Are You Bullish or Bearish on the 2020 Patent Market?

Are you bullish or bearish on the 2020 patent market? That is the question I asked a panel of experts recently. Each of the experts surveyed will participate on the faculty at IPWatchdog CON2020, which will take place in Dallas, TX from March 15-18.

All those industry insiders who responded are bullish, which is an interesting change after many years of insiders being bearish, or at best cautiously optimistic. Indeed, the sentiment expressed across the board by experts from both the monetization / licensing world and litigation world is surprising, at least at first glance. And, as you will read below, while at least several people cited the uncertainty around patent eligibility in the United States, there is real optimism because license deals are getting done and policy changes show evolutionary changes in the IP ecosystem.

It can be all too easy to become cynical about the state of patent eligibility when one focuses on the trees (i.e., each case) rather than the forest (i.e., system wide developments). Similarly, while the Patent Trial and Appeal Board (PTAB) continues to do truly bizarre things in certain cases, the institution rates have decreased, and initiatives spearheaded by USPTO Director Iancu have made it much more difficult to bring harassing, serial and follow-on challenges. For example, the Precidential Opinion Panel (POP) made Valve Corp. v. Electronic Scripting Products. Inc. precedential under Standard Operating Procedure #2, thereby making the General Plastics factors applicable to different and joint petitioners. Likewise, the United States Department of Justice, USPTO and National Institutes of Technology and Standards (NIST) have changed the public dialogue relating to standard essential patents and the need for injunctive relief. So, while at first the unanimity of opinion seemed surprising, it is encouraging that these experts see signs of hope and are bullish on 2020.

Russell Binns
Allied Security Trust

I am bullish on the 2020 patent market.  After many years of uncertainty, and a bottoming out of the patent market, I think 2020 is going to provide more certainty around Section 101 and other areas of the law (and possibly some reform) and a greater focus on quality over quantity.  If patent prosecution isn’t treated as a commodity, and more like the art it is, then we will have a focus on patents that are easier to understand, prove infringement, and avoid invalidity, which will make more valuable assets that are easier to transact, all in the spirit of the Supreme Court Nautilus case.

Russell Binns is CEO & General Counsel for Allied Security Trust, a Delaware Statutory Trust that identifies, analyzes and purchases high-technology patents being sold on the market. He will be speaking at IPWatchdog CON2020 about IP transactions and portfolio management.

Michael Gulliford
Soryn IP Group

For the first time in a long time, I am confident that the IP ecosystem is heading in the right direction. The sounds of progress are certainly faint, but if you put your ear to the wall they can be heard.  The mainstream press, for example, has finally woken to the reality that inspired me to found Soryn in the first place — the anti-patent troll movement hasn’t just succeeded in putting some bad actors out of business, it has also spawned a patent system that affords little protection for those companies and universities that must rely on their patents to protect products, drive revenue and raise investment. That mainstream news outlets are acknowledging this dynamic is a step towards correction.

And there’s more.  A host of administrative and judicial tweaks to the IPR system resulted in a measurable drop in IPR filings last year. The Federal Circuit’s Berkheimer decision has at least given software patent owners a chance at life in district court, with Rule 12 grant rates down to around 50%.  And companies like Sonos have begun to tell lawmakers what we already know.  For many of our most innovative companies, the day will come when business realities make it necessary to disclose delicate technical details to someone with significantly more market power.  But as things currently stand, there is no way to do so without risking eventual ruin because patents are simply not respected.  It sounds depressing, but we should find comfort in the fact that because of companies like Sonos, the truth is finally getting out and folks are finally starting to pay attention.  There can be no change without such acknowledgment.

Michael Gulliford is the Founder of the patent advisory firm Soryn IP Group, as well as its sister company Soryn Capital, which invests significant capital in a host of patent-centric strategies. He will be speaking at IPWatchdog CON2020 about how IP is an asset class and valuing IP assets.

Daniel Papst
Papst Licensing GmbH & Co.

Moderately though, e.g. given a probable standstill on 101 legislation in the US due to election year. The IPR regime slowly keeps getting a more levelled playing field thanks to the USPTO director. The German Supreme Court will rule on the holdup challenge of the UPC and give way to an efficient and streamlined Court. Damages are on the rise and patents (also in the US) will get closer to what they once were – a right to exclude!

Daniel Papst is the Managing Director and Co-Owner of Papst Licensing GmbH & Co., a licensing company that monetizes national and international patents. He will be speaking at IPWatchdog CON2020 about the future of monetization.

Kent Richardson
Richardson Oliver Law Group

Bullish. I believe we have passed low tide for patent value and we are on the way up. We use our own data and surveys to help inform our opinions. Our data says that patent prices are stabilizing and that the market is becoming more predictable. Also, we surveyed about 15 IP executives and asked two questions. First, if you thought you had to take a license, would you rather do it now or three years from now? The answer came back almost unanimously “Now!” This means that potential licensees believe that patents will strengthen over the next three years. Secondly, we asked whether they thought, over the next year, the patent market would expand, contract, or stay the same. Well over half thought the market would expand or stay the same. So, I’m bullish.

Kent Richardson is a Partner with the Richardson Oliver Law Group. Kent counsels clients on a variety of patent and business matters including patent buying, selling, licensing, valuation, prosecution, and operations. He will be speaking at IPWatchdog CON2020 about IP transactions and portfolio management.

Jamie Underwood
Latham & Watkins

I am bullish on the 2020 patent market.  The US patent regime remains a stalwart leader in meaningful IP protections.  Innovators from far and wide think so, too, if one believes that people vote with their feet.  In 2019, the USPTO issued the most patents ever granted in a single year in American history.  Nearly half of the 333,530 patents awarded went to US-based companies, but Japan, South Korea, China, and Germany also received a considerable number of those grants.  The most recent International IP Index, once again, ranked the United States as the strongest overall IP system in the world and as the second strongest patent system (tied with Japan, South Korea, and Switzerland).  Even in the midst of the polarized paradigm between owner and implementer, the United States is finding greater equilibrium in its patent enforcement.  For example, the USPTO and DOJ’s Antitrust Division revised their views on injunctive relief and FRAND commitments, now opining that SEP holders may seek such relief without violating FRAND, while still recognizing that those issues may impact the ultimate remedial assessment.  PTAB policy changes have brought institution rates and outcomes into greater balance as well, and the reduced threat of invalidation therefrom should prompt more patent holders to pursue suits in district court.  For patent holders that still find success in district court elusive, the United States also offers an option replicated in no other country – the US International Trade Commission, which can provide sweeping injunctive relief for the expedient redress from named infringers, or, in certain circumstances, from an entire US market segment.  These relative strengths will not falter in 2020. While stakeholders, no doubt, must grapple with complex challenges regarding Section 101, AI, and potential legislative reforms, to name a few, these challenges are reflective of the evolutionary potency of US patent rights, rather than their shortcomings. 

Jamie Underwood is a Partner and Global IP Strategist in Latham & Watkins’ Intellectual Property Litigation and International Trade Commission (ITC) Practices. She has also participated on the global trade stage as an NGO delegate to multiple World Trade Organization Ministerial Conferences, and also currently serves as the President-Elect for the Federal Circuit Bar Association. Jamie will be speaking at IPWatchdog CON2020 about injunctive relief in patent infringement litigation, as well as solutions for the U.S. patent system.

Annsely Merelle Ward
WilmerHale

I am bullish. I expect 2020 to be very active for the patent market. Some personal predictions: Pressing global environmental, health and equality challenges will invigorate and accelerate innovation and patent filings in 2020.  Global patent battles in telecoms will continue to find jurisdictional footing as courts wrangle with forum arguments. There will be more industry collaborations – patent and know-how sharing platforms, patent pools and dispute resolution mechanisms to overcome perceived inefficiencies of traditional models of licensing and litigation. Companies (and countries) will continue to jostle for 5G/IoT market share.

Annsley Merelle Ward is an Attorney with Wilmer Hale, and blogger with IPKat.com, where she has been widely known as the AmeriKat for more than a decade. She will be speaking at IPWatchdog CON2020 about hot issues for 2020 and beyond, as well as the patent gender gap.

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