Why sinking markets could mean real opportunities for patent acquirers and licensees 07 Oct 08
Although there may be some question marks over the future of IP-related financing given recent events, the outlook for those seeking to acquire good quality patents and other IP rights could be very bright. That may seem counter-intuitive as stock markets across the world continue to fall, but think about it for a moment.
It looks like we are going to be entering a pretty sharp recession. And what happens during a recession? Companies go out of business. Many more than would be the case during times of growth. And a lot of those companies will own patents. These will be auctioned off along with other assets as administrators seek to raise cash for creditors. It’s one way trolls/NPEs have been building their portfolios for years. And now there are going to be more opportunities than ever before. That said, with the appearance of new rivals, such as AST and RPX Corp, trolls/NPEs may find they have more competition than in the past. Still, with more bankruptcies there is going to be more IP out there in the first place. Therefore, the chances are there will be plenty to go round. Not just in the US, but also in Europe and many other parts of the world.
However, you don’t have to be a troll/NPE or a defensive acquisition outfit in order to take advantage of the current climate. Companies that develop and sell products, and which are looking for new technology, can also play the game. All they need is the willingness to spend the cash. That may be easier said than done; but, again, if you think about it, an acquisition strategy may make sense. It seems to me that if you can pinpoint a decent set of rights to buy you are going to save a lot of R&D time and money. This will be very popular with both boards and investors.
In fact, acquisition opportunities are probably not going to be restricted to bankruptcies. There are bound to be a lot of solvent companies looking to raise cash too. That may well make them more willing to listen to offers for parts of their patent portfolios and maybe at cheaper prices than they previously would have contemplated. If they will not sell, surely now is a great time to be negotiating a licensing deal if you are a potential licensee. After all, if the alternative is a drawn-out and expensive court case, maybe a couple of percentage points off a royalty rate is going to be a more attractive proposition.
Times are tough and they are probably going to get tougher. But there will always be opportunities when it comes to patents. Anyway, that’s my story and I am sticking to it. If you want to get the alternative view, though, the IPEG blog is not feeling very cheerful at all.
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