Patent Portfolios as Securities
Villanova University Charles Widger School of Law
September 19, 2013
Duke Law Journal, Vol. 63, p. 89, 2013
Villanova Law/Public Policy Research Paper No. 2013-3022
Companies of all types are buying, selling, and licensing patents — not just one patent, but many patents bundled into large portfolios. A primary problem with these transactions is that the market is illiquid: parties cannot identify holders of relevant portfolios, they cannot agree on the value of the portfolio, and the specter of litigation taints every negotiation.
This article presents a new way to improve market formation and integrity by proposing that patent portfolios be treated as securities. If patent portfolio transactions are treated like stock transactions, sellers steering clear of fraud laws may be forced to disclose information about patent value. This has some unexpected benefits for curbing high-volume demand letter type patent assertions.
Furthermore, patent transactions previously consummated in “dark markets” might now be traded in public clearinghouses. Ultimately, parties openly transacting will develop objective pricing methodologies that reduce the costs of negotiation and decrease the leverage portfolio holders exert on potential licensees.
Number of Pages in PDF File: 66
Keywords: patents, aggregation, securities, trolls, PAEs, royalty stacking, licensing
Date posted: March 3, 2013 ; Last revised: January 1, 2015