no issues have been raised regarding the patent evaluation file.”

Last month, Las Vegas-based intellectual property analyst Samuel Bird looked at the potential value of a bare portfolio of 37,175 BlackBerry patents, which would be one of the largest transactions of the past decade. The cost to the buyer could exceed $900 million, including estimated associated maintenance costs, litigation fees and litigation costs, Mr. Baird said in an online report.

But he warned that 53 per cent of granted patents will expire by 2027 and another 40 per cent by 2034, which means that “the lifespan of a stripped BlackBerry wallet is much less” than other similar patent wallets sold in the years. Last.

Baird also found that many of the stripped BlackBerry patents that will expire by the end of 2024 have a relatively high value compared to the rest, and estimated that the “vast majority” of the portfolio, if challenged to the US Patent Court and Appeals Board, “might You have problems surviving” this process. Nearly two-thirds of BlackBerry’s previous patent appeals have resulted in either the settlement, invalidation or narrowing of its patent claims, indicating that “Challenging the validity of a BlackBerry patent has a high degree of certainty in its success.”

He concluded the price and future costs, including legal expenses and maintenance expenses for a “quick-finish portfolio”, which means that “the return on investment will be an uphill battle.”

Under CEO John Chen, who joined in the fall of 2013, BlackBerry has shifted from the mobile business it once dominated to other areas, including connected car technology and cybersecurity. But its stock has largely struggled to reignite, except last year when it became a “meme stock” that rose in value by speculators.

BlackBerry, like other tech companies whose products are declining, has done a business in recent years extracting money from other companies to use its technology either by suing them for patent infringement or reaching licensing agreements. License revenue was $63 million in the fiscal year ended February 28, down sharply from $272 million, $328 million, and $286 million in fiscal years 2021, 2020 and 2019, respectively.

The patents selling Catapult date back to when BlackBerry was a smartphone company. The company said the deal would not affect customers’ use of its existing products or services and that it had obtained a license for the patents being sold.

Reported by Josh O’Kane

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2022-06-01 15:07:53

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