For two decades, companies that buy software patents to sue technology giants have been the scourge of Silicon Valley. Reviled as patent trolls, they have attacked everything from Google’s online ads to Apple’s iPhone features, sometimes winning hundreds of millions of dollars.
But now the trolls are in retreat from the tech titans, interviews and data reviewed by Reuters show.
In the wake of several changes in U.S. law, which make it easier to challenge software patents, patent prices are plummeting, the number of court fights is down, and stock prices of many patent-holding companies have fallen. Some tech firms say they are punching up research budgets as legal costs shrink, while support for major patent reform is under fire as trolls get trounced.
“Their entire business model relies on intimidation, and that has lost its edge,” said Efrat Kasznik, president of intellectual property consulting firm Foresight Valuation Group. “If the patents are not enforceable in court anymore… the troll has no legs to stand on.”
The need to value patent portfolios may be even greater after the Supreme Court’s decision in the Alice case.
The Securities and Exchange Commission (SEC) may require more transparency among public companies when it comes to valuing their patent portfolios.
Now, such portfolios generally do not have to be formally valued and reported to interested parties. But given the push for increased transparency, such as at the SEC, and the desire by investors to know more about the companies in which they invest there could be more guidelines or formal requirements forthcoming. Continue reading
The Supreme Court’s Alice decision has introduced a dimension of uncertainty associated with the validity of many of the software patents held by operating companies today. There seems to be a consensus among some of the leading academic and judiciary experts supporting that conclusion, as seen in recent comments made by Stanford Law School’s Prof. Mark Lemley, as well as in recent comments by former Federal Circuit Chief Judge Michel. From a valuation and financial reporting perspective, there needs to be a serious examination of the post-Alice landscape implications on the value of patents as corporate assets. The results of such examination may lead to further action – which could range anywhere from additional disclosure requirements by regulators, all the way to actual corporate asset write-offs. This article highlights some of the key issues that need to be addressed by companies and regulators.
Mary Juetten, CEO of Traklight and Efrat Kasznik, Foresight Valuation
Crowdfunding is expected to become a leading source of financing in the early stage, on both rewards and equity platforms. It is likely to add more transparency to startup valuations and, at the same time, contribute to an upward trend in valuations. However, the lack of attention to IP protection or infringement during the campaign can have negative implications on the valuation of your startup. The topic of IP protection should therefore be top of mind for entrepreneurs engaged in crowdfunding, as it is critical to their survival and success long after the campaign has ended.
Read the full article here .