Hello all,
Another year, another batch of bright-eyed entrepreneurs discovering that disrupting trillion-dollar industries is slightly more challenging than their pitch decks suggested. As we settle into 2025, the time-honored tradition of startup failures continues unabated, with the familiar 90% failure rate serving as a sobering reminder that most unicorns are, in fact, mythical creatures. As such, we have been recently bombarded with inquiries from trustees, receivers, investors and entrepreneurs alike who need to quickly liquidate their IP assets. Little do they know…
These spectacular failures often leave behind genuinely valuable patent portfolios—think of them as the archaeological treasures buried beneath Silicon Valley’s entrepreneurial ambitions. The question isn’t whether these assets exist (they do), but rather how to extract value from them before the bankruptcy vultures pick the carcasses clean. I delve into this and the do’s and don’ts of selling distressed IP assets below.
I also cover a few recent developments in the US (PTAB and legislation), where much is happening.
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
If your organization is looking to acquire patents, either because of an urgent need or to meet a longer term freedom to operate goal, feel free to contact us at info@tangibleip.biz . We can source relevant assets and approach patent holders anonymously on your behalf, all the way to closing a transaction.
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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AI Tools: The One We Prefer
Like most of you, we’ve been inundated with demos from various patent analytics and evidence of use search platforms that claim to replace seasoned analysts. While none truly eliminate the need for human expertise, we found that Limestone|Report stands out as the most practical solution we’ve encountered, at a price most can afford.
What sets Limestone|Report apart is its ability to provide a comprehensive view of portfolio pedigree while effectively identifying potential infringers. The platform delivers near real-time, actionable insights across Enforceability, Infringement, and Economics for portfolios of any size – capabilities that have proven invaluable in our day-to-day practice.
We’ve been so impressed with the results that we’re now incorporating Limestone|Report into all our represented portfolios.
What about you? Well, our good friends at Techson IP have agreed to extend special pricing to our readers so that you can try it for yourself. You will receive a 20% discount off their standard pricing on your first project through 12/31/2025 * if you use this link.
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So Much for Taxing the Rich!
The Tackling Predatory Litigation Funding Act had about as much staying power as a snowball in July. Senator Thom Tillis introduced this legislation in May 2025 to slap a hefty 40.8% tax on third-party litigation funders—essentially telling foreign investors they couldn’t treat American courtrooms like their personal casinos without paying Uncle Sam his cut. The bill managed to sneak into the Senate’s reconciliation package despite being conspicuously absent from the House version, which should have been everyone’s first clue that its future was shakier than a house of cards in a hurricane. It was removed at the last minute from the “Big, Beautiful Act” that became law on July 4th. Good riddance to a bill that screamed lobbying money.
However, Tillis’s announcement that he wouldn’t seek reelection—delivered with the timing of someone who clearly didn’t want to spend another six years explaining his votes to an increasingly irritated Trump—throws a wrench into other patent-friendly legislation he’s been championing. As the mastermind behind PERA, PREVAIL, and RESTORE (because nothing says “we’re serious about patents” like acronyms), Tillis was the rare politician (along with his Democrat fellow Senator Coons) willing to wade into the intellectual property weeds that make most lawmakers’ eyes glaze over faster than watching paint dry. While these bills got a fresh start with their May 2025 reintroduction, they now face the legislative equivalent of losing their most enthusiastic parent just when they need someone to fight for them in the patent policy sandbox.
Throwing IPRs Away
In recent months, a curious phenomenon has taken hold at the USPTO: the interim Director, wielding discretionary denial authority like a bureaucratic bouncer at an exclusive nightclub, has been rejecting inter partes review (IPR) petitions with increasing frequency—often despite the PTAB finding that the challenges met the statutory thresholds for institution. The trend, particularly turbocharged by the recent “settled expectations” doctrine, has turned many petitions that were initially accepted into paperweights, citing parallel litigation, timing issues, or just an intuitive sense that “now isn’t the right time.” It has been reported in the last weeks alone that a vast majority of petitions were denied by the interim PTO chief. Petitioners have begun to wonder whether it’s easier to get past TSA with a jug of shampoo than to get an IPR instituted in today’s climate…
The Federal Circuit, that ever-watchful appellate guardian of patent sanity (in theory), has so far tiptoed around the issue like a chaperone at a middle school dance—present, observant, but loath to intervene unless someone sets the curtains on fire. Under Cuozzo and subsequent precedent, the court generally lacks jurisdiction to review institution decisions, even when they start to smell more like policy preferences than reasoned adjudication. Still, murmurs of “arbitrary and capricious” are growing louder, and if the discretionary denials continue to rise like the price of eggs, the Federal Circuit might finally be forced to decide whether the USPTO Director’s unchecked discretion is administrative prudence or something that needs to be reined in.
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Patent Monetization for Startups in Distress
Let’s dispense with the feel-good narratives and examine the brutal mathematics. The 90% startup failure rate isn’t venture capital folklore—it’s backed by rigorous research from CB Insights, Startup Genome, and those delightfully pessimistic economists at Harvard Business School. The scale is staggering: 3,200 U.S. VC-backed startups folded in 2023 alone, with 75% of venture-backed startups never returning cash to investors. “Complete capital loss” has become the modal outcome—which is consultant-speak for “your money is gone, please try again.”
The geographic variations are particularly telling. Singapore, with its government-subsidized safety nets, maintains a civilized 30-40% failure rate, while the US preserves its reputation for entrepreneurial Darwinism with the full 80-90% carnage. It’s almost as if having actual industrial policy makes a difference—shocking, really.
The financial wreckage is appropriately staggering. With venture capital dry powder sitting at $317 billion, we’re looking at potential losses that make Hollywood accounting seem conservative. Consider the greatest hits: Theranos managed to incinerate $614M+ while revolutionizing nothing, and Jawbone dissolved $900M+ into the ether despite actually making products people wanted. These aren’t just cautionary tales—they’re case studies in how valuable IP assets end up in distressed liquidation scenarios.
Now for the part that would make venture capitalists weep if they weren’t too busy chasing the next unicorn: startup patents are demonstrably higher quality than those churned out by tech giants. This isn’t feel-good propaganda—it’s backed by National Bureau of Economic Research studies showing that small firms systematically produce superior inventions compared to their large competitors.
The data is deliciously ironic. Average invention quality declines by 2.7% when firm size doubles, while startup patents receive significantly more citations from subsequent innovations—the academic equivalent of a standing ovation. Meanwhile, large tech companies operate patent factories where “90% or more of many significant high-tech portfolios are comprised of dubious patents”—defensive filings that exist primarily to clog the system and intimidate competitors.
The explanation is elegantly Darwinian: resource constraints force startups to focus on their highest-impact innovations. When you can afford to file ten patents instead of ten thousand, you tend to patent things that matter. Startup patents must be “absolutely bulletproof”—a single flaw in a critical claim can sink both the patent and the business. Large companies can afford to patent the “System and Method for Clicking on Things” (yes, that’s essentially a real patent), while startups must concentrate on breakthrough technologies with genuine commercial potential.
This creates our central paradox: the companies most likely to fail often hold the most valuable IP assets. It’s like discovering that the restaurant just going out of business had the best tacos in town…
When the startup founders have evacuated (usually to their next venture or a mindfulness retreat in Tulum), and the board members are frantically calculating how much they can recover before the creditors circle, patent monetization becomes a peculiar form of financial archaeology. The challenge is extracting value from valuable assets under the worst possible circumstances—imagine trying to sell Picassos during a fire alarm.
The fundamental rules are refreshingly straightforward, though honored more in the breach than the observance:
The Sacred Do’s: Conduct immediate patent audits before anything else vanishes, maintain all patent fees with religious devotion (patents expire faster than milk in these situations), engage IP brokers who specialize in distressed assets (we do) rather than your cousin who “knows about patents,” and bundle related patents as families—nobody wants to buy a single spark plug when they need an engine. Most critically, inventory and secure all IP ownership documentation—assignments signed by founders, employment agreements, and anything proving the company actually owns what it thinks it owns.
The Mortal Sins: Never delay patent maintenance payments (the USPTO doesn’t accept “the dog ate our payment” excuses), resist the pressure to accept the first lowball offer, absolutely don’t attempt patent enforcement litigation when you’re already hemorrhaging money, and never ignore existing licensees or contracts—they complicate everything but can’t be wished away (except that trustees in bankruptcy can sometimes purge some licenses). Also, make sure someone who can explain the technology (ideally the inventor(s)) is available during the monetization process and compensated for their time.
The delicate art of managing boards and creditors requires setting expectations somewhere between fantasy and despair. Remember: only 1% of patents are actually marketable, distressed sales realize 10-30% discounts compared to healthy company transactions, and success rates hover around a modest 40% of bankrupt firms managing to sell at least some patents (averaging only 18% of their portfolios). These aren’t the numbers that make for inspiring TED talks, but they beat liquidating everything for office furniture value.
Here’s where the cosmic joke reaches its punchline: optimal patent packaging requires 6-12 months of careful preparation, while bankruptcy proceedings compress this timeline to 60-90 days. It’s like being asked to perform brain surgery during an earthquake—technically possible, but the conditions are less than ideal. For context, voluntary patent sales typically take 6-9 months minimum for due diligence and deal closing, while distressed sales must move from due diligence to auction in roughly 2.5 months.
The bankruptcy system operates with all the patience of a toddler at bedtime. In Chapter 7 liquidation, patent licenses have a brutal 60-day expiration date—if they’re not assumed within 60 days of case commencement, they vanish into the legal ether and cannot be resurrected. Section 363 sales provide the primary escape hatch for IP assets, but require court approval and “substantial business justification”—bureaucratic hurdles that don’t pause for market timing.
The automatic stay protections add another layer of complexity, freezing pre-petition IP infringement claims while potentially allowing post-petition actions to proceed. It’s a legal framework designed by people who clearly never had to sell anything quickly. Existing patent licenses become “executory contracts” that trustees can assume or reject under Section 365, adding yet another variable to an already complex equation.
This creates the perfect storm of institutional dysfunction: the highest-quality patents from genuine innovators must be liquidated under conditions that would challenge a seasoned auctioneer. Therefore, it is paramount that anyone charged with monetizing the assets of a failed startup quickly carves out the IP portfolio and contacts a professional broker who can analyze and assess the portfolio and, in the right circumstances, rapidly bring one of several buyers in their network who are willing to move fast in exchange for a discounted price tag. It sure beats the alternative where one watches the portfolio die on the vine one missed payment at a time…