Springing Into a Better Market?

Hello all,

Last month, I shared my market predictions for 2024. Now, with Q1 2024 in the rearview mirror and spring in full bloom, there is already notable news that tends to suggest a certain direction. More on this below.

On another front, I will review the latest development in Europe where things are moving quickly, and I delve into the latest patent sales market report from defensive aggregator Allied Security Trust. Keep reading!

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. 

On behalf of the whole Tangible IP team, we wish you a happy 2024!

 Louis

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Tangible IP News

A few weeks ago, we formally announced that we had successfully closed the voluntary (pre-litigation) license of a patent portfolio in the semiconductor space pertaining to patents originating from ST Micro.

We also have several other portfolios for sale that offer great opportunities to savvy buyers. 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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IP Advisory

While many of you know us for our brokerage services, our expertise also extends to our vibrant IP Advisory practice. We are routinely retained by Fortune 500s, SMEs, startups, and investors for strategic intellectual property guidance.

In this capacity, we recently conducted a series of Valuations for clients in the AI, Automotive, Biotech and 3GPP technology domains. A Valuation is a useful exercise when a company is considering raising funds, divesting (or acquiring) IP assets, or if you just want more visibility on the actual market value of the patent portfolio you’ve been building over time. Each project is led by our team of seasoned technical experts, CPAs, and IP attorneys. Please visit our website for a full list of IP Advisory Services as well as testimonials from satisfied clients. To set up a consultation to discuss ways in which Tangible IP could assist with your IP Strategy, please reach out to info@tangibleip.biz.

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Recent News:

Departures

There was a noteworthy restructuring at AON a week ago. For those who are not familiar with the giant’s IP sector, it boasted a large team (200+) of seasoned IP professionals headed by my good friend Lewis Lee (CEO & global head of IP Solutions) and other well-known pros such as former Philips IP Head Brian Hinman, Peter Holz, Peter Pettit, etc. In short, an A-team but also a very expensive bench. We recently learned that Lewis Lee (and arguably most of the IP Solutions group) was leaving AON – amicably it would appear – to form an independent IP valuations startup firm.

There was no press release from AON so we are left to speculate a bit as to the reasons (there is one though as of April 3rd announcing the departure of AON’s CFO). My hunch is that the team was a huge financial drag for a single client and the volume of work may not have been sufficient to justify keeping it in-house. I suspect that the new outfit will continue to provide similar services to AON à la carte going forward and will try to attract other clients, while AON will only pay for what it consumes. We believe this announcement reflects a tightening environment in the patent monetization space, as witnessed by the unrelated laying off recently of some long-standing staff at a well know US NPE entity. This is also consistent with large operating companies substantially reducing their IP budgets this past year along with corresponding layoffs of experienced IP professionals.

Huawei’s Licensing Success

Although Chinese giant Huawei has not been allowed to sell products in the US and a few other countries for many years now, it has become very adept at leveraging its vast IP portfolio around the world. Yet again it demonstrated its prowess when the company entered in two consecutive IP licensing deals with Amazon and Vivo respectively, on the heels of similar deals with Xiaomi and Oppo. Huawei has now become one of the most active – and successful – patent licensor worldwide joining the likes of Nokia and Ericsson.

India Mulling Sovereign Patent Fund

It was recently reported that the Indian government is secretly mulling the creation of a sovereign patent fund to help support its emerging telecommunication industry. Our readers should be somewhat familiar with the concept of such patent funds. But, as a refresher, public funds are used to subsidize the acquisition (mostly for defensive reasons) of a war chest of patents in key industries in order to rescue/support local companies that may need to defend themselves against third party patent claims, or simply want freedom to operate. A decade ago, there were about 5 or 6 countries with such funds and those have since been shut down. These days, the closest thing to a sovereign fund is Canada’s IAC (Innovation Asset Collective) which is operating on a shoestring compared to its predecessors and offers a slew of related advisory services. It will be interesting to monitor how this discussion progresses in India as there has already been some opposition voiced against this initiative.

Apple Takes a NYT Hit

I commented extensively a couple of months ago on how Apple has pushed predatory patent infringement to an art. We saw to what level it used every play in the book to get away from an unfavorable ITC decision in the Massimo case. The New York Times – not one to spend too much attention on IP matters – recently wrote an article displaying how aggressively Apple is now lobbying politicians of all azimuths (during an election year to boot) in order to undo some of the damages and force the ITC to rewrite some of its rules. After all, this approach worked with the PTAB, the US Courts and it is currently working with the European Union officials on SEP rules. So why not? If there is anyone left with illusions that money alone doesn’t drive these important policy decisions, I have a bridge in Baltimore to sell you…

UPC After 9 Months

I have commented often on how the UPC is becoming a game changer in terms of where patent holders will assert their cases against infringers. But it also redefines how innovators need to think strategically about where they file patents going forward. The law firm Allen & Overy recently published a very useful article summarizing the main aspects of UPC activity after 9 months, which is worth reading. I quote: “It is also clear after nine months of operation that, despite some initial skepticism (no doubt caused by the decade of planning and ‘false starts’ in relation to the UPC), the Court has been enthusiastically welcomed and widely adopted by litigants. This is reflected in the statistics – as of February 2024, the court has seen more than 210 cases filed, including more than 80 infringement actions and 25 independent revocation actions. It is also noticeable that emergency relief has been widely applied for, with more than 20 applications in seven months. Furthermore, more than 100 decisions have already been issued, a clear signal that the Court is working and working quickly.”

Potential Impact on Venue for Patent Cases

Those who have followed the tribulations of Judge Albright in the Western District of Texas are familiar with the tactic of “random assignment” which ensures one specific judge who sits alone in a division is not guaranteed to hear a given case. This happened recently in a case – not related to IP at all –  that was highly publicized and led the Judicial Conference in the US to announce that certain types of cases, judge assignments would be done randomly going forward. It will be interesting to see how this new rule affects judge assignments in other districts that have seen a high concentration of patent cases filed. In the Western District of Texas where judge Albright sits, the random assignment initiated in 2022 saw his share of cases dwindled from 23.4% of all patent cases nationally to a mere 6.6% in 2023.

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Latest Market Data

Each quarter, defensive aggregator Allied Security Trust (AST), who represents roughly 50 large operating companies, issues a report summarizing patent transaction activities and trends and one can usually find some nuggets of information there. For those who do not want to read the full Q4 of 2023 report, here is the Reader Digest’s version (Full disclosure: We have been retained by AST for the last 3 years to assist them in divesting patents acquired though their IP3 program).

First, AST analyzed over 27,997 USPTO assignments involving 84,343 US assets with 810 sale assignments, recorded from October 1, 2023, to December 31, 2023. In the final quarter of 2023, the US Patent and Trademark Office (USPTO) recorded 467 patent transactions involving 1,900 assets, with 460 sellers and 439 buyers participating. Despite facing significant economic challenges and geopolitical tensions throughout 2023, the year concluded on a positive note with an increase in patent transactions. This upturn in activity within the patent secondary market coincided with a growing interest among companies to invest in research and development (R&D), particularly in the technology sector.

The above data tells us two things: first, while the patent market is not dead (yeah!), it is still embryonic when you consider the size of the assets class (there are well over 100 million patents in circulation). Any market where only thousands of assets each year change hands with such a large inventory means there is a serious issue with the asset class itself, for there is no shortage of sellers here. For this we have to thank mostly Big Tech which has lobbied extensively for years to water down patent rights.

Second, the above data is quite at the opposite end of what brokers see in general, i.e. most sales being made to NPEs. Which means that direct sales tend to be primarily between operating companies while brokered sales cater more to the NPE buyers’ pool.