The $ 600 million sale of the BlackBerry patent came to a halt

Sale of the BB-T patent to BlackBerry Ltd. $ 600 million hit a snag.

Waterloo, Ont., Said in a report on Wednesday that it was no longer exclusive to Catapult IP Innovations Inc., a U.S. specialty entity created to buy assets, “given the length of time the transaction took place” since the deal was announced on January 31. .

The BB-T’s BlackBerry is “exploring alternatives” as Catapult continues to work to secure the required funding, the vendor said.

The agreement, which was revised by the federal government in March, has been in preparation since 2020. The catapult is led by inventor and businessman York Eggleston of Baltimore, who gathers patent portfolios to realize their licensing potential.

The Delaware-registered catapult has agreed to pay the $ 450 million senior secured loan and bill of exchange for the rest. This was to be secured by a second lien on patents payable in five installments starting three years after the close of business.

BlackBerry said in a January regulatory statement that Catapult had secured $ 400 million in contingent liabilities from a syndicate run by Toronto’s Third Eye Capital and including an unnamed Canadian pension fund, and that Catapult had to complete $ 90 million in equity financing to draw on debt financing. and complete the deal. Third Eye CEO Arif Bhalwani said earlier this year that BlackBerry wanted to ensure that Canadians were involved in the agreement.

The BlackBerry is entitled to withdraw from an unfunded transaction from the beginning of May and either party may terminate it if it does not close it by August 29. A BlackBerry spokesman declined to comment.

The catapult did not respond to requests for comments. Mr Bhalwani said in an e-mail on Wednesday that Third Eye Capital was “still committed as the main senior creditor in the Catapult debt financing syndicate” and that “no problems have been raised regarding the valuation of the patent. portfolio. “

Last month, Las Vegas intellectual property analyst Samuel Baird plunged into the potential value of a portfolio of 37,175 BlackBerry patents, one of the largest such transactions in a decade. Mr. Baird said in an online report that the cost to the buyer could exceed $ 900 million, including estimated related maintenance, litigation and litigation costs.

However, he warned that 53 percent of granted patents would expire by 2027 and another 40 percent by 2034, meaning that “the life of the sold BlackBerry portfolio is significantly shorter” than other comparable patent portfolios sold in recent years.

Mr Baird further found that many of the BlackBerry patents sold, which expire by the end of 2024, were of relatively high value compared to the rest, and estimated that the “vast majority” of the portfolio, if challenged before a U.S. patent court and council appeal, “May have trouble surviving” the process. Nearly two-thirds of previous BlackBerry patent objections have led to either settlement or revocation or reduction of patent claims, suggesting that “challenging the validity of a BlackBerry patent has a high degree of certainty of success.”

He concluded that the price tag and future costs, including the costs of legal services and the maintenance of a “fast-ending portfolio”, mean “a return on investment will be a difficult struggle”.

Under the leadership of CEO John Chen, who joined in the fall of 2013, BlackBerry has moved from the once-dominated mobile phone business to other areas, including connected car technology and cyber security. However, its shares largely tried to flare up again, except last year, when they became “meme shares” whose value was driven up by speculators.

BlackBerry, like other declining technology companies, has been extracting money from other companies using its technology in recent years, either by suing them for patent infringement or by entering into licensing agreements. License revenue was $ 63 million for the fiscal year ended February 28, a sharp decline from $ 272 million, $ 328 million, and $ 286 million, respectively, which it generated in fiscal years 2021, 2020, and 2019.

The patents in Catapult’s sales date back to when BlackBerry was a smartphone company. The company stated that the transaction would not affect the use of its current products or services by customers and that it had obtained a license for the patents sold.

With a message from Josh O’Kane

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