IP Market Updates
Read by over 12,000 IP and business professionals worldwide
April 24, 2017
As we discussed in our most recent newsletter, a market in transition often sends some conflicting signals. These past couple of weeks were no exception. On April 12, we learned that Qualcomm would have to pay Blackberry a whopping $815 million after a binding arbitration decided that the Canadian phone manufacturer had been overcharged for licensing Qualcomm’s IP. This is an interesting way to make for a profitable quarter, but given Blackberry’s continued shortcomings in the marketplace, none of its shareholders is going to complain about the outcome.
While we are in Canada, one of the most respected and widely known Non-Practicing Entity (NPE), publicly traded Wi-LAN Inc. surprised everyone by announcing a few days ago that it would cease relying on patent monetization activities as its core business model and would rather utilize its cash to invest in IOT businesses and made a first such acquisition for close to $50 million. When one of the most stable NPE calls it quits, we should all be very concerned; unlike Intellectual Ventures who announced recently that it has ceased buying patents and would focus on monetizing the tens of thousands it already owned, Wi-LAN cannot blame the high cost of acquisition for disrupting its business model. Indeed, like most other NPEs, Wi-LAN most often acquired title to patent assets at zero cash and would split any ensuing revenues with the seller resulting from licensing activities or litigation.
Therefore, this announcement means that even the most sophisticated NPE just cannot find a way to make the patent licensing model work for its shareholders, as infringers in the US are simply refusing to take on licenses for patents they practice and invite litigation, knowing full well that the deck is stacked in their favor. CEO Jim Skippen made clear that the business is no longer convinced that investing in patent deals is the right approach. “As long there is a patent system there will be a role for patent licensing companies, but the environment has really changed. You can have really good patents and lose on them — in a way it’s not always a fair system and that makes it hard to invest in assets or really rely on the business indefinitely,” he said.
This announcement by Wi-LAN is a key milestone, as it has now taken down a player that had managed until now to survive in the face of adverse market conditions. No more, it appears. More importantly, it reflects the sobering fact that even when one’s cost of acquisition for valuable IP is close to zero, which it rarely is, the US legal system is no longer capable of adequately protecting such IP against infringing activities. No wonder smart capital is now looking to invest abroad, mainly in China, where the patent system being built at lightning speed is exactly where the US one was a decade ago when innovators felt they have a shot at protecting their inventions. How on earth did we get there??
Nevertheless, we also see some encouraging signs in parallel that there may be a renewed appetite for IP. As we discussed recently, Uber just launched a patent buying program, which we suspect is a direct reaction of being sued by Google (through its Waymo subsidiary) on patent and trade secrets grounds. We also just saw that Snap (which just went public) paid a record US $7.7 million for one single issued patent (9459778) around the concept of “geo-filters”. This valuation either reflects Snap’s utter amateurism in buying patents (they are indeed pretty new to the game), or some realization that this was pocket change compared to the worst-case scenario of losing a future infringement lawsuit (there is none as of this day). Yet, while we can collectively rejoice in seeing a US tech company assign so much value to others’ IP, one must wonder how likely it is that a single patent filed as recently as 2011 could be worth that much, especially given the risks of finding relevant prior art or that of an adverse Alice type ruling by a US court. With invalidation rates for challenged US patents still approaching 80%, Snap really rolled the dice here… In any event, it certainly makes the geo-filter patent we sold last year (and which is presently being asserted by the buyer) a lot more valuable, especially given its much earlier priority date of 2006.
Let’s not forget the value of non-patent IP, which we rarely have the opportunity to discuss. A few days ago, we learned that Walmart quietly acquired all IP assets from beleaguered Toronto-based online retailer Shoes.com for US $9 million. The Shoes.com web address still exists, but one click on the page will redirect consumers to Walmart’s recently acquired ShoeBuy unit. Obviously, most of the deal value went into the brand-related aspects (trademarks, logos, and domain name). But as we often discuss with the companies we advise, there are many pillars to a solid IP foundation and patents form only one leg of the stool.
Ultimately, when it comes to pricing IP, one is left with a dearth of reliable data. So we must commend the Richardson Oliver Law Group (ROL) for trying hard to bring some transparency to the market stakeholders. In a recent series of articles, four out of six of which have been published, they show the latest market data and trends. ROL’s key takeaway from pricing data is that asking prices have stabilized from 2015 to 2016 (see Table below). Asking prices have changed only negligibly from last year, both per asset and per US-issued patent. Average price per asset increased by 3.7%, while average price per US-issued patent dropped 0.8%. The standard deviations, though still quite large, have also dropped. They state that it is possible that the fall in asking prices has been arrested, although we’ll have to see over a longer horizon.
It would be great to have more data about actual selling prices, which one can reasonably expect to be lower. But that is the kicker; most sellers are not authorized to make that price publicly available and we therefore live in a world where sporadic announcements like the Snap one above make the headlines and suddenly excite patent owners, giving them false hopes of riches.
Believe me, when the patent market is back where it was a few years ago, you will read it here first!
Other relevant news below. Happy reading!
University of Washington among top schools at turning ideas into patents and startups, study says
... seventh among U.S. universities in commercializing ideas that come from students, staff and researchers and turning them into patents, licenses and ... (more...)
Is there a legislative fix for biotech patents?
JD Supra (press release)
But continued innovation in personalised medicine is threatened by the US' patent system, which has increasingly found biotech inventions ineligible ... (more...)
Marathon Patent Group Inc (MARA) Announces Earnings Results
Marathon Patent Group logo Marathon Patent Group Inc (NASDAQ:MARA) announced its quarterly earnings data on Thursday. The business services ... (more...)
Patent-holding company uses ex-Nokia patents to sue Apple, phone carriers
The largest publicly traded patent-assertion company, Acacia Research, has launched a new lawsuit (PDF) against Apple and all the major cell phone ... (more...)
Samsung Succeeds in Reducing Damages for Infringement of Two Rembrandt Patents
Rembrandt sued Samsung for patent infringement in the Eastern District of Texas and convinced a jury that Samsung infringed its two asserted patents ... (more...)
Internet Of Things Is The Next Big Thing In Patents, And EPO Says It's Ready For It
Intellectual Property Watch
The European Patent Office has a “tradition of looking forwards” to anticipate patenting trends, and it sees the Internet of Things (IoT) as the next ... (more...)
Does innovation lead to patents, or patents lead to innovation?
I recently had the opportunity to speak on the record with Matt Levy, current counsel with Wiley Rein and former patent counsel for the Computer ... (more...)
Want to Revive the Economy? Restore the Patent System!
Let's look at several which unintentionally underscore the importance of patents, as well as the danger weakening our system, presents to the nation. (more...)
“We're not sure that investing significant amounts of capital in patents really makes sense for us ...
IAM (registration) (blog)
Yesterday's news that WiLAN will purchase an Internet of Things (IoT) business as it looks to diversify away from patent licensing represented another ... (more...)
The RPX Corporation (RPXC) Position Maintained by Swiss National Bank
Petro Global News 24
RPX Corporation offers patent risk management solutions. The Company's patent risk management solution facilitates exchanges of value between ... (more...)
Intellectual Ventures Stops Buying Patents
Intellectual Ventures has stopped buying patents on the secondary market based upon an 'investor driven decision.' Removal of this dedicated capital ... (more...)
Huawei earns first victory against Samsung in China over smartphone patents
Huawei asserted a patent covering smartphone technology against the Korean tech company, reportedly seeking compensation for 30 million ... (more...)
Roku Signs TiVo License Pact Covering 6000 Patents
Roku has signed a multiyear intellectual-property license agreement with TiVo, granting Roku access to a portfolio of thousands of patents. Financial ... (more...)
Uber Plans Patent Purchase Program to Boost IP Portfolio
Uber Technologies Inc is inviting patent holders who want to sell to make them an offer, as the ride-hailing service aims to grow its intellectual property ... (more...)