The Intellectual Property strategy that you have in place should have your best commercial interests in mind. It would be unwise to add patents to your portfolio just to add it to your repertoire. Most companies want to know where to invest using their R&D budgets. Many of them are on tenterhooks about buying patents because they wonder if it will become a burden in the future.
In this article, we are going to learn patent buying strategies that businesses can use to get ahead in their industry.
Patent buying strategies:
Think of patent pools as a partnership of at least two companies who have agreed to cross-license patents. The pooled patents are made available to the licensees and the licensing fees are shared among the parties based on each patent’s value.
Many industries will cease to function without patent pools since the risk involved would be too high and reduces the need to negotiate with other patent holders. For example, the automobile industry shares patents to standardize components.
- Target companies that have filed bankruptcy:
The difficult business circumstances caused by Covid-19 has made multiple organizations file for bankruptcy. This presents a hotbed of opportunities for those who want to purchase assets at reduced costs, including intellectual property. You can get a heavy discount for patents, especially with companies that have filed bankruptcy.
In the communications field, the bankrupt Nortel Networks sold their portion of patents to Sony, Microsoft, Apple and Research in Motion for $4.5 billion. Google was also fiercely fighting to get a piece of Nortel’s patent tranche. If Google had won the bid, they would have been able to protect Android from various patent infringement claims.
There are many inventors who work alone or with a small team, and are not part of a business entity. These inventors are looking for someone to purchase or at least license their patents. It is also a chance for businesses to get patents at a reasonable price since the inventors know that their invention has a sell-by date. Businesses should always be on the lookout for investors who keep filing patents in their niche.
Universities spend a significant amount of money on their research and are always on the lookout for either buyers or funders. More often than not, universities are ignored when businesses are on the lookout to buy patents. The patent filing rate in universities has increased of late, and they are also aggressively looking out to license their inventions. If you are looking to acquire patents from a particular niche, we would advise you to contact the universities and take a look at the research that is being done.
- Defensive Patent Aggregation (DPA):
Purchasing patents or patent rights just to keep them off the hands of companies that would use them against operating companies is called defensive patent aggregation. Companies have to often defend themselves against claims of patent infringement, and sometimes, they must purchase patents in technologies which they use or develop.
The opposite of DPA is called Offensive Patent Aggregation (OPA). In this, the patents are purchased in order to assert them against companies which would use the inventions protected by these patents and to provide licenses to get licensing fees or royalties.
It is the practice of licensing patents where they could use them royalty-free. The only condition is that the adopters create improvements under the same terms. Also called a copyleft-style patent license, it seeks “continuous growth of a universally accessible technology commons” from which everyone will benefit.
The idea of such an open patent ecosystem is practiced by a group of research-oriented companies. It is worth noting that most of the businesses that follow this strategy are usually biological patents.
Licensing a patent or any form of intellectual property where the patent owner threatens litigation for patent infringement if the company does not take a license from them. The opposite of this is called carrot licensing where there is a friendly approach to adopt their invention to take a license. An example of carrot licensing would be universities that approach businesses to license or buy their patents.
The reason behind diversification is to reduce your risks to market conditions. The same goes for your patents as well, but it is not only to minimize the risks, but also to expand your research.
Seattle-based retail giant Amazon is an example of a conglomerate that has a diversified patent portfolio. In 2010, they had less than 1,000 active patents, but by 2019, they had more than 10,000 of them. Their patent portfolio encompasses a wide array of technologies- cloud computing, machine learning, drones, retail, robotics- you name it. The reason why Amazon is aggressively diversifying its portfolio is because it gives them the leverage to enter any field that they want to.
In April 2016, Yahoo transferred more than 3,000 of its current and pending patents to a new subsidiary called Excalibur. It was created exclusively to auction these patents. While the executives at Yahoo vehemently denied that it was a fire sale, nothing could be farther from the truth.
What is a fire sale? It is the sale of goods at extremely discounted prices. Another example of a patent fire sale was Kodak selling off its patents for $527 million. It was estimated that their entire patent portfolio was valued anywhere between $2 and $3 billion. Google, Amazon, HTC, Facebook, Huawei, Apple and Samsung were able to buy it at such a discounted price because Kodak was forced to sell them to avoid bankruptcy. While you would not come across a fire sale often, you might get lucky if you closely monitor the conversations in your industry.
Patents can do a world of good for your business if you have the right patent strategy in place. The patent buying strategy that you employ should be in accordance with your company’s unique goals. Having patents can have a huge impact on how your potential customers and partners view you.
If you are looking for help with any patent portfolio analysis or any other end-to-end intellectual property services, ResearchWire is the right partner for you. We are one of the world’s leading technology and intellectual property companies and offer assistance during each stage of the patent lifecycle. Get in touch with us to get an idea of how we can transform your IP strategy.