Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 5. Intangible Assets

Patent Portfolio and Patent Rights

The Company’s intangible assets with finite lives consist of its patents and patent rights. For all periods presented, all of the Company’s identifiable intangible assets were subject to amortization. The carrying amounts related to acquired intangible assets as of September 30, 2017 are as follows ($ in thousands):

	Net Carrying Amount			Weighted average amortization period (years)
Patent Portfolios and Patent Rights at December 31, 2016, net	$	4,951			3.65
Amortization expenses		(1,027	)
Patent Portfolios and Patent Rights at September 30, 2017, net	$	3,924			2.91

The amortization expenses related to acquired intangible assets for the nine months ended September 30, 2017 and 2016 are as follows ($ in thousands):

	Amortization Expense for the Three Months Ended September 30,				Amortization Expense for the Nine Months Ended September 30,
Date Acquired and Description	2017		2016		2017		2016
7/24/13 - Rockstar patent portfolio	$	18	$	26	$	53	$	78
9/10/13 - North South patent portfolio		5		8		16		23
12/31/13 - Rockstar patent portfolio		323		502		958		1,497
	$	346	$	536	$	1,027	$	1,598

The future amortization of these intangible assets was based on the adjusted carrying amount. Future amortization of all patents is as follows ($ in thousands):

	Rockstar		North South		Rockstar
	Portfolio		Portfolio		Portfolio
	Acquired		Acquired		Acquired		Total
	24-Jul-13		10-Sep-13		31-Dec-13		Amortization
Six Months Ended December 31, 2017		18		6		323		347
Year Ended December 31, 2018		71		22		1,280		1,373
Year Ended December 31, 2019		71		22		1,280		1,373
Year Ended December 31, 2020		71		22		638		731
Year Ended December 31, 2021		71		22		—		93
Thereafter		4		3		—		7
Total	$	306	$	97	$	3,521	$	3,924

Equitable Agreement

In March 2016, the Company entered into an agreement (which was subsequently amended) with Equitable IP Corporation (“Equitable”) to facilitate the monetization of the Company’s patents (the “Monetization Agreement”). Pursuant to the Monetization Agreement, the Company has worked together with Equitable to develop and refine the Company’s ongoing litigation plan. Under the Monetization Agreement, Equitable is obligated to use its best, commercially reasonable efforts to monetize the Company’s patents. To that end, Equitable has filed several litigations, one of which is currently pending. The Company will share net monetization revenue derived from all monetization activity equally with Equitable. To facilitate the litigation plan, approximately 186 of over 330 of the Company’s patents and applications have been assigned to Equitable, which will pay all maintenance and prosecution fees going forward. No assigned patents may be transferred by Equitable to a third party without the Company’s consent. In the event that all terms of the Monetization Agreement are met by December 2017, the Company will further assign approximately 140 additional patents and applications to Equitable for monetization. The Company has retained a grant-back license to practice all transferred patents.

The Company has concluded that the Monetization Agreement did not constitute a sale of the patents. The Company’s retention of the right to use the patents, the requirement for the Company’s consent to any sale, and the significant economic benefits the Company retained with respect to the litigation, licensing and sale proceeds, did not meet the sale of patent criteria. The Monetization Agreement has been treated as an agreement to outsource its licensing activities to an outside servicer for contingent fees based on the success of the servicer’s efforts. As such, the Company will not remove the patents from its consolidated balance sheet, and will record its share of litigation, licensing, and sales proceeds, if any, when those proceeds are received, or when due if the other revenue recognition criteria are met under ASC 605, Revenue Recognition.