IP Dealmakers 2017 will take place from November 15-17, 2017, at the Apella at 450 East 29th Street, New York, NY. The Keynote Speaker this year will be Dr. Lulin Gao, the Founding Commissioner of China’s States IP Office (SIPO), and a senior advisor to the World Intellectual Property Organization (WIPO).
In anticipation of the event this year I reached out to a number of those who will be speaking with several questions. The first was simple and straight forward: Is the patent licensing market dead?
The clear consensus seems to be that the patent licensing market is not dead, but that the U.S. market is in decline and due to a weakening of patent rights capital will go elsewhere.
Managing Director, SK14 Advisors
The global patent licensing market is not dead. While there are days it feels like we are living through a secular decline if you focus only on the U.S. market, I believe it is a cyclical decline. The current global market will be sustained by developments outside the U.S .while the U.S. market repairs itself from the damage inflicted by the three branches of the U.S. government.
Erich Spangenberg is currently Managing Director of SK14 Advisors. Mr. Spangenberg was also the founder and former CEO of IP Navigation Group, and the founder and former CEO of nXn Partners. Mr. Spangenberg was previously a partner at the prestigious law firm, Jones Day, as well as an investment banking executive at Donaldson, Lufkin & Jenrette.
CEO, Cerebral Assets LLC
National Trustee of the Rock & Roll Hall of Fame & Museum
Patent licensing is most certainly not dead. Traditional licensing between operating entities continues, and alternative licensing programs, such as the Open Invention Network, Allied Security Trust and LOT Network are growing rapidly. However, the significantly increased risk profile of asserting patents in the U.S. has had the effect of dampening licensing efforts for NPE’s that have anything other than the most strong and diverse patent portfolios. It is unfortunate that for NPE’s, the mindset of efficient infringement has captured much of the U.S. market. What that really means though, is that pricing needs to be reflective of market realities.
Having practiced for over 25 years, including 16 at Sony, Jaime Siegel is now CEO of Cerebral Assets, LLC, an IP Business Advisory and Global Director of Licensing for the Open Invention Network, one of his clients. Jaime is also the CEO of FlipTix LLC, an early stage tech start-up in the event space, as well as an Adjunct Professor at the UC Irvine School of Law, where he teaches the business of patent licensing and patent litigation.
Director, Office of Technology Commercialization
University of Kentucky
The issue is not whether patent monetization is dead, but instead that innovation investment is at risk because respect for strong patent rights in the US is waning. Infringement-based naked patent licensing — or “patent monetization” — has been made very difficult because of the general weakening of patents’ enforceability. Still, the early stage technology licensing world of university tech transfer remains vibrant – our office at the University of Kentucky did 90% more licenses in FY2017 than in FY2016. But what is lost on this figure is that most of these licenses are to start-up companies that hope to solicit, and must rely on, early stage investment capital. The basis of that investment will be on the promise of the technology, but also the ability of the company to compete. If it does not have any barrier of entry to protect with enforceable patents, the ability to compete is significantly diminished. Ipso facto, the ability to secure investment capital is significantly diminished. This capital will go elsewhere to companies that can fairly compete. As a result, the “respect” for patent rights that curtails efficient infringement, is the same “respect” for patent rights that will fuel investment in the hundreds of early stage innovations we develop at our university.
Ian McClure joined the Office of Technology Commercialization as its Director in 2016. Ian began his career as a Mergers & Acquisitions (M&A) and Intellectual Property (IP) transactions attorney with Wyatt, Tarrant & Combs, LLP in Louisville. Most recently, Ian was Vice President of IP Strategy for Black Stone IP, an investment bank headquartered in San Francisco focused on IP-rich M&A, IP deals and technology-driven transactions.
Partner, Shore Chan DePumpo LLP
I don’t think the IP licensing market is dead, but its much smaller. When we look at projects now, they have to pass additional criteria that did not exist before IPRs in addition to our validity review, infringement analysis, damages analysis and client background checks.
Michael W. Shore practices in the areas of intellectual property commercialization, business litigation, and other select litigation matters. His intellectual property practice is multifaceted, aiding clients in commercializing their patent and copyright portfolios through strategic development, licensing and litigation.
Soryn IP Group
The patent licensing market is certainly not dead. It is just different, and the cost of defense is no longer very relevant. Instead, the quality of the patents at issue, and the business opportunity, are what matter. Having closed a number of patent licensing deals and/or sales in 2017, we know for a fact that if the right opportunity is presented to the right partner, with the right potential strategic benefit, deals will happen at meaningful valuations. The trick is finding the right angle, and the right partners. It is not easy but the rewards are still there.
Michael Gulliford is the Founder and a Managing Principal of Soryn IP Group, a patent advisory and litigation finance firm headquartered in New York City. Michael has repeatedly been named to the list of the Leading IP Strategists in the World, and is regularly asked to speak and publish on the latest patent developments.
Global Intellectual Property Leader, Tech Media & Telecom
Willis Towers Watson
No, but it is evolving. It is becoming more global. It’s not just about US patents any more, and it’s not just about US and Western European companies looking for ways to maximize the value of their portfolios.
Kim Cauthorn is the Global Intellectual Property Leader, Tech Media & Telecom at Willis Towers Watson. Kim leads the team responsible for assisting clients with intellectual property and broader intangible asset risk issues and developing intellectual property risk quantification tools and risk transfer vehicles.
Analyst — Tech Litigation
No. Market dynamics and a legal landscape relatively hostile to patent monetization have effectively ended certain business models, but overall patent licensing is alive and continuing to evolve. s an illustration, a composite of publicly traded IP companies with market-caps currently at or above $1 billion outperformed the S&P 500 by roughly 12% over the past five years. Licensing revenues contribute more than 75% of these companies’ overall sales and are largely collected as recurring royalty payments on multi-year deals. By contrast, a composite of the smaller IP companies largely utilizing litigation-driven monetization strategies has lost 80% of its value over the same timeframe. (See graphic below)
Matt Larson is a Patent Attorney and Technology Litigation Analyst with Bloomberg Intelligence focused on high-tech lawsuits and litigation trends impacting the financial markets.