Patent transactions are flat; U.S. asking prices firm at $250K per

The number of patent sales in the 4Q 2016 remained about the same, but the median asking price of sellers of U.S. patents was higher than in recent quarters.

According to data compiled by Richardson Oliver Law Group, a Silicon Valley firm that tracks patent transactions, five of the ten most active sellers were Asian companies, and the most active buyers were led by a variety of operating companies, defensive aggregators, and NPEs. In general, corporate buyers were more active than NPEs.

The median asking price of U.S. patents in the 4Q was $250K; all patents, $150K (see graph below).

As a trend, operating companies represent a higher percentage of overall patent purchases when looking at a five-year sample. The sale of software assets lagged hardware, but not by much, 180 to 234, for some an encouraging trend.  

“Buyers are becoming more comfortable with software risk and understanding what may and may not be ineligible under Alice,” said Kent Richardson, Managing Partner of ROL. 

Sales are flat, which Richardson believes can be interpreted as a sign of relative health, given how badly the case law has gone against patent owners. “Arguably, there should be fewer deals on the market and fewer sales. We won’t know for sure for another 12 months, but it looks like sales rates are climbing back to where they were a couple of years ago.”

Cloud-related inventions are more likely to be technically challenging in terms of patentability, compared with, say, user interface patents. Infrastructure inventions are much more likely to pass an Alice test.

“As a test, we are defaulting to ‘Would it be patentable to the Europeans?’,” concludes Richardson. “It’s not a perfect measure, but it works.”

Available Assets Down, Packages Up

The number of patent assets available in the market dropped 13.2 percent to 2,478 new assets in the fourth quarter from the previous quarter.

The number of patent packages listed rose 3.5 percent to 147 from the third quarter. (This could mean that fewer, better quality patents are being offered for sale.) However, 2,855 assets listed in the third quarter were offered in a smaller number of patent packages.

The median asking price per new asset (U.S. and global) listed by patent brokers was $150,000 in the fourth quarter. That reflected increases of 38 percent from the previous quarter and 80 percent from the fourth quarter of 2015.

Brokers matched buyers and sellers for 28 deals on packages of related patents during the quarter, according to ROL data. Those deals totaled 637 assets, comprising 395 granted or pending U.S. patents, while the remaining amount represented granted or pending foreign patents.

By comparison, 565 assets were sold in 35 brokered patent deals during the third quarter of 2016. In the fourth quarter of 2015, 554 assets sold in 33 patent packages.

For information about Richardson Oliver Law Group, go here.

Image source: RichardsonOliverLaw; Bloomberg/BNA

About Bruce Berman

Independent IP observer, adviser and author.

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