2 November 2020News
Under Armour Acquires Health-Tech Startup For $150 Million, Attracting Adidas-sized Trouble
Under Armour, founded by Kevin Plank, started in a Washington basement in 1996. Touting a special fabric to enhance performance and endurance, it established itself as one of the fastest-growing companies in the sportswear business. With a mix of media attention, strategic partnership and strong revenue records, the brand solidified among the titans of sport and athletic wear.
The M&A Transaction: In 2013, the rising sports brand stepped up its digital health game by acquiring MapMyFitness – Texas-based health-tech startup for $USD150 million. MapMyFitness, which had about 20 million registered users offered running, biking, and walking apps and social networks that integrate with a wide array of other digital health apps and some consumer electronics devices. This put Under Armour in charge of one of the biggest social sports communities on mobile devices and was the first more for the pioneer in moisture-wicking shirts into digital health.
The “Uh Oh” Moment
In early 2014, Adidas (German athletic footwear and apparel brand) filed a federal lawsuit claiming that Under Armour and its recently acquired subsidiary, MapMyFitness, were willfully infringing on as many as 10 Adidas patents by marketing aforementioned digital fitness technologies.
Under Armor launched 10 patent invalidation proceedings (aka IPRs) in the first 9 months of 2015.
In May 2016, the parties resolved their patent litigation and reached a settlement agreement in which Adidas’s claims were dismissed with prejudice.
Adidas granted a license to its patents in exchange for a confidential licensing fee payable by Under Armour and MapMyFitness.
Expand in new markets with confidence but be aware of IP risks.
It is now an industry standard that the portion of total acquisition costs allocated to M&A Patent Diligence ranges from 1% up to 5%. The diligence is too often restricted to plain title checks while a true M&A Patent Diligence should include a review of all patent-related risks. In the case of Under Armour, a proper diligence would have flagged a risk emerging from the German behemoth’s patent position and allow Under Armour to plan ahead accordingly.
For Executive Management: Manage patents proactively – Patents are not just about protecting innovation but more importantly patents can build a competitive advantage that helps you conquer new markets and exert monetary pressure upon your competitors.
For Investors: Be informed – the cost of an IPwe M&A Patent Diligence, part of the IPwe Reports family, will make investments safer. Our reports give you incredible insights to a company’s IP position relative to their market and competitors. Get informed and ask smart questions.
For Advisors: Understand the risks – IPwe Reports enable you to intelligently assess IP risks at a nominal cost. IPwe then offers solutions to mitigate those risks. You can use IPwe Reports to spot the issues and then apply your expertise to advise your client on how to best mitigate risks.