Will the augmented reality magic fade in Plantation, Florida?
That is the first question some have asked after an informal revelation during the weekend that Magic Leap, the maker of the Magic Leap One, transferred much of its patent portfolio to JP Morgan Chase as collateral.
In documents filed with the US Patent Office on August 22 and signed on August 20, a huge 1,903 patents from Magic Leap (as well as from Magic Leap holding Mentor Acquisitions, LLC and Molecular Imprints Inc.) were all assigned to JPMorgan Chase. The document (see below), which is a patent security agreement, has been signed by Magic Leap CEO Rony Abovitz and JP Morgan Chase collateral agent Eleftherios Karsos.
In many cases, such an agreement allows the patent holder to use his patents as collateral. If this sounds familiar, it is because it is exactly what happened to Meta Company in 201
"A creditor usually registers a" security interest "in a patent when the patent is pledged as collateral," patent attorney Andrea H. Evans told Next Reality at the time. "For example, if a loan is contracted, the lender takes a security interest in the patent as collateral against repayment of the loan and to ensure compliance."
In this case, the patent holder, JPMorgan Chase, a member of the company's financing family, as the New York-based bank, was part of the Magic Deap Series D financing round last year, along with Alibaba Group, Google, Axel Springer Digital Ventures, Saudi Arabia & # 39; s Public Investment Fund, and others.
The patent shuffle turned up on Sunday by a Reddit user who spent some time digging the patent portfolio of the Magic Leap.
Although Magic Leap has been advertised as a long runway in recent years given its billions in funding, earlier this year c was turned over to raise $ 280 million from the Japanese NTT Docomo, although the relationship was set up as a partnership at the time . Regarding Abovitz and his team, while the tweets and blog posts keep coming, things have been pretty calm in terms of new announcements from the startup. In fact, most of the big news about Magic Leap in recent months has gone around his lawsuit against a former employee launching a competitive product under the flag of Nreal.
On Twitter, just before signing the collateral agreement, Abovitz wrote: "Magic Leap One Creator Edition has been in the world for 364 days." And while that one-year record may make sense for the founder of Magic Leap, it doesn't change the fact that the rest of the industry players are starting to oust the field.
From small startup Tilt Five, who launched his AR gaming device, Kickstarter (and raised more than $ 1.7 million) just days after Abovitz's tweet to Microsoft HoloLens 2, which finally began shipping last week, becomes Magic Leap faces a growing army of competition for the future of augmented reality.
There is little in the way of figures regarding Magic Leap & # 39; s sale of the Magic Leap One, nor have we heard much about a more user-friendly version promised in the past, therefore this latest news is likely to lead to that some people start the clock of the company die. Normally, such a fate probably does not seem to pass quickly, given the heavyweight investors involved. But in this case the drastic measure of Magic Leap, with the help of his patents as collateral, indicates that it can be financially much worse than anyone had imagined.
Update: A Magic Leap spokesperson has responded to Next Reality & # 39; s request for comment with the following statement:
"Magic Leap is in the middle of an important funding round that will become our Series E when it is completed. We have already closed much of this round, some as shares and some as convertible debt that becomes shares after the full round. The participants in this round are existing investors, new investors and strategic partners, "said a Magic Leap spokesperson to Next Reality.
"Magic Leap expands internationally and now has distribution in the US and Asia with additional regions that will follow shortly. In addition to a growing market share, we are currently producing our 2nd generation device and the Magicverse, and our content is growing. and developers' ecosystems. "
Unfortunately, that statement does not directly address our questions about the company's decision to enter into the patent protection agreement with JPMorgan Chase. Nevertheless, the statement indicates that there are still plans to introduce a new, possibly more consumer-focused, Magic Leap product in the coming months. To do that, however, it is now clear that Magic Leap must create more financial jobs for itself or run the risk of being grounded just as other major AR players take flight.