Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

kguttag.com

Post reply on HN
Print view View original

21–30 of 109 posts

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#21

Post by kguttag »

kelsolaar wrote: post #10

Looks like his server is in damage control, Web Archive has a copy but is in the same state for me: https://web.archive.org/web/*/https://www.kguttag.com/2019/1...

Thanks for providing the link to the archive.

I have up the capacity, but when the cite hits #1 on Hacker News (as it is right now), it looks like the traffic is still overwhelming. It probably does not help that I put the larger associated document for people to download (I was going to put a link up but the link was not working in the Chrome browser).

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#22

Post by egdod »

paulsutter wrote: post #18
berberous wrote: post #5

The title and tone of this article make it sound unusual that the company used its IP as collateral. You can get better loan terms (such as the interest rate) if your loan is secured. If you are going to get a secured loan, the default is that it's secured by 'all assets', which includes IP. In order to perfect a security interest in IP, you need to make this type of filing -- and a lender will be especially sure to…

It’s common to pledge assets as collateral, but I’ve never seen patents actually assigned as a condition for a loan. This looks pretty strange.

The title is probably wrong. At a quick glance, this looks like an ordinary security interest, not an assignment.

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#24

Post by berberous »

paulsutter wrote: post #18
berberous wrote: post #5

The title and tone of this article make it sound unusual that the company used its IP as collateral. You can get better loan terms (such as the interest rate) if your loan is secured. If you are going to get a secured loan, the default is that it's secured by 'all assets', which includes IP. In order to perfect a security interest in IP, you need to make this type of filing -- and a lender will be especially sure to…

It’s common to pledge assets as collateral, but I’ve never seen patents actually assigned as a condition for a loan. This looks pretty strange.

The patents were not assigned. JPMorgan merely recorded a security interest in the patents (although the USPTO does list this as an “assignment”, it’s not). This is completely customary for a secured loan.

You sometimes see secured lenders forego this type of filing since it’s a bit of a pain in the ass, but for a company like magic leap, you would definitely want to do it since that’s where most of the value is.

It’s hard to say more without knowing the terms of the loan. Perhaps they are struggling to raise more equity and had to resort to debt on bad terms, or perhaps it just made sense to raise debt instead of equity and they could do so on favorable terms.

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#25

Post by kguttag »

berberous wrote: post #5

The title and tone of this article make it sound unusual that the company used its IP as collateral. You can get better loan terms (such as the interest rate) if your loan is secured. If you are going to get a secured loan, the default is that it's secured by 'all assets', which includes IP. In order to perfect a security interest in IP, you need to make this type of filing -- and a lender will be especially sure to…

Using patents to secure loans is not new. Most Famously Tesla did it.

What makes it "news" is that Magic Leap was able to raise $2.6 Billion without having to resort to using the I.P. as collateral. It usually does not make the previous investors happy and you usually resort to this when you can't raise money any other way. It is also a one-trick-pony in that you can't do it again and future potential investors know that the I.P. is already gone if the company goes bust.

They just announced a $280M investment from NTT Docomo, but base on my and other people's estimates, Magic Leap was running out of money while burning through about $600M/year so that only bought them about 5 months of runway.

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#26

Post by arthurcolle »

TheSoftwareGuy wrote: post #19

I’m really hoping magic leap makes it in the long run. They’re a huge tech employer in south Florida, and frankly we could use more tech companies. I’m always afraid a recession will wipe them out and flood the market with experienced engineers.

Couple years back when I was dating a girl in Ft Lauderdale, I was looking at companies in Florida. Interestingly enough, it was the only (!) state that was cutting funding for the CS program across its state programs.

Ended up in NYC, and now, Washington D.C.

Don’t think a single company can save the tech economy of a state that doesn’t seem to think its worth the investment. That being said, I love Florida and it would be awesome to build out a tech sector down there.

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#27

Post by kguttag »

berberous wrote: post #12
perspective1 wrote: post #8

Earlier quoted context omitted.

So did Magic Leap default, or is the loan newly made with JPM to hold the patents while the loan is outstanding? Seems like the IP in this case isn't very valuable to JPM* and this is more just another way to guarantee the seniority of JPM's loan. * Didn't read the patents themselves, but Oculus, Hololens and others are doing just fine without them. So, hard to imagine they have too much auction value.

It looks like Magic Leap just closed on a new loan in August, not that they defaulted. This filing ensures that if they ever _do_ default, JPM has the rights it expects in the IP as collateral.

I'm not a lawyer, but my understanding that the effectively J.P. Morgan now owns the patents (unless a court somehow unwinds the deal) and why the assignment was registered with the USPTO. The patents are then being licensed back to Magic Leap. In this way if Magic Leap defaults, J.P. Mogan simply owns the I.P. like if you pawn something and default on the payback terms.

Re: All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral

#28

Post by ineedasername »

kguttag wrote: post #27
berberous wrote: post #12

Earlier quoted context omitted.

It looks like Magic Leap just closed on a new loan in August, not that they defaulted. This filing ensures that if they ever _do_ default, JPM has the rights it expects in the IP as collateral.

I'm not a lawyer, but my understanding that the effectively J.P. Morgan now owns the patents (unless a court somehow unwinds the deal) and why the assignment was registered with the USPTO. The patents are then being licensed back to Magic Leap. In this way if Magic Leap defaults, J.P. Mogan simply owns the I.P. like if you pawn something and default on the payback terms.

It looks like the IP was simply collateral. So as long as Magic Leap repays the loan, they still own the IP. Well, as much as you own a house that has a mortgage anyway.
Post reply on HN