Top Patent Acquisition Strategies – Ultimate 2020 Guide

Patent infringement can be a scary phrase, but as a business and/or intellectual property owner, you should be prepared to face it. This can be a problem not only nationwide, but globally as well – and cases are frequently met with lawsuits.

This is when patent acquisition to better protect your idea (and further avoid lawsuits against you for infringement) can come in handy. But this isn’t just a simple term… there are actually many different ways you can go about patent acquisition.

So… which strategy should you follow? Which suits you the best?

Today I’m going to walk you through some strategies and tips that can give you a better idea of how to approach the patent acquisition process. This will help a lot as you expand to global markets and conquer an even bigger marketplace.

Today we will cover:

  • Xiaomi’s Global Expansion Plan
  • University Patent Acquisition Deals
  • The Potential in Small Businesses
  • When to Purchase from NPEs (Non-Practicing Entities)
  • Public and Private Sales

So, without further ado – here is the ultimate guide to the top acquisition strategies for you and your business!

Xiaomi’s Global Expansion Plan

Xiaomi is a phone company with a global expansion plan

I find that a good place to start with large, nuanced topics like this is with a solid example. For this, I will have us look at Xiaomi, a company whose expansion to the US marketplace provides a lesson for businesses everywhere.

During their journey, Xiamoi was sued by a US Patent Assertion Entity known as Blue Spike. The case was regarding US patent 8,930,719B2 titled “Data Protection Method and Device” which Blue Spike claimed was used by Xiaomi without permission in a number of their models (Xiaomi Mi4 LTE, Xiaomi Mi4c, and others).

In addition to these existing models, Blue Spike also added the Mi5 (a model to be released within the month) to the list. The motivation here was a hope that Xiaomi would be inclined to pay the damages quickly and proceed as planned with the launch of their new device to avoid lost profits.

This wasn’t the only time Xiaomi faced troubles with their global expansion. Xiaomi faced similar lawsuits in several other countries, including India. The instance in India involved a lawsuit by Ericsson that resulted in Delhi High Court granting an injunction that barred the sale of Xiaomi’s cell phones across India.

As you can imagine, these lawsuits were enough to thoroughly emphasize the importance of intellectual property and IP law to Xiaomi. As a result, Xiaomi altered course and nipped the problem in the bud.

To do this, Xiaomi expanded upon their organic patent filings by pursuing patent acquisition. In the process, the company was able to acquire first dozens and later thousands of patents through licensing and acquisitions from various sources. In 2011, they had just 35 patents. Now, they have over 8,600 and have successfully ventured into a variety of markets easily with this IP protection.

This example should serve as an inspiring model to you during your patent acquisition process. Though you may not be in the market to acquire thousands of patents anytime soon, you can use the same concept to you proportionately expand your own business and interests in the quickest and most secure way.

Patent acquisitions will serve as the quickest solutions to roadblocks related to intellectual property and infringement as you expand your business. Especially in international marketplaces. That said, it isn’t always an easy task, especially when you have to figure out the best places to access good, relevant patents that will truly strengthen your patent portfolio.

So, what are some of the strategies you should be using? Where should you look? Let’s dive into that next.

University Patent Acquisition Deals

University patent acquisition

One of the best places to explore for access to good, thoroughly researched patents would be universities.

Universities are hot spots for research, innovation, and creativity. For this reason, they tend collectively to have thousands of patents in their portfolios that are just waiting to be acquired and used in the marketplace.

The best part is that these patents will also have a seal of quality since the universities are an indicator of strong research and insight due to their inherent nature. This makes for prime candidates to strengthen collaborative efforts with truly innovative patents that will serve you well.

To look at a specific example, here are the top six universities that are researching on the communication domain (should this be the area in which you are seeking patent acquisition):

Top six universities researching on the communication domain

In addition to the implication of quality research with university patents, it is often important to note that they don’t often consider these patents as a source of revenue. Since so much research is churned out in universities (and done so for primarily educational purposes), the profit potential of individual patents is usually overlooked.

While overlooking patents can in many instances be an indicator of poor value, it is quite the opposite here. Universities simply have other priorities in mind, so there is a solid chance that they are sitting on gold mines that are just waiting to be acquired.

This is why NPEs tend to display a particular interest in this patent acquisition strategy. One famous NPE, Intellectual Ventures Holdings, has one of the biggest portfolios of U.S. patents and regularly buys from universities. Additionally, even government organizations like the National Institutes of Health prefer university patents.

During this search, I also recommend that you look into specific university professors in your field of interest. These are the people who have the hands-on experience and access with the patents as they are created, so they can provide valuable insight and guidance that can really help you on this journey. When brought in, they can also help a lot with research and development teams.

One last piece of advice in this are: don’t overlook small universities in this search. Just like large universities (MIT, University of California, etc.) these universities can also be sitting on gold in their portfolios. Plus, they may be overlooked by larger companies, so you can have priority access to these gems.

The Potential in Small Businesses

If you are a small business or independent entrepreneur yourself, then I doubt I have to do much to convince you about the potential in small businesses!

Regardless, I’ll dive into it anyway since it’s important to really know what you can find by looking at small businesses in your patent acquisition process. It may make you appreciate yourself and your own hard work a little bit more as well in the process!

When you are entering a new market, especially in another country, it is a costly mistake to believe that you can do it all by yourself without looking to other companies. If we learned anything from Xiaomi’s initial mistakes, it is that this is a quick ticket to a shower of lawsuits and possible bans from marketplaces.

When you are venturing into a new domain, you should be looking for these other businesses and companies. Some things that you should look for are:

  • Businesses with good patents
  • Companies that are ready for partnerships
  • Companies that are potentially open for mergers or acquisitions

Merging and partnerships solely for IP protection is fairly common practice and can serve you well. In fact, it’s followed by most major companies, so you know there has to be something they’re doing right. 

One example can be found with Amazon in 2015. They acquired a back-end mobile video service known as Elemental Technologies for $500 million. While costly, this move strengthened Amazon Web Services’ patent portfolio in cloud infrastructure, adding more company value and strengthening their portfolio.
Even if you aren’t likely to make $500 million deals and purchases anytime soon, you can still use this strategy as an example. One of the best ways to successfully venture into new markets without infringement lawsuits is simply to nip it in the bud and work with competing companies from the start.

When to Purchase from NPEs

Even if you are as cautious as possible during your global expansion plan, there is a fair chance that you’ll face a patent lawsuit in anyway. If this happens, there are two main options for you to consider:

  • Take the defensive route and take the license from the plaintiff
  • Take the offensive route by acquiring patents with which to countersue the plaintiff

Every business and every specific circumstance will be unique, so you will have to brainstorm a way to determine the optimum path. The first option is fairly simple, and your patent attorney will be able to help you!

The second, offensive option, on the other hand, may require a little more strategy. Luckily, I have some advice there! If you find that this route is the most sensible and beneficial to your circumstances, the best way to go about acquiring patents for your case is by looking at portfolios of popular Non-Patent Entities (NPEs) in the area.

So… why do you want to look at NPEs? The answer is simple: NPEs don’t actively practice their patents. Their entire business model is centered around selling or licensing patents, making them the perfect candidate for your needs!

To look at an example, we will review what happened with the U.S. ad tech company Bounce Exchange and the Google-backed software startup Yieldify in 2015. Bounce Exchanged filed a suit against Yieldify with the accusation that they were copying their code and infringing upon their patent. They even managed to add some Yieldify customers as defendants, accusing them of actively “inducing others” to contribute to the infringement!

Naturally, Yieldify denied these allegations, taking an offensive route with a countersuit for infringing on patent US8,806,327. The interesting part?  Yieldify was not the original patent owner! It was actually purchased from Intellectual Ventures (a well-known NPE) in 2016.

At the end of the day, the two companies successfully came to an agreement and dropped the lawsuits, granting each other the respective licenses. If it can work in this instance, it can work for you too!

Public and Private Sales

Public, private, and bankruptcy sales for patent acquisition

Finally, I have a few different types of places you can consider looking for patent acquisition. There are both public and private sales (as well as sales that stem from bankruptcy), so I will dive into those different types here.

Public Auctions

The first sale type that we will dive into here is public auctions. These are becoming increasingly common in recent years, especially as more and more patents are being filed. 

Commentators note that public auctions are an excellent way to facilitate deals because of their inherent transparency. They also provide a networking forum for you and other strategic patent acquirers!

Another great element of public auctions is that the public nature makes it easy for you to get into them and access them, even before you’ve already done a great deal of networking and have access to patent acquiring circles.

An example of this is in 2009 when NASA auctioned off patents through the sale of an exclusive license. 

Private Sales

Once you’re ready to step out of the public sector, you can start looking at private sales. These will likely not be on your to-do list until you’re a little more established, but if you’re already there, they can be a great way to find more exclusive patent auctions!

As the name suggests, private sales will surround transactions between buyers and sellers in a setting that is closed to the public. These can be preferable whenever parties feel that limited publicity and private negotiations will lead to a better price or sale structure.

Sales Out of Bankruptcy

Finally, this brings us to sales that come out of bankruptcy. As you may already know as someone involved in business, bankruptcy isn’t always as dirty a word as it sounds – and it can lead to great opportunity!

When a company goes bankrupt, they are desperate to squeeze as much value out of their patent portfolios as possible. They typically do this by selling them either through the public auctions for impartiality or through private sales.

Though this can be a great strategy to acquire patents at low prices, there are a couple of drawbacks. The main one is that there is a requirement for court approval of transactions, something that can take a substantial amount of time.

In Summary

Patent acquisition is always going to be a strategic process, and different strategies work best for different people. That said, it’s always good to go into things knowing a few key strategies that can really serve you well.

To recap what we’ve discussed, you should remember:

  • Xiaomi’s Global Expansion Plan
  • University Patent Acquisition Deals
  • The Potential in Small Businesses
  • When to Purchase from NPEs (Non-Practicing Entities)
  • Public and Private Sales

Hopefully this gives you a better idea of how to jump into the patent acquisition game with more confidence! Do you know of any strategies that weren’t mentioned here? Which strategy do you think will work best for you and your business?

Legal Note: This blog article does not constitute as legal advice. Although the article was written by a licensed USPTO patent attorney there are many factors and complexities that come into patenting an idea. We recommend you consult a lawyer if you want legal advice for your particular situation. No attorney-client or confidential relationship exists by simply reading and applying the steps stated in this blog article.

Leave a Comment

Your email address will not be published. Required fields are marked *