The secondary market in patents hit its lowest value in years over the course of 2016, though it remained robust with operating companies emerging as the keenest buyers, according to research from California-based IP strategy and law firm ROL Group.
The study focused on patents offered for sale on the open market by brokers, so did not take into account any patents transacted privately between parties. This was the fifth year in which ROL Group has performed its analysis; a full report can be read in Issue 81 of IAM magazine, here.
Among ROL Group’s key findings regarding the 2016 brokered market were the following:
- The overall value of the brokered patent market dipped to $165 million, from $233 million in 2015. This is explained by the lower number of sales that took place.
- However, the market appears to remain viable. Asking prices have stabilised as compared to previous years, which saw dramatic drops in sales package values.
- The arrival of new players on the scene has transformed the landscape in terms of available buying opportunities. These include the launch of IAM Market (see below), as well as the Allied Security Trust-led IP3 patent purchasing programme.
- Decisions handed by US courts, including Supreme Court jurisprudence, have had a palpable effect sales activity. Non-practising entities (NPEs), previously dominant in on the buy side, have fallen behind operating companies for the first time since ROL Group began its annual analysis.
- Even the largest NPEs have been hit: for the first time since ROL Group began conducting its research five years ago, Intellectual Ventures was displaced as the brokered market’s top buyer, with defensive aggregator RPX taking its place.
- There was a significantly higher percentage of single-asset packages on the market in 2016 than 2015, when they had dropped-off nearly 30% year-on-year. Most of these were accounted for by IAM Market, however; excluding it from the data, single-asset packages fell overall.
- The average number of assets per package in the 2016 market year to was 14.87, down from 15.34 in 2015 – largely due to the situation explained above. Nevertheless, the overall market appears to focus on smaller packages because they are more marketable.
The table below shows asking prices in the 2016 market:
|
Asking price $ |
Top and bottom five data points from each set removed |
|
|
|
Per asset |
Per US-issued patent |
|
Average |
$197,320 |
$271,440 |
|
Median |
$150,000 |
$192,500 |
|
Minimum |
$16,670 |
$36,110 |
|
Maximum |
$750,000 |
$1 million |
|
Standard deviation |
$177,400 |
$217,530 |
|
Numerical data |
431 |
416 |
This is what ROL Group had to say about IAM Market’s impact:
IAM Market opened for business in October 2015 and, surprisingly, now comprises 25% of all packages in our open market data. It functions as a platform for companies to list their patents and technologies for license or sale and is positioned not only to list patents for sale, but also to showcase which sellers are currently selling.
Through May 2016, IAM Market listed 194 packages, with 3,724 assets, from 17 sellers, representing 25% of all packages. One note of caution is that the packages have a much wider range of supporting materials than what we usually see from brokers. IAM Market is relatively new and arguably the patents are listed for different purposes from those found on the brokered patent market.
ROL Group is itself an IAM Market vendor; you can view its currently offered packages here.