What causes operating companies to sell their patents? Our intuition tells us that patent sales take place when the seller is in financial distress or the company is underperforming. We wanted to test whether the data aligned with our intuition.
“When Do Operating Companies Sell Their Patents?” Richardson et. al. IPWatchdog (August 2016), available here.
What causes operating companies to sell their patents? Our intuition tells us that patent sales take place when the seller is in financial distress or the company is underperforming. We asked ourselves whether data aligned with our intuition.
We looked at transaction data for sales from corporations. We studied the financial condition of 20 companies across 41 transactions over the last 6 years (post 2008 financial crisis) and looked for correlations between a company’s financial health and the sale of patents. We used sales from corporations to NPEs as a proxy for all corporate patent sales. In the analysis, we found that 78% of large patent sales (>= 10 patents transferred) occurred when the companies were underperforming the QQQ ETF (an exchange-traded fund based on the Nasdaq-100 Index, which was used as a proxy for the market). Further, including the smaller transactions (4-9 patents transferred), the overall share of transactions that occurred when the companies were underperforming the QQQ ETF was 71%.
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You can sell your patents for a cash infusion. If you have a patent portfolio, you may want to consider selling your patents to meet your cash needs. We analyze the steps to selling your patents, including developing the sales package and finding the right price.
“The Non-Dilutive Cash Injection: Selling Your Patents.” Richardson et. al. WSGR Bulletin (July 2009), available here.