Xerox Patent Auction May Contain Standout Assets

ICAP is offering for sale 546 patent assets owned by Xerox and its subsidiaries, including patents owned by PARC (Palo Alto Research Center).  The auction, announced earlier this year, had been slated for September. However, ICAP has not provided a public update on the status of the auction.

Based on information provided by ICAP, there are 217 United States patents being offered at auction, as well as various related foreign patents and pending applications. The Xerox patents at auction cover a myriad of technologies, including user interfaces, data compression, e-commerce systems, multimedia technologies, and, of course, image processing technologies.

There have been mixed opinions as to the value and quality of Xerox’s patents, which is often the case when large legacy patent owners begin to explore patent divestiture options.  Envision IP analyzed the Xerox patents offered for auction, as well as the overall US patent portfolio of Xerox, to understand how the patents compare to the portfolios of Apple, Samsung, LG, and the original Kodak and Nortel patent portfolios.

Xerox has an impressive patent portfolio, with over 12,100 active US patents. The company is an diligent patent filer, having been awarded over 1,100 US patents in 2013 alone.  According to patent assignment data analyzed by Envision IP, Xerox and its research partner Fuji Xerox, as well as Xerox’s subsidiaries, own approximately 17,000 active US patents.

Envision IP analyzed the 217 US patents being offered via auction against Xerox’s overall US patent portfolio to determine how the selected subset compares from a technical citation standpoint.  The patents at auction, on average, each have 40.4 reverse citations, and 30.5 forward citations. Furthermore, the patents at auction have, on average, a remaining term of 12.54 years.

In contrast, Xerox’s overall US portfolio has, on average, 19 reverse citations, and 9.9 forward citation.  The US patent portfolio has, on average, a remaining term of 9.95 years.

The patents offered at auction appear to be standout patents in Xerox’s overall US portfolio, as they contain stronger citation counts and a longer remaining term, on average.

With regards to reverse citations*, the Xerox patents at auction are relatively strong from a validity standpoint, and their reverse citation count is slightly below that of Apple’s US patent portfolio.  While Xerox’s overall US patent portfolio has a significantly lower average reverse citation count than its patents at auction, the reverse citation count is comparable to the US patent portfolios originally owned/developed by Kodak and Nortel.

Xerox_Reverse_Citations_EnvisionIPWith regards to forward citations*, the Xerox patents at auction appear very fundamental as compared to portfolios of the technology companies we sampled. The most direct comparison would be to Kodak’s patent portfolio, as both companies are competitors in the digital imaging market.  Kodak’s forward citation count is less than half of the Xerox patents at auction.  However, Xerox’s overall US patent portfolio has the lowest forward citation count of these companies, with less than 10 forward citations on average per patent.

Xerox_Forward_Citations_EnvisionIP

Our analysis suggests that Xerox and ICAP have potentially identified standout patents from Xerox’s immense patent portfolio, given that the Xerox patents at auction have a significantly higher reverse and forward citation count than the rest of the portfolio as a whole.  In addition, the patents selected for auction have a 26% longer remaining term than the rest of the portfolio as whole.

*A reverse citation is a prior art reference considered by the USPTO during prosecution of the underlying patent application, and it can include art identified by the patent examiner, as well as art submitted by an applicant.  A high reverse citation count indicates that the USPTO has deemed the patent claims novel over a larger number of prior art references. This presumably provides difficulty in identifying previously unknown prior art during an invalidity challenge.

A forward citation occurs when a subsequently filed patent application references an earlier issued patent during examination. For example, if Apple files a patent application on server technology, the patent examiner may review a previously issued IBM patent.  In this case, the IBM patent would receive a forward citation.  A high forward citation count indicates that a particular patent may be fundamental to its claimed technology area and industry.

It is important to note, however, that the strength and quality of patents must be determined using a variety of factors, such as claim analysis, prosecution history review, litigation analysis, etc., with citation counts being only one factor.

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