Select Public PAEs Thrive While Many Struggle
April 14, 2016
While finalizing our latest quarterly report on publicly traded patent assertion entities (PAEs), Unwired Planet—one of the 23 public PAEs we’ve been tracking—announced its intention to exit the IP licensing business. Public PAEs have weathered a tough year. Only four had a positive stock price performance in the fourth quarter of 2015, and, as a whole, public PAEs underperformed the NASDAQ the whole year. Our RPX Q4 2015 Public PAE Report notes that many public PAEs are low on cash and are buying fewer portfolios.
Unwired Planet may be disappearing—at least in its form as a PAE—but its patent assets are not going away. Privately held Optis UP agreed to buy Unwired’s portfolio for up to $40 million and indicated plans for a prolific licensing strategy around the 2,000 or so wireless patents. Such will likely be the pattern if public PAEs continue to struggle.
Still, our report finds that several well-capitalized PAEs are thriving. These larger entities were responsible for the lion’s share of some $725 million raised in the debt and equity markets, and for most of the disclosed public PAE patent acquisition activity, in 2015.
Other key findings in the Q4 2015 report include the following:
- Aggregate royalty revenue for public PAEs was about $1.6 billion in 2015.
- At year-end, four public PAEs had market capitalizations greater than $1 billion as of December 31, 2015; otherwise, public PAEs tend to be small.
- Only eight public PAEs have more than $50 million in cash, and eight had less than $5 million as of December 31, 2015.
- Public PAEs were generally less active acquirers of patent portfolios, with 16 disclosed purchases in 2015. However, WiLAN acquired 10,000-plus patents and applications during the year—again, an example of the concentrated nature of public PAE activity.
- The most well-resourced and active public PAEs earn a significant portion of their revenue from semiconductor and mobile telephony patents, meaning that those royalty costs are embedded in virtually all products that include memory, processor, or cell phone technology.
- Public PAEs are active plaintiffs, accounting for 19 new litigation campaigns in 2015, representing over 260 active defendants as of December 31, 2015.
More summary statistics for a variety of metrics relevant to the public market, including financial performance and enforcement activity, are available in the full report. Comments, questions, or requests for further information are welcome at reports@rpxcorp.com.