Intellectual Asset Management: Patent law changes in US mean there are potentially billions of dollars of write-downs on public company balance sheets, says Spangenberg, by Joff Wild
This post originally appeared in Intellectual Asset Management on January 15, 2015.
Erich Spangenberg, the CEO of nXn Partners and founder and former CEO of IP Navigation Group (IPNav), is not a man to mince his words; and in an exclusive article for the IAM blog he is certainly not doing that. Instead, he has put together a piece that anyone with any kind of interest in US patent reform would do well to consider very carefully.
Spangenberg notes that recent legislative and judicial moves in the US have had a negative impact on patent values. Further developments this year are to be expected and will decrease values even further. Some may applaud that, perhaps; but the CEOs and CFOs of any public company in the US that has acquired patents either on their own or as part of a wider deal should not be among them. Instead, the likelihood is that they will need to engage in an expensive operation to reassess the value of what it is they bought. Failure to do so could open them up to various forms of legal action, from both regulatory authorities and shareholders.
In short, many patents that were valid when purchased and were assigned a “fair value” on that basis may no longer be valid. Public companies and the people who run them have a duty to look into this and to report any changes. That involves time, effort and spending money, and the bigger the portfolio, the more that will be the case.
But, if Spangenberg is correct, there is no alternative if you want to stay on the right side of the law. It is an unintended consequence of reform and one that every US-based entity that has purchased patents – either directly or indirectly – over recent years has an obligation to consider. Of course, the big corporations that trumpet the need for change will have the resources to deal with the implications of this, even if it proves to be an inconvenience for them; instead, and once again, it is smaller businesses that are likely to be hit the hardest. Plus ça change, plus c’est la même chose, as they say in my local pub.