At a time when companies are willing to pay billions for a bankrupt telecom’s patents, there’s no question that there’s money to be made off a company’s intellectual property.

But in a decision Thursday arising out of litigation over Argentina’s default a decade ago, a federal judge in Manhattan held that simply applying for and holding patents doesn’t give rise to commercial activity, at least as defined by the Foreign Sovereign Immunities Act. The decision marked a setback for vulture investment fund Aurelius, which had turned to Barry Ostrager of Simpson Thacher & Bartlett for a novel strategy to try to collect on $1.2 billion in judgments against Argentina.

While bondholders like Aurelius have collectively won billions of dollars in judgments against Argentina stemming from its 2002 default, they have struggled to collect on them. In an effort to satisfy some of its judgments, Aurelius sought attachment orders against 47 U.S. patents or pending patent applications connected to Argentina state entities.

After Judge Thomas Griesa signed the vulture funds’ order to show cause in May, Argentina’s lawyers at Cleary Gottlieb Steen & Hamilton moved to vacate the order. Joining in that motion was BASF Corp., which had a licensing agreement for two patents owned by Argentina’s national institute of agricultural technology.

Foreign countries are typically immune from attachment unless a plaintiff can prove an exception under the FSIA. One major exceptions is if a foreign government’s property was “used for a commercial activity in the United States.”

In his decision Thursday, Judge Griesa wrote that he saw no evidence that 45 of the 47 patents were in commercial use in the United States. “The filing of patent applications and the obtaining of patents represents at most the generation of a property interest, not its commercial use,” he wrote.

Judge Griesa also didn’t find any commercial activity related to the two pending patent applications for herbicide-resistant rice plants that BASF was licensing. The licensing of patents could constitute commercial activity, he wrote, but BASF said it had no plans to commercialize the technologies within the U.S. And the judge signaled that even if the royalty payments were enough to create commercial activity, Aurelius couldn’t seek an attachment order because the royalties were paid outside the United States to BASF’s Dutch affiliate, BASF B.V.

Ostrager did not rule out an appeal when we reached him Friday. “Our position is that the patents are themselves an inherently commercial asset that has value, because they can be bought and sold,” he said.

Neither Argentina counsel Carmine Boccuzzi of Cleary Gottlieb nor BASF counsel S. Alyssa Young of Leader & Berkon responded to requests for comment.

(Note: Due to a typo, Cleary Gottlieb partner Carmine Boccuzzi’s name was misspelled in an earlier version of this story. We regret the error.)