Patent Acquisitions… in 60 seconds
A patent is generally a tool that allows you to protect your inventions, technologies and products from other people. Patents are valuable assets and are being transacted in the secondary market.
Why are companies acquiring patents? There are two main categories:
Defensive purposes – When companies are acquiring patents for “defensive” reasons, it means they want to protect their products from market competitors or other kinds of predators from imitating, or even worse, suing them for their activity. These could be either existing products that the company is currently selling or products that they are intending to sell in the future. And there is more to this, a patent is a “location based” protection which means that if you’re holding a US patent that you believe covers your product or technology and you want to start selling this product in China, you are not covered there yet and you may want to consider purchasing patents in this new territory you desire to enter in order to allow yourself the “freedom to operate” in this new location. So, when you purchase a patent for defensive reasons, it means you want to protect your company from potential intellectual property hazards you think may arrive sooner or later. In many cases, these will be operating companies or patent aggregators that are acquiring patents in order to protect their members from infringement lawsuits. For example, more and more young companies understand that when they are entering into a dense market or a new territory, it is not always enough to just file for new patents in order to protect themselves, but are actually also allocating a specific budget for the purpose of acquiring existing patents.
Offensive purposes – Buying patents for offensive purpose generally means you want to “use” the IP rights in court against other parties. There are a variety of reasons why a company would be seeking to use a patent in court against another company, a very common scenario is that an NPE (non-practicing entity) or what’s often called a “patent troll” will acquire patents as a part of their business model in order to sue/assert these patents against someone else they believe is infringing these patents. This of course, for financial purposes. Another scenario could be that two companies are involved in, or are expected to be involved in, a patent litigation and have a need to equip themselves with patents that could potentially be used against their opponent. A very famous example of this is the patent war in the last years between Apple and Samsung. There have recently been some significant impacts related to this kind of activity in the US market that have affected the ability to enforce patents (especially software related patents) against others.
How do you decide what patents to buy?
There are a lot of parameters that need to be considered when you acquire patents. The first question should be: what’s the purpose of the acquisition? Then, depending on the areas of technology you’re interested in, you have to identify assets that are within your specific technology scope and review different aspects of the patents like the claims and priority dates in order to ensure that they’re aligned with the strategic goals you are looking to achieve. And lastly - you have to make sure that the patents you’re considering to purchase could be actually available for sale.