Is the financial crisis taking its toll on IP monetization?

How likely is it that the current financial crisis will also have a negative impact on IP monetization? One would think that it will. After all, acquiring patents can be a rather costly affair. Dire finance conditions and limited or no access to additional credit lines will certainly not help convincing the CFO to put funds in IP acquisition, no matter what the good reason is to do so. Most likely the company needs all its cash at hand to meet internal financing demands to keep up growth. However, one could have a different look at it if the patents to be acquired can be turned in an “intellectual property revenue stream” payable as licenses over a number of years. Certainly companies having a business model of acquiring patents with the aim to monetize via future licenses may not have a choice but to continue this path, no matter what the financial conditions re. Not doing so will eventually endanger the up-to-date-ness of the current IP hence future revenue. But that’s only a very small portion of the IP monetization market. Those companies that can postpone the acquisition or taking licenses could, as a result of the crisis, revert to stalling tactics to avoid paying for IP they might need but can’t afford to acquire.

Other categories of companies most likely to remain on the buyers’ side are those involved in litigation but in need of IP to countersue or those paying way too much for licensing in searching for ways to decrease the exposure by acquiring IP to force the licensor to cross license rather than take money.

It’s unfortunate timing, to say the least, now IP begins to be picked up by financiers as attractive property with a different risk profile than existing assets like immovable property, airplanes, ships, and so on. For the first time in many years private equity companies, or active on secondary markets, like Coller Capital via Coller IP seem to have taken bold steps to acquire IP positions and set up monetizing programs. Most likely the appetite to invest in IP will be significantly reduced once it turns out that the market, that is the buyers, hold their horses in buying IP or taking licenses.

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