Hello all,
Lately, I’ve received numerous inquiries about the impact of a weakening economy and the looming threat of recession on the value of intellectual property (IP) as an asset class. In today’s rapidly shifting landscape, marked by daily economic policy shifts that create uncertainty, this question has become particularly pertinent. With significant stock market declines and traditional safe-haven U.S. bonds losing favor, it’s natural to consider whether alternative investments like patents might offer a comparatively less risky path, assuming other factors remain constant. Are patents recession-proof? How does an economic downturn affect them? I will address these questions and offer my predictions below.
Furthermore, I will discuss recent developments at the Patent Trial and Appeal Board (PTAB), encouraging legislative news from a pro-patent rights Senator, and other noteworthy updates.
As usual, as I focus on the macro picture in this newsletter, I want to remind everyone that we track everything that is going on in this world and for those who need their regular dose of news, once again you can follow me on LinkedIn where I post almost daily about some of the most newsworthy events. If you want to catch up on what grabbed my attention these recent weeks, you can access all my posts directly here.
Happy reading!
Louis
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Tangible IP News
I am pleased to report that we recently completed the sale of a small portfolio in the private email domain technology area. You can see the full announcement here.
Next week, I will be talking at the 7th IP Awareness Summit 2025 in San Francisco organized by our good friend Bruce Berman of the Center for Intellectual Property Understanding (CIPU). I look forward to a lively discussion with my esteemed co-panelists on current patent and trade secret strategies for generating IP value and return.
We also recently brought to market a rather large portfolio of approximately 100 assets in the VoIP & Data Roaming in Telecommunications area. See details below.
Tangible IP is also pleased to represent the Wisconsin Alumni Research Foundation (WARF) in the monetization of a portion of its patent portfolio. The portfolio includes six different lots across technologies including: optics & sensors, clean technology, engineering, information technology, medical devices and medical imaging. Through this partnership, Tangible IP is pleased to support WARF’s efforts to license its high-quality patent assets, helping to bring innovative research from the lab to the marketplace. For more information, please reach out to Erika Warner at erika@tangibleip.biz.
All of our patents for sale are listed here. Similarly, if you’d like to be added on our distribution list in the future so that you are the first to receive new opportunities, please email us at info@tangibleip.biz.
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Featured Portfolio
We are pleased to bring to market a VoIP & Data Roaming in Telecommunications Patent Portfolio in the coming weeks. The offered assets of iBasis Inc., a wholly owned subsidiary of Tofane Global, comprise a portfolio of 92 patents. The portfolio enhances global voice communication by enabling seamless VoLTE roaming across multiple LTE networks and addresses the demand for high-definition voice services in a connected world. The technology distribution includes Roaming Network Policy, VoLTE Call Routing, QoS in VoLTE and Mobile Network Switching. The marketing package includes 8 claim charts, including the ETSI Standard, and 5 indication of use documents.
If you are interested in receiving the marketing materials, please reach out to Erika Warner at erika@tangibleip.biz.
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Recent News:
Trade Deficits and IP
In the current tariff war unfolding before our eyes, several pundits have mentioned that the US trade deficit numbers thrown by the Trump administration are somewhat incomplete as they only cover goods, whereas the US is a large exporter of services, and these should be counted as well. For instance, the U.S. trade deficit with the European Union in goods was $235.6 billion for December 2024 while the deficit in goods and services combined was a modest $20.4 billion. Similarly, the U.S. goods trade deficit with Mexico was $171.8 billion in 2024. However, for goods and services combined, the U.S. had a $0.722 billion deficit in services trade with Mexico in 2023 (latest available data). Clearly, the US is a much larger exporter of services. Looking at IP as a standalone class/service, a recent report by the U.S. Chamber of Commerce, titled “From Innovation to Employment: IP’s Role in Job Growth” released on April 9th, highlights the significant role of intellectual property (IP) in the American economy. According to the report, total IP-related exports reached $140.36 billion in 2024. This figure underscores the substantial contribution of American intellectual property to international trade. Texas led the nation in IP-related exports with $32.5 billion, followed by Louisiana with $7 billion and Florida with $5 billion.
Hope Springs Eternal
A recent article in IAM magazine (behind paywall) featured an interview with Republican Senator Thom Tillis who chairs the Senate Judiciary Subcommittee on Intellectual Property in which Senator Tillis expressed hope that we would soon see some progress on both patent eligibility (PERA) and PTAB reform (PREVAIL). I have discussed these two draft bills on numerous occasions in previous columns and explained how either of these would be a game changer in the US and would directly impact patent valuations positively. Anything that can remove the current cloud of uncertainty over patent validity will do this. So, it is encouraging that an insider like Senator Tillis sees encouraging movement on these fronts given how little legislation actually ends up becoming law these days.
Is the PTAB Self-Reforming?
In the meantime though, it looks like PTAB reform may already be underway. In our previous column, I explained how a new guidance on the FINVIV rule was a major departure from the guidance under previous USPTO director Vidal.
On March 26th, acting USPTO Director Coke Morgan Stewart doubled down and issued a new memorandum outlining a bifurcated process for evaluating discretionary denials of IPR and PGR petitions.
- Bifurcated Decision-Making: The decision on whether to institute an IPR or PGR will now involve two separate steps:
– Discretionary Denial Review: The Director, in consultation with at least three PTAB judges, will first determine whether discretionary denial is appropriate based on factors outlined in PTAB precedent (like Fintiv, General Plastic, and Advanced Bionics) and potentially new considerations.
– Merits Review: If discretionary denial is not deemed appropriate, the petition will then be referred to a standard three-judge PTAB panel to consider the merits of the unpatentability challenges.
- New Briefing Schedule for Discretionary Denial: The memorandum establishes a new briefing schedule specifically for discretionary denial issues.
- Expanded Considerations for Discretionary Denial: The memo lists several permissible considerations for discretionary denial, some based on precedent and others that are new, including:
– Whether the patent’s validity has already been adjudicated.
– Changes in law or judicial precedent since the claims issued.
– The strength of the unpatentability challenge.
– The extent of reliance on expert testimony.
– Settled expectations of the parties (e.g., how long claims have been in force).
– Compelling economic, public health, or national security interests.
– The PTAB’s workload and ability to meet statutory deadlines.
Impact of These Changes:
These recent changes are expected to lead to an increase in the number of discretionary denials of IPR petitions. The rescission of the Vidal Memo removes limitations on when the PTAB can deny institution based on parallel litigation, and the new bifurcated process with dedicated briefing and expanded considerations provides more avenues for the PTAB to exercise its discretion to deny institution even if the merits of the challenge might otherwise warrant it. Patent owners are likely to find these changes favorable as they offer more opportunities to avoid PTAB review. Petitioners, on the other hand, may face a higher hurdle in getting IPRs instituted.
This should be music to the ears of patent owners and should also make funding patent assertion cases easier as a major threat over the validity of the patents at stake may just have been removed. While celebration may be premature until we see how this process plays out, I cannot stress enough the importance for the IP market of decreasing, let alone removing, the threat- and substantial costs- of an IPR.
Patent Valuations in an Uncertain World
As the stock market plummets, bonds cease to be a safe-haven, the dollar loses value, and respected economists warn of recession, the natural assumption is that every corner of the economy will suffer, leaving us to simply batten down the hatches and wait for brighter days.
But hold on! What about patents? What drives their worth? Are they immune to recession? The answer is a qualified yes. Here’s the rationale. First, for those needing a refresher, my predictions on the IP market’s vitality over the last decade have consistently relied on five key indicators: i) supply and demand; ii) shifts in the regulatory landscape (think PTAB or UPC); iii) pivotal legal decisions (think Alice); iv) substantial damage awards; and v) accessible funding for small patent owners to enforce their rights.
Noticeably absent from this list are the typical economic barometers – inflation, mortgage rates, gas prices, unemployment, etc. – that occupy economists daily. This underscores the contrarian nature of the patent market. During periods of stock market stability and growth, investors understandably maximize their positions there, leaving limited funds for more unconventional investments like patents. The same principle applies to high interest rates. Why risk millions on complex patent litigation with uncertain outcomes and a 5-7 year potential monetization timeline when a guaranteed 5-6% return with zero capital risk is available? However, when traditional investment avenues lose their appeal, investors become more willing to embrace risk for potential significant returns. The substantial devaluation of patents over the past decade means that investing in them now is akin to acquiring a stock at its historical nadir – minimal risk with considerable upside potential.
Given this, I predict a significant influx of capital into the IP market in the coming months (a trend already in motion) as traditional alternatives become less attractive. This, combined with the growing momentum for patent owners and tangible supportive actions (as mentioned above), leads me to expect an upward trajectory for patent valuations in the short to medium term. This won’t be an overnight transformation, as buyers have long enjoyed depressed prices and are still seeking bargains. However, this will evolve as patent owners, dissatisfied with low offers, increasingly opt for independent funding to directly assert their patents.
On the other hand, a wave of startup failures or a renewed push by large patent holders to liquidate significant portions of their portfolios to shore up corporate finances could flood the market, creating a ceiling on valuations despite the improved underlying conditions.
Ultimately, I believe the preponderance of short-term indicators points to continued strength and justifies our positive outlook for the patent market. However, the current global landscape, marked by tariff wars, represents uncharted territory where unforeseen events could trigger widespread disruption. In such a scenario, no sector would likely be immune. We can only hope that such a crisis is avoided.