Patent monetization

Patent monetization refers to the generation of revenue or the attempt to generate revenue by a person or company by selling or licensing the patents it owns. According to a 2006 survey of patent owners at the European Patent Office, about half of small and medium-sized enterprises (SMEs) take patents for monetary reasons.[1]

Some of these owners try to make money from patents on inventions they develop, manufacture or market. Others attempt to generate revenue by buying and enforcing patents against one or more alleged infringers in a manner considered by the target or observers as unduly aggressive or opportunistic, often with no intention to further develop, manufacture or market the patented invention. The latter group is pejoratively called patent trolls by their critics.

History

Texas Instruments is believed to be the first company to monetize in the 1990s its portfolio of patents[2] (more than 38,000 in total[3]) when the company was losing market share to competitors.[4]

After the Texas Instruments example, IBM was another company who used the same technique in the 1990s to monetize its own patents to make more than $1 billion annually in revenue.[2]

Microsoft use its patents to make deals with the major Android vendors, which amount to more than 70% of Android's market share.[5]

Eastman Kodak is an example of a struggling company which use its patents portfolio to make additional revenue. For example, it is said that Kodaks' licensing programs have generated more than $3 billion in revenue since 2004.[2]

Nokia generated €500 million from patents in 2013.[6][7]

See also

References

  1. ↑ de Rassenfosse, Gaetan (2012). "How SMEs exploit their intellectual property assets: Evidence from survey data". Small Business Economics. 39 (2): 437–452. doi:10.1007/s11187-010-9313-4. Working paper on SSRN
  2. 1 2 3 "Kodak in Crisis Mines Patents for Cash Copying Texas Instruments". Texas Instruments. 2012-01-13. Retrieved 2012-01-15. Texas Instruments, the second-largest U.S. chipmaker, wrote the template decades ago on techniques to exploit patent holdings when a company is struggling, said Joseph Siino, who runs patent-consulting firm Ovidian Group. Losing market share to competitors, Texas Instruments used an aggressive litigation strategy that extracted royalties from those using the Dallas- based company’s technology without permission, he said.
  3. ↑ "TI Fact Sheet". Texas Instruments. Retrieved 2012-01-15.
  4. ↑ "How Texas Instruments Transformed the Eastern District of Texas". www.law.com. 2011-10-26. Retrieved 2012-01-15. For the answer, rewind to the early 1990s. That's when Texas Instruments devised a money-making litigation strategy intended to ensure customers renewed their licensing agreements with the Dallas-based tech company or face a patent infringement suit(...). "Truthfully, TI is the one that really discovered the Eastern District and took advantage of it," says Carl Roth, who was a patent lawyer for TI during the 1990s. "TI, which was very aggressive in those days at enforcing their patent portfolio, ended up loving the Eastern District and filed 25 or 30 suits during the 1990s in the Eastern District"
  5. ↑ "Microsoft, LG Strike Android Patent Deal". InformationWeek. 2012-01-12. Retrieved 2012-01-15. Microsoft said the deal with LG means that 70% of Android-based smartphones sold in the U.S. are now covered by its licensing program
  6. ↑ "Nokia Unlocks Significant Value With Microsoft Deal". Forbes. 9/05/2013. Retrieved 27 December 2013. patent business.. is healthy and has been consistently generating cash flows of around Euro 500 million annually Check date values in: |date= (help)
  7. ↑ "Nokia Earnings: NSN And Patents Drive Value". NASDAQ. October 28, 2013. Retrieved 27 December 2013. At the current run rate, Nokia's IP licensing arm generates about 500 million Euros in steady royalty income every year.
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