It’s unclear whether attempts by lawmakers and the courts to rein-in invalid patents and bad patent-holder behavior have succeeded in improving the system.
Whatever the case savvy investors will be looking for a silver lining.
Recent United States Supreme Court and federal district court decisions and new laws making it harder to enforce patents have failed to provide a clearer definition of what is patentable.
Tested patents — including those that surmount USPTO examination hurdles and that the Patent Trial and Appeals Board elects not to review or that survive it — are likely to be more valuable than ever. Fewer, more thoroughly vetted patents are likely to be a more significant factor.
The increased time and cost necessary to enforce patents may actually improve the profit picture for NPEs unwilling to settle too quickly and with sufficient asset quality and capital to prevail. Many NPEs, however, will be knocked out of the box by higher hurdles, which is not necessarily bad, especially if their strategy is merely to bring nuisance suits for their early settlement value. Astute IP investors — and not always the obvious ones — will more than likely benefit from depressed IP prices, higher legal costs and a longer time horizon for resolving disputes.
In “Turning Uncertainty Into Opportunity,” in the September IAM Magazine, published shortly, I look at what are some of the scenarios likely to play out in the IP investing space, especially for PIPCOs, or public IP (licensing) companies, most of whom are feeling increased pressure.
“With patents affecting more businesses in new ways, an increase in tech M&A means more dollars will be spent on IP and the R&D that underlies it,” I write in the upcoming The Intangible Investor. “Learning to live in a world with even less patent certainty is difficult for both businesses and inventors. For investors, it presents an even greater challenge.
“Adversity of this nature may turn out to be a welcome surprise for some, presenting a foundation for new opportunities. Those rights (and holders) that are not destroyed by the patent system may indeed be made stronger by it. Is this not what free markets are all about?”
“Even if patents are less certain, holders with the right combination of quality, capital and patience will continue to be rewarded. New hurdles will not dissuade serious direct IP investors from continuing to play – nor will it stop strategic or defensive investors from stockpiling patents. Those with the best patents will dig in deeper for still rewarding if more delayed and less headline-worthy outcomes.”
The September IAM will be published in early August. Click here for subscriber access.