The Year in Review and 2026 Outlook

by | Jan 14, 2026 | IP Market Insights

Hello all and a belated Happy New Year,

We are back after a much-deserved break which allowed me to look back at this pivotal year in the patent space and try to connect some dots. 2025 undeniably marked an inflection point for patent valuations, driven by converging forces: NPE acquisitions surged, IPR institution rates collapsed to historic lows under new USPTO leadership, three bipartisan reform bills gained momentum through committee votes and hearings, and $2 billion in damages awarded through just the first half of the year. In Europe, the UPC’s impact through injunctive relief is there to stay. The cumulative effect creates the most favorable patent monetization environment in nearly a decade — which, depending on your business model, is either excellent news or a reason to update your liability insurance… Our detailed year in review and outlook for 2026 below.

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.

 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.

Louis Carbonneau will be speaking at IPWatchdog LIVE in Arlington, Virginia on March 22, 2026. Gene and Renée Quinn always put together a great event, and this year should be no different.
 
We are also delighted to report we successfully brokered multiple voluntary licenses to the Vortex Intellectual Property patent portfolio just before the close of the year. Details can be found here.

With a few more deals in closing, look for additional announcements in the coming weeks.

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Patents Wanted

Calling for high quality portfolios! We represent several buyers looking to acquire high quality portfolios. Some of the areas of interest are included below. Please refer to our Brokerage Criteria to see if your assets qualify. If so, please send portfolios to info@tangibleip.biz for review.

  • Semiconductor
  • Handset/laptop
  • Wireless wifi5/6
  • Crypto/blockchain/security
  • Network security
  • Medical device
  • Network hardware
  • Imaging
  • Battery
  • Lights/led
  • Automotive
  • Display
  • IoT

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The Year in Review and 2026 Outlook

It is often said that the patent market is somewhat contrarian to the general economy. This would suggest that when the economy goes down, patent transactions and valuation pick up, and vice versa. This is a rather simplistic world view and, although it may be true from time to time, factors that impact patent valuations are more diverse and react differently to what happens in the economy. For those of you who have been reading this column for a while, you can probably skip directly to the next paragraph. For those who are new, I will repeat once more what these factors track, based on a few decades of transactions and observations.

These main factors are:

  1. Noticeable changes in the supply & demand;
  2. New case law that may have a long-lasting impacts;
  3. Changes in the regulatory environment;
  4. Recent large damage awards against infringers;
  5. Broad availability of funding to support assertion activities.

Let’s see how these have impacted the environment that dictates whether valuations are going up or down.

  1. SUPPLY AND DEMAND: NPEs DOMINATE AS BROKERED MARKET STABILIZES AT $158M

The patent marketplace maintained robust liquidity throughout 2025. AST’s quarterly reports documented 466 transactions involving 3,597 patent assets in Q1, then 454 transactions with 1,921 assets in Q3—sustained activity reflecting a mature market. The most striking shift: NPE acquisition share jumped from 30% in Q4 2024 to 48% in Q1 2025—signaling aggressive accumulation by assertion-focused entities. One can practically hear the champagne corks popping at litigation finance firms.

Major transactions included Dolby’s divestiture of 768 patents to Dominion Harbor, InterDigital’s acquisition of 328 media assets from Edgio, and Ofinno Technologies’ transfer of 266 wireless patents to Dominion Harbor. Fortress Investment Group and Dominion Harbor appeared as buyers in four of the largest U.S. transactions during H1.

Richardson Oliver’s 2025 Patent Market Report reveals the brokered patent market stabilized at $158 million—consistent with 2022-2023 levels. As the report notes, “the secondary patent market has become that oddly predictable relative at the reunion—always a little chaotic, rarely dull and somehow still showing up in a new suit every year.” The report emphasizes these assets remain “some of the most dangerous” in terms of litigation risk, accounting for approximately 32% of all U.S. patent litigations filed.

University involvement reached 24% of all transactions in Q1, with the Chinese Academy of Sciences leading sellers with 5 deals. This academic IP increasingly feeds litigation pipelines—former university assets appeared in suits against Fortinet and CrowdStrike shortly after transfer. The ivory tower, it turns out, casts a rather mercenary shadow…

Seven Q1 transactions spawned 21 lawsuits against 20 major companies including Amazon, Comcast, and ASUSTeK. The median time from purchase to complaint continues to approach the speed of light, or at least express mail.

Pharmaceutical patent cliff: Companies facing $170-236 billion revenue loss by 2030-2032 drove unprecedented M&A. Novartis completed a $12 billion acquisition of Avidity Biosciences, while MSD executed two deals totaling $19.2 billion. With 190 high-earning drugs facing expiration including 69 blockbusters generating over $1 billion annually, 2026 will be “one of the most active years ever for biopharma dealmaking.” Nothing focuses the corporate mind quite like the approaching cliff edge, particularly when it’s measured in tens of billions of dollars.

2. CASE LAW RESHAPES DAMAGES AND AI ELIGIBILITY

EcoFactor v. Google (May 21, 2025) represents the Federal Circuit’s first en banc utility patent ruling since 2018, fundamentally altering how damages experts must construct royalty analyses. The 8-2 decision vacated a $20 million verdict, holding that settlement agreements containing lump-sum payments cannot support per-unit royalty testimony unless both parties unambiguously agreed to such rates.

EcoFactor’s expert relied on licenses with “whereas” clauses stating lump sums were “based on what EcoFactor believes is a reasonable royalty”—language the court found insufficient. Apparently “trust me, I’m an expert” no longer qualifies as sufficient factual foundation. The decision mandates rigorous “gatekeeping” under Rule 702 and Daubert. In Jiaxing Super Lighting v. CH Lighting Technology (July 2025), the Federal Circuit immediately vacated a $14 million damages award under EcoFactor’s heightened standards.

Recentive Analytics v. Fox Corp. (April 18, 2025) delivered the Federal Circuit’s first direct ruling on AI/machine learning patent eligibility, invalidating all four Fox patents covering ML-based TV broadcast optimization. The court held that “claims that do no more than apply established methods of machine learning to a new data environment” fail Section 101 requirements.

The court characterized “iterative training, dynamic updates, or real-time adjustments” as “incident to the very nature of machine learning”—not transformative features warranting patent protection. In other words, slapping “with machine learning” onto an existing process is about as innovative as adding “on a computer” was in the 1990s. The Supreme Court denied certiorari in December 2025, cementing this restrictive standard.

3. PTAB INSTITUTION RATES COLLAPSE UNDER DIRECTOR SQUIRES

Director John Squires, confirmed September 18, 2025, implemented dramatic changes to PTAB proceedings. Under his centralized Director review policy, IPR institution rates plummeted to approximately 4% through December 1, 2025—with 99 of 105 petitions denied on discretionary grounds, only 4 granted.

The preceding period under Acting Director Coke Morgan Stewart established the foundation: institution rates hit a 5-year low of 50% in FY2025, collapsing to 24%, 20%, and 27% in July-September 2025. Discretionary denial rates reached 61% during the May-October “Interim Era.”

Squires’ October 20, 2025 policy routes all institution decisions through Director review with three PTAB judges, with summary notices (containing no reasoning) as the primary vehicle. This transformation fundamentally enhances patent value: patents now survive validity challenges that would have succeeded under previous standards. For patent challengers, the new regime offers roughly the same odds of success as a Powerball ticket—but with considerably higher legal fees.

THREE BIPARTISAN BILLS ADVANCE WITH VARYING MOMENTUM

PREVAIL ACT achieved the most progress, passing Senate Judiciary Committee 11-10 on November 21, 2024. However, passage came only after a manager’s amendment addressing patient advocacy concerns. Several Democratic senators voted yes with explicit reservations about floor support. In legislative terms, this is the equivalent of agreeing to a second date but keeping Tinder installed.

The bill died with the 118th Congress but was reintroduced May 1, 2025 as S.1553 (Senate) and H.R.3160 (House). Both remain in committee with no markup scheduled. The PREVAIL Act would require petitioners to demonstrate standing through active infringement engagement, limit challenges to one IPR per patent, shift burden of proof to “clear and convincing evidence,” and mandate panel separation.

PERA was withdrawn from committee in November 2024 after Senator Tillis alluded to forces “trying to undermine progress.” One suspects these mysterious “forces” had business cards and K Street addresses. The bill was reintroduced May 1, 2025 as S.1546 (Senate) and H.R.3152 (House).

The Senate IP Subcommittee held a hearing October 8, 2025 featuring former Directors Iancu and Kappos, both strongly endorsing the bill. Witnesses emphasized current eligibility framework uncertainty reduces VC investment in diagnostics and AI. The bill would eliminate all judicial exceptions while establishing five narrow statutory exclusions: unintegrated mathematical formulas, substantially economic processes, mental processes, unmodified human genes, and unmodified natural materials. Despite renewed momentum, the bill hasn’t proceeded to full markup.

RESTORE ACT was reintroduced February 25, 2025 as S.708 (Senate) and H.R. 1574 (House). The single-sentence bill establishes a rebuttable presumption favoring permanent injunctions upon final judgment—addressing the 2006 eBay decision.

Outlook: All three bills enjoy bipartisan support and align with Trump administration goals for AI innovation leadership. However, opposition from pharmaceutical pricing advocates and technology defendants creates significant headwinds. Apparently “innovation leadership” means different things depending on which side of the infringement complaint you occupy.

The most likely 2026 scenario: PREVAIL has the best chance given committee passage, though amendments will be required. PERA may see another markup attempt. RESTORE faces the steepest climb. In other words, expect more hearings, more amendments, more carefully worded press releases, and possibly—just possibly—some actual legislation.

4. DAMAGE AWARDS EXCEED $1.9 BILLION IN FIRST HALF

Patent litigation produced extraordinary damages in 2025, with $1.91 billion awarded across 21 major cases through H1:

  • Masimo v. Apple: $634 million (November 14, 2025) – Pulse oximetry patents covering 43 million Apple Watch units
  • VLSI v. Intel: $948.76 million (verdict contested) – Intel secured May 2025 jury ruling that Fortress controls VLSI, potentially voiding this and $3+ billion in total verdicts through a 2012 license defense (Nothing says “litigation strategy” quite like discovering your opponent is actually your licensee.)
  • Headwater Research v. Samsung: $278.8 million (April 2025, settled September 2025)
  • Maxell v. Samsung: $111.72 million (May 2025)
  • TOT Power Control v. Apple: $110.73 million (June 2025)
  • Anonymous Media Research v. Samsung: $78.5 million

However, the Federal Circuit demonstrated willingness to overturn substantial verdicts: USAA v. PNC Bank’s $218.5 million verdict was reversed on Section 101 grounds, Optus Cellular v. Apple’s $300 million verdict was vacated for verdict form defects, and Rex Medical v. Intuitive Surgical’s $10 million award was reduced to $1 nominal damages for apportionment failures.

China strengthens remedies: Chinese courts expanded punitive damages to 1-5x compensatory damages—exceeding U.S. treble damages. Apparently China looked at American patent enforcement and thought “we can do better.” Zhejiang Province applied punitive damages in 53 cases totaling 144 million yuan in 2025. A French stroller company received 3x punitive damages against three Chinese manufacturers. Raising Bébé is risky business after all…

At the ITC, exclusion orders issued against smart rings, electronic nicotine devices, RF skin treatment devices, and liquid cooling components. Five of six SEP investigations by Ericsson and Nokia ended in settlement, demonstrating SEPs’ leverage even without final orders.

5. LITIGATION FUNDING GROWS TO $15-18.9 BILLION

Third-party litigation funding now backs over 30% of patent lawsuits against large technology companies. Total industry commitments reached $15-18.9 billion, with funders typically structuring “waterfall” arrangements receiving 2-3x investments before plaintiffs see proceeds. One imagines Niagara Falls itself would blush at the metaphor.

The Litigation Transparency Act of 2025 (H.R. 1109), introduced February 7, would require all civil litigants to disclose funding agreements within 10 days. It is still in house committee and GovTrack estimates a 4% chance of getting past committee and 1% chance of being enacted. On January 14, its sponsor Darell Issa killed its own bill and instead introduced a watered down version thereof called The Protecting Third Party Litigation Funding From Abuse Act — which covers the same topic but includes more exemptions to its transparency requirements. The Protecting Our Courts from Foreign Manipulation Act (H.R. 2675) would prohibit foreign governments and sovereign wealth funds from investing in federal litigation entirely. The bill passed out of the House Judiciary Committee on January 14, advancing to the House floor. This is a major development – it’s moved beyond committee stage.

Currently, approximately 25% of federal district courts require some disclosure. Chief Judge Connolly’s Delaware standing order produced a 41% drop in patent suits over two years, with only one new funded case filed in 2024. Transparency, it seems, has a remarkable cooling effect on litigation enthusiasm.

Major funders including Burford Capital, Longford Capital ($1.2B+ AUM), GLS Capital, and Parabellum Capital maintain top-tier rankings. Burford’s April 2025 survey found 79% of in-house lawyers acknowledge over a quarter of their patent portfolios are underutilized—presenting monetization opportunities that litigation finance enables.

UPC EMERGES AS GAME-CHANGING EUROPEAN ENFORCEMENT FORUM

The Unified Patent Court processed 946 cases through mid-2025, with patentees achieving over 50% success rates—and notably, injunctions granted in most cases where validity and infringement were established. For patent holders accustomed to the eBay four-factor minuet in U.S. courts, the UPC’s approach must feel refreshingly binary.

The BSH v. Electrolux CJEU decision (February 2025) confirmed courts may accept jurisdiction over foreign infringement claims based on defendant’s domicile, enabling cross-border enforcement. The Fujifilm v. Kodak decision (July 2025) established UPC jurisdiction over UK national parts of European patents post-Brexit.

English dominates proceedings (53%), with Germany’s local divisions, especially Munich, seeing the most filings. Fee increases of 33%+ take effect January 2026, reflecting institutional confidence. NPE activity increased substantially in Q4 2025, with several newly formed entities filing multiple cases targeting automotive and telecommunications sectors.

PATENT LICENSING BUSINESS REMAINS ROBUST AS POOLS CONSOLIDATE POWER

The patent licensing business demonstrated continued health throughout 2025, with major SEP licensors reporting strong revenue generation while patent pools expanded coverage and importance as centralized licensing mechanisms.

Ericsson maintained strong IPR licensing revenues with Q3 2025 at SEK 3.1 billion, emphasizing strategic pivot toward IoT and multimedia licensing. Management noted annual royalty run-rates at record levels. Nokia Technologies reported annual net sales run-rate of approximately EUR 1.4 billion in Q3 2025, with the division growing 11% year-over-year. Having concluded its smartphone license renewal cycle with no major agreements expiring for several years, Nokia aggressively expanded enforcement in the streaming sector.

Huawei reported approximately $630 million in patent licensing revenue for 2024—modest compared to Western competitors but strategically significant given the company pays nearly three times more in royalties than it receives (over $12 billion paid versus ~$4 billion received historically). This “balanced philosophy” positions Huawei as both major licensor and licensee. Call it hedging, call it pragmatism, but when you’re both paying and collecting at that scale, at least the money stays in motion. Huawei held 233 licensing agreements by year-end 2024, with 95% reached through negotiation.

Qualcomm generated $5.57 billion in licensing revenue in 2024, maintaining its position as the largest patent licensor globally.

Patent pools consolidate coverage: Patent pools demonstrated accelerating importance as implementers preferred one-stop licensing solutions over bilateral negotiations with dozens of patent holders.

Access Advance announced “significant expansions” of its HEVC Advance and VVC Advance pools during Q2-Q3 2025, adding 15 new HEVC licensees. Major participants included Sharp, Huawei, HP, MSI, and Xiaomi. Most significantly, the HEVC pool now covers an estimated 75-80% of the global HEVC patent landscape—more than doubling the 35% coverage anticipated at launch—with over 29,000 patents. The VVC pool expanded to over 4,500 patents.

Sisvel reported major milestones across multiple pools. The Wi-Fi 6 pool secured 30 licensees in under three years. Sisvel adjusted enterprise access point rates from $3.00 to $1.00 following market consultation. With Wi-Fi Alliance projecting 5.2 billion Wi-Fi 6 device shipments by 2025 and Sisvel’s rate at $0.50 per consumer device, the pool addresses a potentially $10 billion aggregate royalty market.

The patent licensing business health combined with expanding pool coverage creates predictability for both patent owners and implementers. The 95% negotiated settlement rate Huawei achieved demonstrates that even outside pools, mature licensing practices favor negotiation over litigation—particularly for SEPs bound by FRAND obligations. When even the lawyers prefer settlement, you know the transaction costs have gotten out of hand.

The streaming sector represents the next major licensing frontier. Nokia’s aggressive enforcement, Access Advance’s VDP Pool launch, and Disney’s December 2025 antitrust complaint against InterDigital collectively signal that content platforms face substantial IP costs. For patent portfolio valuation purposes, telecommunications patents with demonstrable pool inclusion or bilateral licenses command premium valuations given revenue visibility.

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Conclusion: Converging Forces Elevate Patent Asset Values for 2026

The 2025 patent landscape fundamentally shifted the balance toward patent owners through multiple reinforcing mechanisms. Collapsed PTAB institution rates eliminate a primary validity challenge avenue that previously invalidated patents at 70-80% rates. Three bipartisan bills advancing through committee promise restored eligibility (PERA), reformed PTAB procedures (PREVAIL), and enhanced injunctive relief (RESTORE) — though full passage remains uncertain. $1.9 billion in damages through mid-year demonstrates continued jury willingness to award substantial compensation. Roughly 50% NPE acquisition share in Q1 signals sophisticated investors’ confidence in monetization opportunities.

The Federal Circuit’s EcoFactor decision, while tightening damages methodology standards, affects both plaintiffs and defendants—those with well-documented licensing programs gain relative advantage. The Recentive decision on AI patent eligibility creates new hurdles for machine learning claims but leaves open pathways for inventions disclosing concrete technical architectures. The UPC’s maturation provides European patent owners genuine enforcement alternatives with reliable injunction availability.

For patent portfolio valuations entering 2026, these developments suggest upward revision of expected values: reduced litigation risk discounts (given lower PTAB invalidation rates from 70-80% to ~4%), stronger negotiating leverage (given injunction availability in UPC and potential RESTORE Act passage), and expanded buyer pools (given NPE accumulation activity). Companies holding strong, well-documented patents—particularly in telecommunications, automotive, and life sciences—occupy the strongest positions in this transformed landscape.

However, caution remains warranted: the legislative agenda faces significant opposition, Director Squires’ policies could face legal challenges, and the EcoFactor standard may suppress damages valuations for patents lacking robust comparable license documentation. The market has found stability, but whether 2026 brings the breakthrough policy reforms that could expand the transactable universe from 1% to 10% of issued patents remains the critical question for the coming year. After all, there are approximately three million active U.S. patents, and at current transaction volumes, we’re moving roughly 4,000 annually—which, at this rate, will achieve full liquidity sometime around the year 2775! Mark your calendars accordingly.