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By Mike Wilczek
Nov. 17 — Patents and patent applications for connected cars, fiber optics, digital cameras and traffic data were among those sold through the brokered patent market during the third quarter of 2016, according to data provided to Bloomberg BNA.
The median asking price for all asset types, including U.S. and foreign patents and applications, fell during the quarter to about $108,000, compared with about $167,000 in the second quarter of the year, according to data from Richardson Oliver Law Group LLP, which advises companies that want to acquire patents and has visibility into much of the brokered market.
That market, a small portion of the overall market for patent sales between companies, can offer insights into broader trends. Brokers can help companies acquire patents in fields where competitors and likely legal adversaries operate, giving them defensive leverage against infringement claims.
The median asking price for U.S.-issued patents was $200,000 during the quarter, down from about $250,000 in the prior quarter. That is the lowest median asking price for U.S.-issued patents in the brokered market since the fourth quarter of 2015.
Patent holders made sales in the brokered market from 21 patent packages, containing 373 patent assets and 212 U.S. patents, during the quarter. That is down from the prior quarter, when patent holders made sales from 26 packages containing 631 patent assets and 432 U.S. patents. Patent assets include foreign and domestic patents and patent applications.
The ROL Group tracks the reassignment of patents from various listed packages to identify when a sale is executed. Because of a Patent and Trademark Office lag in recording reassignments, the ROL Group assumes that a package is sold if the PTO’s system shows any of the U.S. patents listed in it as reassigned.
Not all patents that brokers list end up being sold through them. In the third quarter, some of the patents listed with brokers were sold through the Industry Patent Purchase Program (IP3) a type of auction organized by Allied Security Trust for a coalition of buyers. Unlike brokered deals, which involve negotiated prices, the IP3 model is based on sellers offering patent packages at fixed prices, with no negotiations.
The program purchased 67 patents and applications, including 32 U.S. patents, which had originally been offered through brokers as five different packages. A total of 56 patents were purchased through the IP3 program for more than $5 million, AST announced in an Oct. 26 statement.
The median price of the IP3 purchases was $100,000, just $8,000 less than the median asking price in the brokered market. The average prices for brokered market purchases and IP3 purchases differed greatly. The average price for IP3 was $96,000, while the average asking price in the brokered market was $152,000 higher. However, there is no way of knowing how close sellers in the brokered market were able to get to their asking prices.
The IP3 companies, including Google Inc., Facebook Inc. and Microsoft Corp., participated as buyers in an effort to prevent patents from being used against IP3 members in litigation. According to AST, other companies involved in IP3 include Adobe, SAP, Ford and Honda.
Patent holders listed 2,855 patents and patent applications in 142 packages, including 1,730 U.S. patents, on the brokered market during the quarter. In the previous quarter, 2,749 total patents and patent applications in 214 packages were listed. Those packages contained 1,590 U.S.-issued patents.
Verizon Communications Inc. sold 49 patent assets, including 47 U.S.-issued patents related to fiber optics, that were listed on the broker market to one of its network suppliers, Ciena Corp.
Samsung’s Hanwha Techwin Co. sold 59 patents and applications, including 20 U.S. patents covering digital camera technology, to Intellectual Discovery, a Seoul, Korea-based non-practicing entity. Non-practicing entities buy patents to license for profit.
Microsoft Corp. picked up 12 U.S. patents and four U.S. applications for technology focused on gestural and movement tracking using time-of-flight camera technology from Edge 3 Technologies. Time-of-flight cameras use the speed of light to measure distances and are used in Light Detection And Ranging (Lidar). Lidar has applications in autonomous vehicles.
Some of the Edge 3 patents are specifically focused on automotive applications. Microsoft has been building an intellectual property portfolio around connected cars and offers licenses through Microsoft Technology Licensing. Edge 3 announced a licensing deal with Microsoft on other patents at the same time as the patent assets were reassigned at the PTO.
Defensive patent group purchases were also happening outside the IP3 program. RPX Corp purchased 15 assets, including five U.S. patents. The patents covered projectors and data collection.
Open Invention Network continued to pick up patents to protect the Linux community. The NETWORK, a patent non-aggression group, was assigned one U.S. patent from a package that was listed containing 49 total assets and 19 U.S. patents. Because of the PTO recording lag, it is not clear if Open Invention Network actually purchased the entire lot.
Apple Inc. purchased two patents from Crowd Sourced Traffic LLC covering collecting traffic data. The patents were asserted against Google’s Waze Inc. and TomTom Inc. Both lawsuits were initiated in November 2011 by the patent owner in the famously patentee-friendly U.S. District Court for the Eastern District of Texas. However, the cases were transferred by the court to other district courts and were voluntarily dismissed within a year.
—With assistance from Tommy Shen
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