Mid-Year Review
Well friends… Summer is over! Which means it’s time to take a step back now that we have firmly closed the first half of the year (and are mid-way through Q3) and look at some indicators that tend to explain current and future market trends.
When searching for influencers of the IP marketplace, I generally look for the following clues:
- Noticeable change in the supply & demand chain;
- New case law that may have a long-lasting impact;
- Regulatory environment;
- Recent large damage awards against infringers;
- Stock performance of publicly traded IP companies (PIPCOs);
- Statistical trends regarding patent enforcement and validity;
All the above are capable, especially when taken together, of shifting the market one way or another. So, let’s look at those factors for the first half of 2019 and whether they should push the market up or down. For those who need their daily dose of news, once again you can follow us on either LinkedIn or Twitter, where we post regularly.
Happy reading!
Supply/Demand:
2019 saw a continuation of a trend that started last year where several large patent owners started divesting their own portfolios, not necessarily to leverage the privateer model through direct sales, but rather to prune vast portfolios of non-core, nonperforming assets through the brokered market. In parallel, most large technology companies (that used to have a dedicate patent acquisition function) have paired those down and, in some instances, dismantled their team altogether, relying on a few defensive aggregators to act as a clearing house on their behalf. Most large patent holders, usually on the receiving end of patent litigation, do not value patents in the open market (i.e. pre-litigation) and appear to only show interest in having a discussion with patent holders once there is a lawsuit in place. This behavior, in turn, incentivizes such patent holders to file suit first before initiating a dialogue which could have been prevented it in the first place. On the other hand, we have witnessed several new NPEs entering the market in 2019, many of whom are willing (at least this, is their pitch) to pay cash for good portfolios. Although new entrants are filling the vacuum left by operating companies who used to be active buyers, it does remain a buyers’ market even if valuations have picked up a little. This does not mean really good patents won’t sell at a decent value, but it suggests that many patents will simply not sell as buyers can still afford to be extremely selective.
Net: neutral
Case Law:
This was a busy first half year on the judicial front and we discussed the most important decisions in previous columns. Again, this year, some cases were favorable to patentees, others not so much. At the district court level, patent holders have rejoiced in the nomination of Justice Albright in the Western District to Texas who is quickly becoming the new forum of choice for plaintiffs. On the other hand, the... [Read the full article]