Strategic Patent Acquisition Before Licensing: Why “Buy First, License Later” Is Gaining Ground

Introduction : As everyone knows, we've seen a seismic shift in how IP management works as we move into the tech economy. Rather than the standard path of developing the patent in house, then seeing how that may have traction for licensing, companies are starting to buy patents to build IP for an eventual licensing campaign. This 'buy first, license later' trend is becoming dominant in the technology space, big telco and pharma. BlackBerry sold 32,000 patents to a third-party investor in 2023 for $170 million (about $5,300 per patent), and this licensing approach, for years coming from in-house R&D pipelines, now stems from companies building the portfolio through purchases.

Legal Provisions

• United States Patent Law,
• India Patent Act, 1970

- Section 68: Validity of patent licenses,

- Section 84: Compulsory licensing,

- Section 90: Terms of compulsory license,

- Section 25(2): Post-grant opposition;

- Section 39: Foreign filing restrictions

Legal Analysis

The Move Away From Build-To-License, Toward Buy-To-License

Why the Old Way Is Breaking

In The Past: Build (in-house), then License – It Used to be “Build and license” your patents. The model, derived in-house, now struggling with:

Time Disadvantage: It takes years for patents to even be issued-during that time your industry moves so fast it might no longer be an effective use of intellectual property. “Invalid” Risk: 45 % of lawsuits over patented tech eventually result in patent invalidity - a huge drain on time and money. Rising litigation. The number of patent cases filed spiked 22% in 2024 over 2023 - and companies involved in those cases paid out $4.3 billion in damages.

Using targeted acquisitions to bolster licensing negotiation position

Developing Leverage for Cross-Licensing: In technologically saturated areas-such as semiconductors, telephones, or, a bit farther off in terms of “ Patent War zones ”, -technology companies amass patent portfolios to negotiate reciprocal patent licenses. Operating companies constitute 40–75% of annual patent transactions on the market. Inter Digital has $404 million in licensing revenue as of the latest reported figures in 2022 for acquired patents and their licensing with such companies as Apple, and Samsung, Qualcomm, one of the largest chip producers, licensing revenue exceeds over $1.3 billion per quarter.

The Shield Effect of Defensive Acquisition - Protecting against patent infringement lawsuits : Companies will consistently take patent possession for their respective technological area of interest before Non-Patenting Entities (NPEs), which would enforce the patent against infringers. In the last two decades, the prevalence of IP suits against big tech have more than tripled, and nearly half involve the involvement of third-party financers.

Offensive Capabilities Through Expanded Patents Portfolio - Companies taking possession of a broad or seminal patent portfolio would be empowered to cross-license patent portfolio to competitors while also be allowed to pursue infringement against such competitors if it so chooses. The key is to own patents with litigious power.

Blocking Access to Strategic Assets - preventing competitor action. Sometimes, the best acquisition you can make of a technology asset is simply keeping it out of the possession of a competitor. In 2023, US issued patents that were for sale increased 34% from previous years-opportunities arose from tech assets from different sectors. It gave an opportunity for some tech firms to remove valuable technology from another tech competitor. For example, IBM selling 237 of its patent portfolio to a China based organization connected to the TikTok owner - this attracted some “attention” from other companies on this deal.

The “Catch & Release” Strategy: One method that Patent Intermediaries are increasingly employing involves purchasing large collections of patents, making their use available to their subscribers for some period, then reselling them once interest has decreased or an optimal sales point has been reached. The entity RPX Corp buys patent portfolios with stated non-use in mind - but can also license members, with prices for membership ranging from $30,000–$5 million (depending on the company’s size and stature) for protection.

Driving Forces Behind the Trend - Growing Volume of Patent Transactions:

Patent deals are now being made with unheralded frequency. While we are not expecting a significant rebound in the aggregate value of the patents transacted in 2025 in line with their recent history, the sharp increase in deal volume signals a long overdue acceleration of momentum in the patent dealmaking arena. - Increased NPE Acquisition Momentum: A report on patent dealmaking in Q1 of this year from the GTT Group identified an acceleration in the momentum of NPE Acquisitions. NPE's have accounted for roughly 62% of the patent cases in tech and filed over 2,500 high tech patent cases last year often via patents that NPE’s acquired from original patentees in operating companies. - Pricing Information: The median asking price for each patent asset was $125,000 up from $100,000 in 2022.

$45B of total ask was placed on the market, and some $16B was transacted. Strategic Frameworks for Licensing Based on Acquisition –

Framework 1 - defensive first When to Use this framework: Your company operates in high litigation value areas (e.g., tech, electrical).

Approach:

1. Proactively identify patents with value to you that NPE's have already claimed

2. Act quickly and acquire patents before the NPEs get to you

3. Utilize them in an affirmative role as defensive leveraging in any negotiation against them

4. Potentially licensing those defensively important patents in defensive pools ROI

5. Potential legal cost savings could be in the hundreds of millions.

Framework 2 - defensive with monetization focus When to Use this framework: Where your patents are related to industry standard essentials (SEP) and core technologies.

1. Procure significant fundamental patent assets

2. Build a robust licensing program directed to numerous industry players

3. Actively litigate against non- licensees.

4. Begin building scalable revenues

5. ROI- $404M yearly licensing revenues (InterDigital)

Framework 3 - tech acquisition: When to Use this Framework:

Where you're expanding into a new market/product and don't already possess core technology, where your company is starting up and lacks deep tech experience.

Approach:

1. Focus on buying a license or acquisition with technology that is proven to work

2. Acquiring rights enables your immediate "freedom to operate".

3. Spend less on years of lost research and development costs.

4. Leverage patent as a part of licensing against technology

5. Real example (Ford acquiring 137 of Argo AI 's self driving tech patents when the firm shut down in Dec 2022)

Framework 4 - portfolio for cross-licensing When to use this framework: Where you operate in an industry where patent ownership is diffused throughout.

Approach:

1. Invest strategically in buying key tech patents that are enabling.

2. Do it in a strategic fashion such that quality beats out quantity.

3. Utilize these in cross licensing agreements with strategic IP partners.

4. Build Leverage against industry standards groups.

Key Take Away: Owning strong quality, high-powered patents grants negotiating power, while weak patents weaken it Key Success Factors for the Organization, High-Quality Patents Trump Low-Quality Patents - the key in many industries is engineering out the high value Chokepoints into commercially viable litigation Quality Patent protection. Owning One properly constructed, commercially valuable Patent to cover an industry leading Chokepoint could be more valuable then the best performing other 5,000 or so. Strong Patents Enable: A more defensible competitive position from those looking to improve upon what it is you’re selling Roadmaps for what you do next.

While the weak patents enable a roadmap for competitors to “get around” what you offer even more quickly & cheaply. A weaker patents position would give your competitor a clue on what you’re working to avoid.

Case laws

Akamai Technologies, Inc. V. Limelight Networks, Inc. – A 2014 US Supreme Court case decided the extent of U.S. Patent infringement liability. Specifically, it held unanimously that the defendant may not be liable for inducing infringement unless another party has directly infringed all the steps of a patented method.

Gust, Inc. V. AlphaCap Ventures LLC (905 F.3d 1321) – In a major patent case relating to predatory litigation and legal costs, an NPE plaintiff, AlphaCap, sued a crowdfunding company Gust over its patent. When Gust refused to take a low offer from the company, they succeeded in invalidating their patents as unpatentable subject matter, specifically an unpatentable abstraction or mathematical formula under the Alice framework after moving their case to New York. The district court did award over $500,000 in attorney fees – a total sum to be awarded to Gust and its attorneys on grounds that the company had pursued its litigation in bad faith. This case, while still important to NPE-centric litigation strategy, was less than a full victory in terms of fees awarded to the defendant’s legal counsel after the Federal Circuit held, not surprisingly, that their lawyers had reasonable basis for challenging the case against them in such a quickly evolving area of patent law.

The attorneys ultimately were awarded attorneys fees under a different section for bad faith allegations – not the fee-awarding provisions that may otherwise penalize opposing counsel.

Gust ultimately had their case removed to the Southern District of New York for further consideration. (Update: Since this writing it seems Gust obtained over half a million dollars in legal fees after a 6 month litigation cycle with an NPE.) In Gust v. AlphaCap, which we are reviewing in this article, a non-practicing entity (NPE) brought patent litigation against crowdfunding business Gust. In its defence, Gust had success invalidating the patents in a New York District Court, and were awarded reasonable attorneys’ fees. Gust won as it successfully argued for the patents to be deemed unpatentable, on grounds that it’s based on a mathematical formula – thus abstract unpatentable ideas under the United States legal doctrine called the alice framework .

Federal Circuit, in part, vacates and remands the district court order granting Gust over $500,000 in attorneys fees on its bad faith claim, holding that attorneys arguing their clients “’reasonable and nonfrivolous defense to infringement,’ do not engage in frivolous arguments in a rapidly-evolving area of law in ways that warrant a fee award against their attorneys for arguing non-meritorious points in the case itself,” but “their arguments for attorneys’ fees and attorneys’ costs do” have some merit.

Conclusion

A “buy first, license later” mentality could revolutionize your intellectual property (IP) strategy if you’re a company looking for leverage. For speed, quality, and licensing bargaining leverage, companies need a solid patents “buy” pipeline before they can develop their patent licensing strategy. As shown in the Gust v. AlphaCap case, to protect themselves, any acquiring party cannot disparage patents after purchase without also owning and controlling sufficient licenses, or, at a minimum, understanding their licensing strategy with their acquisition before a challenge.

Acquired patents are similar to developed in-house patents according to Federal Circuit case data: 61% of acquired patent filings were sustained in comparison to 64% for in-house patents in recent litigation at Federal Circuit court.

This supports the idea that these patents maintain roughly equivalent value during licensing negotiations, even after acquisition. From the Indian perspective, there is a Patent Act 1970 that has many specific requirements and conditions concerning patents: licenses, foreign applications etc… to be followed. Article 68 provides that licenses granted to an applicant need to be signed by the applicant and the patent holder and also requires registration with the patent registrar. Foreign filing requirements (article 39 of The Patent Act 1970), non- compliance of these rules may result in Compulsory license (articles 84-94).

Author :- Madhurima-Gope, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.

Endnotes

1. The Patents Act, 1970 (Act No. 39 of 1970), ss 25(2), 39, 68, 84 and 90, Government of India, available at https://www.indiacode.nic.in , accessed 26 June 2026.
2. World Intellectual Property Organization (WIPO), World Intellectual Property Indicators 2025 (WIPO 2025), available at https://www.wipo.int/publications , accessed 26 June 2026.
3. United States Patent and Trademark Office (USPTO), Patent Assignment Dataset and Patent Assignment Resources, available at https://www.uspto.gov/patents , accessed 26 June 2026.
4. Akamai Technologies, Inc. v Limelight Networks, Inc., 572 U.S. 915 (2014), Supreme Court of the United States. 
5. Gust, Inc. v AlphaCap Ventures LLC, 905 F.3d 1321 (Fed. Cir. 2018).
6. IAM Market, Patent Transactions 2025 Annual Review (Intellectual Asset Management, 2025), available at https://www.iam-media.com , accessed 26 June 2026.
7. RPX Corporation, RPX Annual Review and Defensive Patent Acquisition Model, available at https://www.rpxcorp.com , accessed 26 June 2026.
8. Organisation for Economic Co-operation and Development (OECD), Enquiries into Intellectual Assets and Technology Transfer: Patents, Licensing and Innovation (OECD Publishing), available at https://www.oecd.org , accessed 26 June 2026.