Companies are encouraged to consider monetizing their patent portfolio during the COVID 19 economic downturn – as Alex Reese, Ashleigh Nickerson, and Sarah Tsou recently outlined in IP Watchdog.
Patents can bolster corporate revenue in economic downturns
As the authors explain, for years many tech companies utilized large tech patent portfolios to enhance company value and fend off lawsuits. The authors argue that during these difficult economic times – when corporate avenues to revenue are challenged – monetizing dormant patent assets may create new avenues to revenue. The authors also cite recent US precedent creating a more favorable legal landscape for the monetization of IP – and recommend companies with large patent portfolios in computer, server, software, and other hardware related technologies – take action to monetize.
Recent legal precedents augur well for proactive patent strategies
New legal precedents have created a more favorable climate for the assertion of IP rights – including an American precedent which permits large judgements in litigation. These judgements are often funded by litigation funding providers – making access to this route simpler.
Favorable recent IP rights judgements
The authors identified a series of recent large awards in the hundreds of millions of dollars – primarily involving the holders of technology of IP asserting those rites against major corporations, including Wells Fargo, Apple, and Samsung.
Litigation funding playing a positive role
Litigation funding permits tech companies to assert IP for little to no cost. The litigation funder, in exchange for their support, receives a share of recoveries — permitting companies to “generate significant revenues from their otherwise dormant patent holdings for substantially less risk.”
Patent reviews more favorable to owners
The authors also cite shifting US federal law in favor of patent owners, particularly those related to computer and hardware-related inventions. Further, US federal review of patent infringement actions (the IPR review process) has in recent years been more favorable to patent holders. Where IPR’s were once a hurdle to patent owners, they are now less so – and this has had the effect of “easing the path for tech companies to assert and generate revenue from their patent portfolios.”
How to conduct a patent assertion program
To monetize a patent portfolio companies can:
- Create a list of high priority patents and organize them by subject, date and history of assertion or use. Some will be more vulnerable to legal challenges based on validity and damages. Early priority dates for the market are favored by counsel and funders – as is a successful history of commercialization, litigation, or licensing.
- Perform due diligence via analyzing initial infringement and invalidity. Determine their market impact and potential valuation. And identify potentially relevant witnesses and investors.
- Have counsel and funders help you validate the strength of a patent portfolio and provide insight into potential risks and strategic considerations.
Looking forward
Remember that economics and legal precedent now favor those who seek to monetize patent portfolios. Hence, it’s worth considering a proactive strategy.
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