Tag Archives: RPX Corporation

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

1Q + 2Q 2015 = downer for most PIPCOs; a few bright spots shine

Shares of public IP companies (PIPCOs) continued to fare poorly in the 2Q of 2015. The stock of companies with larger market capitalization tended to do better, and there were even a few whose shares were up significantly.

Just how bad was the first half of 2015 for PIPCOs? Pretty bad.

Through July 6 the S&P 500 Index was virtually flat, down just .51%. Patent licensing company losers YTD, however, include Spherix (SPEX), $.43, down 60.28%; Inventergy Global (INVT), $.39, off 50.29%; Marathon (MARA), $2.89, down 65.68%; Finjan (FNJN), $1.35, down 46.64%; Document Security Systems (DSS), $.29, off 35.51%; Unwired Planet (UPIP), $.61, off 38.8%; and VirnetX Holding Corp. (VHC), $4.22, off 23.13%.

CopyTele (now Itus, stock symbol ITUS), $.14 was up 27.27%. (Could a name change make a difference? I guess maybe if the stock barely trades and has a market value of $1M.)

Pendrell (PCO), which was down as much as 30% and up 5% since May, finished the first half of the year just a shade under flat.

[For a snapshot of individual PIPCO performance, including recent news, and a look at how they compare to each other, visit the recently updated IP CloseUp 30, here.]

Bigger Players

Of the bigger players Acacia (ACTG), $8.11, was down 52.13%; and WiLAN (WILN), $2.23, was down 25.42%. WiLAN with $93M in annual stock-market-predictions-2-300x199revenues and $118M in cash, appeared to stand a good chance of weathering the storm. Its shares pay a 7.1% dividend.

On the plus side: RPX Corporation (RPXC), $22.57, was up 22.57% year to date; InterDigital at $56.30 gained 6.43%; Tessera (TSRA), $37.75 was up 5.56%; and Rambus (RMBS) at $13.89, advanced 25.25%.

Perhaps the most outstanding performer of the group is licensing/ operating company Universal Display Corporation (OLED). It stood at $51.17, up an amazing 81.84% YTD. The flat panel display and solid state lighting company has 3,500 worldwide patents and applications and licenses to many leading electronics sellers, including Apple. It was founded by Sherwin Seligsohn, who was founder and Chairman of InterDigital 

Deals in the Works?

In a quarter-ending column by Richard Lloyd that ran on the IAM blog he speculated that there could be some deals in works as some of these licensing business wind down. “This blog and others in the market have been predicting for a while that there will be some sort of shake-up of the PIPCO sector,” Lloyd wrote, “be it consolidation through mergers or asset sales. But so far any signs of that shake-up have been limited to an approach by Marathon to Spherix (which was rebuffed) and the merger between Internet Patents Corporation and Prism Technologies. But, thanks to the continuing tough conditions, are we now approaching the point where we will start to see heightened activity?”

Inventergy could be delisted from Nasdaq as its share price has remained below $1. It has applied for an extension to remain on the exchange for a further six months. Vringo, ParkerVision and Spherix have all been granted extensions to remain on the NASDAQ in the first half of 2015.

Challenges Ahead

It will not be easy for PIPCOs to be acquired or otherwise merged with stronger players, nor will it be easy for them to sell off assets. One prominent CEO told me that he has been approached by several PIPCOs but that he does not see much value in merging or in acquiring potentially undervalued public licensing companies, even for stock. “Numerous encumbrances involving the patents and relationships with capital providers would need to be sorted out, and, frankly,” he said, “few of the assets are worth it.”

Image source: mt5.com; onlinesharetradingtips.in

Leading IP stocks for 1Q include VRNG, RMBS, TSRA, VHC & RPXC

Despite a soft first quarter 2015 for the 13 IP licensing company stocks that comprise the PIPX IP Stock Index, versus the S&P 500, individual winners and losers that bucked the trend.

Vringo (VRNG), down 80.9% over the past 12 months, was up 18.2% in the quarter one, the most in the group. Also advancing were Rambus (RMBS) was up 13.4%, Tessera (TSRA) 12.6%, Virnetx (VHC)10.9% and RPX (RPXC) 4.4%.

Unwired Planet (UPIP), Acacia (ACTG) and Marathon (MARA) were down, 43.0%, 36.8% and 31.0% respectively for the quarter. For MARA it came after a stellar 2014 where it gained some 170%, so some profit-taking is not unexpected. InterDigital (IDC) also cooled off after a torrid 4Q 2014.

*****

PIPX under-performance relative to the S&P 500 was more muted in the first quarter. This appeared to be less a result of improving performance among PIPX sector companies as a group, than improved performance among a handful of larger Index leaders (Tessera and InderDigital), whose weighting impacted overall results (see final graph).  

Fig2
Vringo’s stock was beaten down significantly in the 2014 as the result of adverse decisions in court, so its gain is less impressive in relative terms. Its improved stock performance is either being considered by some investors as a positive harbinger, or the shares are enjoying a favorable bounce due more to traders than long-term investors.

The role of depressed patent values as a result of the American Invents Act, IPRs and proposed proposed additional anti-patent litigation legislation in poor PIPCO performance is difficult to determine. The likelihood is that investors are beginning to regard some companies as better capitalized and and more sufficiently equipped for the long hall, whatever the scenario.

Those larger players that appear to be in possession of sufficient numbers of good patents and licensing opportunities, appear to be the best position to perform over time.

*****

Fig3The PIPX Index, compiled exclusively for IP CloseUp by Dr. Kevin Klein, Director of IP Licensing at Freescale Semiconductor, is designed to provide a measure of the market value and health of the intellectual property licensing business. The index consists of 13 public companies all whose market capitalization exceeds $100M, whose primary focus of licensing and enforcement of patent intellectual property. The companies included in the index are listed in Table 1. Several of the companies’ market capitalization has fallen below $100M since being added to the index.

“The PIPX index starting from July 2011 through March 31, 2015,” says Dr. Klein. “Somewhat surprisingly, given the amount of interest and attention provided to IP licensing in recent years, the index trends down from July 2011 to about the middle of 2012 and from there has been relatively flat. This performance stands in contrast to that of the broader economy and of publicly traded companies in general.”

The 2015 1Q PIPX update can be found here.

Fig5

Image source: PIPX IP Sector Index, Q1 2015 Update

Dueling Data: Patent Dispute Stats Don’t Add Up

U.S. Government Accountability Office and some IP information sources differ on whether there is a patent troll problem.

In a comprehensive study examining forces impacting the patent system mandated the American Invents Act, the United States Government Accountability Office (GAO) has found that only about 20% of patent suits are brought by NPEs or so-called patent trolls. The majority of patent litigation, the report stated, are filed by companies that sell products.

This information is in stark contrast to what lawmakers and the public have been led to believe. Data reported this year by RPX and cited by Professor Colleen Chien of Santa Clara University School of Law, and other others in academic papers, says that in 2012 NPE suits were 62% of those filed. Rational Patent Exchange (NASDAQ: RPXC) is a publicly held patent aggregator that buys patents on behalf of its members, mainly large technology companies, to avoid being named in patent infringement suits.

seal_2011_12_20Stated the government study: “GAO’s detailed analysis of a representative sample of 500 lawsuits from 2007 to 2011 shows that the number of overall defendants in patent infringement lawsuits increased by about 129 percent over this period. These data also show that companies that make products brought most of the lawsuits and that non-practicing entities (NPE) brought about a fifth of all lawsuits.

Pace and Meaning

It’s not difficult to tell that some companies are interested in painting a more negative picture of patent litigation and plaintiffs than really exists.

NPE activity is up over the past few years for multiple reasons, and the licenses that result from them are not necessarily bad for innovation or commerce. The pace and meaning of innovation is accelerating rapidly. With new and complex ideas having greater meaning to businesses than ever, disputes over inventions are inevitable. So is misinformation.

Bad actors that file patents that should never have issued in the first place, and who routinely infringe others’ inventions, are no better than businesses that launch nuisance suits. Unfortunately, there are a lot more of the former than the latter.

Information sources that fail to provide all of the information or to explain it in context compound the problem.

Illustration source: gao.gov; aplusclick.com

Article Traces Rise of a Phone Patent over 11 Years and 4 Owners

From Mitsubishi to Apple, to an NPE and finally RPX, one IP asset, several objectives.

It’s a hard-knock life for some patents, so says an insightful article appearing in the current IEEE Spectrum that provides a behind-the-scenes look at the road traveled by a single smart phone patent as it was sold and resold, mostly to well-known holders. Spectrum is the magazine of Institute of Electrical and Electronics Engineers, the largest professional organization for the advancement of technology.

“The Troubled Life of Patent No. 6,456,841,” by veteran technology reporter Tam Harbert, traces the path of an invention by a Mitsubishi Electric Corp. engineer,  covering the alert sent to a cellphone user of incoming messages by displaying an icon on the screen. The U.S. patent was issued in September 2002, and for nine years, writes Harbert, led a very quiet life. In 2011, with the smartphone wars heating up, the patent became more interesting, and so did its ownership history.

In March 2011 Mitsubishi transfers the patent and 11 others to Apple. In August 2011 Apple turns over all 12 patents to Cliff Island, a company controlled by Digitude Innovations, which had slide_1previously acquired hundreds of chip-related patents, some from AMD.  Digitude was established around 2008 by Altitude Capital Partners, a successful patent investment and monetization firm. (ACP was at one time a Brody Berman Associates client.) 

In December 2011 Digitude sues 9 mobile phone and tablet companies for patent infringement, but not Apple. In May-June Digitude drops its suit and ITC complaint and sells the ‘841 patent and some 500 others to  RPX (NASDAQ: RPXC), a defensive patent aggregator for $46 million. RPX is in the business of deflecting patent litigation for its clients, mostly large technology companies. 

It would not be right for me to give away the entire story, which is summarized with good humor in a slide show which you must watch.

*     *     *

Why did the ‘841 patent take this seemingly strange path?

Harbert is an excellent reporter with keen instincts and an open mind — exceedingly rare in media coverage of intellectual property.  I’ve served as a resource to her on stories in the past, and she asked if I could provide some perspective for this one, which you can read here.slide_2

Is it possible that the ‘841 patent could be on the move again? You never know who may have the greatest demand for a given IP asset at a particular time, and how best to maximize it.

From my perspective, Apple knew it had purchased something worthwhile. However, to deploy the asset most effectively it needed to transfer it to another, more flexible entity. Enter Cliff Island with its AMD chip patents and a greater ability to sue infringers and sell to them. For Apple it was likely less about the cash return the patent provided than the strategic advantage. The sale to RPX may have bought the consumer electronics giant some temporary patent peace that could not have otherwise been achieved.

*     *     *

Expect to see more collaboration between one or more operating companies and NPEs in the future as patent monetization models continue to evolve and more businesses seek new ways of protecting their market share and generating revenue on their IP rights.

The unexpected turns taken by the “Icon” patent on its long road have provided uncharacteristic return. I wish that could be said about every patent.

 Illustration source: http://spectrum.ieee.org/ 

Patent “Plot” Thickens

EDN Takes a Fresh Look at NPEs

In the current Electronic Design, Strategy, News, contributing editor Tam Harbert cuts to the heart of the NPE matter with a timely article that focuses on the performance of patent aggregators.

The take away is that NPEs appear to be here to stay and with them defensive patent aggregators (DPAs), as well. NPEs are growing and increasingly serve to facilitate innovation, not just to impede it, as some would have us believe.

The two major patent aggregators, Allied Security Trust and RPX Corporation, differ structurally and functionally from Intellectual Ventures. All have succeeded in mitigating risk associated with NPEs. IV, arguably, a hybrid aggregator, part DPA and NPE, has accumulated some 30,000 patents. The others, only a few hundred.

Patent aggregators are evolving, and now possess a growing list of participants and patent acquisitions intended to defend members and reward investors.

Brody Berman Associates was a source for EDN article.

Illustration source: Newsletter Archive


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