Wednesday, July 18, 2018

Love, Richardson, Oliver, and Costa on Brokered Patents

Brian J. Love, Kent Richardson, Erik Oliver, and Michael Costa have published a paper titled An Empirical Look at the “Brokered” Market for Patents, 83 Mo. L. Rev. 359.  Here is the abstract: 
We studied five years of data on patents listed and sold in the quasi-public “brokered” market. Our data covers almost 39,000 assets, an estimated eighty percent of all patents and applications offered for sale by patent brokers between 2012 and 2016. We provide statistics on the size and composition of the brokered market, including the types of buyers and sellers who participate in the market, the types of patents listed and sold on the market, and how market conditions have changed over time. We conclude with an analysis of what our data can tell us about how to accurately value technology, the costs and benefits of patent monetization, and the brokered market’s ability to measure the impact of changes to patent law.
The following observations relevant to damages can be found in the paper's Part V:  Analysis, at p.404:
First, our data strongly suggests that the brokered market for patents is primarily, and perhaps almost exclusively, a market for the transfer of potential legal liability, not a market for the transfer of technology. . . .
One important consequence of this conclusion is that prevailing prices in the brokered market may be of limited use for purposes of calculating damages in patent suits. While courts and commentators alike have called for the increased use of evidence derived from the market for “real world” patent transactions, . . . we are not convinced that data from the brokered market is a panacea for concerns about damages calculations. If we are correct that prices in the brokered market largely reflect buyers’ and sellers’ estimates of the litigation value of available assets, then brokered market data falls prey to the same “circularity” concerns that a long list of commentators has raised against undue reliance on prior license agreements. . . . True technology transfer, it would appear, remains hidden from public view even more so than the brokered market for “bare” patent transactions.

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