By the numbers: A shifting intellectual property market

The Licensing Executives Society, Inc., recently released the results of the LES High Tech Sector Royalty Rates & Deal Terms Survey. This survey covers the ever-changing world of intellectual property licensing and patents. Data from the survey digs much deeper than what can be found through public sources. Information from this survey and the past two LES surveys gives us a closer look at what is happening over time to the licensing market from 2008 to 2017.

Taking a look at the numbers

The survey covers a number of high-tech fields, including software, green/clean technology, aerospace, medical devices, communications, electronics, computers, semiconductors and consumer products. The size of licensees and licensors, as well as the products themselves, cover a wide range with over half below $25 million.

The most recent survey shows some interesting information regarding the modern intellectual property landscape, including:

  • Over half of licensed assets included patents, while others included copyrights, trademarks, software or trade secrets.
  • Two-thirds of licensing deals involved a governmental or academic licensor.
  • 35 percent of licensors entered into deals based on economic gains, while 28 percent moved forward for strategic purposes. The remaining 21 percent entered into deals for assertion strategy or for Standards Essential Patent licensing.
  • There was a jump in 13 percent of licensors who entered deals to support new products.
  • The aerospace industry had the highest royalty rate.

What does the data mean?

Due to changes in the law, data shows that the intellectual property industry is depending on collaborations and deals even more as initiatives for high-tech growth. Analyzing royalty rates over the past decade shows how the intellectual property landscape has shifted due to the economy, important Supreme Court decisions, the Patent Trial and Appeal Board and Inter Partes Review.

Inter partes review has made an impact

Demographics have changed in the wake of inter partes review blooming in popularity. The number of governmental and academic licensors have spiked while private companies have declined. Specifically, non-practicing entities have been steadily dropping. The strategy behind licensing has shifted as well. More agreements have been entered as a means to build strategic relationships or for product development rather than for purely fiscal reasons.

Why is this the case? The IPR process raises the uncertainty of using patents for monetary purposes while increasing the cost for private patent owners. The process incentivizes federal entities and state universities to participate. This look at the past gives us an idea of what the future may hold for licensing, patents and IP.

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