ManagingIP
Blackbird, Dominion Harbor, Acacia, Endpoint IP and Harfang IP share their goals for a pandemic-wrought 2021, including buying up cheap divested patents
By Patrick Wingrove
January 28 2021
With vaccines providing hope of a reprieve from the pandemic, non-practising entities including Dominion Harbor, Blackbird Technologies, Acacia Research, Harfang IP and Endpoint IP are gearing up for the year ahead with new revenue-generating strategies.
Speaking to Managing IP, these NPEs say they suspect the lingering effects of COVID will be both a help and a hindrance in their goals to buy more patents and monetise them – along with the intellectual property in their legacy portfolios – through licensing or litigation.
Some say they plan to take advantage of recovering economic conditions by acquiring patents that businesses have divested to save money, in order to help them build larger and more robust portfolios that will spawn lucrative licensing or litigation gains.
COVID changes
David Pridham, CEO of the Dominion Harbor Group in Dallas, says a lot more patents have been put on the market this year because of COVID.
These rights are also considerably cheaper than they might have been a few years ago, he says, because their values have been depressed by Supreme Court decisions, such as Alice v CLS Bank, and the unpredictability of the district courts in patent cases, among other things.
“We’re seeing a lot more patents on the market than there were a few months ago and I think that trend is going to continue,” he says. “It’s a good market for us to be buying in, which is exactly what we’re doing.”
Other sources say they are planning to start or continue filing cases in the District Court for the Western District of Texas – a favourite forum for NPEs last year – and the District Court for the Eastern District of Texas, partly because of their resilience to the effects of COVID.
They note that while the pandemic-induced trial backlog has slowed the progress of cases in certain courts to an unfavourable degree, the Western District of Texas and Eastern District of Texas did a good job moving matters along by holding numerous hearings and conferences via video.
Judges in these districts mostly only stopped cases short at jury trials, which were restricted by social distancing rules for most of last year.
“We’ve been lucky on the litigation front because the eastern and western districts of Texas pretty much held up,” says Marc Booth, chief IP officer at Acacia Research in California. “The litigation we had scheduled for this year really hasn’t slipped very much at all. I hope that continues.
“It’s difficult to tell whether the slowness of cases we have in other venues, slower ones such as Delaware, has been caused by the pandemic or the fact that the court just moves so gradually,” he adds.
Beyond those two COVID-affected strategies, a couple of NPE leaders are planning to ramp up licensing efforts that have showed promise over the past year.
Buy low, license high
Booth at Acacia agrees with Pridham at Dominion Harbor that there are excellent opportunities for patent acquisitions this year, although he cannot be certain that the new dump of IP onto the market is a result of COVID.
“Whatever the reason, there is quite a bit more available, especially from large companies,” he says. “There are some tech patents out there and we’ve also seen IP in areas such as automotive and industrial manufacturing.
“We’ve seen a lot of activity from Asian companies – Japanese firms, in particular, seem to want to divest their portfolios.”
Not everyone expects this divesting trend to last long into 2021, however. Jonathan Szarzynski, CEO at Endpoint IP in Dallas, says his business benefitted from acquisitions that were probably motivated by the pandemic over the past six months.
But he suspects that this flow of new patents onto the market could dry up as the effects of COVID lessen, people start to go out more and more companies begin to recover.
“I’m not counting on this level of divesting activity to remain for much longer as we get back to normal,” he says.
NPEs looking to buy high-tech patents might be less in luck. Christian Dubuc, president of Harfang IP in Ottawa and who previously held senior roles at Longhorn IP and Acacia, says there have been fewer high-tech registrations on the market.
He notes that this scarcity is partly a result of high-tech companies profiting from mass remote working and increased reliance on touchless payment systems and online ordering solutions. Companies tend not to shed patents when they’re doing well, he adds.
But Dubuc points out that whatever the COVID-related situation, there has been a steady improvement in the patent acquisition market over the past few years because more and more companies are opening up to monetising their IP assets. He intends to take advantage of this situation again this year.
Texas holds ’em
Most of the NPEs Managing IP spoke to said they plan to file cases in the western and eastern districts of Texas (particularly the former) this year to take advantage of the speed and risk mitigation those venues offer, on top of the reasonable guarantee they make that cases will be advanced until trial.
Wendy Verlander, CEO at Blackbird Technologies in Boston, says she filed one case in the western court last year and intends to file more there.
“There’s a reason why the Western District of Texas has become so popular,” she says. “Judge Albright’s procedures and abilities have really made his court a good venue for both plaintiffs and defendants.
“I really don’t think it’s an NPE thing. A lot of people harp on about that, but the procedures are fair for both sides.”
Booth at Acacia says that he also likes the Western District of Texas as a venue and will probably file cases there this year. “It’s not in the tech giants’ backyards and it’s fair in how it treats plaintiffs and defendants.”
NPEs also told Managing IP that despite the trial backlog holding up cases – and partly because of the speed of proceedings in Texas – they don’t plan to file fewer matters or to try to get speedier resolutions by asking for bench trials or mediation.
Verlander says she might consider bench trials if the problems of the past year keep occurring, but that she prefers jury trials. Szarzynski at Endpoint adds that he is happy to wait for things to get back to normal, partly because he files most of his cases in Texas.
Booth says he isn’t considering bench trials or mediation in lieu of jury trials, but adds that he is exploring soft licensing as a means to get results faster. Instead of jumping straight to litigation in all matters, Acacia has started approaching some companies in good faith to agree licences first.
“We’ve had a reasonable amount of success with that practice,” he says. “But it’s usually a tougher process and it can be hard to get people to the table – it’s practically impossible when it comes to the tech giants.
“But lots of major companies are willing to negotiate. Plus, the process of licensing can be done faster and at a fraction of the cost of litigation.”
The COVID shutdown will hold up trials for at least a few months more (and probably longer), but it seems NPEs are happy to wait so long as courts continue to proactively manage cases.
And with lots of new patents on the market and the Texas courts ready to steam through trials once social distancing restrictions are relaxed, it’s all but certain that these NPEs will file as many – if not more – cases this year.