INSIGHTS

Would you buy a second hand patent from this IP agent?

3.2.2017

IPR Business Manager Tuomas Matila writes about how to make the most of your patent portfolio.

Exploiting intellectual property rights is often seen as utilizing your own patents, trademarks and other IP assets to support your business, or as a separate source of income. Yet, it often happens that your own patent portfolio does not support your business after all, and your patents are just collecting dust. The patent portfolio needs to be useful to its owner, just like a car.

Quality

In principle, selling and buying patents is simple – just like selling or buying cars. Valuation may also be simple, based on negotiations between a seller  and a buyer. In the case of cars, the prices of cars of the same model and of the same year of manufacture may vary a lot. A badly wrecked car may be worth its re-usable parts, but on the other hand, a well-maintained car of low mileage may be worth tens of thousands of euros.

The values of patents are even higher. A patent, even if granted and valid, may be worthless if nobody infringes it or if an infringement is impossible to prove. On the other hand, a single patent may be worth hundreds of millions of euros.

Timing

The price of one and the same car is definitely different in a situation when a potential buyer is asking for it from a family about to leave for a skiing vacation, the car being fully packed with a ski box on the roof and the family sitting buckled up in their seats, compared to a situation when the car is useless, for example due to moving abroad.

Similarly, a company currently involved in a patent litigation hardly sells a patent that is used in the litigation, but might be willing to buy new patents to help in the situation. Also, a company heading to a new market area or launching a new product might be willing to acquire patents to support their business activities.

Benefit

For a person wanting to buy a suitable car, the web pages of different brands provide sophisticated tools for looking for a suitable car to meet one's own needs. The needs may change in different situations in life. With the growth of the family, a two-seat sports car is no longer the best alternative, and a family wagon beings to seem a good choice. When the children grow up and move out, the time would be right for the sports car again – or even for a small electric car. For transportation of goods, a truck is often clearly the best alternative, but it is useless if the owner does not have a truck driver's licence. It may then be worthwhile to sell the truck to a person with a truck driver's licence.

Patents, like other intellectual property rights, are negative rights. Now, if for example a private person possesses an excellent patent which is infringed by a huge multinational company, it is more than challenging to utilize the negative right of the patent. In such a case, the patent could be sold to a party that could utilize it and sue said company, or said company might want to buy the patent to avoid the risk of infringement and to protect its own products from pirates.

Business plans, products, services may have been changed over the years, or for example the technology choices have turned out to be different from those originally envisaged. In such a case, too, it is important to understand one's own portfolio. If, however, the patents apply to competitors' products or services, they may have defensive value in avoiding infringement litigation. On the other hand, if no value is found, it may be worthwhile to consider even the trimming of the portfolio by non-payment of the annuity fees. Before the trimming, however, it is in the owner's interest to think over if the portfolio had value to someone else – even to a competitor. With the money earned from a sale or saved by non-payment of annuities it is possible to acquire a patent portfolio which supports the business better.

Summa summarum

 

The author works as our IPR Business Manager and is a great fan of patents and VW Beetles.

Berggren 80 years of IP experience

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