Patent market positivity reflected in IAM’s latest annual benchmarking survey

IAM has just published the findings of its 2017 benchmarking survey. According to the results, the patent market remains at a low ebb – but IP professionals are beginning to see the emergence of green shoots.

Respondents to the previous edition of IAM’s benchmarking survey generally reported a patent market that was experiencing substantial price depression, with scant demand for assets on the buy side. The significant factor in all this was the delayed effect of the US Supreme Court’s Alice decision – which was widely viewed as having obliterated the value if software-related patents – coupled with rampant patent invalidations at the US Patent and Trademark Office and a feeling of a general anti-IP tendency in the wider political landscape.

But it would appear that the US market is far from down and out. In fact, the findings of this year’s survey suggest that many senior executives in IP-owning operating companies, their counterparts in non-practising entities (NPEs) and their private practice advisers are again turning Stateside in search of the jurisdiction that will give them the most value – and the best RoI – on their IP assets.

IAM conducted its benchmarking survey over six weeks in February and March this year. Three demographics from across its entire readership were targeted with bespoke questionnaires – senior IP executives in operating companies, NPE personnel and legal professionals in private practice. Over 800 responses were received.

IAM subscribers can view the survey results in full here, but what follows is a quick summary of some of the most pertinent findings for IAM Market users.

  • 34% of operating company respondents report that their organisation has been purchasing patents this year, compared to 32% last year.
  • Last year, 48% of operating company respondents stated that prices had fallen; this year, 36% are reporting further falls, with 51% of NPEs saying the same (compared to 71% in 2016).
  • According to both operating company and NPE respondents, the three major contributing factors to these low prices, in order of importance, are:
    • the inter partes review system in the United States;
    • the US Supreme Court’s Alice decision; and
    • a greater availability of patents on the transactions market.
  • Nevertheless, operating companies and NPEs alike see US-issued patents as being the most valuable assets in their portfolios. Operating companies rate UK and Korean patents as the next most important, while NPEs go for German and Korean.
  • When it comes to IP licensing, 8% of operating company respondents say that royalty rates have fallen, compared to 16% last year. However, the number reporting that royalty rates have risen has also decreased – and that from an already low percentage (4% in 2016 to 2% in 2017).
  • Fewer operating company respondents say they are seeking licensing opportunities outside the United States this year (9%, compared to last year’s 13%). The decline on the NPE side has been even more dramatic: 30% told IAM last year that looking beyond the United States was part of their licensing strategy, falling to 17% this year. This might be explained by uncertainty over the Unified Patent Court and Brexit, or a lack of resources that is making it more difficult to enter overseas markets.

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