The Telecommunication Portfolio II follows on the heels of the highly successful Telecommunications Portfolio I, offering a broad range of assets primarily directed to the hardware and overall functionality of the “back-end” of the telecommunications business.

Six general categories of patents are offered. Three of these categories — Base Stations, Network Nodes, and general Wireless Communication — comprise over half of the portfolio. The portfolio also includes User Equipment, Data Packet functionality, and Mobile Terminal asset categories, as well as a limited group of assets that do not fit within these classifications.

As with Telecommunications Portfolio I, the assets included here are ideal for offensive or defensive use by entities in the hardware and software back-end of the telecommunications business. Patents in this portfolio are international in scope and potentially affect players in the telecom field, such as manufacturers and users of base stations, network nodes, network operations centers, and the like.

Telecommunications Portfolio II comprises 1590 patents including 497 US assets and spanning 606 patent families. The portfolio was originally developed by Alcatel-Lucent / Bell Labs, Nokia Technologies and Nokia Networks. The Alcatel-Lucent assets account for approximately 83 percent of the overall number of assets offered. Few of these patents have expired, indicating robust recent development and a relatively high value portfolio. Of those active patents, the average remaining life is eight years.

When considering this portfolio, of particular note is the fact that these assets represent significant development investments by Alcatel-Lucent and Bell Labs. A significant number of parties have never licensed these patents and pending applications. Buyers looking to build defensive portfolios or acquire long term defensive assets in the basic backbone of the telecommunications business would find value in the assets offered. Over 170 unlicensed entities in the telecommunications industry have been identified, and names of these unlicensed parties are available under NDA. As may be appreciated, in a portfolio this large, certain assets may have encumbrances that others do not. Aqua is prepared to assist in identifying assets potentially assertable against specific entities.

Significant litigation has occurred in the telecommunications sector in recent years. Price-Waterhouse Coopers generated a report detailing patent litigation statistics including the graphic on the right (source), indicating that the median damage award in the Telecommunications sector is approximately $16M based on 39 adjudications in the field. This figure is significantly higher than the median damages award for all industries of $5.8M.

Proper positioning in the current litigation environment can therefore be crucial, and the technology covered by these assets can offer value from both a defensive and offensive perspective. The present portfolio offers strong assets in a number of telecommunications backbone groups, including Communications Equipment, Electronic Components and Accessories, and Computer and Office Equipment. Subjects covered by patents of significant strength include VPN technology, software management functionality, content protection, internet functionality particular to wireless handsets, traffic resiliency, and overall functionality of call and data processing.

The Telecommunications Portfolio II is very robust, with eight years of average life remaining for all assets. A search of the portfolio reveals older patents addressing basic telecommunications functionality, including Bell Labs developments, as well as more recent products covering growing industry trends.

In short, there is something for everyone in the enclosed portfolio having an interest in the telecommunications sector, offensively or defensively.

For interested buyers, Aqua is available to assist in identifying specific assets of interest. More specifically, for those potential buyers having existing or potential particular litigation concerns, Aqua is able to help find candidate unlicensed assets, based on party or subject matter, and provide an appropriate list of assets for more thorough evaluation.

Below, we discuss this portfolio in terms of its:

Subject Matter

The chart below shows the main subject matter categories of this portfolio (click on the chart to explore the portfolio):

In terms of applicable industries, Telecommunications Portfolio II includes assets relevant to the Communications Equipment, Electronic Components and Accessories, Computer and Office Equipment, Household Audio and Video Equipment industries. The allocation of the portfolio across these industries is presented in the chart below:

 

Note that 78% of the assets apply to the Communications Equipment or Electronics Component sectors. From this, we would expect particular applicability to players in the communications hardware industry.

Finally, looking at patents by CPC classification, we see a wide variety of classifications employed in the portfolio:

The highest number of patents are in CPC patent classification H04 W36/00, Handoff or Reselection Arrangements, followed by H04 W72/00, Local Resource Management, H04 L1/00, Arrangements for Detecting or Preventing Errors in the Information Received, and H04 L12/00, Data Switching Networks Interconnection.

This confirms that the assets in the Telecommunications II portfolio represent the backbone of telecommunications processing, including base station and network operations functionality. Numerous other similar classifications are identified as prominent in this portfolio (Network Data Management, Packet Switching, Network Traffic Management, etc.) as well as certain relevant smaller classification groupings (Mobile Application Services, Power Management).

Patent Strength

Overall portfolio quality as well as the quality of the individual patents is determined by comparing relative Patent Strength. This can help quickly identify the patents that rise to the top of the list as potential IP opportunities or threats.

The Total Portfolio Patent Strength Distribution chart below describes how all the patents from Telecommunications II Portfolio are distributed according to Patent Strength. This helps demonstrate how strong the entire portfolio of patents is as a whole.

This chart shows that over 200 of the analyzed assets scored within the highest quartile.

The following graph represents various strength factors along a number of axes:

Strength is high for the entirety of the claims presented, as well as the forward citations and life of the assets in Telecommunications Portfolio II. The number of industries applicable to the portfolio is also significant. From this chart and the foregoing strength bar graph, we believe the overall strength of Telecommunications Portfolio II, particularly of the top patents offered, is of great interest to the right buyer.

Forward Citations

The chart below shows the companies with patents that cited the Telecommunications Portfolio II:

From the foregoing graph, companies to the right have a higher number of patents, a higher percentage of overlapping classes between patents citing to and being cited in the portfolio, and a higher percentage of raw citations to the portfolio. The companies higher up in this graph are generally stronger companies, having higher revenue, number of locations, and amount of litigation.

Thus we see a strong correlation between the Telecommunications Portfolio II and major players in the telecommunications industry, including the following names sorted by number of citations to the Telecommunications Portfolio II:

QUALCOMM, Inc. 506
Microsoft Corporation 212
International Business Machines Corp. 180
Telefonaktiebolaget LM Ericsson 160
HEADWATER RESEARCH LLC 148
Cisco Systems, Inc. 142
Intel Corporation 139
Huawei Technologies Co., Ltd. 139

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† Note that the analysis presented in this page is based on a subset of the 1590 assets offered. The reasons for this include that a number of European assets share the same EP published number, and that a number of other assets have not yet published. The analysis provided here is accurate as to assets publicly available; for further details, we invite inquires as to the specific assets of interest.