… Activity in final quarter of 2023 was proportionally small, given the size of the assets class
We have to thank mostly Big Tech, which has lobbied extensively for years to water down patent rights.
BY LOUIS CARBONNEAU
Each quarter, defensive aggregator Allied Security Trust, which represents roughly 50 large operating companies, issues a report summarizing patent transaction activities and trends. Here is the “Reader’s Digest version.”
(Full disclosure: Tangible IP has been retained by AST for the past three years to assist it in divesting patents acquired through its IP3 program.)
AST analyzed more than 27,997 United States Patent and Trademark Office assignments involving 84,343 U.S. assets with 810 sale assignments, recorded from October 1, 2023, to December 31, 2023. In the final quarter of 2023, the USPTO recorded 467 patent transactions involving 1,900 assets, with 460 sellers and 439 buyers participating.
Despite the significant economic challenges and geopolitical tensions throughout 2023, the year concluded on a positive note with an increase in patent transactions. This upturn in activity within the patent secondary market coincided with a growing interest among companies to invest in research and development, particularly in the technology sector.
Three key trends revealed:
- 17 percent of transacted assets were bought by non-practicing entities or NPEs (people or businesses owning a patent but with no intention of developing it).
- 33 percent of NPE buyers are first-time buyers.
- 20 percent of assets were related to the Semiconductor segment, protecting the invention of new computer memory chips.
This data tell(s) us two things.
First, while the patent market is not dead (yeah!), it is still embryonic when you consider the size of the assets class (well over 100 million patents in circulation).
Any market where such a small percentage of assets each year change hands with such a large inventory means there is a serious issue with the asset class itself, for there is no shortage of sellers. For this we have to thank mostly Big Tech, which has lobbied extensively for years to water down patent rights.
Second, the above numbers are quite at the opposite end of what brokers see in general: i.e., most sales being made to NPEs. This means that direct sales tend to be primarily between operating companies, while brokered sales cater more to the NPE buyers’ pool.
HUAWEI UNDAUNTED: Although Chinese communications equipment giant Huawei has not been allowed to sell products in the United States and a few other countries since November 2022 due to national security concerns, it has become very adept at leveraging its vast IP portfolio around the world.
Yet again it demonstrated its prowess when the company entered into two consecutive IP licensing deals with Amazon and Vivo, respectively, on the heels of similar deals with Xiaomi and Oppo. Huawei has now become one of the most active—and successful—patent licensors worldwide, joining the likes of Nokia and Ericsson.
TIMES BITES APPLE: I commented extensively a couple of months ago on how Apple has pushed predatory patent infringement to an art. We saw to what level it used every play in the book to get away from an unfavorable International Trade Commission decision in the Massimo case.
The New York Times—not one to spend too much attention on IP matters—recently wrote an article displaying how aggressively Apple is lobbying politicians of all azimuths (during an election year to boot) in order to undo some of the damages and force the ITC to rewrite some of its rules.
After all, this approach worked with the Patent Trial and Appeal Board and the U.S. courts, and Apple is working with the European Union officials on standard-essential patent rules. So why not?
If there is anyone left with illusions that money alone doesn’t drive these important policy decisions, I have a bridge in Baltimore to sell you.
UPC AFTER 9 MONTHS: YES! I have commented often on how the recently opened Unified Patent Court is becoming a game changer in terms of where patent holders will assert their cases against infringers. But it also redefines how innovators need to think strategically about where they file patents going forward.
The law firm Allen & Overy recently published a very useful article summarizing the main aspects of UPC activity after 9 months, which is
worth reading.
I quote: “It is also clear after nine months of operation that, despite some initial skepticism (no doubt caused by the decade of planning and ‘false starts’ in relation to the UPC), the Court has been enthusiastically welcomed and widely adopted by litigants. This is reflected in the statistics—as of February 2024, the court has seen more than 210 cases filed, including more than 80 infringement actions and 25 independent revocation actions.
“It is also noticeable that emergency relief has been widely applied for, with more than 20 applications in seven months. Furthermore, more than 100 decisions have already been issued, a clear signal that the Court is working and working quickly.”
POTENTIAL IMPACT ON PATENT CASE VENUES: Those who have followed the tribulations of Judge Alan Albright in the Western District of Texas are familiar with the tactic of “random assignment,” which ensures one specific judge who sits alone in a division is not guaranteed to hear a given case.
This happened recently in a case—not related to IP at all—that was highly publicized and led the Judicial Conference in the United States to announce that in certain types of cases, judge assignments would be done randomly going forward.
It will be interesting to see how this new rule affects judge assignments in other districts that have seen a high concentration of patent cases filed. In the Western District of Texas, the random assignment initiated in 2022 resulted in Judge Albright’s share of cases dwindling from 23.4 percent of all patent cases nationally to 6.6 percent in 2023.