Blackbird, Dominion Harbor, Acacia, and Harfang IP say the market is hot for patent acquisitions and that litigation opportunities could soon emerge in Europe
By Patrick Wingrove
March 03 2022
Non-practising entities including Dominion Harbor, Blackbird Technologies, Acacia Research and Harfang IP are once again gearing up for a busy year of deal-making.
Like last year, they’re looking to take advantage of a hot patent acquisition market to build larger and stronger portfolios and spawn lucrative licensing or litigation gains. According to some sources, patent buying is even more important than last year because of an increase in litigation funding opportunities.
But perhaps unlike in previous years, these NPEs are also taking a closer look at jurisdictions outside the US – namely Europe, which will soon include an amalgamated jurisdiction for patent matters in the form of its emerging Unified Patent Court (UPC) and unitary patent system.
“The UPC is very interesting, and we’ve certainly been keeping our eyes open and watching developments there,” says Wendy Verlander, CEO of Blackbird Technologies and managing partner of Verlander LLP in Boston.
“We have been very focused on monetisation in the US, but having a centralised system like the UPC really opens up possibilities.”
UPC appeal
For a long time, it looked like the UPC and unitary patent project might never come off.
The plan, intended to harmonise patent prosecution and litigation across most of the EU, was held up by Brexit and successive constitutional complaints in Germany’s Federal Constitutional Court for about four years.
But recently it was announced that the UPC had entered its final preparatory phase, meaning that the court could open by the end of the year.
NPE counsel tell Managing IP that the court’s establishment could create some attractive opportunities for them in Europe.
Marc Booth, chief intellectual property officer at Acacia in California, says his company hasn’t litigated much on the continent in the past, partly because of the difficulty of managing cases between different countries with different rules. The NPE’s last case there ended in 2019.
But the UPC’s one-stop-shop offering would make Europe a much easier place to litigate, he says.
“We’re definitely keeping the UPC in mind because we have a very large standard essential patent portfolio that could very well require us to litigate in several venues, with Europe being the second choice outside the US.
“It’s a little bit of wait and see in terms of when we start to use the new system, however. I suspect it’s inevitable that we’ll go there but we might not want to be the first to jump in.”
Christian Dubuc, president of Harfang IP in Ottawa – who doesn’t currently have any cases pending in Europe – agrees that it is still a case of wait and see for the UPC, but adds that the court offers a lot of potential for his business.
“We’ve been planning for the UPC for a few years already – it’s been coming for a while and I hope that it’s the real thing now,” he says. “The court is definitely something of great interest to us, though, because it would give us another way to litigate in a market comparable to China or the US.
“Europe, mainly Germany, was already interesting for us – but by themselves the European nations were very small markets compared to the US. The UPC would make patent litigation in Europe much more enticing by combining most of them,” he adds.
SEP questions
Dubuc says the next step for him once the UPC is established is to work out how the court treats SEP litigation.
“There are still a lot of unknowns there, including on where these cases will be held. My understanding is that wireless tech and SEPs will be handled by a court in Paris – and if that’s the case, we won’t now how cases will be handled.”
The UPC Agreement doesn’t explicitly address whether the court has jurisdiction to decide on fair, reasonable and non-discriminatory issues, although it’s expected that it will deal with these when they are presented in defence of infringement actions.
David Pridham, CEO of Dominion Harbor in Dallas, agrees that it will be important to find out how the court operates.
“I’m cautiously optimistic but I’m not fully up to speed on how the court will proceed on infringement and validity issues or SEP matters. But streamlining processes across Europe will reduce costs, and that’s good.”
Pridham adds that his firm has started to prepare for the effect that the UPC could have on licensing practices in Europe, noting that Dominion rarely litigates in the US and has never done so in Europe. He says he suspects the UPC will help patent owners with their licensing efforts.
“In that regard, we’re certainly watching what is happening there,” he notes.
Buoyant market
The creation of the UPC and unitary patent would make patent acquisition more attractive in Europe, Pridham adds, but he points out that such acquisitions may not happen in a big way until the new system is tried and tested.
In the meantime, NPEs are looking to take advantage of a market filled with high-quality patents. Pridham says his firm bought a large portfolio of Wi-Fi patents that originated with Sony and Panasonic late last year, which made him very optimistic for 2022.
“We hadn’t seen anything that good on the market in several years. That gave us some optimism for other high-quality patent portfolios.
“It seems like there’s more on the market now than there was a year ago. More large companies are stepping forward to sell their patents.”
He adds that such patents will continue to come onto the market this year as companies look to enhance their revenues.
Those firms, Pridham notes, used to turn to patent licensing to buttress their revenues, but are finding it more difficult than before because of the way these patents tether to operating companies and the results of cross-licensing.
“Rather than just having those assets sitting on the balance sheet and not yielding a return, companies are selling some of their non-core patents to increase cashflow,” he says.
Sellers step up
Booth at Acacia agrees, adding that companies are looking to supplement their revenues amid the continuing uncertainty of the COVID pandemic and have become much more receptive to selling patents.
He adds that even larger and more well-established companies that weren’t well known for selling patents have started jumping on board.
“I’ve seen a lot more deals available recently than in the past few years,” he says. “Last year was good for patent buying and this year will be more of the same.”
It’s just as well for NPEs looking to take advantage of the increase in litigation funding opportunities, with Dubuc at Harfang IP saying there is more pressure on the acquisition market this year as a result of the increase in litigation funding available.
All in all, it seems NPEs have a lot to look forward to in 2022: scores of lucrative patents on offer and litigation opportunities at the UPC – if they use it, of course.