Despite the relative quiet of summer, we’d be remiss to ignore the early signs of a certain “movement” favoring those dedicated (for at least the last decade) to weakening the US patent system. The clouds are indeed gathering over what has been a somewhat positive marketplace in the recent past, judging from our own transactions and daily discussions we have with buyers, litigators and other key stakeholders. So, this is a good time, midway through the year, to reflect on the IP marketplace and take stock of both how and, most importantly, where things are going. I’ll discuss below a few recent events which in aggregate, indicate momentum slowly shifting away from patent owners, quite unfortunately I must add.
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 either LinkedIn or Twitter where I post almost daily about some of the most newsworthy events..
Tangible IP News
For those who missed our most recent newsletter a few weeks ago, we recently announced the sale of a rather large transaction involving over 100 assets and relative software code in the computer visualization area.
This week, we are pleased to officially announce the closing of a few licenses with Fortune 100 companies on a couple of portfolios pertaining to Application Programming Interfaces (API).
Finally, we will soon announce the sale of a few additional lots of the AST IP3 2020 Program, making this our third successful transaction on this portfolio, where we are the exclusive broker. The IP3 2020 assets won’t be available much longer so if you’d like to review, please reach out to firstname.lastname@example.org.
In terms of new assets for sale, we have 4 distinct portfolios now actively marketed pertaining to smartphone camera, 3D digital advertising, GNSS and Zigbee and foldable phone technology respectively, some of which we have already received offers on. If you are interested in reviewing any of these, please do not wait and email us at email@example.com to receive the full package of materials.
Similarly, if you’d like to be added to our distribution list in the future so that you are the first to receive new opportunities, please email us at firstname.lastname@example.org.
Calling for high quality portfolios!
The downside of selling almost everything you have on offer is that your pipeline needs to be replenished. So for a short window this year, we are entertaining new prospective portfolios across a variety of sectors. You can review our criteria here but if you own a patent portfolio with at least two issued US patents and have knowledge of others using your technology (infringement), we are happy to review for potential brokerage. We will also look at larger portfolios where evidence of use is uncertain.
Some of the areas of particular interest include:
- Medical device technology
- Autonomous driving systems
- Hardware such as cameras and displays
- Streaming media
Please reach out to Erika Warner with any assets that may match this request at email@example.com.
Patent Brokers are In Vogue
I will admit to being that “guy,” the one that cuts the middleman from every operation. When I do construction projects, I act as the general contractor, and if I could sell my house without a realtor, I would do it in a heartbeat. Yet, here I am, a patent broker… Is this a case of “Do what I say, not what I do?” To be honest, no. I do not believe that you can sell a patent nowadays without a professional intermediary to facilitate the process, despite numerous attempts over the last decades to automate the process. (See our past column where we list those.)
The IP marketplace remains very illiquid and patent brokers cultivate the contacts and relationships to successfully matchmake; they know who is looking for what and how much they are willing to pay for it, how a transaction can be structured and how to avoid common pitfalls all of which increase the likelihood of actually closing a deal. Numerous Fortune 500 companies have inhouse teams dedicated to selling patents, primarily to avoid the broker fee, and many times they ultimately knock at our door for assistance.
In other words, representing one’s own patents is akin to defending oneself in court; you have a fool as a client…
Given our soapbox on the value of a broker, I personally felt some validation (and a little vindication) when I saw the latest ROI report and the quote below:
“One of the major shifts we’re seeing is buyers’ attitude towards brokers. In our 2020 survey, 70% of buyers listed direct outreach as the best source of deals. Only about 30% of buyers listed brokers as the best source. However, in just two years, the picture has changed dramatically. Less than 30% of buyers now think that the best deals comes from direct outreach. In fact, over 60% – twice as many as in 2020 – listed brokers as the best source.”
So hug your broker the next time you see him/her 😉
To understand how the market moves, let’s look again at the fundamentals and go back to the Tangible 5 IP Indicators for market trends:
- Noticeable changes in the supply & demand;
- New case law that may have long-lasting impacts;
- Changes in the regulatory environment;
- Recent large damage awards against infringers;
- Broad availability of funding to support assertion activities.
We have seen no noticeable changes in the supply and demand of patents in the past few months. Sellers still outnumber buyers and buyers continue to chase the “perfect patent,” which rarely exists given the current legal environment.
There has been no watershed decision from the court either that would substantially alter the course of business. 101 is still a mess – albeit at least a more predictable one – and will remain that way with the Supreme Court passing on yet another opportunity to fix it (see our last column “Kicking the Can”).
There was a major award for a whopping $2.75 Billion against Cisco in late 2020, but in a strange turn of events a couple of months ago, the Federal Circuit threw the case out because the trial judge, U.S. District Judge Morgan, found Cisco liable for patent infringement, two months after learning that his wife owned 100 Cisco shares worth $4,688. The judge later put the shares in a blind trust, but the Federal Circuit, sitting on appeal, thought he should have sold those instead. Talk about a distinction without a difference… Now another judge will hear the case and Cisco will get another bite at the apple. Meanwhile Clarence Thomas remains at the Supreme Court hearing cases that involve his wife’s actions… the irony!
Finally, while money continues to flow into the patent assertion business and some litigation funders have begun acquiring patents themselves, this is not that different from a year ago.
So this leaves us with changes in the regulatory space, which have a way of muddying the waters. Let’s look at those.
When new USPTO director Kathi Vidal was nominated for her position, we adopted a cautious tone given her past representation of a number of large tech companies notorious for pushing an agenda that aims to weaken the US patent system. I said then: “We remain a little apprehensive at this stage of what may happen at the PTO for inventors and patent owners alike if she is confirmed as the new director. Let us hope that time proves me wrong.”
My prediction after she was confirmed was that she would take her time before doing anything that would be perceived as undermining the work done by her predecessor Andrei Iancu. Last January, I wrote the following: “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!”
Looks like the gloves might be off a few months ahead of schedule as last week, under Director Vidal’s instruction, the USPTO reversed the so called “FINTIV rule” which allowed the PTAB to use its discretion to decline instituting Inter Partes Reviews (IPRs) when there is already a parallel court case it believes can adjudicate on the same issue faster, so as to avoid duplicative – and possibly contradictory – rulings.
While this sounds like an arcane administrative rule that only the initiated understand, it will breathe a second wind into IPRs, which have been the most effective tool of the past decade to invalidate issued patents, with a “kill” rate hovering around 70%. Needless to say, this is not good news for patent owners wanting to assert their patents in court, as more cases will be stayed while the parallel IPR proceeds. Ultimately, patentees may never have their rightful day in court.
Another Blow to Judge Albright
Since he was appointed to the bench in 2018 for the Western District of Texas, Judge Alan Albright, an experienced patent litigator, set out to make his district a venue of choice for patent cases. In so doing, he created rules of practice that allowed for a swift and efficient docket and for parties to have their day in court, sometimes within a year, reminiscent of what the old “rocket docket” of the neighboring Eastern District of Texas once was in the early 2000s. As a result, it attracted a lot of new cases and given that the district englobes the city of Austin where many large companies maintain a presence, it became hard for those to transfer the case to another venue.
Naturally, several defendants complained about what they said was too “patent friendly” of an environment, conflating a rapid and efficient docket devoid of unnecessary motions (which is true) with an alleged bias by the court (which is not). The continuous lobbying from big tech reached the Federal Circuit, which took pleasure in overruling Judge Albright on venue transfer motions, sending cases to other districts where the defendants were located, all to the great delight of Apple and the likes. But Albright still had a disproportionate number of cases filed in his district by patent owners looking for a quick and less expensive process than in other districts.
This is when the infringement lobby turned their efforts to the US Senate and soon thereafter, two US senators (Tillis and Leahy) sent a rather uncommon letter to the Chief Justice of the Supreme Court John Roberts complaining that Judge Albright was overseeing too many patent cases, as if this was a crime.
Chief Justice Roberts said that he would look into this and it seems that he did indeed; last week, out of the blue, Chief Judge Garcia for the Western District of Texas issued a one page order whereby all patent cases filed in Waco will now have to be distributed randomly (and equally) between the 12 judges in the district, meaning essentially that Judge Albright will now see only 8% of the patent cases he used to oversee. Most other judges in the district have little to no patent experience and many even resent patent cases, as these are complex and technical. As a result, litigants will now need to find new strategies and allocate larger budgets to assert patent cases.
This is truly a regrettable decision for those who believe cases should be heard by competent judges who don’t fall trap to the numerous motions filed by defendants who have no intent to see a case go to trial. There was a method to the madness of filing patent cases in Western District of Texas; it produces an environment that ensured a swift and less expensive decision from the Court, something all other courts should want to emulate and exactly the same reasons – at least officially – behind the creation of the PTAB. The exact opposite has now happened due to this extraordinary turn of events, and it is extremely concerning to see yet another great US institution being politicized. One can easily follow the breadcrumbs of lobbying money to politicians and ultimately to a judiciary that appears to have become anything but independent.
New Bills on the Hill
Earlier this week, the same two US Senators Tillis (R-NC) and Leahy (D-VT) – maybe to atone for the above – introduced not one but two separate bills that may impact the patent marketplace. The one worthy of mention is called Patent Eligibility Restoration Act of 2022 and aims to “ restore patent eligibility to important inventions across many fields, while also resolving legitimate concerns over the patenting of mere ideas, the mere discovery of what already exists in nature, and social and cultural content that everyone agrees is beyond the scope of the patent system. This bill affirms the basic principle that the patent system is central to promoting technology-based innovation.”
All this sounds good in principle, and it is good to see Congress trying to fix the 101 mess that SCOTUS has created with Alice, which this new bill aims to overturn legislatively. Most experts that have been vocal on this issue (Kappos, Iancu, Michel, etc.) publicly support the bill. However, since not a single patent related bill introduced in the last decade has made it into legislation (and there have been many), we doubt that this one will be any different. In the meantime, the status quo still holds on this point and this possible ray of sunshine will remain hidden behind gathering clouds until Congress can pass bipartisan bills again more routinely.