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March 21, 2007

The Future of IP Securitization

There is some intriguing stuff in an article over at IDD on the re-burgeoning business of Bowie bonds, or IP securitization:

But the potential for IP is endless, and many insiders are talking about IP securitizations of books, photography catalogs, sports broadcasting rights, sponsorship and advertising, as well as TV shows and video games.

"No one has done a TV or video game deal, and we're looking hard at those sectors," says Dresdner's Fazio, "There are very tangible opportunities."

Another possibility - one that could represent the next gold mine - is when companies learn how to extract value from their "strategic patents," which are not necessarily associated with royalty streams. Those patents are valuable not for their cash flow but because of what they allow brands to achieve.

"The value of such strategic patents is rarely recognized by financial institutions," Berman says. "There are literally trillions of dollars of hidden value locked up in selective, big-company patents that, by providing freedom to operate, are invaluable to maintaining market share and profit margins. This is the life blood of most large companies."

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