Last Will Be My First...My Look Ahead to 2019
by: Tom Hochstatter, President
I had ever good intention to make this my last post for 2018 but the holidays won out over my earnestness. Nonetheless, onward. I’m not much for the year in review, or retrospectives, the looking back stuff. I hope that I and Techson have kept you sufficiently up to speed with what has transpired, in real time, over the course of the year, and took note of the things to keep watch and learned from or ignored the rest.
So, what I’d like to do here early in 2019, is look to the future and what I think are the top stories and trends for 2019 and the places Techson will be actively placing its bets. Nothing like putting one’s money where their mouth is.
(New) Patent Investment Capital
It is coming (and quite a bit of it is already here). Patents will be a more mainstream asset class investing vehicle - not just litigation financing, but straight-up patent investment funding. We couch this as “Alternative Asset Investing - with uncorrelated returns to the broader equities markets”. It is and will be a great hedge to the public markets’ volatility. Here’s a billion places to start watching:
· iPEL announced another $100M commitment to China patent buying/licensing
· Bentham announces $500M new fund with “Upsize Potential to $1 Billion”
· Fortress/Softbank bellied up for $400M “patent troll” fund in May
I know of half a dozen other groups looking to enter the patent investment space here in 2019 with a willingness to deploy large amounts of capital. I can only imagine that that number has exploded after the December to (not) Remember in the public markets. There is now tons of idle capital sitting out the early parts of 2019 so why not pursue it and get it deployed in patents – especially in light of my next one to watch…
Huge Patent Portfolios for Sale
Large patent holders are desperate to monetize – we’ll see dozens of (very) large portfolio transactions here in 2019 and many dozens more offered for sale. They are coming from both previously active patent sellers and net new sellers just entering the market. The move is away from the contingency future splits model; sellers are looking for cash up front. The news is that this model allows for a considerable discount, which again serves the patent investor community well. We hope to be a part of a few of them (hint). Here is a sample of some big moves in 2018:
· Panasonic sells 3,450 patents to Dominion Harbor
· Microsoft sort of gave up and went the way of LOT and OIN with a vast portion of their patents
· IBM, like Motel 6, will leave the light on for you, or wait until you file an IPO
China, China, China
There I said it…three times because in the time it took me to write this blog it’s been said at least 1,000 times more in the IP press. It will dominate the headlines – and it looks like Qualcomm v Apple is already set to take first position while the establishment of the Chinese Appellate Court sits comfortably in second right now. Who’s on third? Trade Wars and Tariffs? (No, “Who’s on first” …”I Don’t Know is on third…” - sorry couldn’t resist).
Unfortunately, the wet blanket is the ridiculous “trade war” and the now concerns over being detained in China as a Western Co. Executive. The US State Department has issued stern warning wrt China travel and the Huawei executive detained/arrested isn’t helping either. I’ve heard of a number of IP executives cancel or postpone planned trips to China for IP-specific opportunities. It’s a lose/lose folks, but the machine will grind on.
Big Data Will Hit
None of the blockchain, machine learning, and artificial intelligence will hit widely in 2019 despite the (modest) headlines and loud rhetoric. There are advances being made, but for those of us in the patent research, monetization, and investment sectors, the data aspects of patents are firmly stuck in the stone ages compared to other modern data intensive industries. There are many other baby steps that must be taken to get us out and into the latest century, and we’re not Superman able to leap large decades of neglect in a single bound.
The irony is not lost on us that patent data is by-and-large free, public record, and widely available around the world. Dozens of firms have been at the patent data aggregation game for decades and the data and access to it still sucks. Period! But! With the wave of new investment will come a demand for better “Bloomberg Terminal”-type tools to satisfy the most discerning of investors and therefore the rest of us too.
NPL is critical to us in the industry and it needs to be made more freely available (at least cheaper) in an effort to further strengthen patent quality. If I can find the prior art during prosecution, the then ‘bad” patent application never grants in the first instance and the Unified Patents of the world may have to create a new business model.
· Blockchain – a bunch of noise, while firmly useful to the global commerce/currency side of the world, we have found no good use for it in patents (so far) and/or legal tech.
· USPTO released a bevy of RFIs asking (maybe begging) for new technology to help its examiners become more efficient, increase patent quality and overall success. Heed the call techies and help (or stop complaining about PAIR being down or your patents taking 3+ years to issue.
· Reed Elsevier, in an open battle with UC Berkeley among others, is under pressure to release the paywall krakens and change the way non-patent literature is made available to all of us.
· Techson’s own Limestone, will hit later this quarter and disrupt the patent research industry for the good. (Sorry to shill for this, but it’s true; you’ll see).
That’s all I’ve got for now. I’ll try to provide a quarterly update to my pontifications and see what my batting average is/was since my last post. I’m taking the over… If there is any retrospective in me, then I guess I’ll go all softy on y’all and thank you, the IP community – readers, clients, strategic partners, and most of all my team here at Techson. We are a passionate bunch with so much on our agenda for 2019, I/we can’t wait to get started.