Despite a boom in patenting over the past two decades that reflected the growing importance of patents in the economy, patent reform has caused a sharp decline in patent licensing revenues in recent years. Patent reform brought reduced damages, removal of the threat of injunction, and subject matter restrictions, mainly on software, all of which combined to effectively burst the patent valuation bubble that had built up between 2005 and 2010. Reassessing patent valuation models with the help of talented professionals will be the only way for patent holders, and all those associated with the patent industry, to predictably profit in this new post-patent reform age.
Patent reform notwithstanding, the two trends fueling today’s patent monetization market are still present: a large number of patents continue to be filed each year; and those who invent often remain decoupled from those who make and sell products incorporating inventions. Capital markets are rediscovering the resultant opportunity, as evidenced by the increased availability of patent litigation financing. Besides owning quality patent portfolios covering good inventions, the key to accessing these capital markets is how one positions and packages those portfolios. Attention must be paid to subject matter eligibility under the Patent Act, evolving damages law, especially with respect to standards-essential patents, and the impact of inter partes PTAB reviews on the timing of expected returns to investors. In this era, such positioning and packaging of a portfolio can, at times, be nearly as important as its underlying inventions.
Although patent reform has reduced the margins of error in a monetization program, experienced players can still navigate those margins and help patent owners and their financiers make the same outsize profits that characterized the market 10 years ago. Seasoned experts can help patent owners with the following important tasks:
a) Identifying the patents in their portfolios that can be monetized in this post-reform environment;
b) Raising capital for patent monetization programs;
c) Devising creative and low transaction-cost paths to monetization that are tailored for their portfolios;
d) Litigating to drive licensing outcomes, including litigating to survive inter partes PTAB reviews; and
e) Negotiating a realistically achievable licensing or sale fee from those using their patent portfolio inventions.
Ultimately, it is preferable for patent owners to seek help with the foregoing tasks from experts working at an integrated one-stop shop, not only to reduce costs and increase profitability, but also to minimize the mistakes that tend to arise from the complex interactions that occur when interrelated tasks are carried out by these traditionally siloed specialists. It is possible to earn a just reward for the unauthorized use of one’s patented inventions, but only with a team of experienced professionals at your side.
For more information on this alert, or to learn how Prince Lobel can help you with all your Intellectual Property needs, from patent mining, to top-to-bottom monetization, to enforcement licensing and IPR, please contact Matt Vella, a partner in the IP group and the author of this alert, at 617.456.8191 or email@example.com, or Intellectual Property Practice Group chair, Robert Gilman, at 617.456.8017 or firstname.lastname@example.org. You can also read Matt’s article, “The Secondary Market in Patents,” in the most recent issue of IAM magazine (co-authored with Chris Donegan).