So You Want to Buy Patents – 10 Best Practices in Corporate Patent Buying

patents-file-folder-335Patent buying is an effective way to solve a patent deficiency challenge. In many technology areas (e.g. high-tech, solar, automotive), you can buy patents on the open market that can substantially improve your patent position. With over $7B worth of patents brought to market in the past five years, the opportunities to purchase patents far exceeds any one company’s needs.

By adopting a few best practices, you can design and execute a successful patent buying program for your company. The first step is to recognize that you will have far too many potential purchases, your expenses can rise quickly, and your ability to manage can become overwhelmed. Creating buying criteria, setting diligence limits and tracking potential purchases all greatly reduce your buying spend and increase your chances of success.

The Challenge of Too Much Potential

Scenario:  Your company is entering the US smartphone market and wants to buy patents to help reduce the risk of being sued by large patent holders or having a very negative outcome if you are sued. You are tasked with the job of solving this problem. Already you receive unsolicited patent purchase opportunities that are piling up in your inbox. You have the goal to buy patents, but how do you do this efficiently? You start to look at the problem and investigate the market further (maybe you have read one of our papers on the patent market). You come to a few conclusions quickly:

  1. Too many patent sales packages are coming in – more than 1 a day.
  2. The vast majority of the packages contain assets that are not of interest.
  3. Sellers’ claim charts, when they are available, do not meet your expectations of claim charts.
  4. You have seen some of these packages before.
  5. Not all the information about the package is readily available, like pricing.

You also may be thinking longer term with these questions:

  1. What happens if we pass on a package, and then someone else buys it?
  2. Our law firm bills are starting to get very expensive, and it may be a while before we buy something. What are the expectations of my executive team?

The challenges are considerable, but most are easily addressed through the adoption of a few best practices we have developed. We have run, and helped run, corporate buying programs for more than a dozen large corporations and currently run seven buying programs. Also, we regularly consult on corporate buying and selling programs. We review over 500 patent packages a year and have filtered more than 68,000 patent assets. By adopting these best practices, our clients have efficiently purchased more than $60M in patents.

Patent Buying Best Practices

1. Establish Business Related Buying Criteria First

Establishing business related buying criteria for purchasing will eliminate over 75% of your diligence costs. To establish the criteria, first assume that patents in any patent sales package are perfect: the claims are perfect; the prior art has been fully vetted; the prosecution was perfect; and the specification is perfect. The most important question you can ask yourself is, “Do these ‘perfect’ patents fit my company’s need?” Surprisingly, the answer is often no. This may seem counterintuitive, but consider that even if the patents are perfect, they are not necessarily ones you want to buy for your company (e.g., the patents cover the wrong technology, you already have enough patents in that area, the companies you care about do not make products).

This leads to our first best practice: define your business need and define what kinds of patents will work best for that need. We help our clients define a set of buying criteria that reflect their business needs by defining the patent challenge they face, identifying the threats (e.g. companies A, B and C are the greatest threats)  and where the best patent purchases would be (e.g. middleware is better than LTE).

Example buying criteria:

  1. Patent age – the patents are at least eight years from priority and have a minimum of 5 years of life left.
  2. Technology – the patents fall into the specific technology area of interest. If the general technology is smartphones, is the specific area standards-based LTE, manufacturing, semiconductors, applications, or OS? Note, the list of specific technologies can be quite long, and we recommend revisiting the list regularly in your buying program.
  3. Price – the asking price is no more than 5X the market price. An asking price much greater than 3X may indicate an unsophisticated seller, making the transaction too difficult to close. Alternatively, the buyer may be able to find assets for a much better price somewhere else.
  4. Countries – are the countries where you need the assets? EU, Chinese, other countries?
  5. Continuations need to be available – do you need to have continuations available to make the purchase?
  6. Other criteria – additional criteria can be established. For example, encumbrances, minimum deal size, and other situation-specific criteria.

These example criteria can immediately eliminate 75% of the packages from further diligence resulting in substantial savings in time and resources.

Here are some important factors to consider to ensure the criteria are effective:

  1. Easily testable – the criteria are simple to understand and apply. Patent purchasing opportunities either fall into or outside of these criteria very quickly. Examples include pricing and age of the patents.
  2. Relate directly to your expected use of the patents – if you plan to use the patents to counter-assert against XYZCo, then you need to buy patents that are not already licensed to XYZCo. So, add a criterion to check whether XYZCo is licensed.
  3. Lend themselves to automation – can a computer test the criteria or are easily tested by someone with little patent knowledge?
  4. Reflect corporate culture biases of the buyer – are there some technologies that you know will be too difficult to convince your executive team to buy? For example, for companies just starting patent buying, we recommend purchasing patents in their own technology fields first. These patents can be used to remove NPE risk and also for counter-assertion, but they may not be the perfect patents in the long run. However, we know it is much easier to convince an executive team to buy patents in their own technology space first.

2. Obtain Buy-In From Your Finance Department

Early on, ask your finance department to help you build a financial model for the purchasing of patents. The model includes assumptions about when you might need the patents, how effective they could be in given litigations or competitor licensing, and what alternatives you have to buying patents. With the financial model, you can plan your spending, ask for sufficient resources from the company and have a good sense of when you have been successful.

An example financial plan can be found in Kent Richardson and Erik Oliver, “The Strategic Counter-Assertion Model for Patent Portfolio ROI,” IAM Magazine, July/August 2015, Issue #72, downloadable here.

3. Sell Your Buying Program to Your Exec Team

Using the financial model you developed with your finance department, present your plan, goals, financial results to all of the executives and obtain buy-in for the program. Then revisit the program quarterly. Setting realistic expectations about timing, costs, success will ensure that the money for the purchases will be available when you find the patent you want to buy.

4. Ask Your Corporate Development Department to Send You Potential Deals

A great source of potential patent purchases may be right down the hall from you. Your corporate development department regularly evaluates other companies for potential purchase. If they pass on buying a company, the patents may soon be available for purchase. Establish a communications channel where your corporate development is providing you with the names of companies they have evaluated and whether there might be some interesting patents there. Importantly, this source of buying opportunities is typically not available to other buyers, and you will have an inside track on making a purchase.

5. Build Relationships with the Brokers/Sellers

There is a vibrant community of regular patent sellers and patent brokers. Establishing good relations with this community helps ensure that you receive packages on a timely basis. Specific actions you can take to facilitate your package analysis processes include establishing NDAs with the brokers, contacting brokers with general buying criteria (we would like patents generally in this technology area, these countries, this age), and establishing agreements that prevent damages clocks and willfulness arguments to be used against you by you simply reviewing any patents for purchase. You can find a list of patent brokers and regular sellers on our website at

6. Tag and Track Patent Packages

With more than a potential deal a day hitting your desk, multiple deals in diligence, questions out to brokers about other deals, and managing the package flow can be challenging, patent buying can quickly turn into an operational mess. We recommend that you tag and track basic information about patent packages you receive. You will know which packages are of interest, passed packages, and be able to determine efficiencies.

Here is a short list of some of the information that we track.

  1. Source
  2. Asset list
  3. Representative patent
  4. Asking price
  5. Technology summary
  6. EOU or claim charts available?
  7. Open continuations available?
  8. Has it sold?
  9. Diligence stage

7. Set Limits on Diligence by Stage

Limit the amount you commit to diligence on a particular package. Set capped or fixed price diligence projects for multiple defined diligence stages. This allows you to effectively budget how much you spend on diligencing packages by considering the fact that just a few packages will make it through the complete diligence process. For example, we recommend a $3-5K initial diligence cap for a typical patent package. Then a $10-25K cap for the next set of diligence steps. After that, we recommend package specific diligence, if any more is needed.

8. Do Not Eliminate Patents Because an Issue Was Found – Seek Responses to Patent Challenges

One challenge that we find when working with new buyers is a something that we all face – we can always find problems with any patents. After more than 20 years of writing and reviewing patents, we do not remember finding a patent that did not have some issues. To help with buying patents, we recommend adopting a slightly different perspective; one that you likely take with your own patents. Were the issue to be spotted by an opposing party, what response would you give and how well do you believe the response addresses the issue? For example, assume the most important claim has an indefiniteness issue. A reasonable response to that issue is, “We have an open continuation and are addressing that concern.” If a prior art issue is found, a reasonable response would be, “We reviewed the reference, prosecution and cited references. We believe that the reference is duplicative of reference XYZ.” In both instances, a real issue is being raised and a reasonable response has been developed. If no reasonable response can be found to the issue raised, then pass on the patent package.

Also remember that by the time you have reached these types of diligence questions, you have successfully eliminated many patents that will not satisfy your business needs. The patents you are currently reviewing are ones that if reasonable responses can be found to issues, then the patents should fit your business needs.

9. Accept That You Will Miss Some Patents

You will not win them all and you miss some patents. The program you are setting up is focused on finding the best patents at the lowest cost. This means that some patents will slip through the net but that you will have an optimized program.

10. Analyze Your Results and Spending – Revisit Your Buying Criteria and Plan

Analyzing how you are doing allows you to improve your program. Keeping track of the number of deals you have reviewed, how much money you are spending, and what successes you have had allows you to tune your buying program and adjust to market and business strategy changes.


The best practices above do not focus on pricing and closing patent purchases. There are significant challenges and opportunities in those areas; however, we find that clients are often more challenged with the overwhelming number of potential deals, executive buy-in, and diligence efficiency. That said, there are ways to help yourself. Reviewing market reports will help guide you with pricing, see Kent Richardson, Erik Oliver and Michael Costa, “The Brokered Patent Market in 2015 – Driving Off a Cliff or Just a Detour?”, Intellectual Asset Magazine, Issue #75. Bidding and closing best practices can be determined from your lawyers and patent brokers (for help with patent brokers, see Kent Richardson, Erik Oliver, “There Is No Yelp for Patent Brokers – 10 Best Practices for Picking a Patent Broker”, Richardson Oliver Law Group LLP News, December 21, 2015).

Corporate patent buying benefits from the adoption of a few best practices. By gaining internal support for your program, eliminating patents that do not fit your business needs, and implementing diligence management practices, you can efficiently find and buy patents.


Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of Read more.

Join the Discussion

18 comments so far.

  • [Avatar for Xtian]
    January 25, 2016 09:14 am

    @anon – So this is interesting. If software doesn’t like it and pharma doesn’t like it, who is pushing it? I about to give credence to the conspiracy theorists that it was pushed by Google….

    Thanks for the discussion.

  • [Avatar for Anon]
    January 22, 2016 03:29 pm

    My mistake Xtian – I presumed that you were stating that pharma liked the AIA, because:

    Certainly, we are both off, as I know of no one in the software arts that likes the AIA

  • [Avatar for Xtian]
    January 22, 2016 01:12 pm

    @Anon – The bad example is hedge fund manager Kyle Bass and his “Coalition for Affordable Drugs” use of IPRs to short stocks.

  • [Avatar for Xtian]
    January 22, 2016 01:11 pm

    Anon – Talk to any pharma practitioner, the AIA is definitely not good for pharma. It undermines Hatch-Waxman. I was under the impression the software arts liked AIA.

  • [Avatar for Anon]
    January 22, 2016 09:38 am


    I think that you are displaying more of your naivete.

    Your comment of “exemplify the misunderstanding of why the AIA is so “good” for one industry and so “bad” for another” is misplaced.

    There is NO “good” for one industry – elsewise, why would the industry (yours) that it is purportedly “good for” be trying to gain an exception for itself?

  • [Avatar for xtian]
    January 22, 2016 09:16 am

    @Kent – I get the strategy, but I also completely agree with American Cowboy’s sentiment. Your article sheds light on the difference in our industries.

    At one time in my career, we, a biotech, thought it would be interesting to partner with a big computer/software company. We were going to license some software IP from them. They presented us with a big stack of patents. I asked which ones do we need (in the form of a rep and warrant)? They responded: “Not sure exactly which ones, but probably ones in this stack.” I was so taken back. How can you insist I need a patent license when you can’t tell me which patents cover the product you are selling me?

    Then, another glaring difference arose. The computer company kept insisting on a cross-license to all of our (the pharma company’s) IP. We asked them what are you planning on doing with our patents (e.g. patents on small molecules/oligonucleotides/etc.) when you are in the business of software and computers? Their response: “We have a corporate policy to always obtain an unblocking license.” In order to accept a deal without an unblocking license, they told us the deal (which was not very big) had to get board approval?! Needless to say, the deal didn’t get done. We just couldn’t understand each other.

    I truly believe these naive differences (both on our part (pharma) and the computer company’s part) exemplify the misunderstanding of why the AIA is so “good” for one industry and so “bad” for another. This article just amplifies that difference between the industries.

  • [Avatar for angry dude]
    angry dude
    January 22, 2016 12:06 am

    Forgive me but this is total bs

    There is no market in patents anymore – it has been destroyed years ago (I know it from my personal experiences – OceanTomo, ICAP patent brokerage etc etc etc… the very last one was with google’s “patent palooza”)

    SV company will never ever buy a strong valid patent from a patent holder to ride their competitor off the market
    Instead they collude to bulldoze patent holder making sure he doesn’t get any money at all
    They do it for other things as well – e.g. making secret deals not to hire employees from each other or forcing their engineers to sign illegal employment contracts which is an outrageous violation of rights and should be criminally prosecuted

    I don’t know which planet you live on, people

  • [Avatar for Anon]
    January 21, 2016 07:44 pm

    American Cowboy @ 7,

    There is a reason why “patent troll” was coined by a large corporation – and the benefit of such troll-like feature is to END the nuclear Armageddon effect that the large corporations had adopted.

    You nailed it.

  • [Avatar for Gene Quinn]
    Gene Quinn
    January 21, 2016 05:12 pm

    Kent (and all)…

    Just rescued a couple comments from Kent that went to Spam. Not sure why, but they have been posted.


  • [Avatar for Kent Richardson]
    Kent Richardson
    January 21, 2016 03:59 pm

    Xtian, The rational for counter-assertion in high tech is different. A new entrant into smartphones would likely need to license between 100K-250K patents held by hundreds to thousands of different entities (if you could even identify them all). So, the strategy for most high technology companies is to have patents on core features you deliver and that others need, then you can trade cross-licenses. If you have no patents, you enter into these negotiations at a distinct disadvantage.

    Benny, yes you read the patents. You also do prior art searching, patent prosecution review, and other diligence. If you do this for every package (on average 10 patents each), you waste enormous resources looking at patents that even if they were perfect (and they never are), you still wouldn’t buy. It’s a filtering method so you only have to do the most expensive diligence on a smaller subset. Also, I’m not sure why you would buy lousy patents when you can buy good patents at the same price.

  • [Avatar for Kent Richardson]
    Kent Richardson
    January 21, 2016 02:39 pm

    The point regarding diligence is different. Yes, you read the patents, as do you do prior art searches, you ensure the claim charts make sense, and you review the prosecution. These are all important, but the point is that this is true for all patent purchasing. The problem is that if you first read/diligence all the patents, you waste enormous resources on the wrong patents; why read a patent that doesn’t fit your basic needs? The example given is a company trying to enter the US market – the company doesn’t have patents and expects to have problems from large patent holders. The goal is to defend themselves through patent counter-assertion when the company tries to enter the US market. So, I’m unsure of why you would want to spend time and money buying lousy patents when you can buy good patents; good patents are available on the open market. Just buy the good ones.

  • [Avatar for American Cowboy]
    American Cowboy
    January 21, 2016 11:45 am

    I think this article is addressed to really big companies, the ones with megabucks in sales and investments. They get patents but don’t value them for their competitive benefit — they keep out significant competition by buying competitors, or undercutting them on price, or otherwise swamping any effort to compete, so patents are not important to them to protect their competitive advantage. They use patents as stick to assert a counterclaim against anybody who sues them, with the intention of preventing infringement suits against them. They don’t care how broad the patent is or how reliable it is; they simply want to have numbers of patents to throw at a plaintiff and say “Well you probably infringe some of these and we’ll assert them against you if you sue us.”

    And these are the same guys who scream bloody murder that some non-practicing entities send letters to people saying “Well you probably infringe some of these and we’ll assert them against you if you don’t pay us.”

    Actually the reason they hate NPE’s so much is the big company’s above-described strategy does not work: that they have no counterclaim to assert, since the NPE doesn’t infringe since it does not make, use or sell.

  • [Avatar for Benny]
    January 21, 2016 11:20 am

    It is an interesting business model. Buying a patent covering your competitors’ product means buying out his space on the shelves in home depot or target. But if you don’t actually read the patent and understand what you have, you just might be buying a shelf in the back storeroom. Yes, I can see you were being sarcastic, an emotion often lost on the patent attorneys who frequent these pages.

  • [Avatar for Xtian]
    January 21, 2016 10:58 am

    @Benny – I fully agree. My attempt at sarcasm failed!!

    The scenarios in this piece are very foreign to me. This really struck me as odd – “Too many patent sales packages are coming in – more than 1 a day.” I don’t know what is included in a patent sales package. I’ve never seen one. To me, a patent package is a bundle of rights that would allow its owner the ability to prevent others from doing what is claimed in the bundle of rights. Interesting business model – not looked favorable on by others.

    Would I buy a patent package so that I can develop my product with the intent of developing within the claims of the patent package I bought? Seems an odd way to develop products.

    I practice mainly in pharma, and I can tell you that this is not how business is done. We trade in mainly in compounds or pharmaceutical products. The patent side of these deals involve doing diligence on the assets (i.e.,FTO’s and patentability work).

    I guess I have a lot to learn.

  • [Avatar for Benny]
    January 21, 2016 09:02 am

    Wise man taught me, when you assume you make an as of u and me. I would only assume that patents which appear valuable might well be worthless because of claims unduly narrowed in prosecution or reliance on obsolete technology.

  • [Avatar for xtian]
    January 21, 2016 08:40 am

    @Benny – Why would one do that? Just assume they cover what you want them to cover; assume that the entity with which you are negotiating with can actually transfer legal title to you; and assume that there is no dominating patent that you might need to cross license.

    Note to authors: your EOU or claim charts are discoverable…

  • [Avatar for Benny]
    January 21, 2016 07:00 am

    No suggestion that anyone actually read any of the patents?

  • [Avatar for Kent Richardson]
    Kent Richardson
    January 20, 2016 02:18 pm

    We’re always interested in hearing about your experiences and recommendations. Let us know in the comments what works for you, and where the challenges have been.