In demand: The popularity of patent purchasing

Barney Dixon

In demand: The popularity of patent purchasing

Celebrating its 10-year anniversary this year, Allied Security Trust plans to build its patent acquisition business even more. CEO Russell Binns explains.

IPProPatents: Congratulations on AST’s 10-year anniversary. How far do you think
you’ve come in 10 years? What are your plans for the next decade?

Russell Binns: I think we’ve come quite a way. Our business model is more efficient
for today’s marketplace. There wasn’t much of a brokered market for
patents in the past. Now, there’s a very robust marketplace with a lot of
liquidity in patents, which I expect will only continue to grow alongside
even more transparency in the future.

In the next 10 years, we’re aiming to maintain the same business
model, which focuses on catch and release. We will focus on risk
mitigation for our members through strategic patent acquisitions and
sales subject to licences. That’s really going to be the primary focus
for Allied Security Trust (AST) going forward. We expect slow but
steady growth of our membership and to conduct more transactions
each year.

How would you describe the current state of the patent market
globally? Are you seeing any specific trends?

Globally, I think prices are at the bottom, so I see the market going
upwards. It’s very much a buyers market at the moment, but I see the
pendulum swinging the other way, especially globally.

The proposed Unified Patent Court in Europe will add extra value to
European assets. As for China, I see those assets becoming more
valuable too. Globally, we are going to see the value of patents go up.

What sort of patent deals are taking place in China, where innovation and
applications are on the rise? What sort of technology is being targeted?

We’re not seeing a lot yet, but we’re gearing up for it. There are some
legal hurdles in China with respect to who can buy and sell patents
there, but I think we’re going to start seeing, in the not too distant
future, more Chinese patents being sold. We are already seeing
enforcement actions in China starting to ramp up, with parties having
better opportunities as plaintiffs in China. I think that’s going to lead to
more patent sales across a lot of different technologies.

Communications and telecommunications are likely to be the big
starting place because there’s a real abundance of those types of
patents in China already.

How much of a say do your members have in the direction of AST?

Our members have all the say. We have about 30 member companies
and they make up our board of directors. We’re a member-driven
organisation that is built on a not-for-profit foundation. We have no
outside investors, so it’s solely the members that direct AST. It’s
extremely member-driven and we are very transparent with that.

What is the IP3 programme, and how well did it go?

We started our IP3 programme last summer. IP3 was a fixed price
purchasing programme where sellers gave a ‘buy it now’ price for their
assets, and in return for no negotiation and a fixed price, we received a
quick decision on whether to acquire those assets or not. It takes a lot
of the risk off the table, in a very streamlined and efficient way.

We did 55 transactions in a three-month period. That was quite
significant. We saw a lot of demand from both buyers and sellers
on the programme and requests to do it again, so that’s why we’re
working to integrate it into our business.

We’re looking into a new version of IP3 coming up later this year. We’re
still working on it, but, from a seller’s perspective, it will be very similar.

What was the goal of the IP3 programme?

Our goals were to take a lot of assets off the market at reasonable
prices. It was a pre-funded programme and we used all of the money,
and there were still assets that we weren’t able to acquire.

In that respect, it was a success, because it attracted more quality
assets than we could actually purchase with the money we had.
I think going forward, we’ll focus on different technologies on a
rotation basis, mostly in the high-technology space.