Recently, Canadian company BlackBerry Limited ("BlackBerry"), originally known as Research-in-Motion, for the BlackBerry brand of interactive pagers, smartphones, and tablets, announced that it has entered into a patent sale agreement with Catapult IP Innovations Inc., a Delaware, US based company.
Under this patent sale agreement, BlackBerry will sell substantially all of its non-core patent assets to Catapult for total consideration of US$600 million. The payment/ transaction model is 'two-tiered', to put it simply: at closing, BlackBerry will receive $450 million in cash and a promissory note in the principal amount of $150 million. The promissory note will be secured by a second lien on the assets of the purchaser and will be subordinated to the rights of the senior lending syndicate. The promissory note will be payable in five equal annual instalments of $30 million in cash commencing on the third anniversary of the closing date, provided that the senior loan is not in default. Furthermore, completion of the transaction is conditional upon, among other things, satisfaction of all regulatory conditions under the Hart–Scott–Rodino Antitrust Improvements Act in the United States and the Investment Canada Act.
The portfolio of BlackBerry's non-core patent assets includes most of the technologies and features that made BlackBerry phones what they were, including it's BlackBerry Messenger (BBM). It is estimated that the patent portfolio to be transferred would include close to 38,000 issued and pending patents. As per the announcement made by BlackBerry, patents that are essential to BlackBerry's current core business operations are excluded from the transaction. BlackBerry will receive a license back to the patents being sold, which relate primarily to mobile devices, messaging and wireless networking. BlackBerry states that this transaction will not impact customers' use of any of BlackBerry's products, solutions or services. It may be noted that BlackBerry originally put up the smartphone business patents for sale in 2020 and sold 90 of its patents to China based Huawei Technologies in December 2020.
Catapult is a special purpose vehicle formed to acquire the BlackBerry patent assets. Catapult's principal funding for the acquisition will be a $450 million senior secured term loan, for which it has received $400 million of conditional commitments from a lending syndicate led by Toronto-based Third Eye Capital that includes a Canadian pension fund and an insurance company.
As per CEO of Third Eye Capital, Catapult is not going to act like a patent troll and it doesn't intend to use aggressive legal tactics to try and enforce patent rights. The CEO stated that "The most important premise of this transaction is helping emerging companies and growth companies access this treasure trove of IP". BlackBerry wasn't able to unlock all these licences because they had channel conflicts. You can't ask your customer to get licensed when you're already doing a cross-licensing deal with them."
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