IP market – buying and selling

Although those in IP-owning companies have not experienced a significant change in the demands for the further monetisation of IP portfolios, there has been a tangible shift for private practitioners. This year, practitioners reported a 10% increase in clients seeking advice on how to best monetise IP portfolios. This indicates that awareness of the value of patents is becoming more mainstream and people are understanding that there are more advantages to a strong portfolio than the basic protections it affords. This may be because of the recent politicisation of intellectual property in the United States, where coverage of the patent industry has significantly increased.

More people are capitalising on market opportunities, with an 8% increase in respondents stating that they have sold patents in the past year. Many of these purchases have been driven by the need to secure freedom to operate, as well as to develop monetisation opportunities. Nevertheless, there is no decisive trend as to whether the prices of patents have risen or fallen, with the number of people stating that they are either more or less expensive both growing by 7%.

Overall though, more individuals – 31% – have reported that patents are cheaper. Those who believe that the price of patents has dropped over the past year claim that this is because of issues caused by the PTAB and patent eligibility in the United States more generally. Another potential factor flagged by our respondents is that more assets are available on the market, which could have driven down costs.

As in previous surveys, the United States ranks as the most important jurisdiction for businesses when purchasing patents. France has lost its spot as the runner up, appearing much further down the rankings this year compared to last year. Aside from the United States, China and Germany rank as high-priority jurisdictions. Indeed, the data underlines that China is becoming a much more important jurisdiction in the patent world.

Figure 21. In the past year, has your company sold patents? (IP-owning company)

Figure 22. In the past year, has your company bought patents? (IP-owning company)

Figure 23. If you have bought patents in the past year, has it primarily been to: (IP-owning company)

Figure 24. If you have bought patents in the past year, has it primarily been to: (IP-owning company)

Table 2. If you believe that patents are now cheaper, what do you think has driven this fall in value? (Please choose up to three options) (IP-owning company)

 

First most important

Second most important

Third most important

Problems caused by the PTAB

35%

21%

8%

Concerns over patent eligibility in the United States

19%

19%

14%

The effects of TC Heartland

2%

5%

8%

Less interest overall in patent monetisation

9%

17%

8%

The winding down of the smartphone wars

2%

14%

6%

Greater availability of patents in the marketplace

21%

12%

31%

Increased difficulty enforcing SEPs

7%

7%

22%

Other

5%

5%

3%

Table 3. When purchasing patents, which jurisdictions are your priority? (Please choose up to three options) (IP-owning company)

 

First most important

Second most important

Third most important

China

9%

29%

29%

France

0%

0%

4%

Germany

8%

39%

29%

Japan

4%

11%

13%

Korea

3%

0%

2%

United Kingdom

1%

13%

9%

United States

72%

20%

7%

Other

4%

7%

9%

Market – licensing

This year’s data shows that the licensing market has remained stable over the past year, but it may be at risk of hitting a rough patch. Although 17% of respondents stated that deal flow remains steady, another 17% also said that they were doing more deals than the previous year – an increase of 7%. While this is positive, the number of people reporting a decrease in the number of deals being transacted has also increased by 5% – up to 18%. A further 22% feel that it is more difficult to initiate negotiations before filing suit – up from 14% in 2017.

When it comes to royalty rates, the percentage of licensors reporting that rates have remained steady has doubled to 25%. Further, fewer people (8%) are reporting a decrease in royalty rates, compared to 11% in 2017.

Another interesting shift from last year’s results is that 16% of respondents said that they are focusing on opportunities outside the United States – up from 12%.

There has been no definitive agreement on whether the licensing environment is likely to improve over the coming year. Although 18% of our respondents said that they expect the deals market to stay the same (an 8% increase on last year), concern that the deals market will worsen has also doubled to 12%.

Moreover, there has been no noticeable shift in the SEP licensing market. However, the number of respondents who are finding it more difficult to enforce SEPs has dropped from 19% to 12%, with 4% saying that it has become easier to enforce these assets. Although 13% of respondents are still less likely to declare patents as standard essential, the number of respondents that are more likely to declare patents as standard essential has grown from 5% to 11%.

Table 4. If you are a patent licensor, how would you characterise the current licensing environment? (Please choose up to three options) (IP-owning company)

We are doing more deals than we were a year ago

17%

Deal flow remains steady

17%

We are doing fewer deals than we were a year ago

18%

Royalty rates have increased in the past year

5%

Royalty rates have remained steady

25%

Royalty rates have decreased in the past year

8%

We are finding it more difficult to initiate negotiations prior to filing suit

22%

We are focusing on opportunities outside the United States

16%

We are confident that there will be an upturn in the deals market in the coming year

8%

We believe that the deals market will remain the same over the coming year

18%

We are concerned that the deals market will worsen in the coming year

12%

N/A

32%

Table 5. What impact has the recent uncertainty around SEPs had on your organisation? (Please choose up to three options) (IP-owning company)

We are reconsidering our relationship with standard-setting bodiesv

11%

We are less likely to declare our patents standard essential

13%

We are more likely to declare our patents standard essential

11%

It is getting more difficult to enforce SEPs

12%

It is getting easier to enforce SEPs

4%

We have been a victim of patent hold-out

8%

We are not concerned by patent hold-out

4%

Patent hold-up is a real problem for us

4%

We do not believe that patent hold-up exists

8%

N/A

62%

Table 6. What best describes your approach to patent procurement? (Please choose up to three options) (IP-owning company)

We are submitting more applications than we were a year ago

35%

We are submitting fewer applications than we were a year ago

16%

We are submitting a similar number of applications as a year ago

30%

We are focusing more on quality and allocating extra resources so that we can maintain or increase our application rate

34%

We are focusing more on quality and submitting fewer applications as a result

26%

We are considering focusing more on quality, but have yet to make a final decision

12%

We believe that quantity is as important as quality

9%

If we had to make a choice, we believe that quantity is more important than quality

3%

We submit applications with a view to monetisation opportunities further down the line

26%

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