Posts Tagged: "patent pricing"

In any market, pricing is where the rubber meets the road. As a buyer, you will not be taken seriously if you significantly underbid, yet you want to get a fair price. Conversely, if you are a seller who will not negotiate near the market price, it will be almost impossible to close a deal. We understand that patents are definitionally unique, have varying relative strengths and market applicability, and also that the demand for patents varies by technology area and many other factors. But when it comes down to it, you have to have a place to start. This is where average pricing statistics become useful. And to every seller who says: “My patents aren’t average, so average pricing should not apply to me,” we respond by saying: “We’ll accept that as true, you just have to show us why.” In the vast majority of cases, starting with the average price and moving up or down from there is an effective way to set a price for buyers and sellers. In 2018, the average price per asset shifted significantly: it fell by 30%, from $176,000 per asset to $123,000. The asking price per U.S.-issued patent also dropped by 30% from $251,000 to $176,000. If you are a seller and these were the only facts you had, it would look like it’s time to panic. But this is not the whole story. The drop was primarily due to an adjustment in the asking price for single-asset packages. For most package sizes, the asking price did not change at all. Figure 8 shows the asking prices per asset across packages of different sizes. In the 2017 market, there was a massive premium on single-asset packages. In 2018, the price for single-asset packages dropped by 56% and came more in line with the pricing for other package sizes. This drop in single-asset prices accounts for 48% of the overall drop in per-asset prices. The asking price in the 26-50 asset range also dropped significantly, while the price for 6-10 asset packages went up.

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).