Things are looking up.

Spending 2 days with the IP and Investment leaders in NYC this week at the IP Dealmakers Forum, highlighted for me 3 key take-aways of IP licensing in today’s business environment: Optimism, Geography, Bargains.

1) Optimism

Despite the doom and gloom the past two years, most of the discussion was centered around the discussion of a (slightly) improving marketplace – with even a flat marketplace being something to be happy with. Although nowhere near market highs of past years, BRG Capstone provided an interesting chart asking if a price rebound was a real indicator of a more optimistic market.

#IPDF15. Michael dansky. BRG-capstone’s chart with patent sale price chart. pic.twitter.com/R9eR1vEm8v

— Julia at Chipworks (@Julia_Elvidge) December 7, 2015

Solid first day of presentations at the IP Dealmakers Forum in NYC. Consensus that outlook more positive than 1 year ago. #IPDF15 — Louis Carbonneau (@louiscarbonneau) December 7, 2015

While this gives brokers and sellers something to be happy about, on a complimentary note, the pure licence based companies still are moving to hedge their bets by diversifying. Gene Quinn summarizes Edward Jung’s keynote, noting how diversification is helping offset some of the challenges of the past.

 

US makes it harder for innovation, companies must diversify to Europe, China @IPDealmakers @ipwatchdog – https://t.co/BA8SiL1vTG

— Gene Quinn (@ipwatchdog) December 8, 2015

3rd panel of the day @IPDealmakers Forum looking at new IP businesses ie moving beyond traditional monetisation. Big trend right now #IPDF15 — IAM (@IAM_magazine) December 7, 2015

One interesting point I heard was Brian Hinman from Royal Philips, where he noted that even inside the Philips IP group they diversify as well via investments in startups and other portfolios:

 

Investments in startups and portfolios to monetize or protect our products – it is part of our p&l that has paid dividends – Hinman #IPDF15

— Peter Cowan (@noremacc) December 8, 2015

But just because it’s looking up doesn’t mean it’s still easy. The one point mentioned several times is how for small investors, lenience entities, or single patent sales / enforcement, the market challenges still hasn’t changed for them.

#IPDF15 small portfolio companies will need to diversify to grow. Helps deliver results more evenly for the investor – Skippen, WiLan — Peter Cowan (@noremacc) December 7, 2015

Single inventors are in a tough spot. The buying market is marginally optimistic (but numerocity is important) – Spandenberg #IPDF15

— Peter Cowan (@noremacc) December 7, 2015

2) Geography Perhaps part of the optimism is the shift to Europe and China to supplement the US. And while the US legal environment is smoothing out, it is still to unpredictable to make large IP investments and bank on a return. With a reduced time to decision, Germany seems to still be the venue of choice with the predictability of process trumping the potentially lower returns.

#IPDF15 Croxall – $30-40M IP settlements still possible in U.S. and in Europe (Germany in particular). $150M+ settlements are not. — Julia at Chipworks (@Julia_Elvidge) December 7, 2015

Dollars may be lower in Europe damages but predictability and time is better – Hartstein. Injunctions as well – Croxall #IPDF15

— Peter Cowan (@noremacc) December 7, 2015

It was interesting to note that even in broad geographies like Europe, a focus on some specific countries still dominates like Germany. But to simply to consider German as your EU strategy – and to do so without a quality patent – isn’t enough the bigger global picture still needs considered.

Decision with injunction in Germany is not the whole picture, you need cash to file the bond + an international playbook – Dietrich #IPDF15 — Peter Cowan (@noremacc) December 8, 2015

#IPDF15. Yann Dietrich- German courts -you really be serious and prepared. You could be thrown out quickly if you have a weak case.

— Julia at Chipworks (@Julia_Elvidge) December 8, 2015

It’s not patent unfriendly, it’s just you need a good patent and case now (admittedly harder for SMEs) – Donegan @EverEdgeUK #IPDF15 — Peter Cowan (@noremacc) December 8, 2015

Even within Asia Pacific there are countries of note, with South Korea and Japan leading the play, with Singapore looking to be the IP hub via government incentives.

The current “temperature” of global IP markets #IPDF15 from global experts pic.twitter.com/Qdw2nAbnGK

— Prediqtus (@Prediqtus) December 8, 2015

In short it’s still a global business that needs managed with topics like tax structures, enforcement, bond requirements, and injunctions to consider:

Tax structures also drive ip filings in certain countries (Luxembourg, Ireland) not just innovation centres – Donegan @EverEdgeUK #IPDF15 — Peter Cowan (@noremacc) December 8, 2015

3) Bargains

Discussions around the conference seemed to indicate prices seemed to be at the point where it was low, and although it may drop a little more it was low enough to start to re-invest in purchasing – particularly for those that had the backing to buy and hold.

Think we’re at bottom with #patent mkt and now is good time to start investing cautiously. – Ashley Keller GKC #IPDF15

— IP Dealmakers Forum (@IPDealmakers) December 7, 2015

A few people indicated that investing outside of the traditional US only IP marketplace was done and the global portfolio was a necessity. BRG Capstone noted investing in Chinese patents was one thing to seriously consider.

Interesting point from Michael Dansky of BRG Capstone @IPDealmakers – If I had money and a lot of time I’d invest in Chinese patents #IPDF15 — IAM (@IAM_magazine) December 7, 2015

Keynote speaker Ed Jung of IV – Average cost per asset peaked in 2007 now at lowest it’s ever been in the history of IV buying IP #IPDF15

— IAM (@IAM_magazine) December 7, 2015

#IPDF15. Edward Jung, IV. Chart of his version of patent acquisition costs per asset over time. pic.twitter.com/Sx8tdIGwIW — Julia at Chipworks (@Julia_Elvidge) December 7, 2015

Wrapup: As usual, the industry is constantly changing and it is those that are adapting quickly are seeing the financial benefits. Having a licensing program for any venture requires a key team to search out and execute on opportunities, and with new geographical opportunities and IP assets seemingly at the bottom (for now), there are deals to be made.

This month it happened again – meeting with a company about defining their patent strategy, only for them to discover their filing and prosecution strategy was the same as it was 5 years ago when they started.  Unfortunately for them the seemingly vast changes in law, license environments, and competitive space have left them with little relevant IP to use going forward… and a hefty legal bill to show for it.  There is an inherent risk associated with filing patents – the process is longer than it takes to get some products to market, and is tremendously costly.  This issue becomes compounded for most companies as they are too small to have their own IP group, so it becomes an outsourced action to counsel, managed by a VP or R&D leader, a line item checked in quarterly meetings saying “patents are underway”.

But what are the IP leaders doing? How are they positioning for success?

Innovation as the new IP

While the majority of organizations continue to plow onwards, perhaps only adjusting the patent budget line item as needed, a few companies seem to be tackling the change head on.  And much like a canary in the coal mine scenario, some of the first moves for change can be see in the professional NPE or Innovation firms.  For example, companies like Patent Utility – formed to remove the friction of licensing in the market – has pivoted to Haystack IQ which is linking innovation and IP together for clients.  ipCreate, an innovation on demand firm (also heavily linked with IP in the executive team) is also growing,  announcing a major fundraising effort earlier this year. Last month IAM Magazine reported that publicly traded NPEs Vringo and WiLAN have also hinted at becoming more involved in product development, and R&D activities, as has Marathon following its merger with Uniloc. It is not a coincidence that those heavily involved in IP are pushing for a greater link to tangible new innovations as part of their growth (or survival) strategy.

A change in thinking

It is becoming clear that the IP professionals are seeing future of IP tightly linked to innovation programs.  As first movers they will be spending a tremendous amount of time focusing to get ahead, while traditional R&D firms doing innovation will be left well behind with their old IP strategies. So this begs the question – are R&D based companies, who are centered around innovation for survival as well, updating their IP plans to be aligned with the IP professionals path?

There is a new fight within innovation emerging and the only thing that is clear is this: It is time for Innovation + IP strategy reboot.

In the past month I came across 3 articles of interest and insight  – worth reading when you have the time:

• Industry report – Billion dollar start-ups: do unicorns like patents?(By IAM Magazine & Aistemos) – Do soon to be unicorn startups file IP? Linked-in discussion here.
• Just-in-time patents and the development of standards (by Byeongwoo Kang and Rudi Bekkers) – Want to know when companies file patents on Standards so you should be too? Hint: 7 days both sides of the Standards Meeting.  It is an academic paper behind a paywall but the working paper is here.
• Lack of Focus on IP Strategy Destroys $100 Millions in Value (by Jackie Hutter) – Who owns your IP strategy? No assigned ownership could cost you down the road.

If you have others to add, please let me know and I will post them as well.

Last month I came across 4 articles of interest and insight  – worth reading when you have the time:

• Jawbone vs. Fitbit: the Opening Salvo in the Fitness Band Patent War? (by Tony Trippe) – Details around the IP of personal fitness bands for two of the leading players. A leading indicator of the IP wars to come? (with some additional insight by Forbes)
• How Startup Patent Filing is Different (by Jackie Hutter) –  Balancing customer validation with new filings is critical.
  
• Patent values are hit by uncertainty; operating co buying overtakes NPE (by Bruce Berman) – instability is the new status quo?
• Deliberate Success: Developing a Winning Patent Prosecution Strategy (By Gene Quinn) – IP is expensive, so use strategies that are known to work.

If you have others to add, please let me know and I will post them as well.