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Posts Tagged: "2016 Patent Market"

2016 Patent Market Size and Conclusions

Once again, the brokered market has shrunk: we estimate that actual sales from June 1, 2015 to May 31, 2016 were $165 million (down from $233 million the previous year)… In the 2016 market year, 118 sales were identified, accounting for a total asking price of $242 million. We know that some of the sales in that period have not yet been recorded – estimated at approximately 3% – so we reduced our standard 35% discount between the asking price and the expected selling price to 32%. Thus, our expected total market size for the 2016 market is $165 million. In our analysis last year, we estimated the 2015 market at $233 million, so the market has declined by approximately 30%.

Litigation and IPRs: More Dangerous Than You Thought?

We analyzed all of the packages in our database to look at the use of the assets after receipt of the package by the broker. Because we used a better source of US litigation and inter partes review data this year, it makes it impossible to compare our results to our previous year’s analysis. Focusing on package-level analysis for packages received in the market years from 2012 to 2016, and looking for packages with at least one litigation or inter partes review as of October 2016, we found that the sold packages are litigated and inter partes reviewed to a greater degree than packages generally.

Patent Sales Rates Decreased in 2016, but Patent Market Remains Viable and Robust

Though patent sales rates have decreased in 2016, the patent market remains viable and robust. We continue to see a trend in the increased speed at which packages sell (over 50% are sold within four months) as well as an increased sales premium for packages with Evidence of Use (EOU) — a 27% price boost. 2016 also saw a rise in sales rates from larger patent packages; its highest sales rates were from packages with between 11 and 25 assets, an increase in package size from 2015, which counted its highest sales rates from packages with six to 10 assets.

2016 Patent Market Report: Patent Prices and Key Diligence Data

When comparing the per-asset price to the asking price for packages, we found that per-asset pricing is relatively constant in the pricing brackets from $250,000 to $2 million, with the low being $180,000 per asset and the high being $234,000 per asset (Figure 9). We observed a slight premium on asking prices in the $4 million to $10 million range – $323,000 – which was not seen in 2015. However, the $10 million to $20 million range per asset prices dropped significantly, from $356,000 to $257,000. Because of a limited number of packages in the $4 million-plus range, it can be challenging to draw firm asking price conclusions for those packages. However, it may be that sellers are becoming more reasonable; the outliers in the $4 million to $10 million range are being driven by smaller packages with many EOUs, as opposed to large undifferentiated packages. Price per asset continues to drop for packages below $250,000, indicating higher-risk or lower-value patents (eg, no infringement, recent priority dates or almost expired patents).

2016 Patent Market Report: Patent Brokers and Patent Packages

This is part 2 of a 6-part series on our 2016 Patent Market Report. To begin reading from the beginning please see 2016 Patent Market Report: An Overview. 2016 saw a significant rise in both the number of patent brokers and patent packages, with the latter mostly due to IAM Market packages. Though the frequency of package sizes is similar…

2016 Patent Market Report: Overview

After five years of analyzing and reporting on the patent market, the only constant appears to be change. Although asking prices have stabilized, sales are down, bringing the value of the brokered market down to $165 million from $233 million last year. However, the launch of both IAM Market and the Industry Patent Purchase Program (IP3) has introduced new buying opportunities. At the same time, the impact of negative patent decisions is becoming apparent as non-practicing entities (NPEs) pull back from the market. For the first time, purchases by corporations have exceeded NPE purchases. Even the biggest NPEs have been affected, with RPX succeeding Intellectual Ventures (IV) as the new buying leader. Further, the data shows that the US Supreme Court’s decision in Alice has crushed much of the nascent financial technology (fintech) patent market and affected software package sales rates. Finally, we received better litigation data this year and it appears that the litigation risk from sold patents is much higher than previously reported – you may want to reconsider your risk models and membership of defensive aggregators.