The U.S. constitution established patent rights in the late 1780s in order “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Marathon Patent Group (MARA) is a company which acquires and develops patents and provides intellectual property services to companies and individuals, thereby facilitating advances in science. In a sentence, Marathon Patent Group facilitates the process of providing incentives to companies, individuals and non-profit organizations to discover new technologies. The company was established in late 2012 and since then it has achieved the following goals:
Gathered a team of pioneering and highly regarded professionals in the area of intellectual properties;
Acquired a number of patents and is in the process of obtaining additional patents;
Launched its first litigation campaign against a number of well known blue chip companies; and
Is developing partnerships with a leading company and a university in the intellectual property area
Importantly, Marathon is a vertically integrated intellectual property company acquiring patents, partnering with individual inventors and organizations in pursuit of their patent rights, assisting companies in finding missing parts of their patent portfolios, and providing defense services against patent infringement.
Marathon Patent Group at a glance
Marathon has 51.5 million shares outstanding (including 6 million shares issued in connection with the recent acquisition of CyberFone systems) for a market capitalization of about $20 million as of this writing. The company has eight employees, three independent directors, and an adviser. More than half of these employees are experienced and highly regarded intellectual property professionals. For comparison, Vringo (VRNG) and VirnetX (VHC), two other intellectual property services companies, have 28 and 14 full-time employees and market capitalization of about $230 million and $1.1 billion, respectively. It is clear that Marathon has a market capitalization to staffing ratio that is disproportionately smaller than Vringo and VirnetX. It should not be a problem for Marathon to increase its market capitalization without many additions to its workforce.
Due to its recent launch, Marathon has no revenues and its operating expenses for 2012 were $5.5 million. This is comparable to Vringo and VirnetX who recorded revenues of about $0.4 million each in 2012 and operating expenses of $25.1 million and $39.3 million, respectively. Among the three companies, Marathon’s monthly expense rate is the lowest in the group with an estimated $150,000 per month.
Currently, Marathon Patent Group has three patents related to online communication and collaboration methods expiring in Mar. 2018, Dec. 2019, and Nov. 2023 and one patent related to this technology is filed and pending with the U.S. Patent and Trademark Office. In addition, recently the company acquired CyberFone systems, which has an established licensing base and owns a patent portfolio consisting of ten U.S., 27 foreign, and one pending patents. Also, Marathon Patent Group acquired one patent from MOSAID Technologies, a leading privately held intellectual property consultancy.
Simlarly, Vringo and VirnetX have significant intellectual property. Vringo owns eight patents in the internet search area, which were previously owned by Lycos, and hundreds of patents acquired from Nokia in the area of telecommunications infrastructure. And VirnetX owns 20 U.S., 32 foreign, and several pending patents primarily related to secure online communications.
All three companies, Marathon Patent, Vringo, and VirnetX are engaged in negotiating the acquisition of additional patents and developing patents on their own. What distinguishes Marathon Patent from VirnetX and Vringo is that the company is establishing itself as a go-to provider of consulting services in the intellectual property industry.
Marathon Patent has established an IP Research and Services Center at the University of Arizona Science & Technology Park in Tucson, Arizona and is also developing a strategic relationship with IP Navigation, a leading privately-held full-service patent consultant. This holistic business approach makes Marathon Patent Group the only vertically integrated company in the intellectual property area as of this writing.
Today, companies spend significant time and effort on research and development in order to stay competitive and grow. Due to the increased complexity, globalization, and time sensitivity of intellectual property, many businesses find themselves in need of acquiring existing patents to complement their own discoveries. Also, management of many companies is starting to realize that their patents can be licensed to other companies thus benefiting their shareholders while allowing their patents to be fully utilized. Finally, companies are often being threatened with lawsuits regarding intentional or unintentional patent infringements by patent holders and inventors. Marathon Patent Group, in addition to acquiring patents and developing technologies on its own, strives to provide value in every step of the intellectual property management. It remains to be seen if this relatively new public company can match the better known and often hyped Vringo and VirnetX.