$96,000: the average price for a patent package under the Allied Security Trust-led IP3 purchase scheme

Defensive aggregator Allied Security Trust has released data on its Industry Patent Purchase (IP3) patent-buying programme, which closed earlier this year. The figures give a useful insight into current asking prices for patents covering a range of technologies and markets.

Twenty-one companies – including Adobe, Cisco, Facebook, Ford, Google, Honda, Hyundai, IBM, Microsoft, SAP and Verizon – teamed up with AST to launch IP3 back in May this year. The stated aim was to “simplify sellers’ access to the secondary market by eliminating the common hassles associated with it, such as hiring experts to prepare evidence of use of the invention or hiring lawyers to instigate litigation”.

Like Google’s 2015 Patent Purchase Promotion, on which it was modelled, IP3’s primary objective seemed to be to acquire patents – particularly from SMEs and lone inventors – that could prove problematic to its operating company backers farther down the line should they end up being transferred to NPEs or other businesses that would seek to assert them.

Between May 25 and June 10 2016, patent holders could visit an AST-operated online portal to identify assets they would like to sell and indicating their price expectations. Following this submission period, AST reviewed the offered packages and, for those that it and its members and partners were interested in, contacted vendors by the end of July. All transactions were completed by the end of September.

The results announced this week reveal that AST and its IP3 partners reviewed 1,378 patent packages submitted by over 434 rights holders. Of these, they made 56 purchases comprising 107 in-force assets including:

  • 86 US-issued patents;
  • 17 US patent applications;
  • two UK patents;
  • one French patent; and
  • one German patent.

The purchase prices for these ranged from $10,000 to $325,000. In terms of the technological areas the purchased patents covered, the breakdown was as follows (using AST’s technology categories):

  • 13 deals in Automotive – mean price $130,000, median price $100,000;
  • 31 deals in Communication – mean $110,967, median $100,000;
  • 43 deals in Computers/Software – mean $94,825, median $75,000;
  • 23 deals in Consumer Electronics – mean $96,848, median $75,000;
  • two deals in Financial Services – mean $158,745, median $158,745;
  • one deal in Healthcare/Medical – mean $175,000, median $175,000; and
  • five deals in Semiconductor/Components/Lighting – mean $130,000, median $100,000.

In total, the mean price across all 56 deals was $96,071; and the median price was $75,000. In general, these final purchase prices were largely reflective of prospective sellers’ expectations when they submitted their patents, though they did come in lower – across 1,175 reviewed packages, sellers’ mean expected price was $152,593 (median $100,000).

A search of the US Patent and Trademark Office Assignments database appears to show that the majority of sellers to IP3 were individual patent holders or obscure companies. Perhaps the most well-known vendor is South Korean sovereign patent fund Intellectual Discovery, which records indicate as having sold four patents via IP3, including three that were formerly assigned to scheme member IBM.

Another note of interest is that over half (52%) of total submissions came from brokers, with the rest coming directly from patent-holding companies and individuals. However, 64% of the packages that ended up being purchased by AST and its IP3 partners came from the latter group, with only 36% from brokers. According to AST, around 85% of the submissions it receives on a day-to-day basis (ie, outside of the IP3 programme) are offered by brokers.

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