Hello all,
Every week, without fail, an inventor walks into our virtual office clutching a valuation report like it’s Willy Wonka’s Golden Ticket. The document, usually prepared by a firm that has never actually sold a patent in its life, proclaims their modest portfolio to be worth somewhere between $10 million and $50 million. Then comes the awkward silence when we explain that the market will likely pay a small fraction of that amount—if we’re lucky. As someone who has personally brokered well over 5,000 patents over the years, I’ve witnessed this scene play out more times than I can count. It never gets easier.
So today, I want to tackle head-on the persistent confusion between patent valuation and patent value—two concepts that inventors, investors, and even some seasoned IP professionals continue to conflate to their considerable detriment. Consider this your reality check, delivered with the tough love that only someone who lives and breathes this market every day can provide.
I also share below the most recent patent sale market data from Q3 and discuss a few of the most salient stories of the last few weeks in the IP world.
As usual, while I focus on the macro picture in this newsletter, I want to remind everyone that we track everything happening in this world. For those who need their regular dose of news, you can follow me on LinkedIn, where I post almost daily about the most newsworthy events. If you want to catch up on what grabbed my attention in recent weeks, you can access all my posts directly here.
This will be my last column this calendar year as I learned that between me and Santa competing for attention, I stand no chance whatsoever. So enjoy these last musings while you are trying to close the books for the year. On behalf of the whole team at Tangible IP, I wish you a wonderful holiday season and see you in early January.
Happy reading!
Louis
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Tangible IP News
We’re pleased to report that both our CEO Louis Carbonneau and Sr. VP Brokerage Erika Warner have been recognized among the World’s IP Global Leaders for 2025, an honor bestowed to them for several consecutive years.
We are also delighted to report the sale of various lots under brokerage originating from the AST IP3 2024 program. Full details available here.
The Canadian government passed its first budget under new Prime minister Mark Carney a couple of weeks ago. Although it contained some modest measures supporting IP creation and retention, it fell short in my opinion of moving the needle and certainly did not fit the “generational budget” narrative the government was pushing. I wrote an oped on this that was published in the Financial Post.
With a few more deals in closing, look for additional announcements in the coming weeks.
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IP Dealstream: Compact Portfolio Exchange
Over the last 15 years since its inception, Tangible IP has earned it stellar reputation by brokering only high-quality patent portfolios. Unfortunately, with up to 5 new opportunities to review each day, there is only so much we can take under brokerage. We focus on larger sets of patents with evidence of use demonstrated by detailed “litigation grade” claim charts. Unfortunately, this leaves aside many smaller portfolios, hidden gems that represent meaningful innovations that are often relevant to industry. Hence the creation of a new conduit to market some of those going forward.
Featured Portfolio
We are pleased to present a portfolio in the occupancy sensing and resource utilization for connected devices domain. The portfolio covers an accelerometer-based apparatus and system that detects the occupancy or use of equipment (e.g., chairs, desks, counters, gym equipment, warehouse tools and other valuables) by continuously monitoring micro-movements against a stored acceleration threshold and managing state transitions with timers and low-power processor operations. This enables real-time occupancy status detection with multi-year battery life. View additional information HERE.
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The Inconvenient Truth About Patent Values
The Paper Fantasy vs. Market Reality
Let’s start with the fundamentals. When a valuation expert prepares a “paper valuation” — say, for M&A purposes or to satisfy investors — they typically rely on the income-based method. The math goes something like this: take the patent owner’s current and projected sales, assume the patents contribute roughly 25% to those revenues (the so-called “25% rule” that has taken on near-mythical status, much like Bigfoot but with better documentation), then build a discounted cash flow model projecting out 10+ years. Factor in some technology obsolescence discounts, bring it back to present value, and voilà — you’ve got a number that looks impressive on paper and nowhere else.
The problem? This model rests on a foundation of assumptions that rarely materialize in the real world. It assumes the company will actually achieve those hockey-stick revenue projections (spoiler: they won’t). It assumes the patents will remain relevant and enforceable for a decade or more (increasingly unlikely in today’s fast-moving technology landscape). It assumes the patents will successfully deter competitors and maintain barriers to entry (good luck with that in the current enforcement environment).
Most critically, these valuations represent the theoretical value to the patent owner — not what any third party would actually pay to acquire those assets. That distinction is everything. It’s like valuing your house based on how much you love it rather than what buyers are actually offering.
What the Market Actually Pays
For the unvarnished truth about patent prices, we turn to the data — specifically, the comprehensive market reports published by our good friends at Richardson Oliver Insights, who have been tracking the brokered patent market since 2012. The numbers paint a sobering picture. You might want to sit down for this.
The 2024 brokered patent market totaled approximately $158 million — roughly in line with 2022 and 2023. While Richardson Oliver has tracked over $38 billion worth of patent assets offered for sale since they began monitoring the market, the harsh reality is that only about 21% of packages brought to market actually sell. Let that sink in: nearly 4 out of 5 patent portfolios fail to find a buyer at any price, an those are the few ones that brokers bring to market. If real estate agents had these numbers, they’d be looking for new careers. (For the record, Tangible IP transacts close to 100% of the patents we take under brokerage).
Average asking prices have hovered in the $200,000 to $300,000 range per U.S. issued patent in recent years — and remember, asking prices typically exceed closing prices, much like that “firm” listing price on your neighbor’s house that somehow dropped 15% before sale. At Tangible IP, we commonly see patents transact in the range of $150,000 to $350,000 per asset for decent quality portfolios with demonstrable infringement. Many sell for considerably less, especially larger portfolios where there is a lot of “fluff” once you look beyond the few deal drivers. The million-dollar-per-patent deals you occasionally read about in the press? Those represent the extreme exceptions, not the rule — the patent equivalent of winning the lottery while being struck by lightning.
Here’s the uncomfortable math: even a modestly valued portfolio of 10 patents with a $5 million paper valuation might fetch $500,000 to $1.5 million on the open market—if it sells at all. That’s a 70-90% haircut from the valuation report sitting in the inventor’s drawer. At least haircuts come with a nice scalp massage… And not to forget, many buyers will keep their power dry for litigation and only offer a small amount of cash at closing, the rest being anchored on a revenue sharing scheme where the seller shares both rewards…and risks.
Why the Massive Disconnect?
The gap between paper valuations and market prices comes down to one fundamental truth: buyers don’t purchase patents for their theoretical income potential. They buy patents for their assertion value—the ability to collect royalties from entities that are using the patented technology without authorization. Everything else is, as they say, academic.
This shifts the entire calculus. A buyer isn’t asking “how much revenue could this patent generate for an operating business?” They’re asking a much more specific set of questions: Who is infringing? Can we prove it? Will the patents survive validity challenges? What are the likely damages? What will it cost to litigate or license? What’s the probability of success? And, most importantly: is this going to be worth the inevitable headache?
And here’s where the PTAB comes in as the great equalizer—or more accurately, the great destroyer of patent value. Current USPTO statistics show that the total invalidation rate at the Patent Trial and Appeal Board has climbed to 71% for the first two quarters of 2024 and remain at that level until a few months ago. That means if your patent gets challenged in an inter partes review and the petition is instituted, there’s roughly a 70% chance that all challenged claims will be found unpatentable. Only about 6% of patents survive an IPR completely unscathed. Chief Judge Randall Rader famously called the PTAB a “death squad” back in 2013, and the patient hasn’t exactly recovered since.
The last few months have given inventors reason to hope however and since USPTO Director John Squires took personal control of all IPR institution decisions on October 17, 2025, the landscape has shifted dramatically. As of early December, of 105 IPR petitions fully processed under his centralized review policy, only 4 have been granted institution — an institution rate of approximately 4%. But his approach is being challenged in court and time will tell whether this new trend will continue.
For now at least, any sophisticated buyer still factors this potential gauntlet into their price calculations. A patent that might theoretically be worth $10 million in damages becomes worth far less when you apply a 70%+ risk discount for PTAB invalidation, add in millions in litigation costs, account for multi-year delays (time to money is very important to funders), and factor in the reality that most serial infringers will fight tooth and nail rather than pay a license. They’d rather spend $5 million defending against your $1 million claim, just to send the message that suing them isn’t worth anyone’s time.
The 99% Problem
Perhaps the most sobering statistic I can share: of all the portfolios we review at Tangible IP — and we look at approximately five new portfolios every single day — we can realistically transact only about 1-2% of them. The other 98-99% have no meaningful market value whatsoever. Yes, you read that correctly. We are basically in the business of disappointing people professionally. (There is some science to it, and you can see our brokering criteria here.)
Why? Because most patents simply aren’t being infringed—or if they are, the accrued damages are minimal and future infringing activities are speculative. Others have fatal validity issues lurking in the prior art like a tax auditor waiting patiently in the shadows. Still others fall victim to Alice and its progeny, rendering software and business method patents essentially unenforceable. Many patents are drafted so narrowly or with such weak claims that designing around them is trivial—sometimes a competent engineer can do it over lunch, or have divided infringement issues.
This isn’t how things were a decade ago. Back then, buyers would occasionally acquire patents for their “futuristic” value—betting that the market would eventually adopt the patented technology. That speculative buying has essentially disappeared. In today’s patent market, there are no futures, only the present. And the present demands clear evidence of infringement, quantifiable damages, and defensible validity. I wished we could just go back in time. But alas, hope is not a viable strategy.
The Three Valuation Methods (and Why Only One Matters)
For completeness, let me briefly outline the three generally accepted methods for valuing patents — and explain why only one reflects what you’ll actually receive in a sale.
The Income Method is what I described above—projecting future revenue streams attributable to the patent and discounting to present value. It produces impressive numbers that bear little relationship to market reality. Excellent for PowerPoint presentations and investor pitches; less excellent for actual transactions.
The Cost Method values patents based on what it would cost to recreate them—essentially the R&D investment plus prosecution costs. If you spent $10 million developing a technology and $100,000 obtaining patents, the cost-based value is closer to $100,000, not $10 million. The technology cost is sunk; the patent is what you’re selling. I know, I know—all those late nights in the lab should count for something. The market respectfully disagrees.
The Market Method looks at comparable transactions—what similar patents have actually sold for, if you can find one. This is the only method that reflects reality, but it requires access to transaction data that most patent owners don’t have and there is still no MLS for patents. This is where brokers like us add value—we know what the market is actually paying. And we’ve learned to break the news gently…
A Reality Check for Patent Owners
So what’s an inventor or patent owner to do with this information? First, understand that a paper valuation — however professionally prepared — is not a price tag. It’s a theoretical exercise useful for certain financial and strategic purposes, but it will not determine what buyers will pay. Framing it and hanging it on your wall won’t change that.
Second, before you spend significant resources trying to monetize your patents, get a realistic market assessment from someone who actually operates in this space. We review portfolios daily and can quickly tell you whether your patents have commercial potential. Consider it a wellness check for your IP.
Third, manage your expectations. The headline-grabbing patent verdicts you read about—the billion-dollar jury awards—represent a tiny fraction of patent assertions, and even those are typically reduced dramatically on appeal or reversed entirely. For every spectacular win, there are thousands of patents that never generate a dollar for their owners. The press doesn’t write stories about those.
Finally, if you’re serious about patent monetization, recognize that success requires a combination of strong patents, clear infringement evidence, defensible validity, and either the stomach for litigation or the patience to find the right buyer. Most patents lack one or more of these elements. It’s like dating—you need more than just a nice smile.
The Bottom Line
I realize this newsletter may burst a few bubbles. That’s intentional After years of watching patent owners approach the market with wildly unrealistic expectations — often fueled by valuation reports that bear no resemblance to market reality — I feel an obligation to set the record straight. Someone has to be the bearer of inconvenient truths, and apparently that someone is me. On the bright side, it may save me a few hours of work every day!
Can patents have significant value? Absolutely! We’ve brokered portfolios that have generated life-changing returns for their owners. But those success stories share common elements: demonstrable infringement by well-resourced targets, patents that can withstand validity challenges, and realistic pricing that accounts for the risks and costs of enforcement. And some level of luck!
The gap between patent valuation and patent value isn’t going away anytime soon. But understanding that gap — and pricing accordingly — is the first step toward actually realizing returns from your intellectual property. Remember; the market doesn’t care about your feelings or your valuation report. It only cares about what it’s willing to pay.
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Q3 2025 Patent Market Data
A great segway from the previous topic is to look at actual patent sales and market data for Q3 2025, courtesy of our good friends at AST. The U.S. secondary patent market demonstrated continued resilience and increasing competitive pressure. The USPTO recorded 454 patent sale transactions involving 1,921 assets, with participation from 441 sellers and 425 buyers.
NPE Activity and Enforcement Risk: NPEs accounted for 29% of all acquisitions this quarter, with 17 new entities entering the market. Notably, several newly formed NPEs transitioned their portfolios into litigation within weeks of acquisition. Seven deals involving 14 assets resulted in 18 new litigations against major technology companies including Apple, ASUSTeK, HPE, and Intel. Critically, over 56% of the litigated assets had been previously offered to AST, underscoring the importance of early visibility and coordinated defensive strategies for operating companies.
Major Transactions: The top five deals accounted for 25% of all transacted assets. Key transactions included Ni Wang and Massand PLLC acquiring 196 Lighting assets from Advanced Lighting Technologies, Equip IP Management (a new NPE) purchasing 101 Semiconductor assets from AUO Corp, and GE Vernova acquiring 81 Industrial assets from Cummins Inc.
Sector Concentration: High-tech sectors—including Semiconductors, Electronics, Lighting, and Computing Systems—accounted for 59% of total transacted assets, reflecting sustained demand for innovation-intensive patents with significant enforcement potential.
Academic Participation: Universities and research institutions participated in 99 transactions (22% of total deals), demonstrating their growing role in commercializing academic IP. One university-originated asset was subsequently asserted in litigation against HPE.
Market Outlook: The data points to a maturing yet increasingly contested market characterized by aggressive NPE expansion, rising litigation risk, and growing pressure on operating companies to monitor patent transactions closely and secure defensive positions earlier in the acquisition cycle.
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While You Were Sleeping
Never a dull moment in the patent world. Hundreds of stories unfolded worldwide. We are focusing on a few salient ones since our last column:
- USPTO’s Dramatic Pro-Patent Shift Under Director Squires
Since taking personal control of IPR institution decisions in October, Director John Squires has denied 91 consecutive petitions with zero explanation — a 0% institution rate compared to the historic 67%. If you’re keeping score at home, that’s statistically indistinguishable from having a dartboard make the decisions, except the dartboard would occasionally hit yes by accident.
Simultaneously, the USPTO proposed sweeping PTAB rule changes (comment deadline was December 2) that would severely restrict public challenges to patents by requiring estoppel if petitioners later litigate and barring IPRs when parallel litigation exists. The EFF and patent community are sharply divided — critics call it “making bad patents untouchable” while supporters see it as strengthening patent rights. This represents the most significant policy reversal in post-AIA PTAB history, which is saying something given that the AIA itself was marketed as the most significant patent reform since 1952. Apparently every generation gets to have its own “most significant” moment. Stay tuned.
- National Security Enters US Patent Policy
On November 10, Director Squires issued an unprecedented Show Cause order requiring YMTC (Yangtze Memory Technologies, a Chinese company on the Commerce Department’s Entity List) to justify why their IPR petitions against Micron should proceed given national security concerns. Because apparently the Entity List wasn’t clear enough—we needed to make sure they got the message at the Patent Office too. Just in case they missed it at Commerce, State, Defense, and wherever else we maintain lists of entities we’d prefer not to do business with.
This marks the first time the USPTO has explicitly introduced geopolitical considerations into patent validity proceedings, signaling an “anti-China approach” in the patent system that could reshape how foreign entities challenge US patents. One imagines similar treatment awaits other geopolitical rivals, though presumably our friends in Luxembourg and Switzerland can sleep soundly.
- UPC Consolidates as Europe’s Dominant Enforcement Venue
The Unified Patent Court surpassed 700 cases with increasing pharmaceutical sector filings showing growing trust in the system. Munich Regional Court alone received 275+ new patent cases in 2025, maintaining its position as Europe’s busiest venue. One has to admire Munich’s work ethic—while the rest of Europe takes August off, they’re apparently churning through patent disputes like there’s a quota to meet.
Key November developments included InterDigital securing two German injunctions against Disney (November 5 and 21), which must have made for interesting conversations in the Magic Kingdom. More significantly, Dolby won Europe’s first-ever preliminary injunction based on a standard-essential patent. The court’s willingness to issue swift, pan-European injunctions is accelerating SEP licensing settlements and establishing the UPC as the preferred forum over national courts. Who knew that a unified court system might actually be more efficient than 27 separate ones? Shocking development, really.
- AI Inventorship Rules Relaxed
Last but not least, the USPTO issued new guidance significantly easing restrictions on AI-assisted inventions, analogizing AI tools to traditional laboratory equipment. The guidance allows humans using AI systems (like LLMs) to retain inventor status, rescinding prior requirements for “significant human contributions.”
So apparently prompting ChatGPT now qualifies you as an inventor, which should make for some interesting Office Actions. “I asked the robot to solve the problem and it did” is now a defensible inventorship claim. While binding on examiners, the guidance doesn’t bind courts, leaving some uncertainty—which is patent law’s way of saying “we’ll figure this out in litigation, as usual.” This aligns with the broader pro-patent shift under the current administration, though one suspects future administrations may have thoughts on whether “I used autocomplete” constitutes inventive genius.