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A Decade of Billion Dollar Patent Sales

Nortel – $4.5B

Nortel Networks Corporation holds the distinction of generating the highest grossing patent sale in history. In 2012, Nortel, then a multi-national telecommunications and data networking equipment manufacturer, sold its last major asset out of bankruptcy — 6000 US and foreign patents encompassing fundamental 4G wireless, data networking, optical voice, internet and semiconductor technologies. The patents commanded a purchase price of $4.5B from a consortium of prominent technology companies.

AOL – $1B

On the heels of the Nortel transaction, AOL sold more than 800 key internet patents to Microsoft and Facebook. Although a distant second place to Nortel in terms of total dollars, the AOL transaction comes in first when viewed by its per patent price ($1.2M) which is nearly double that obtained by Nortel.

Kodak – $527M

Kodak’s 2013 sale of digital imaging patents lands in third place by gross revenue and per patent price. What is astounding about this sale, however, is the unique group of buyers (product producing companies and non-practicing entities) that banded together to purchase and then parcel out the assets for different strategic (defensive and offensive) purposes. The valuation is also significant given the publicly available encumbrances on the patents resulting from Kodak’s many years of aggressive licensing.

Texas Instruments

Texas Instruments is credited as the founder of modern day patent licensing having successfully turned its stockpile of patents into cash in the mid 1980’s (and continuing to this day) through intensive patent licensing. In the process, TI saved itself from bankruptcy. A decade and a half and an estimated $4B later, TI fundamentally changed how companies view patents — as valuable business assets that should be carefully and strategically developed for monetization. By 1992, TI was earning $400M a year from patent licensing — 40% more than its yearly operating income. Fast forward to today, and TI’s current licensing revenue exceeds $1B a year – every year. In the mid -1990’s, IBM began its own aggressive campaign to monetize its portfolio and similarly now generates in excess of $1B a year from patent licensing. Google and Microsoft followed suit in the early 2000s and likewise generate billions of dollars every year through patent monetization.