The other shoe to drop
Business Impact – GAAP Write-downs
All of the above factors – patent reform at both the legislative and judicial levels, the Supreme Court weakening patents, and IPRs – are part of a process that’s reducing the value of patents in a dramatic fashion. These aren’t just obscure issues that only a patent nerd could love – they’re real issues that have a major effect on the entire intellectual property ecosystem.
It may not have been the goal of Congress and the Supreme Court, but the combination of the AIA and recent Supreme Court decisions, especially Alice, have had the effect of wiping out billions of dollars of value in patents, especially software patents. If some of the more recent 101 (what is patent eligible) decisions are upheld, we are only beginning to understand what Alice means.
In our blog post from back in August, “ Patents, GAAP, and Balance Sheets,” we talked about how the environment has changed in a way that damaged the value of many patents, and we asked
Given these dramatic changes, why haven’t we seen major write-downs of the acquired patent assets of large corporations? There are many, many patents whose value has been impaired by these issues, yet the problem remains invisible to the investor community.
Expect the investor community to finally notice. I expect to see the first lawsuits filed for failure to write down the value of patents that were purchased or that are on the books as part of an acquisition. If an acquisition any time in the last few years resulted in a significant allocation to software patents, those assets aren’t worth now what was paid for or allocated to them then – and the companies have been hiding or ignoring that fact. Reality will hit soon.
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