US patent sales jump, with Samsung, InterDigital and Fortress among those leading the way

IAM    Richard Lloyd     7 January 2019

The latest quarterly patent deals data from Allied Security Trust (AST) shows that activity was back up in the third quarter last year after a slump in Q2.

Overall, 256 transactions closed between the end of June and the start of October. These involved 3,977 assets, 243 unique sellers and 229 unique buyers. In terms of number of assets that’s almost double the volume of Q2 when 2,176 patents changed hands.

Among the top buyers were InterDigital, which completed its acquisition of Technicolor’s patent business, and Samsung, which acquired 469 assets across five deals including two big transactions with Japan Display/Panasonic and Toshiba. Fortress also picked up a large portfolio of 626 assets from Uniloc and has since started to assert them against a broad range of tech businesses.

As AST CEO Russell W Binns Jr points out below, the increase in transactions puts activity in Q3 above the average from the last couple of years and means that, overall, the 2018 deal pipeline looks to be broadly in line with 2016 and 2017

Although Samsung was one of the big buyers, overall NPEs fuelled much of the purchasing activity. Binns suggests this might point to growing confidence among licensing businesses that their ability to monetise patents is on the rise.

Top sellers by numbers of assets

Rank Seller Seller type Deals Assets Industry category (see below for full list of categories)
1 Technicolor PE 1 988 Elec (1)
2 Uniloc NPE 1 626 Comm (1)
3 Japan Display; Panasonic PE 2 261 Elec (1), Semic (1)
4 AT&T PE 3 188 SW (3)
5 Toshiba PE 1 173 Semic (1)
6 Philips PE 2 133 Elec (1), Med (1)
7 Intellectual Ventures NPE 4 128 Elec (1), Semic (1), SW (2)
8 Seiko PE 1 87 Elec (1)
9 Quarterhill NPE 1 84 WL (1)
10 AMD PE 1 62 Semic (1)
  Others   239 1,247 Mixed
  • Practising entities (PEs) reduced their selling this quarter – only 68% of transferred assets came from them. This makes sense given the corresponding increase in non-practising entities’ (NPEs) selling. Nearly 79% of the total assets exchanged were related to four industries: communications (1,434), electronics (797), semiconductors (600) and software (323).
  • Key question: although there were a handful of larger NPE sales, will NPEs continue to increase their buying of assets from both individuals and PEs?
  • Worth noting: Multiple individuals sold 77 assets in 35 deals. Buyers include 15 PEs, 15 NPEs, two defensive consolidators (DC), and two individuals.

Top sellers by number of deals

Rank Seller Seller type Deals Assets Industry category
1 Intellectual Ventures NPE 4 128 Elec (1), Semic (1), SW (2)
2 AT&T PE 3 188 SW (3)
3 Foxconn PE 3 25 Elec (2), Semic (1)
4 Japan Display; Panasonic PE 2 261 Elec (1), Semic (1)
5 Philips PE 2 133 Elec (1), Med (1)
6 Intellectual Discovery NPE 2 34 Auto (1), SW (1)
7 Hewlett Packard PE 2 13 SW (2)
8 University of Arkansas Univ 2 4 Med (2)
9 Daimler PE 2 2 Auto (1), Ind (1)
10 Technicolor PE 1 988 Elec (1)
  Others   233 2,201 Mixed
  • In Q3 143 PE sellers were involved in 151 deals. Twenty-six NPE sellers (including DCs) completed 30 deals. Intellectual Ventures led the pack with four deals involving 128 assets
  • Key question: How much will IV continue to sell and in what areas, and how many of those patents will end up in litigation—especially as IV has recently signed a deal with Dominion Harbor to help monetise its patents?

Worth noting

  • Since Q1 of 2016 IV (36 deals involving 3,166 assets) and Panasonic (33 deals involving 1,447 assets) have been on the list of top sellers.
  • In Q3, IV sold assets to four different NPEs: San Carlos Apache Tribe (33 assets), American Patents LLC (35 assets), IP Valuation Partners (32 assets), and BCS Software LLC (23 assets).
  • Foxconn sold its assets to Velos Media (13 assets), Longhorn IP (nine assets), and DWP Energy Solutions (three assets).
  • NPE sellers sold assets to 10 NPEs in 13 deals, one DC in two deals, one broker in one deal, and one government entity in one deal.

Top buyers by number of assets

Rank Buyer Buyer type Deals Assets Industry category
1 InterDigital NPE 1 988 Elec (1)
2 Fortress (SoftBank) NPE 1 626 Comm (1)
3 Samsung PE 5 469 Elec (1), Semic (4)
4 Prosper Technology LLC NPE 1 158 SW (1)
5 Xiaomi PE 1 132 Elec (1)
6 Dominion Harbor NPE 3 122 Semic (1), SW (1), WL (1)
7 RPX DC 5 110 Elec (2), SW (3)
8 Advanced Interconnect Systems NPE 1 87 Elec (1)
9 Innovative Foundry Technologies LLC NPE 1 62 Semic (1)
10 Sisvel NPE 2 56 WL (2)
  Others   235 1,167 Mixed

Top buyers by number of deals

Rank Buyer Buyer type Deals Assets Industry category
1 Samsung PE 5 469 Elec (1), Semic (4)
2 RPX DC 5 110 Elec (2), SW (3)
3 IP Edge LLC NPE 4 11 Comm (1), Semic (1), SW (2)
4 Dominion Harbor NPE 3 122 Semic (1), SW (1), WL (1)
5 IP Valuation Partners NPE 3 42 Elec (2), SW (1)
6 2S Ventures NPE 3 12 Cons (1), SW (2)
7 Blackbird Tech NPE 3 12 Auto (1), SW (1), WL (1)
8 Sisvel NPE 2 56 WL (2)
9 Velos Media NPE 2 30 Elec (1), Semic (1)
10 Value Innovation Partners PE 2 29 Comm (1), WL (1)
  Others   224 3,084 Mixed

Assets and deals by industry category

Rank Industry category Deals Assets
1 Software 55 323
2 Electronics 46 797
3 Industrial 43 227
4 Medical 42 166
5 Semiconductor 17 600
6 Communication 13 1,434
7 Automotive 12 21
8 Wireless 11 218
9 Consumer goods 9 88
10 Lighting 7 22
11 Computing 1 81
  • Since Q4 of 2015, software assets have accounted for the highest number of deals by industry. In Q3 of 2018, 21% of deals, involving 8% of total assets, were software-related. Electronics deals were second with 18% of all deals, involving 20% of all assets.
  • Communication technologies (36%) and electronic technologies (20%) topped the list for number of assets exchanged in this quarter’s deals. The number of communication deals increased from six last quarter to 13 this quarter.
  • Key questions: have concerns about the validity of software patents dissipated and, in turn, are buyers feeling more confident about purchasing these patents? If they are, will we see an increase in the value of software patents?
  • Out of the top 25 deals, based on the number of assets, the top industry categories were semiconductor (7), software (6), and electronics (6).

Commentary from AST CEO Russell W. Binns Jr

Since the beginning of 2017, quarterly transactions have undergone more dramatic and concentrated swings than in the past. After a well‐below‐average number of transactions in Q2 of 2018, in Q3 transactions swung back above the average mean of the past few years. With that increase, 2018 deal activity is on par with 2017 and 2016—well above 2015 and before. In brief, the third quarter saw 256 new patent sale deals, involving 3,977 assets, 243 unique sellers, and 229 unique buyers. A few things stand out:

  •  The increase in activity has been accompanied by an increase in the number of NPEs functioning in the market—and an increase in their buying. This trend may suggest increased confidence by NPEs that they can monetise their patents.
  •  Software patents continue to dominate transactions, which may indicate more assertion risk in that area, and possible price increases in the future if the legal landscape continues to become more predictable around software.
  •  There was a significant increase in the number of practising entities , which lead both buying and selling. This could demonstrate increased reliance on growth of the secondary market.

Richard Lloyd

Author | Editor

rlloyd@GlobeBMG.com