Method and apparatus for establishing and enhancing the creditworthiness of intellectual property

• US 6,330,547 B1
• Filed: 06/02/1999
• Issued: 12/11/2001
• Est. Priority Date: 06/02/1999
• Status: Expired due to Term

• Current Assignee: M•CAM Global Holdings LLC
• Original Assignee: Mosaid Technologies Incorporated (MOSAID Technologies Inc. (f/k/a Conversant Intellectual Property Management))
• Inventors: Martin, David E.
• Primary Examiner(s): Trammell, James P.
• Assistant Examiner(s): Elisca, Pierre E.
• Application Number:
  US09/324,871
• Time in Patent Office: 923 Days
• Field of Search: 705/1, 705/35, 705/36, 705/38, 705/39, 705/4.8
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method and apparatus for deciding whether to make a loan using an intangible asset, such as intellectual property, as collateral and for making such a loan more attractive to a lender. The method requires that an assessment of the transferability and viability of the asset be made to determine if the asset and loan applicant meet minimum qualifying criteria. If they do, a more detailed analysis is undertaken in which judgments are reached concerning various factors related to historical, comparative and prospective market behavior in market sectors identical with, as well as parallel and corollary to the primary market sector for the asset sought to be used as loan collateral. The analysis leads to calculation of an asset liquidation value and production of a correlated depreciation schedule which are both presented to the prospective lender. A third party then contracts with the lender to pay the asset liquidation value to the lender, adjusted for depreciation over time, in the event that the loan applicant defaults on the loan. This arrangement reduces the lender'"'"'s risk of loss thereby making the loan more attractive. A computer-based apparatus for carrying out the method is also disclosed.

Claims

1. A method for establishing and enhancing the creditworthiness of at least one intangible asset to be used as collateral for a loan to be made by a lending institution to a loan applicant wherein the proposed loan has a specified amount and specified term for repayment and the intangible asset has utility in at least one market sector comprising the steps of:

assigning a transferability score to the asset by

assembling biographic, organizational, financial and legal data concerning the loan applicant and the intangible asset;

examining said data concerning the loan applicant to determine whether the loan applicant meets minimum, specified criteria;

reviewing said data concerning the intangible asset to determine whether and the degree to which it is transferable; and

attaching a transferability score to each intangible asset of between 0 and 100;

determining a viability score for the asset by

finding the primary market sector for the intangible asset;

ascertaining the life cycle for the intangible asset within the primary market sector;

rejecting the asset evaluation application if said life cycle is shorter than the proposed term of the loan;

establishing the degree of litigation risk associated with the market sector by giving a litigation risk score associated with the market sector to the intangible asset;

rejecting the asset evaluation application if said litigation risk is high;

deciding whether there are additional market sectors for the intangible asset;

ascertaining the life cycle for the intangible asset within the additional market sector, if one exists;

assigning a transplant survival score to the asset if there are no additional market sectors for consideration or if the proposed term of the loan is longer than the life cycle of the asset in any market sector other than the first market sector;

returning to the establishing step if the proposed term of the loan is shorter than the life cycle of the asset in any market sector other than the primary market sector; and

finding the sum of the weighted average of said life cycle, litigation risk score and transplant survival score to yield the viability score;

calculating an asset liquidation value for the asset; and

providing a surety agreement and depreciation schedule to the lending institution wherein, in the event of default on the loan, the surety agreement indicates the promise of the third party to assume ownership of the intangible asset in exchange for a payment to the lending institution in an amount corresponding to a value shown in the depreciation schedule reflecting said asset liquidation value adjusted downward for the length of time which has passed since initiation of the loan.

2. The method of claim 1 wherein the calculating step for the intangible asset further comprises the steps of:

computing a predicate value prediction (PVP);

establishing a depreciation linearity slope (DLS);

projecting a sector proliferative index (SPI);

specifying an orthogonal confidence factor (OCF);

choosing a profit factor (k); and

calculating the asset liquidation value pursuant to the following formula;

3. The method of claim 2 wherein the predicate value prediction is established by

researching comparable industries and market sectors to find and record comparable values which have been offered for or expended on intangible assets comparable to the intangible asset(s) sought to be used as collateral for the loan where such comparable values are based, where known, on the cash value of predicate transactions and, otherwise, calculating estimates based on the use of sector specific standard licensing and royalty terms and annual predicate product sales;

finding the mean value of all such comparable values;

figuring the coefficient of variation for said mean value; and

multiplying the mean value times the coefficient of variation to establish the predicate value prediction.

4. The method of claim 2 wherein the depreciation linearity slope is established by

determining the life of the intangible asset;

formulating a competition score;

ascertaining the product development period;

determining a customer profile score; and

applying dynamic depreciation discriminant analysis with continuous relevance adjustment to said intangible asset life, competition score, product development period and customer profile score figures.

5. The method of claim 2 wherein, prior to calculating the asset liquidation value, the depreciation linearity slope is adjusted by treating the viability score as a percentage and multiplying the viability score times the depreciation linearity slope to determine a final depreciation linearity slope.

6. The method of claim 2 wherein the sector proliferative index for each market sector is established by

examining the growth environment within the sector;

evaluating sector traits;

reviewing the inter-company environment within the sector; and

assigning a value between 0.01 and 1 to the sector proliferative index for that sector based on an analysis of the relationship between the growth environment, sector traits and inter-company environment within that sector.

7. The method of claim 6 wherein said transferability score is used as a weighting factor in determining the sector proliferative index.

8. The method of claim 2 wherein the orthogonal confidence factor is established by

determining, addition to the primary market sector, which and how many parallel or corollary market sectors currently and prospectively exist for the intangible asset;

projecting an orthogonal confidence factor for each of those parallel or corollary market sectors; and

finding the mean value of all of the orthogonal confidence factors so projected.

9. The method of claim 8 wherein the projecting step includes applying dynamic discriminant analysis with continuous relevance adjustment to restrospective and prospective orthogonal data.

10. The method of claim 8 wherein there are at least a total of three market sectors including the primary market sector for which orthogonal confidence factors are projected.

11. The method of claim 1 which is computer assisted.

12. A user-based interactive computer system for establishing and enhancing the creditworthiness of at least one intangible asset to be used as collateral for a loan to be made by a lending institution to a loan applicant wherein the proposed loan has a specified amount and specified term for repayment, the intangible asset has utility in at least one market sector and the lender is provided a guarantee of payment in the amount of a depreciated asset liquidation value calculated based on multiple scoring functions performed by the system in the event the loan applicant defaults on the loan comprising:

user CPU means for entering biographic, organizational, financial and legal data concerning the loan applicant and the asset into the system and for receiving interactive input from and transmitting data to the user;

display means for providing the user with hard copy and visual display of the data entered into and generated by the system;

storage means for receiving and storing the biographic, organizational, financial and legal data concerning the loan applicant and the asset, for storing other data retrieved from sources external to the system and for maintaining experiential data representing the accuracy of decisions made by the system in the past;

expert system CPU means for applying heuristic rules to solve scoring, indexing and valuation problems and for performing data management and actuarial modeling of historical and prospective events which may impact the asset liquidation value based in part on the experiential data stored in said storage means;

scoring system CPU means for applying statistical models to build scoring functions based on associated quantitative input attributes in order to objectively evaluate the creditworthiness of the loan applicant and the asset;

critiquing system CPU means for comparing the reasoning and input of the user with the results generated by said expert system CPU means and said scoring system CPU means and for notifying the user of discrepancies and reasoning errors; and

supervisory CPU means connected to each of said user CPU means, said expert system CPU means, said scoring system CPU means, said critiquing CPU means and said storage means for coordinating, organizing and relaying communications between said user CPU means, said expert system CPU means, said scoring system CPU means, said critiquing CPU means and said storage means.

13. A computer-assisted method for valuing at least one intangible asset having utility in at least one market sector comprising the steps of:

assigning a transferability score to the asset by

assembling biographic, organizational, financial and legal data concerning the intangible asset;

reviewing said data concerning the intangible asset to determine whether and the degree to which it is transferable; and

attaching a transferability score to each intangible asset of between 0 and 100;

determining a viability score for the asset by

finding the primary market sector for the intangible asset;

ascertaining a life cycle for the intangible asset within the primary market sector;

establishing the degree of litigation risk associated with the market sector by giving a litigation risk score associated with the market sector to the intangible asset;

deciding whether there are additional market sectors for the intangible asset;

ascertaining the life cycle for the intangible asset within the additional market sector, if one exists;

assigning a transplant survival score to the asset if there are no additional market sectors for consideration; and

finding the sum of the weighted average of said life cycle, litigation risk score and transplant survival score to yield the viability score; and

calculating an asset liquidation value for the asset.

14. The method of claim 13 wherein the calculating step for the intangible asset further comprises the steps of:

computing a predicate value prediction (PVP);

establishing a depreciation linearity slope (DLS);

projecting a sector proliferative index (SPI);

specifying an orthogonal confidence factor (OCF);

choosing a profit factor (k); and

calculating the asset liquidation value pursuant to the following formula;

15. The method of claim 14 wherein the predicate value prediction is established by:

researching comparable industries and market sectors to find and record comparable values which have been offered for or expended on intangible assets comparable to the intangible asset(s) being valued where such comparable values are based, where known, on the cash value of predicate transactions and, otherwise, calculating estimates based on the use of sector specific standard licensing and royalty terms and annual predicate product sales;

finding the mean value of all such comparable values;

figuring the coefficient of variation for said mean value; and

multiplying the mean value times the coefficient of variation to establish the predicate value prediction.

16. The method of claim 14 wherein the depreciation linearity slope is established by:

determining the life of the intangible asset;

formulating a competition score;

ascertaining a product development period;

determining a customer profile score; and

applying dynamic depreciation discriminant analysis with continuous relevance adjustment to said intangible asset life, competition score, product development period and customer profile score figures.

17. The method of claim 14 wherein, prior to calculating the asset liquidation value, the depreciation linearity slope is adjusted by treating the viability score as a percentage and multiplying the viability score times the depreciation linearity slope to determine a final depreciation linearity slope.

18. The method of claim 14 wherein the sector proliferative index for each market sector is established by

examining the growth environment within the sector;

evaluating sector traits;

reviewing the inter-company environment within the sector; and

assigning a value between 0.01 and 1 to the sector proliferative index for that sector based on an analysis of the relationship between the growth environment, sector traits and inter-company environment within that sector.

19. The method of claim 18 wherein said transferability score is used as a weighting factor in determining said sector proliferative index.

20. The method of claim 14 wherein the orthogonal confidence factor is established by:

determining, in addition to the primary market sector, which and how many parallel or corollary market sectors currently and prospectively exist for the intangible asset;

projecting an orthogonal confidence factor for each of those parallel or corollary market sectors; and

finding the mean value of all of the orthogonal confidence factors so projected.

21. The method of claim 20 wherein the projecting step includes applying dynamic discriminant analysis with continuous relevance adjustment to retrospective and prospective orthogonal data.

22. The method of claim 20 wherein there are at least a total of three market sectors including the primary market sector for which orthogonal confidence factors are projected.