Investing in IP: Buying in Bulk?

Purchasing patents assets in bulk is a common practice in the patent brokering market.  When buying in bulk, the typical due diligence involves analyzing the patents by title and abstract, to get a sense for the overall technology space.  The sheer volume of patents, however, may necessitate a prohibitive number of hours regarding conducting a substantive claim-scope, validity, and enforceability analysis for each asset.

There are pros and cons to purchasing patents in bulk.  If you are a company and your patent portfolio is small and slowly growing, a bulk purchase of 100 or even 1000 patent assets can significantly increase your numbers; sometimes there is strength in numbers and that alone can enhance your company’s credibility.

But while the increase in numbers may have showcase value, a bulk purchase may not be profitable for you.  For example, if you purchase 500 patent assets but none of them have claims that read on relevant markets or industries, then the patents will likely have zero potential for monetization (e.g., through a licensing campaign).  Further, the bulk purchase will certainly create liability for you in the future, because you will need to pay maintenance fees to the government to keep them active and enforceable.  The more patents you purchase, then the greater burden these maintenance fees become.

If you are looking to earn a financial return on your patent assets, avoid purchasing assets in bulk.  Rather than purchasing an entire portfolio, hand pick the patent assets whose claims have a relevance to key markets and industries, and conduct a thorough due diligence on just those patent assets.  Then, negotiate for just those assets.

Purchasing assets you hand pick can reduce the purchase price considerably, and reduce your future maintenance fee obligations by streamlining the number of patent assets you own.

Regarding how to hand pick such patent assets, I will be addressing this topic in future posts.


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