In the fiery red era of the heavens, refrigerators are refreshed daily.

Similarly, they also proposed an alternative cooperation plan: exclusive licensing.

Moreover, Samsonite is much more generous and pragmatic than Samsonite when it comes to licensing fees.

Their initial offer was 5% of the product's retail sales, but after Larson's lawyers argued based on market prospects and the uniqueness of the patent, the licensing fee was eventually increased to 7%.

"Seven percent, Mr. Yang, Attorney Larson, that's close to, or even at, the level of top-tier technology licensing fees in the industry," the Samsonite representative said sincerely.

"For a patent that truly has the potential to change the industry landscape, this is the maximum sincerity and the highest percentage we can offer in terms of licensing model."

We believe that through our marketing capabilities and channels, this product can quickly penetrate the market, and even a 7% share will bring you very considerable long-term benefits.

Larson, the attorney, privately told Yang Guangming that the licensing fee percentage was indeed very competitive, almost reaching the upper limit of industry practice, demonstrating Samsonite's great sincerity in the cooperation. If the licensing model were chosen, this would undoubtedly be a very high price.

However, deep down, Yang Guangming still preferred a one-time buyout.

In the coming year, the financial market will be full of opportunities. With his knowledge of the future, he can easily earn more than ten times the return within a year.

Compared to long-term gains, the huge sum of money obtained through a one-time buyout has a higher time value and greater flexibility, which better meets his strategic needs for quickly mobilizing resources for a larger-scale deployment.

Just as he was having in-depth discussions with his lawyer Larson about whether to accept Samsonite's $10 million buyout offer or try to negotiate a higher licensing fee percentage, an unexpected turn of events from a third party completely disrupted the existing negotiation framework.

Prior to this, Yang Guangming had not placed all his hopes on the three agents.

During his spare time while studying at Stanford, he conducted some independent, low-profile research and proactively contacted several well-known patent aggregator companies or investment institutions that specialize in patent buyouts and long-term licensing operations.

These organizations do not produce products directly, but rather acquire promising patents and then license them to multiple manufacturers to generate long-term profits.

He compiled the detailed descriptions, renderings, and market prospect analyses of the remaining 29 provisional patents he had into a professional project plan and sent it to these organizations.

Assessing the potential value of these patents, which cover multiple fields, requires a process, and initially these institutions did not pay much attention to the patent portfolio of an unknown student, responding only sparsely.

However, at a crucial moment in his negotiations with Samsonite, one of the firms, called Intellectual Property Capital Partners, under the insistence of a visionary analyst, completed a preliminary assessment of the patent portfolio and showed great interest.

This organization's business model involves finding patents with huge market potential that may be underestimated by traditional companies, buying them outright, and then licensing them to multiple companies in related industries on a long-term, multi-regional, non-exclusive basis, collecting continuous licensing fees to obtain long-term, stable profits.

They have a professional evaluation team, strong legal backing, and extensive licensing experience, and are adept at deeply exploring the long-term value and economies of scale of patents.

After carefully reviewing the list of 29 patents provided by Sunshine, and especially focusing on assessing the market prospects, patent barriers, and disruptive potential of the "two-wheeled suitcase" to the entire luggage industry, the evaluation team at Intellectual Property Capital Partners reached an exciting conclusion:

This portfolio of patents, especially the core suitcase patent, contains astonishing commercial value that has not yet been fully recognized by the market.

This core patent has the potential to create a completely new market worth billions of dollars, and its long-term licensing revenue has an astonishingly large potential!
What made them feel even more urgent was that, through special channels within the industry, they learned that the two giants in the luggage industry—Samsonite and Samsonite—were in close contact and negotiations with the patent holder.

This made them realize that the window of opportunity for wealth was rapidly closing, and they had to act immediately or they might miss out on this potentially huge investment opportunity.

Intellectual Property Capital Partners acted swiftly, demonstrating the efficiency and decisiveness characteristic of investment institutions.

They dispatched a strong five-person negotiation team, led by the company's senior vice president and including assessment experts, authorization experts, senior lawyers, and financial analysts, to San Francisco to request an emergency face-to-face consultation with Sunshine.

Their goal is very clear and direct: they hope to acquire all global ownership and all derivative rights of all 29 patents held by Sunshine Ming.

What they value is the overall portfolio and the potential to maximize that value through professional operation.

Upon receiving this news, Yang Guangming keenly realized that this might be an excellent opportunity!

This perfectly aligns with his underlying need—to resolve the monetization of all patents at once and quickly recoup a large amount of capital!

Although selling patents as a package may result in a lower total price than meticulously cultivating each patent and negotiating with the most suitable companies individually, it can greatly save him time, energy, and subsequent management costs, allowing him to invest huge sums of money more quickly and earlier in the next more important phase of development.

For him, the time window and financial flexibility are far more valuable than the maximum premium of a single patent.

He attached great importance to this unexpected opportunity for negotiation and immediately made thorough and efficient preparations.

He once again hired Richard Lewis, a senior business negotiation consultant who had impressed him during the previous negotiations with Coca-Cola, to lead the negotiation process and strategy with his extensive experience.

Meanwhile, considering the huge amount of money involved in this negotiation and the need for professional financial analysis, tax planning and patent law support, he temporarily hired an experienced certified public accountant and a new partner lawyer with expertise in complex patent transaction structures and international taxation through the recommendation of Lewis consultant, forming a core negotiation team of four.

He did not include lawyer Ernest Larson in the negotiation team.

This decision was made after careful consideration.

The reason is simple: this time, it was Intellectual Property Capital Partners that approached them proactively, rather than through Larson's lawyers' introduction.

If Larson were to formally join the negotiations as an agent, according to the terms of the previously signed agency agreement, once the deal is finalized, Sunshine would be required to pay Larson a tiered commission of approximately 10% of the total transaction amount, which would be a huge expenditure in the millions of dollars.

If he were to lead the negotiations himself, he would only need to pay Larson, Mark Jennings, and the other two agents a fixed and relatively small "compensation fee" and "interruption fee" after the transaction is successful, in accordance with the "exemption from liability" or "direct transaction" clauses in the contract, to make up for their efforts and costs incurred in the previous promotion work.

The total amount of these three compensation payments is estimated to be only tens of thousands of US dollars, a huge difference compared to commissions that often amount to millions of US dollars.

From a business perspective, under the premise of legality and compliance, Yangguangming will naturally make the choice that is most beneficial to itself and has the lowest cost.

He believed that while Larson's abilities were certainly outstanding, his ad hoc, more targeted team was equally capable of handling such specific large-scale package deal negotiations, and might even be more efficient due to its focused objective.

In a conference room at a top hotel in San Francisco, negotiations for a multi-million dollar deal began.

Outside the window, the sea is a deep blue with white sails dotting the water, but inside, the atmosphere is one of professionalism, calmness, and even a slightly tense, strategic competition.

Yang Guangming, leading his four-person professional team, sat on either side of the large mahogany negotiation table, while the five-person team from "Intellectual Property Capital Partners" sat on the other. Both sides were polite during their introductions, but their eyes betrayed caution and shrewdness.

Buying out 29 patents in different fields with vastly different values ​​was an extremely complex, tedious, and time-consuming negotiation process.

The two parties first need to conduct a preliminary assessment and discussion on the potential value of each patent and determine a baseline.

Many of the patents, such as "hand warmer", "improved electric toothbrush", and "frequent flyer program" framework, have large valuation gaps between the two parties due to differences in market prospects, technological maturity, application direction and competitive landscape, making it difficult to reach an agreement quickly.

The opposing team's evaluation and licensing experts raised sharp and professional questions about each patent.

The negotiations were exceptionally difficult, with both sides engaging in heated debates and in-depth discussions on aspects such as the level of innovation of each patent, market capacity, competitive landscape, technological barriers, the possibility of alternative solutions, and the breadth of patent protection.

Yang Guangming's side prepared ample materials and detailed data. In particular, Yang Guangming's insights into the future development of certain technologies often provided surprisingly convincing descriptions of the future.

Intellectual Property Capital Partners, on the other hand, demonstrated the rigor, discernment, and bargaining instincts of a professional investment institution. They downplayed the short-term value of each patent, emphasizing its role as part of a "portfolio" and the uncertainty of long-term investment.

The focus of the negotiations naturally and inevitably centered on the most valuable patent: the "two-wheeled suitcase".

Both parties were well aware that the value of this core patent would directly determine the overall price and success or failure of the entire package deal.

Yang Guangming first presented a price quote for the patent. This time, he had a more solid and persuasive negotiating foundation and "anchor point" than before.

Consultant Richard Lewis calmly began, “Gentlemen, regarding the core patent for the ‘two-wheeled suitcase,’ we need to discuss its value based on an important new circumstance.”

We have now received the latest official quote from Samsonite.

They are willing to pay a patent licensing fee of 7% of the final retail price of the product in exchange for exclusive rights.

He paused deliberately, allowing the other party to fully process this crucial information, and observed their subtle changes in expression.

"Based on our commissioned independent market research firm's conservative forecast for the global luggage market over the next ten years, and our calculations of Samsonite's potential market share."

Lewis continued in a calm tone, “The potential total revenue generated by this patent during its future patent term, solely through exclusive licensing to Samsonite, will exceed $45 million in net present value!”

This is a financial calculation based on real-world pricing and a conservative market model.

He then changed the subject, his tone becoming more forceful, "And clearly, granting this groundbreaking patent, which is enough to create a completely new product category, to a single manufacturer exclusively is not the optimal strategy to maximize its value."

If a non-exclusive licensing model is adopted, licensing to multiple luggage manufacturers worldwide, the potential total revenue will far exceed this figure, and may even reach hundreds of millions of dollars in the future.

This perfectly aligns with your company's business model and profit logic.

"therefore."

Lewis's gaze swept over each member of the group, finally settling on the leading vice president, his tone leaving no room for argument:
"Based on its enormous strategic value, which has been recognized by industry giants, and its potential for long-term, substantial revenue through non-exclusive licensing, we are offering a global ownership buyout price of US$20 million for this patent."

This price takes into account the substantial returns your company may obtain through professional operation in the future.

"Twenty million US dollars?"

Harrison, the vice president of Intellectual Property Capital Partners, an elderly man with gray hair and sharp eyes, shook his head with an incredulous expression on his face.

"Mr. Lewis, Mr. Yang, this price is completely detached from reality and is based on overly idealistic assumptions. Licensing fees are future, uncertain revenues, full of variables—market acceptance, competitors' reactions, the emergence of alternative technologies, macroeconomic fluctuations, and even changes in laws and regulations."

The buyout price is an immediate, definite, and risk-free transfer.

We cannot directly equate the buyout price with an ideal, unverified, and uncertain present value of licensing fee revenue.

This is tantamount to ignoring all potential risks and time costs.

His team members then refuted and pressured him on the price from multiple angles:

Are your global market projections overly optimistic? Can Samsonite truly achieve your projected market share? Will other competitors, unwilling to pay high licensing fees, focus on developing alternatives, potentially leading to patent litigation? Will the validity of your patents be fully guaranteed throughout the entire protection period, preventing them from being invalidated?
They attempted to steer the discussion back to a "realistic" risk-adjusted value assessment framework.

At the negotiating table, a turbulent atmosphere arose, with numbers, models, assumptions, and risk factors colliding in the air.

However, with Samsonite's 7% licensing fee offer as a solid and powerful "anchor," the debate between the two sides, though intense, always revolved around relatively objective data, market logic, and risk probabilities, avoiding pure wishful thinking and speculation, and making Sunshine's $20 million offer not a castle in the air.

Yang Guangming remained silent most of the time, attentively listening to the arguments from both sides, only using eye contact or brief words to convey instructions or express support to his team at crucial moments.

He noticed that although the other party was trying hard to lower the price and their words were sharp, their desire for the patent was real. Their rebuttals were more of a professional negotiation strategy aimed at probing and lowering the price, rather than truly denying the huge potential of the patent.

Their hasty flight to San Francisco speaks volumes.

After hours of intense negotiations and multiple rounds of internal consultations, Intellectual Property Capital Partners' bid for the two independent buyouts of the suitcase patents was finally settled at $14 million.

Harrison's vice president emphasized that this was the maximum price they could offer based on the lowest level of risk adjustment and discounted future earnings.

This price exceeded Samsonite's $10 million buyout offer, as well as Yang Guangming's bottom line of $10 million, and was even $4 million higher than Samsonite's offer that he was almost willing to accept.

He had basically accepted the price, believing it fully reflected the value of the patent and met the expectations of a package sale.

But he knew that he must not nod easily at this moment.

He needs to leverage the high value of this core patent to drive the entire bundled transaction, using it to compensate for and enhance the valuation of other patent projects with lower value or unclear prospects that the other party is desperately trying to drive down the price, thereby raising the total price of the entire bundled transaction and maximizing overall benefits.

He signaled to Lewis, the consultant, to temporarily set aside the debate over the price of the two-wheeled suitcase and instead focus on negotiating the other twenty-eight patents one by one.

He demanded that the team argue their case on every issue, even for minor patents, striving for the highest possible valuation.

In the following days, the negotiations entered a more tedious, mentally taxing phase, testing patience and attention to detail.

The two sides engaged in a protracted negotiation on the remaining 28 patents, often arguing for half a day over a valuation difference of tens or even thousands of dollars.

Some patents, due to their promising market prospects, have received offers ranging from hundreds of thousands to millions of US dollars.

Others, however, either have too small a market, are too difficult to implement, or are considered by the other party to have weak patent protection and limited value. The price difference between the two parties is huge, and at one point, the valuation of certain patents was so problematic that it led to a stalemate and threatened the entire package deal.

The certified public accountants and patent lawyers temporarily hired by Sunshine played a crucial role in these detailed negotiations.

Accountants analyze the potential cost savings or revenue generated by each patent from a financial perspective, providing quantitative support for valuation; patent lawyers, on the other hand, emphasize the uniqueness and scope of protection of the patent from a legal perspective, refuting the other party's disparaging remarks.

Richard Lewis, the consultant, acted like an experienced conductor, coordinating the rhythm of the entire team, finding a delicate balance between toughness and compromise, and offering compromise solutions at crucial moments to advance the negotiation process.

For seven whole days, the lights in the negotiation room often stayed on until late at night. Countless cups of coffee were consumed, and the whiteboards were covered with numbers and charts. Both teams had invested tremendous energy and mental effort, leaving them physically and mentally exhausted.

Finally, when both sides felt exhausted and realized that they had crossed each other's bottom line and that further arguing might lead to the breakdown of the deal, a comprehensive package that weighed the interests of all parties finally emerged and was accepted by both sides.

Intellectual Property Capital Partners agreed to acquire all global ownership and all derivative rights of all 29 patents held by Sunshine for a total of US$22 million in cash in a single transaction.

This total price is based on a consensus reached after difficult negotiations on a series of patents, including the "two-wheeled suitcase" patent valued at $14 million, and the estimated value of $8 million for 28 other patents after intense negotiations.

Yang Guangming was satisfied and even pleased with the total price.

This far exceeded his initial expectations and perfectly achieved his strategic goal of quickly recovering a large amount of funds and shedding the burden of patent management at this stage.

While some individual patents may be underestimated, when considered as a whole, and taking into account time costs and risk-taking, this is undoubtedly an extremely successful deal.

He met the questioning yet slightly triumphant look in Lewis's eyes and nodded very clearly and firmly.

The draft agreement was quickly compiled by the legal counsel of both parties, and thick documents piled up on the corner of the table.

Both parties' legal counsel meticulously reviewed each clause to ensure its accuracy.

The agreed payment terms are as follows: 80% down payment, i.e., US$17.6 million, and the remaining 20%, i.e., US$4.4 million, after all intellectual property rights certificates have been fully transferred and confirmed to be correct.

After confirming that all terms, including the total price, the list and specific procedures for the transfer of intellectual property rights, representations and warranties, confidentiality clauses, and dispute resolution mechanisms (agreed arbitration), were correct, the representatives of both parties solemnly signed their names on a thick stack of agreement documents.

The moment Yang Guangming put down that heavy pen, even with his composure and the resolve he had cultivated through two lifetimes, an indescribable surge of emotion welled up within him—a tremendous sense of accomplishment and ease.

Twenty-two million US dollars!
In 1979, this was a truly astronomical figure, unimaginable to most people, a huge fortune enough to make anyone a member of the wealthy class!

This is not just a sum of money, but also the first and most solid foundation upon which he has successfully established himself in this era, based on knowledge from the future.

After the agreement was signed, the two sides shook hands, and the atmosphere eased considerably.

Mr. Harrison, the gray-haired elderly man and vice president of Intellectual Property Capital Partners, walked up to Yang Guangming, shook his hand firmly again, and said:

"Mr. Yang, it's a pleasure to cooperate with you. We are impressed by your vision and the value of these patents. We believe this is a win-win deal."

His tone then became more formal, "There is another important procedural matter that I need to explain to you."

He paused, then continued, "In subsequent payments, according to the IRS regulations, for residents of other countries that have not signed a tax treaty with our country, we need to withhold 30 percent of the amount as federal income tax for fixed or determinable annual income such as royalties, or a specific portion of the proceeds from the sale of assets."

You can apply for a refund or additional payment based on the actual amount of tax payable by hiring a professional tax accountant to file a tax return at the end of the tax year.

This is a mandatory legal requirement, and as the payer, we must comply. We ask for your understanding.

Yang Guangming nodded; he already knew about this from previous transactions.

Although the amount of withholding tax is huge, at $6.6 million, it is a procedure that must be faced.

“I understand, Mr. Harrison. This is a necessary compliance procedure, and I will entrust professionals to handle the subsequent tax filing matters,” he replied calmly.

He was well aware that although China and the United States had established diplomatic relations, they had not yet signed a comprehensive tax treaty to avoid double taxation.

Under current U.S. law, capital gains or royalties from the transfer of such patents by non-resident aliens are subject to a withholding tax rate of up to 30 percent.

Only after the US and China formally sign the relevant tax agreement will the withholding tax rate on income such as patent royalties be significantly reduced to around 10% according to the terms of the agreement.

But now, he has no choice but to abide by the current rules of the game and pay this exorbitant "entry fee".

That evening, Yang Guangming hosted a banquet at a famous Michelin-starred restaurant in San Francisco, generously entertaining all members of both negotiating teams.

The atmosphere at the meeting was harmonious. Although it had been several days of intense competition and mental and physical torment, now that the dust had settled and the deal was done, everyone felt a sense of mutual appreciation and shared success.

Fine wine and delicious food, laughter and cheerful conversation temporarily dispelled the fatigue of the past few days.

A week later, with the cooperation of both parties' lawyers, the registration of ownership transfer for all 29 patents and the handover of related legal documents were successfully completed.

Intellectual Property Capital Partners also strictly adhered to the agreement. After receiving confirmation of complete handover documents, the company promptly transferred the final payment of US$4.4 million, after deducting 30% withholding tax, to the bank account designated by Sunshine Capital.

At this point, all payments have been completed.

After a total of 30% federal income tax was withheld (i.e., $6.6 million), a total of $15.4 million was transferred into the bank account controlled by Yang Guangming.

Including the approximately $960,000 he received from selling the bottled water patent to Coca-Cola, after deducting withholding taxes and Larson's lawyer's commission, the total amount of available funds in his personal account has reached $16.36 million!
Even after deducting the symbolic compensation to Larson, Jennings, and other agents, as well as the hefty fees for hiring Lewis's consulting team, accountants, and temporary lawyers, he still had $16 million in hand!

This is several times better than the best-case scenario he initially envisioned. The size of this funding has provided him with unprecedented scope and solid foundation for his next steps.

Standing on the Stanford campus, looking at the majestic silhouette of Hoover Tower in the distance under the golden glow of the setting sun, and feeling the pulse of technology and innovation represented by this land beneath my feet, Yang Guangming felt an unprecedented sense of groundedness, composure, and a power poised to be unleashed.

He took this crucial first step with remarkable steadiness and success.

The seeds of knowledge from the future have been successfully transformed into enormous capital that can be freely controlled in this time and space and leverage the future through legitimate commercial channels recognized by this era.

Next, we must precisely invest this wealth of wisdom into the next, even greater, emerging opportunity, allowing it to continue to grow and expand! (End of Chapter)