Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Secondary Patent Market: Buyers, Sellers, Pricing and Trends

134 views

Published on

A presentation on the secondary market for patents, buying, selling, pricing, what lawyers need to know to establish a program, and what are the chances of winning with bought patents.

Published in: Law
  • Be the first to comment

  • Be the first to like this

Secondary Patent Market: Buyers, Sellers, Pricing and Trends

  1. 1. Business Sense • IP MattersBusiness Sense • IP Matters 1 Secondary Patent Market: Buyers, Sellers, Pricing, and Trends Erik Oliver April 12, 2018 Contact Information: +1 (650) 967-6555 erik@richardsonoliver.com Copyright 2017 ROL
  2. 2. Business Sense • IP Matters Agenda Look back Market dynamics Prediction Copyright 2017 ROL 2
  3. 3. Business Sense • IP Matters Brief Introduction 3 Erik Oliver •Advised clients on nearly $100M in patent purchases/sales •Example deals: LinkedIn’s purchase of Digg portfolio, Color Labs portfolio sale •Established LinkedIn’s buying program •Proprietary database tracking over 120,000 patent assets for sale •Bloomberg quarterly patent market reports data supplied by ROL Group •Regular speakers and authors on patent buying and selling •6 years of publishing market analysis, including price and buyers and sellers Patent buying and selling •Recognized as top worldwide IP strategists list for 8+ years (IAM300) •Former general counsels, patent attorneys, significant in-house experience •Financial modeling of defensive aggregator solutions •Advisor and analyst for defensive strategies against Intellectual Ventures and large corporate patent asserters Defensive strategy
  4. 4. Business Sense • IP Matters What’s the Secondary Patent Market? 4 Seller Buyer Copyright 2017 ROL
  5. 5. Business Sense • IP Matters What Is in a Brokered Patent Package? • List of patents for sale, applicable market, infringement analysis (claim chart), background on the seller • Asking price, bid dates, special circumstances (license back, specific encumbrances) Typical package • Confluence Patent Portfolio • Single family (15 US Patents and 7 open applications) relating to social network data aggregation. • 2006 priority date. • Received July 2013 • Sold October 2014 • Asking prices: “7 figures” • Multiple claim charts presented for • Apple • Google • Facebook • Purchased by an operating company • Fingerprint Cards AB Example package from Patent Profit (Will Plut) 5Copyright 2017 ROL
  6. 6. Business Sense • IP Matters LinkedIn – What You Can Do Over Four Years 2011 0 500 1000 1500 2000 2500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 #ofAssets Portfolio Growth by Priority Year Organic Portfolio Projected Organic Portfolio 2016 0 500 1000 1500 2000 2500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 #Assets Total Portfolio by Priority Year Acquired Portfolio Organic Portfolio 6Copyright 2017 ROL
  7. 7. Business Sense • IP Matters Where Is the Patent Market Today? 7Copyright 2017 ROL
  8. 8. Business Sense • IP Matters Ten Years Ago Secondary Market 8 2007 IV the biggest buyer Few brokers AST and RPX Few capable buyers What’s a good deal? Copyright 2017 ROL
  9. 9. Business Sense • IP Matters Five Years Makes a Difference 9 2012 2017 Sources Transactions Pricing Capabilities Private Public Only WSJ published deals Quarterly public data Skewed Intellectual Ventures plus select companies Quarterly public data SMEs buying Copyright 2017 ROL
  10. 10. Business Sense • IP Matters Agenda Look back Market dynamics Prediction 10Copyright 2017 ROL
  11. 11. Business Sense • IP Matters Deal Flow 11 Sellers Buyers Direct Sales >1000 deals per year hit the market Copyright 2017 ROL
  12. 12. Business Sense • IP Matters $0 $2 $4 $6 $8 $10 $12 $14 2011 2012 2013 2014 2015 2016 2017 2018 $12.5B in Patents Offered on the Secondary Market 12 Cumulative sum of asking prices of 110,000 plus patent assets in 119 technology categories Copyright 2017 ROL Unsold Sold Billions of dollars of unsold patents on the market. Litigation risks continue to increase $B
  13. 13. Business Sense • IP Matters What’s the Asking Price of a Patent? $252,367 13Copyright 2017 ROL
  14. 14. Business Sense • IP Matters Caveats – Sure There Are a Few 14Copyright 2017 ROL
  15. 15. Business Sense • IP Matters Asking Prices Reported Quarterly 15 Source: “Intellectual Ventures Back in Brokered Market in Q4,” Bloomberg BNA, March 10, 2017. https://www.bna.com/intellectual-ventures-back-n57982085043/ Copyright 2017 ROL
  16. 16. Business Sense • IP Matters $K Listing Year Average Asking Prices ($K) USMean AssetMean Asking Prices Are Stabilizing 16Copyright 2017 ROL
  17. 17. Business Sense • IP Matters What’s Hot in the Patent Market Today 17Copyright 2017 ROL
  18. 18. Business Sense • IP Matters Sales Rates Dropping or Shifting? Sales Rate by Listing Year Sales rates by listing year keep falling, even when adding projected sales Sales Rate of Inventory by Year But sales as a percentage of new listings per year are about the same 18Copyright 2017 ROL
  19. 19. Business Sense • IP Matters SalesRate # of Listings 2016 broker sales rate by number of listed packages SalesRate 2016 Sales Rate 10.8% Some Brokers Are More Effective Than Others 19 Better Copyright 2017 ROL
  20. 20. Business Sense • IP Matters SalesRate # of Listings 2015 broker sales rate by number of listed packages SalesRate 2015 Sales Rate 19.5% And Some Do Amazingly Well 20Copyright 2017 ROL
  21. 21. Business Sense • IP Matters Valueforbusinesspurpose Proportion of the patent market Value Distribution in the Secondary Market 21 Goal: Identify high-value patents to purchase (1-2% of market) Copyright 2017 ROL
  22. 22. Business Sense • IP Matters Sequencing Diligence is Critical 22Copyright 2017 ROL
  23. 23. Business Sense • IP Matters 66% 13% 13% 4% 3% 2% Distribution of seller type by sale year 2016-2017 Operating company NPE Inventor University/research Defensive aggregator Other Distribution of Seller Type by 2017 Sale Year Operating Companies Dominate the Market 23 Operating companies represent over 66% of the patents on the market, same as last year NPEs decreased their sales for the first time in 3 years, but not all sales appear in the brokered market Cross-licensing prior to competitor patent sales is a benefit Copyright 2017 ROL
  24. 24. Business Sense • IP Matters 46% 37% 13% 4% Distribution of buyer type by sale year 2016-2017 Operating company NPE Defensive aggregator Other Distribution of Buyer Type by 2017 Sale Year 24 Operating companies remain top buyers NPE buying is ticking back up to 37% from 32% IV ended their buying program RPX and AST tied for top single buyer Copyright 2017 ROL
  25. 25. Business Sense • IP Matters Multiple Sellers and Buyers 2016 - 2017 Top Sellers by Package Count Aaron Emigh Allied Security Trust (AST) ATT Clifford Sweatte Cypress Semiconductor Corporation Foxsemicon Integrated Technology, Inc. Hewlett Packard Enterprise (HPe) Honeywell International Inc. Huawei Technologies Co. Ltd. IBM Intel Corporation MITRE Corporation Panasonic Corporation Rovi Corporation (Before Tivo acquisition) RPX Satyajit Patwardhan Sergey Mavrody Siemens Silent Communication Ltd Verizon 25 Top Buyers by Package Count Allied Security Trust (AST) Apple Inc. Beijing Xiaomi Mobile Software Co., Ltd. Belisso Llc Blackbird Tech Llc Cria Inc. Empire IP, LLC Entit Software Llc Google Inc. Huawei Technologies Co., Ltd. Insight Interfaces Llc Intellectual Ventures Knapp Investment Company Kudelski SA Marking Object Virtualization Intelligence, Llc Microsoft Corporation Mobile Synergy Solutions, LLC (Monument Patent Holdings subsidiary) Copyright 2017 ROL Top Buyers by Package Count Munitech Ip SARL Nuance Communications, Inc. Open Invention Network, Llc Optimum Communications Services, Inc. Pathunt Ip Management Limited Rakuten, Inc. Regional Resources Limited RPX Servicenow, Inc. Sk Hynix Inc. Spectrum Patents, Inc. Taiwan Semiconductor Manufacturing Co., Ltd. Twitter, Inc. Uber Technologies, Inc. Uniloc Luxembourg S.A. Vector Capital Corporation
  26. 26. Business Sense • IP Matters Litigation Analysis: You Can Model Your Risk Has Litigation Has IPR Package Type Prior to listing date After listing date Prior to listing date After listing date Sold packages 6.3% 14.3% 0.3% 4.5% All packages 4.2% 5.0% 0.2% 1.4% 26 14.3% of sold packages are litigated – time to update models? 4.5% of sold packages are IPRed after listing – very few before they are listed Both sold and unsold packages are litigated post listing Defensive aggregator value may be greater than anticipated Copyright 2017 ROL
  27. 27. Business Sense • IP Matters What Happens when You Litigate Bought Patents? °Operating companies are successful °33% self-generated vs. °23% bought °Conclusion: bought patents work, and factor the spread into your models Attorney-Client Privileged & Confidential 27 Source: “Patent Purchases and Litigation Outcomes.” Lemley et. al. 2016 Patently-O Patent L.J. 15 (December 2016)
  28. 28. Business Sense • IP Matters Agenda Look back Market dynamics Prediction 28Copyright 2017 ROL
  29. 29. Business Sense • IP Matters Where Is the Market Going? 29Copyright 2017 ROL
  30. 30. Business Sense • IP Matters Trends and Predictions More international sales Prices – stabilized Sales rates – remain low Faster and simpler transactions expand market NPEs continue to buy – fewer buyers drive this part of the market More brokers leave 30Copyright 2017 ROL
  31. 31. Business Sense • IP Matters Learning More – Further Resources °Richardson Oliver Insights °New data-business, increasing patent market transparency °Home page has regularly updated market data °URL: roipatents.com °Hosts reports on the market °“The 2017 Brokered Patent Market – the Fightback Begins.” Richardson et. al. IAM Magazine (January 2018) °“An Empirical Look at the ‘Brokered’ Market for Patents.” Love et. al. SSRN (October 2017) [5 year study] °URL: roipatents.com/publications/ Attorney-Client Privileged & Confidential 31
  32. 32. Business Sense • IP Matters Attorney-Client Privileged & Confidential 32 BUSINESS SENSE • IP MATTERS ROL Group has over 60 years of IP strategy and execution experience. We ask the business questions first. We blend in- house and large law firm experience to create clear steps for success. We guide companies through unique IP challenges—like buying and selling patents, developing licensing programs, defending against patent assertions, and creating a value-driven IP portfolio. We give direction to businesses that share our passion for new ideas, creative problem solving and forward motion. Contact Information: +1 (650) 967-6555 info@richardsonoliver.com

×