A very Happy New Year to all our readers near and far. It’s too bad we all wanted to believe that with the flip of a calendar, 2022 would mark a new era or a return to an era pre-pandemic. Well, well, well. I guess the joke’s on us now as Omicron rages full steam ahead through every school, neighborhood, and town across the globe. Hopefully these next few months are the final straw for this virus and this is the last salvo, with no other letters of the Greek alphabet in reserve… Then, we can all party like Boris Johnson!
In the meantime, I dust off my crystal ball and reflect on both the market in 2021 and stick my neck out with 10 predictions for the IP market in 2022. There is no better way to look silly than to make those public, so for what it is worth, below are my first 5 predictions for the year. 5 more will follow in a week or two.
Tangible IP News
The last months of 2021 were incredibly busy for us with numerous deals in closing. Both buyers and sellers often find value in closing before year-end and this year was no exception. As such, we successfully closed the sale of 2 portfolios in the last week of December and two more are in their final stage of closing.
We announced earlier this week that we closed the partial sale of a patent portfolio owned by our client Allied Security Trust (AST), a well-respected membership-based organization representing multiple dozens of Fortune 500 companies, among others. We sold 10 of the 29 lots on offer across a variety of technologies, which means that a lot of high-quality assets are still available for sale or licensing. The second transaction was the sale of a digital content delivery portfolio owned by Media I/P, LLC. We will formally announce that transaction in the coming days.
We are nearing our marketing efforts relative to the sale/license of RealNetworks’ RealMedia HD video codec representing 54 patents (and associated code base). This is a great play for any company that wants to own the end-to-end encoding/decoding pipe and free itself from the costs and other dependencies of having to implement an expensive standard. See the full prospectus here.
With this, we have successfully brokered the vast majority of patents that we had under brokerage in 2021 and will be looking forward to representing new high-quality assets to an ever increasingly large pool of buyers.
Which brings me to this interesting conundrum we are now facing; with the torrid growth we have experienced in the past two years (including 65% this year alone), we are busting at the seams and find ourselves in the delicate position of having to refuse very interesting projects because we do not want to sacrifice our bespoke approach for both brokerage and advisory projects for the sake of quantity. As such, and after a decade of building a reputable firm that has ranked first of class in various private surveys, it is now time to confront this growth head on. Accordingly, we will be looking at ways to increase our capacity in the coming months, either organically by adding high calibers individuals, or by contemplating investments, strategic partnerships or other corporate structures. If you know someone who might be interested in discussing any of the above, send them my way. All discussions will be treated confidentially.
As we indicated in our last issues, we are letting our readers know the areas where we have buyers willing and ready to acquire patents. Our VP Brokerage, Erika Warner is the point of contact for those. You can also reach her at email@example.com.
Currently, we either formally or informally represent buyers with interest in the following technology areas:
– Digital Advertising patents with relevance to main social media players. (NOTES: Evidence of Use is required, with at least 3-5 years of life remaining. US assets are most critical though foreign counterparts are nice to have.)
– 5G SEPs with claim charts drafted to the standard
– Portable Audio Recorders (Handy, Field, Podcast, Video, etc.) – with customized applications for field recording, music and podcasting and/or Digital Mixing Products used to mix, monitor and record professional-sounding podcasts and music performances
– Wireless Charging and/or Wireless Power Assets as they relate to phones/tablets/laptops.
We are also always interested in reviewing Semiconductor patent portfolios as we have a wide variety of buyers interested in reviewing patents in this sector.
Our Predictions for 2022 (Part 1)
I recognize I will probably look at these predictions a year from now and ask myself “What on earth was I thinking?”, but I just cannot resist the beginning of the year urge to make some predictions as to where I believe things are heading.
1. Kathi Vidal will be the new USPTO Director. While this seems more like a fait accompli than a real prediction, Vidal’s nomination has not been sailing as smoothly as most people expected; the US Inventors lobby led by Josh Malone and others has mounted a very aggressive campaign to derail her appointment, and her confirmation hearing before the entire Senate was already postponed once (although officially for unrelated reasons). Nonetheless, we just do not see the forces at work as being sufficient to move enough senators to oppose her confirmation on substantive grounds. This is a very technical field and one that few Senators understand or have interest in understanding. Not to mention, patent law, while exciting to many of us is often lacking the passionate backing to bring new interest on the Hill. Lastly, I expect most Senators have little appetite to expend their capital “on this minor topic” that would alienate themselves from Senator Leahy on the eve of his retirement. We might well see a few Senators drag their feet for political reasons (Josh Hawley is the most likely), but Vidal will eventually be confirmed, much to the delight of the Big Tech lobby (many members thereof she has represented in the past). An ancillary prediction: Mrs. Vidal will tread lightly in the initial few months of her tenure, so as to not give fodder to those who opposed her. I do not expect her to rock the boat too early nor change current policies or practices at the PTAB (such as the FINTIV rule) this year. But watch out in 2023!
2. The US Department of Justice (DOJ) will revise its Standard Essential Patents (SEP) policy. This one is a little more arcane to those who do not follow this world closely, but it could have a quite significant impact. At the risk of oversimplifying what is at stake, under the previous administration, the antitrust division of the DOJ took a stance that was very supportive of large patent owners who participate in standards and own SEPs. Those owners used to be mostly US-based companies, but if you look around at the most strategic patent pools these days (LTE, 5G, 6G), the largest patent owners are European or Asian based companies, such as Nokia, Ericsson, Huawei, etc. So, what have large US implementers done? They brushed up on a few pages of their favorite playbook, namely those related to so-called “patent troll” abuse. Now, some US Opcos such as Apple are complaining to the DOJ that SEP owners’ demands are egregious and amount to an abuse of dominant position under antitrust laws, nothing less. I suspect they will eventually succeed again under the current administration, despite some early setbacks in court. Such a revision of the current policy, which will mostly favor those large US implementers, would no doubt have a domino effect internationally, as European and Asian legislators will see a need to retaliate. Indeed, we already witnessed some preemptive strikes, as a few international courts have been issuing what are called “anti-suit injunctions” to prevent implementers of SEP patents to free ride on standards by hiding behind antitrust arguments while refusing to pay a fair and reasonable license fee (FRAND). The same courts are also determining the royalty rates that will apply worldwide, regardless of what US courts might say. Stay tuned.
3. The US Supreme Court will confuse everyone, again. Ever since its ominous ruling in Alice, SCOTUS has silently observed from the sideline the growing mess it created and has refused over 20 times to take another case that would allow it to clarify what it wanted to say when it established its two-step test to determine whether inventions covering so called “abstract ideas” are patent eligible. Meanwhile, district court judges have been invalidating patents by the thousands (partly I suspect because it is a great way to clear one’s docket without ever having to conduct a patent trial), while the Federal District, which hears all patent cases on appeal, has branched out in so many camps that litigators can now mostly predict the outcome of a case on this topic once they find out who will be the three-judge panel in front of them! It is that bad… Yet, 2022 could feel different, as SCOTUS has finally agreed to hear at least one case (American Axle) that presents an opportunity to fix Alice. Why now you might ask? No one really knows. Will the Court finally acknowledge that it royally screwed things up in Alice and propose a clearer test or, even better, simply revert to the original language of the Patent Act that says nothing about “abstract ideas”? While I can see the appeal of this approach for, say, a Justice Gorsuch or Kavanaugh who are “originalists”, still count me as a doubter. If you look at patent cases the highest court adjudicated in the past decade, one might be satisfied by the outcome on some of them, depending on which side one stands, but I have rarely heard anyone say they were wowed by the judicial reasoning underlying the cases. We just don’t have the right interest level at the Supreme Court when it comes to patent cases, which most justices either resent or just do not understand well enough to put in the hard work and horsepower required to control the legal Frankenstein they unintentionally created several years ago in this case.
4. Judge Albright will continue to lose control over cases in the Western Disctrict of Texas. When Albright came to the bench in Waco a few years ago and rapidly established a name for himself as the new sheriff in town, with a patent “rocket docket” and a no-nonsense set of practice rules, patent owners were ecstatic. Apple was mad. They could no longer pull the same tricks as they once had in the neighboring Eastern district such as closing their flagship Apple store to avoid any physical presence that allowed patentees to sue them there. Austin however is no Longview, and most tech companies have a major presence there. So, for a while, things worked and Albright’s approach forced many early settlements because Defendants in patent cases just did not have the time or opportunity to deploy their usual arsenal of moves (IPR, 101 motion, etc.) to avoid a decision by a jury of peers. Well, all this appears to be up in the air as the Federal Circuit has stepped in and repeatedly forced Judge Albright to transfer an array of patent cases to districts much friendlier to defendants. Some of it, he brought on himself I am told, rubbing several appeals judges the wrong way with his written decisions and issuing counterorders, which usually does not go well with the higher courts. Perhaps his style did not help, whereas his colleague in the Eastern District (Judge Gilstrap) -who has been doing this for a lot longer- seems to find a way to keep his cases in his court by using a different legal approach and by not antagonizing the Fed circuit judges. But even a change in style could be too little too late now; Big tech has apparently been successful in lobbying… the Supreme Court Chief Justice Roberts who recently asked for a review of this egregious situation where “a third of the patent cases in the country are decided by one judge”. Those who remember the hay days of 2000-2010 will smile, as up to 90% of the patent cases used to be filed in the Eastern District of Texas…
5. The ITC will become the forum of choice for large patent cases. In part this is because it is increasingly more difficult to keep patent cases in the Western District of Texas and also because it is now the only way to secure something that looks like an injunctive relief (it is called an exclusion order), we therefore predict that litigation before the ITC will continue to increase in 2022. Note that only a few cases qualify for the “domestic industry” test that is required to file a complaint before the ITC and there are a few major downsides to consider, not the least being that the ITC will not rule on damages (which means you must bring a parallel case before a district court). Plus, litigating before the ITC is bloody expensive and that money will be spent in a matter of months, not years. Yet, it is a powerful tool and here to stay, unless the Biden administration repeats the same mistake made by President Obama when he interfered in favor of Apple who was on the receiving end of an exclusion order obtained by, ironically, Samsung. That did not sit well in other countries.
Predictions 6-10 to follow soon. Stay tuned.