Snap’s Patent Purchase Demonstrates the Value of Intellectual Property for Start-Ups

Recently, TechCrunch reported that Snap Inc. (the developers of SnapChat) had purchased a US patent relating to the concept of ‘Geofiltering’. Their article claims that the patent was sold to Snap by a company called Mobli.

Reports of the sale originate from an email, allegedly leaked from within Mobli. However, a publicly available assignment, visible via the European patent register, indicates that the sale may well have occurred.

The US patent in question (US 9,459,778) has the title ‘Methods and Systems of Providing Visual Content Editing Functions’. Although this title is rather vague, the claims of the patent relate to the idea of providing different image/video editing functions depending on events occuring near the user’s location.

The description of the patent provides a few examples of how the invention might be implemented. In one such example, a user takes a photo in a stadium using an app on their smartphone . The phone’s GPS location indicates a particular stadium, whilst news sources indicate the teams that are playing in that stadium. The app is then provided with overlays, or ‘filters’, including images of the relevant team’s logos.

TechCrunch’s report suggests that Snap paid $7.7m for Mobli’s patent. This is claimed to be the highest price paid for a patent originating from the Israeli tech industry.

News of this patent purchase, by what is now a huge company from a far less successful one, highlights the role that patents can play in a start-up’s business plan. On the one hand, patents can be very useful in protecting a start-up’s market share, particularly when that start-up has become a resounding success. On the other hand, Snap’s purchase shows that, by investing in intellectual property, start-ups can reap huge rewards, even when they have lagged behind the competition in their primary marketplace.

Of course, any particular patent is not likely to have a $7.7m price tag. However, this report from IP Watchdog claims that the average asking price per US granted patent in 2016 was around $270k. Therefore, if companies choose to invest in intellectual property in the right way, they should hope to see a significant return by converting their ideas into valuable business assets.

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