Next up in Yahoo's closing down sale: The patent auction

The real value of Yahoo's intellectual property cache might be less than expected, Withers & Rogers patent attorney John-Paul Rooney tells Computing

Following the $4.8bn sale of Yahoo's core business to US telecoms company Verizon at the end of July, Yahoo is now preparing to sell off the patents portfolio that it has accrued in its 20 years of business, covering everything from e-commerce to search.

The so-called non-core patents have been grouped together in an entity called ‘Excalibur', which is being auctioned off by US investment bank Blackstone.

Although approximately 700 patent ‘assets' were included in the Verizon deal, price estimates for the Excalibur package, which totals approximately 2,500 patent assets, vary wildly.

According to John-Paul Rooney, partner and patent attorney at intellectual property firm Withers & Rogers, the auction contains many unknowns. "The content of the patent portfolio being sold, its enforceability and the terms of any licences already granted to third parties, are largely unknown, which is why there is so much speculation about its worth," Rooney told Computing.

He continued: "The portfolio is thought to relate to e-commerce, internet searching, messaging and cloud computing technologies. But its true value depends on the individual buyer and their intentions. For a buyer new to the tech sector, ownership of Yahoo's patents could catapult them into the big league, or act as a form of insurance against other businesses filing aggressive patent infringement claims."

The portfolio is thought to be less appealing to a so-called patent troll looking to utilise the offensive value of the patents, because it is likely that many licensing deals have already been struck with big tech companies. This reduces the portfolio's appeal to those pursuing aggressive patent monetisation, he added.

However, many of the patents might be reaching their expiry date, which would radically reduce the value of the portfolio, while the rules governing the enforcement of claims of intellectual property ownership have also (mercifully) been tightened up in recent years.

"It is also thought that much of the patented technology within the portfolio dates back to 1996 and as the term of a patent is 20 years, they will be reaching the end of their life. This would certainly have a negative effect on the portfolio's value," said Rooney.

"Additionally, since many of these patents were granted, the rules in the US have changed, making it much more difficult to enforce business method or abstract software patents. While these technologies would have been very valuable at the dawn of the internet age, they are unlikely to hold such a great significance now.

"It is unlikely that the patents will be split between several buyers. The future buyer is most likely to buy all of the patents - good and bad - in the hope that there will be a ‘nugget' within them. For example, they will be hoping to find a patent covering a useful technology, which may soon be widely used and has not yet been licensed to others, to justify the cost paid.

"The value of intellectual property reached a peak in 2011; around the time that the Rockstar Consortium paid $4.5bn for Nortel's patent portfolio. While the sale of Yahoo's patents is unlikely to achieve this kind of figure, it could still raise an eight or nine-figure sum," said Rooney.