Algorithm: patent transactions have decreased 78% since 2013

If it seems like US patent transactions have fallen dramatically over past few years you are not imagining things, says a Chicago patent attorney.

According to research conducted by Dmitriy Andreyev, CEO with Flagship IP, P.C., an IP monetization firm, transactions have dropped more than 4.5-fold or 78% over a two-year period from 2013-2015 (10,509 to 2,286). For the purposes of his analysis, transactions include those between corporate entities, not just portfolio or individual sales.

Transferred assets, which include various types of assignees, were down from 275,235 to 73,333, better than 3.75-fold or 73% (see graph below).

“The primary reason for the dramatic drop is the Alice decision at the Supreme Court in 2014,” Andreyev told me. “It introduced a level of uncertainty regarding software and business methods patents never before seen.”

Andreyev made several working assumptions to arrive at his algorithm-based figures.

No Easy Task

For example,” he says, “the majority of the recorded transactions represent assignments of patents and patent applications executed by inventors for the benefit of their employers. Those assignments represent patent filing activity, but do not exactly represent the change of ownership, since individual inventors are often under contractual obligations to assign the patents.

“Another large subset of the transactions that do not represent market activity are assignment records executed for collateral purposes. For example, ACME corporation may borrow a loan from ABC bank and use ACME’s IP portfolio as a collateral for the loan. In this case, the assignment of the security interest from ACME to ABC will be recorded in the Patent Assignment Database.

“Identifying the assignment records described above programmatically is not simple and can be prone to error. The good news is that the same algorithm has been applied to all analyzed years and the identified change in the total number of the transactions should still be statistically significant.”