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

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

#71

Post by [deleted] »

hogFeast wrote: post #52
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…

The reason it makes headlines is because the value of IP is very volatile and bogus collateral is a very old scam (not only in banking btw, fake valuations are a feature of many scams). If I go to the park, pick up a rock, and then go to a bank and say there is diamonds inside worth $1m, and they lend against that then I have made $1m. If you lend against collateral, you are making a bet on the collateral being worth…

[deleted]

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

#72

Post by mikekchar »

egdod wrote: post #61
flukus wrote: post #57

Earlier quoted context omitted.

At least some of their key patents ( https://patents.google.com/patent/US20130128230/en?oq=inassi... ) are nearly halfway though there lifetime, so at best those patents will have a decade of value before they get a retail product out the door. It seems a bit like putting a decade old car up as collateral, sure it's got value but it's rapidly diminishing.

Patents have value even if you never get a product out the door.

I was thinking about this... Let's say Magic Leap survives for another 2 years, then defaults. That gives you 8 years left on those key patents. It just doesn't seem like enough time to actually build something and sell it. So like you say, the only real value is in selling it to someone who would like it as part of a defensive portfolio (not too likely in my books)... or using them in a patent troll fashion (suing other people for patent infringement despite the fact that you never intend to use the patent yourself). My question is: Who does JPM think they would sue in this case to justify the value? I wouldn't think there were too many candidates to choose from (both in VR and have piles of cash that you can liberate)...

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

#73

Post by mikekchar »

v64 wrote: post #65
iamaelephant wrote: post #64

Earlier quoted context omitted.

Did they? I googled "buy magic leap" and all I can find are dev units ("Creator Edition"). That's not a consumer product. That's a pre-requisite for a consumer product. Magic Leap have never released a product for general sale.

You can buy a Magic Leap at https://shop.magicleap.com/

Weird. The developer version is $500 more than the "personal version", but seems to include only the "Developer Hub" (apparently: "[...] a split cable that connects the computer to the power source to enable uninterrupted development time while charging") and support. Is there any other distinction?

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

#74

Post by pottertheotter »

yo-scot-99 wrote: post #54
kguttag wrote: post #25

Earlier quoted context omitted.

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…

how would a bank evaluate the risk -- do they generally have an internal team or farm it out to a consultancy? they don't have the history or contacts like VC or google's invesment funds. meanwhile, they are playing footsie with saudia arabia again: https://www.youtube.com/watch?v=iDv2E22Mz0s&feature=youtu.be...

The big banks like this have their hands in everything and connections all over the place. They have their own VC funds, they have investment bankers who specialize in different areas of tech, and they often have their own tech bus dev people in Silicon Valley who are deeply networked with both company founders and VC firms. For a lot of startups, being able to put the JP Morgan/Chase logo on your website as a customer is huge. The founders and VCs know this.

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

#75

Post by ChuckMcM »

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…

I expect the title and tone reflects that Magic Leap had a history/reputation of being able to walk into a room and have money thrown at it for no reason at all, and now it can't do that.

It also shipped in 2018 and has yet to file an S-1 for a public offering.

Typically, once execution risk has been retired (i.e. you are shipping a product), and market risk (or fit) has been retired (i.e. you're getting more demand than you can fill) then you pour in money and grow the company.

So they have been shipping for a year and don't have enough sales to be operationally cash flow positive, and they don't have a good enough story to convince investors that they can get to market success, and they need cash to continue operations.

No, what this note/observation makes clear is that it's that time where either they figure out some problem where their technology has the most value, or they end up selling off the chairs and desks and try to return something to their investors after JP Morgan sells their IP to cover their last loan.

Odds are its about to follow DAQRI[1] into the bin.

[1] https://techcrunch.com/2019/09/12/another-high-flying-heavil...

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

#76

Post by riffraff »

kguttag wrote: post #25
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…

How is magic leap burning through so much cash? It can't be all salaries and at the same time they don't seem to be selling a ton of devices at a loss.

Are they building factories or something?

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

#77

Post by riffraff »

mikekchar wrote: post #72
egdod wrote: post #61

Earlier quoted context omitted.

Patents have value even if you never get a product out the door.

I was thinking about this... Let's say Magic Leap survives for another 2 years, then defaults. That gives you 8 years left on those key patents. It just doesn't seem like enough time to actually build something and sell it. So like you say, the only real value is in selling it to someone who would like it as part of a defensive portfolio (not too likely in my books)... or using them in a patent troll fashion (suing o…

Apple, Microsoft, Google all have some VR tech and a lot of cash. I wouldn't think they would be a good candidate for patent trolling but they could have some mild interest in buying the IP.

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

#78

Post by v64 »

mikekchar wrote: post #73
v64 wrote: post #65

Earlier quoted context omitted.

You can buy a Magic Leap at https://shop.magicleap.com/

Weird. The developer version is $500 more than the "personal version", but seems to include only the "Developer Hub" (apparently: "[...] a split cable that connects the computer to the power source to enable uninterrupted development time while charging") and support. Is there any other distinction?

The Developer Plus version is $500 over the Developer version, and the only difference is an extra year of priority service. It doesn't look like there any differences other than what you pointed out.

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

#79

Post by DonHopkins »

riffraff wrote: post #76
kguttag wrote: post #25

Earlier quoted context omitted.

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…

How is magic leap burning through so much cash? It can't be all salaries and at the same time they don't seem to be selling a ton of devices at a loss. Are they building factories or something?

Nepotism. The people running the company hired all of their friends and family into kooshy do-nothing positions.
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