More On

IP: Are we in the midst of a patent bubble, market correction or something else?

As patent valuations trend upward, questions arise about causation

Patent values have increased dramatically over the past two decades. Evidence of record valuations has been demonstrated recently in the mobile phone/wireless communication industry. For example, in the second quarter of 2011, Novell’s 882 patents sold for an average value of $510,000 per patent; in Q2 2011, Nortel’s 6,000 patents were reportedly purchased at a per-patent price of $700,000; and, in Q3 2011, Motorola Mobility’s 24,500 patents went for the same $510,000 price (great multiples for patents that likely cost $20,000 to $50,000 each from filing to granting). Pundits often cite the meteoric rise of valuations in patent portfolio acquisitions such as these as evidence that patents are in the midst of a speculative bubble.

More recently, in the summer of 2012, the Kodak portfolio of 1,100 patents, which was initially predicted to sell for more than $2 billion, attracted bids of only $150 million to $250 million. Some suggested this was the first evidence that the patent bubble was ready to pop. However, the portfolio eventually sold months later for $525 million, or $480,000 per patent. While the per-patent price seems to have peaked, is this a sign that a precipitous drop is approaching, or has there simply been a market correction for an asset that had been previously undervalued?

Contributing Author

author image

Gregory Novak

Gregory V. Novak is the Chief Executive Officer and Managing Partner of Novak Druce Connolly Bove + Quigg. Mr. Novak serves as national intellectual...

Bio and more articles

Contributing Author

author image

Brad Woodcox

Brad Woodcox is a technical specialist at Novak Druce Connolly Bove + Quigg LLC, where he focuses on business development, strategic analysis...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.