Buy, Sell, Hold? The Market for Patents and What It Can Tell us
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Looking to get an understanding of the current product landscape looks like for emerging tech in the U.S. and Internationally? In this presentation we’ll discuss what’s going on in the market right now, the implications of your IP decisions, and provide tips for navigating unique IP challenges.
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Buy, Sell, Hold? The Market for Patents and What It Can Tell us
- 1. Business Sense • IP MattersBusiness Sense • IP Matters 1 Buy, Sell, Hold? The Market for Patents and What It Can Tell Us Kent Richardson April 3, 2019 Contact Information: +1 (650) 967-6555 erik@richardsonoliver.com Copyright 2019 ROL
- 2. Business Sense • IP Matters Agenda Look back Market dynamics Prediction Copyright 2019 ROL 2
- 3. Business Sense • IP Matters Brief Introduction Kent Richardson CEO 3 More than $100M in patent purchases/sales Proprietary database with over 150,000 patent assets for sale Recognized as top worldwide IP strategists for 10+ years (IAM300) Advisor and analyst for defensive patent strategies against Intellectual Ventures and large corporate patent asserters Patent attorney for 25 years. General counsel of public company. Formerly Rambus, Numerical Technologies, Sezmi, Thinkfire, and Wilson Sonsini Goodrich & Rosati Email: kent@roipatents.com
- 4. Business Sense • IP Matters What’s the Secondary Patent Market? 4 Seller Buyer Copyright 2019 ROL
- 5. Business Sense • IP Matters What Is in a Brokered Patent Package? °Typical 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) °Example package from Patent Profit (Will Plut) °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 5Copyright 2019 ROL
- 6. Business Sense • IP Matters LinkedIn – What You Can Do Over Four Years 2011 0 500 1000 1500 2000 2500 #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 2019 ROL For more information on the LinkedIn patent strategy, see “How and Why LinkedIn Learned to Love Patents.” Harrington et. al. IAM Magazine Issue 82 (March 2017), available for download here
- 7. Business Sense • IP Matters Where Is the Patent Market Today? 7Copyright 2019 ROL
- 8. Business Sense • IP Matters Nine Years Make a Difference 8 2010 2019 Sources Transactions Pricing Capabilities Private ROI IAM Market Bloomberg Only WSJ published deals Quarterly public data Skewed and opaque Intellectual Ventures plus select companies 7 Years of ROI annual reports Private analysis of >$500M closed deals Multiple ways to buy SMEs buying Copyright 2019 ROL
- 9. Business Sense • IP Matters Agenda Look back Market dynamics Prediction 9Copyright 2019 ROL
- 10. Business Sense • IP Matters Deal Flow 10 Sellers Buyers Direct Sales >1000 deals per year hit the market Copyright 2019 ROL
- 11. Business Sense • IP Matters The ROI Patent Market Report ROI Patent Market Report $XB in spending 8000 offerings 150K patent assets 7th annual report “ROI’s brokered patent market report continues to be one of the year’s most read and anticipated pieces amongst IAM’s subscriber base of global IP executives and professionals” - Joff Wild, Editor in Chief of IAM 2018 report in a nutshell “The patent market has fully stabilized and prices are rational,” said no one ever. 11
- 12. Business Sense • IP Matters $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cumulative sum of asking prices ($B) - brokered and private market Cum Sum Asking Price (Entire Market) Cum Sum Total Asking Price (Sold) Predicted Cum Sum Asking Price (Entire Market) Predicted Cum Sum Total Asking Price (Sold) $17B in Patents Offered on the Secondary Market 12 Cumulative sum of asking prices of 150,000 patent assets in 108 technology categories Copyright 2019 ROL Unsold Sold Billions of dollars of unsold patents on the market. Litigation risks continue to increase $B
- 13. Business Sense • IP Matters What’s the Asking Price of a Patent? $176,000 13Copyright 2019 ROL 30% drop from 2017but it’s complicated
- 14. Business Sense • IP Matters Where Did the 2018 Price Drop Originate? Attorney-Client Privileged & Confidential 14 More assets Lower per asset price -56% single asset deals
- 15. Business Sense • IP Matters Caveats – Sure There Are a Few 15Copyright 2019 ROL
- 16. Business Sense • IP Matters Asking Prices Reported Quarterly 16 Source: Google Makes First Sale in U.S. Brokered Patent Market. (2019). Bnanews.bna.com.2019, from https://bnanews.bna.com/ip- law/google-makes-first-sale-in-us-brokered-patent-market Copyright 2019 ROL
- 17. Business Sense • IP Matters $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2012 2013 2014 2015 2016 2017 2018 $K Listing Year Average Asking Prices ($K) USMean AssetMean Asking Prices Are Stabilizing’ish 17Copyright 2019 ROL
- 18. Business Sense • IP Matters What’s Hot in the Patent Market Today 18Copyright 2019 ROL
- 19. Business Sense • IP Matters Sales Rates Dropping or Shifting? 19Copyright 2019 ROL More sales Sales rate But sales can happen years later…
- 20. Business Sense • IP Matters Some Brokers Are More Effective Than Others 20Copyright 2019 ROL
- 21. Business Sense • IP Matters Sequencing Diligence is Critical 21Copyright 2019 ROL
- 22. Business Sense • IP Matters Distribution of Sellers 22Copyright 2019 ROL 66% sellers are corporations time to join?
- 23. Business Sense • IP Matters Distribution of Buyers 23Copyright 2019 ROL 42% buyers are NPEs time to join anybody?!
- 24. Business Sense • IP Matters Multiple Sellers and Buyers 2017 - 2018 Sellers Aaron Emigh Alcatel Lucent Allied Security Trust (AST) ATT Bell & Howell, LLC Clifford Sweatte Concert Technology Foxsemicon Integrated Technology, Inc. Hewlett Packard Enterprise (HPe) Hewlett Packard Inc (HP inc) IBM Intel Corporation Intellectual Ventures IP Cube Partners (ICP) Co., Ltd KT Corporation Mirai Ventures LLC MITRE Corporation Nokia Communications Company Panasonic Corporation Pendrell Technologies Seiko Epson Corporation Sony Corporation Xerox Buyers Akoloutheo, Llc Allied Security Trust (AST) Blackbird Tech Llc Brunoco, Inc. Cria Inc. Didi (Hk) Science And Technology Limited Etsy Inc. Fiver, Llc Fluence Automation Llc Google Inc. Innobrilliance, Llc Insight Interfaces Llc Intellectual Ventures Jlp United States Patent Solutions, Llc Knapp Investment Company Nokia Communications Company Open Invention Network, Llc Pathunt Ip Management Limited Prosper Technology, Llc Provenance Red Dragon Innovations, Llc RPX Samsung Electronics Co., Ltd. Scenera Technologies, Llc Servicenow, Inc. Spectrum Patents, Inc. Uber Technologies, Inc. Uniloc Luxembourg S.A. Wi-Fi One, Llc WSOU Investments LLC 24Copyright 2019 ROL
- 25. Business Sense • IP Matters Litigations (2012-2018 market year packages) Inter partes reviews (2014-2018 market year packages) Package Type Before listing date After listing date Ever Before listing date After listing date Ever Sold packages 6.6% 16.3% 21.1% 0.8% 6.0% 6.8% Unsold packages 3.9% 3.9% 7.0% 0.4% 1.0% 1.3% All packages 4.6% 7.0% 10.4% 0.5% 2.2% 2.7% Litigation Analysis: You Can Model Your Risk 25 16.3% of sold packages are litigated – time to update models? 6% 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 2019 ROL
- 26. 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 26 Source: “Patent Purchases and Litigation Outcomes.” Lemley et. al. 2016 Patently-O Patent L.J. 15 (December 2016)
- 27. Business Sense • IP Matters Agenda Look back Market dynamics Prediction 27Copyright 2019 ROL
- 28. Business Sense • IP Matters Where Is the Market Going? 28Copyright 2019 ROL
- 29. Business Sense • IP Matters Trends and Predictions More international sales Prices – stabilize’ish Sales rates – remain low Faster and simpler transactions expand market NPEs continue to buy – fewer buyers drive this part of the market More and varied patent sales 29Copyright 2019 ROL
- 30. Business Sense • IP Matters Learning More – Further Resources °Richardson Oliver Insights °Increase patent market transparency °Regular market updates °Hosts reports and analysis on the market °“The 2018 Brokered Patent Market” Richardson et. al. IAM Magazine (January 2019) °“An Empirical Look at the ‘Brokered’ Market for Patents.” Love et. al. SSRN (October 2017) °“Patent Purchases and Litigation Outcomes.” Lemley et. al. 2016 Patently-O Patent L.J. 15 (December 2016) °roipatents.com/publications/ Attorney-Client Privileged & Confidential 30
- 31. Business Sense • IP Matters Attorney-Client Privileged & Confidential 31 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
- 32. Business Sense • IP Matters Ten Years Ago – The Secondary Market 32 2007 IV the biggest buyer Few brokers AST and RPX Few capable buyers What’s a good deal? Copyright 2019 ROL
Notas do Editor
- Private and public deals tracked by the ROL Group Graph shows the cumulative asking price of sold and unsold assets. Where no asking price is provided by the seller, the average asking price is used.
- Results varied by entity type (average across all types was 21% success bought vs. 28% self-generated) Data set focused on patents that were litigated with the suit brought in 2009-2010 and taken to a substantive decision Different types of entities had different results with bought patents (e.g. PAEs 11%, failed startups 22%, inventor-started companies 33%) Overall Bought patents work, you just need to factor the probabilities into your models Litigation not the only reason to make purchases