A tough environment for patent deals highlights the need for transactions platforms like IAM Market

IAM published the results of its latest annual benchmarking survey this week. The findings indicate that while patent prices appear to have fallen compared to the previous year, demand from the buy side remains – setting the scene for an increasingly vibrant market in the months to come.

Conducted in February and March this year, the IAM annual benchmarking survey consisted of three different questionnaires, each tailored for one of three stakeholder groups: operating companies; non-practising entities (NPEs); and law firms and attorney firms. IAM received over 600 responses, primarily from individuals working in senior positions.

At first glance, the benchmarking results would appear to bear mixed news for those in the patent transactions business. In the previous year’s survey, 52% of operating company respondents stated that their organisations had bought patents over the preceding 12 months; this figure dropped to 32% for the 2016 survey. And while 40% of participants to the 2015 survey indicated that they had sold patents in the past year, just 27% said the same this time.

The downward trend appears to be reflected in asset pricing too. Compared to 31% last year, 48% of operating company respondents in 2016 say that patent prices have fallen further, with 71% of NPE participants in agreement. When asked for the reasons behind the slowdown in deals and the price drops, both operating company and NPE respondents highlighted the growing popularity of the new patent validity challenge procedures introduced in the United States by the 2011 America Invents Act – inter partes and covered business method reviews – as the key factor.

Nevertheless, it is clear that NPEs and operating companies alike still want to buy patents; and, interestingly, for the latter there appears to have been something of a shift in their motivations for doing so. Compared to 52% last year, just 38% of operating companies stated that their main reason for purchasing IP assets is to secure freedom to operate. Acquiring patents to explore opportunities for monetisation (19%), or simply to keep them out of the hands of competitors and NPEs (17%), are both increasingly popular deal drivers.

Moreover, on the sell side 48% of operating company respondents either agreed or strongly agreed that they are under increasing pressure from their senior management to monetise their patent portfolios, with a further 12% confirming that they have always been expected to seek out patent monetisation opportunities.

Taken together, this all seems to suggest that there is plenty of interest on both the buy and sell sides of the patent market. The major difference compared to a year ago is that it is now somewhat more difficult to get deals done, for a variety of reasons.

This is where a platform like IAM Market can make a real difference to your business. Instead of spending time and money on the legwork of deal making, IAM Market allows you to connect directly and rapidly to the right technologies and the right buyers and sellers, effectively cutting out the middlemen. We think it will make for a much more liquid patent and technology market – so if you are one of those corporate executives under pressure from management to make money from your patents, why not give IAM Market a try?

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