Top tips on packaging patents for sale revealed in IAM Market’s first webinar

IAM Market was pleased to broadcast its first-ever webinar last week. The session – which was hosted by IAM editor Joff Wild and Kent Richardson, partner at Silicon Valley’s Richardson Oliver Law Group (ROL) – was brimming with high-level insights on how best to prepare your patents for sale.

Richardson is no stranger to the world of patent transactions. Starting out as a private practice lawyer, he later became general counsel at Numerical Technologies and vice president of intellectual property at Rambus, before moving to defence-focused patent fund Constellation Capital and then starting ROL in early 2009.

In addition to advising patent owners on selling their assets, for the past five years he and colleagues Erik Oliver and Michael Costa have published an annual overview of the brokered patent market for IAM. “We started to track asking prices of all patents on the market,” he told webinar attendees. “We’re tracking about $11 billion in private and public or quasi-public deals.” That includes $7.2 billion-worth of brokered patent packages plus a further $3.7 billion-worth of non-brokered packages – although the latter, by their very nature, are more difficult to derive information on, likely meaning that the vast majority are not accounted for in this figure. Since 2011 they have tracked over 3,600 discrete packages comprising over 87,000 patent assets, with 108 diverse technology categories represented including LEDs, social networking and automotive engineering, to name but a few.

As Richardson pointed out, this data demonstrates just how important it is for would-be sellers to make their patents stand out in this crowded market if they are to have any hope of closing a deal. The opacity of the patent market and the fact that the biggest buyers review somewhere in the region of 1,000 packages each year – around five per working day – mean that it is paramount to provide them with all of the information they need, and to present it in a clear and concise way. “One of the bigger buyers that I talk to, his take was ‘If I don't like this package, another one will come along tomorrow’,” said Richardson. “You should assume buyers don't have the time to think about any of the kind of subtleties in your package. Your value drivers have to be clear and upfront.”

The key, Richardson suggested, is to create a sales package that lists the patents for sale, outlines the applicable product or service markets and gives a detailed infringement analysis including claim charts and evidence of use (EoU) or indications of use, and background on the seller. Further information that may be relevant might include asking prices, bid dates and details on license-back provisions and specific encumbrances on the portfolio.

A few other tips from Richardson:

  • ROL research suggests that you are 41% more likely to sell your portfolio if you include EoU with your package. “These are really big numbers, and really impact your ability to close a patent sale and also to price your patents.”
  • An ROL study of over 1,000 EoUs from the past five years found that Apple, Google, Microsoft and Samsung were the most cited companies, while smartphones, social media, wearables and data storage were among the most cited technologies. “Clearly, positioning your patents for sale such that their EoUs are targeted at small markets, like less than $100 million, isn’t a good idea. Targeting large markets that are more valuable, the companies most likely to be in a [patent] fight today, are the companies that are most likely to be buyers.”
  • Be prepared to give prospective buyers as much information as you can, but be mindful. “Are you burying the buyer with too much information, or are you providing them the right level of information? Providing 50 pages of technical info isn’t going to be that helpful”.
  • Despite its common use as an indicator of patent value, citation and ranking analysis of patents is not that important for most buyers, though it certainly doesn’t hurt to include it in the package. “Unless its extraordinary, most people don't pay much attention to it.”
  • Buyers will appreciate details of licences and other encumbrances on the patents, since not all of these will be recorded at patent offices.
  • Remember to include your contact details! “You’d be surprised at the information that is forgotten.”

Close to 200 people attended the webinar, hailing from a range of backgrounds including operating companies, universities and research institutions, NPEs, brokers, law firms and other service providers. For those of you that missed out – or if you attend but want to listen again – a recording of the session is available here. You can also find the slide deck that accompanied the presentation here.


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