Patent values are hit by uncertainty; operating co buying overtakes NPE

Three things are needed to succeed today in patent licensing: more capital, more patience and more good patents, which are in increasingly short supply. 

Uncertainty is the glue that binds weaker patents to cheaper ones.

Patent reliability is poorer than ever, in part because invalidating bad patents is now somewhat less arduous and costly. The courts are awarding fewer and lower damages awards, and defendants with time on their side and cash in their pockets, can play an even longer waiting game.

Increased uncertainty has encouraged more patent holders, mostly those operating companies that generate their inventions and rights internally, to consider purchases that they may not have previously. At “buyers’ market” prices, who can blame them? It will be interesting to see how uncertainty in the patent system will affect future R&D strategy and domestic patent filings.

With asking prices per asset trending down, and brokered patent sales lower, the percentage of packages sold is actually up significantly, as is opco buying.

The top buyers in 2015 Q1 according to Richardson Oliver Law Group, which tracks brokered patent transactions, were RPX, a Canadian numbered company, and Intellectual Ventures, for their Intellectual Investment Fund 3. These buyers accounted for 42% of all of the packages purchased in 2015 Q1 and RPX alone accounted for 28%. Other, much smaller buyers in Q1 include Apple and Philips.

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Listings are Down; Sold Packages Up

ROL indicates that patent deal listings (patent and application packages) are down 20% from 4Q 2014 to 1Q 2015, but that packages sold are up 88%. In an article in IAM earlier this year by ROL (see The brokered patent market 2014,), it was shown that corporate buyers have overtaken NPEs in 2013 and 2014, comprising 46% for the market versus 38% for NPEs.

Asking prices for US-issued patents monitored have fallen from $577,000 in 2012 to $360,000 in 2014, a fall of 37.6%. ROL’s latest broker sales stats can be found here.

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“Uncertainty rules,” my latest Intangible Investor, the July IAM Magazine looks at why confusion over new patent hurdles and lower damages awards is creating an opportunity for some companies to buy patents at lower prices and settle disputes more favorably. Subscribers can get it here.

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Don’t expect to see patent uncertainty to wane anytime soon.  Many operating companies and at least some NPEs will be sad to see it go.

 

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Image source: Richardson Oliver Law Group

About Bruce Berman

IP trend spotter, consultant and author.

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