Comments for A typology of IP intermediaries Priya Jindal 5 October 2016 As discussed in the article, a variety of intermediaries have emerged in the market for technologies, seeking to create efficiency and liquidity. These include the transaction facilitators that match the buyers and sellers of IP; as well as merchants that acquire and monetize patents. Just like the articles mentioned above that analysed the contribution of PLECs or patent trolls, I…Read moreAs discussed in the article, a variety of intermediaries have emerged in the market for technologies, seeking to create efficiency and liquidity. These include the transaction facilitators that match the buyers and sellers of IP; as well as merchants that acquire and monetize patents. Just like the articles mentioned above that analysed the contribution of PLECs or patent trolls, I tried to undertake a similar analysis for online IP platforms. One of the reasons patent markets fail is because of the high search costs involved, both on the seller (i.e. patent owner) and the buyer (patent user) sides. Transaction facilitators like online IP platforms and IP auction houses seek to bridge this gap. Thus, they try to match the sellers with the buyers, without ever taking ownership of the patents involved. In the last 15 years, many online IP platforms have emerged, but none of them have successfully provided the value expected. Some of the platforms that emerged in the past decade have either renamed themselves, changed their value proposition, or have shut down. Some haven’t been able to scale up their operations and limited their scope. Some have diverged as brokerage firms, earning only through commissions on completed transactions. Some offer technology consulting services now, helping buyers and sellers and charging consulting fees. A similar failure can be seen among the IP auction houses. These sought to eliminate the market failure of uncertainties in the valuation of patents. However, these auctions have been able to create low participation and low transactions. Platforms, in any context, are faced with problems of network effects. More buyers attract more sellers and more sellers attract more buyers. The vice versa stands true as well. IP platforms have not been able to attract enough participants on either side. One of the reason for the same is the credibility factor, thus unable to reduce search (due diligence) costs. Thus, this limited traction shows that these intermediaries have not been able to provide enough social value. Reference: Belleflamme, P. (2013). A Typology of IP Intermediaries – Report for PATLICINFO. http://perso.uclouvain.be/paul.belleflamme/Patlicinfo/Papers_files/IPIntermediariesTypology2.pdf Technology Market Transactions: Auctions, Intermediaries and Innovation By Frank Tietze Andrei. Hagiu & David. Yoffie. Intermediaries for the IP market: Working paper, 12-023. Harvard Business School (2011) http://hbswk.hbs.edu/item/intermediaries-for-the-ip-market Show less Reply Garima Kaushal 5 October 2016 As the importance of IPR increased for innovators, the growth of intermediary services to IPR gained momentum. One such intermediary service is that of IPR Insurance. it almost sounds paradoxical to have protection for a protective instrument. But, IPR insurance does have its advantages. For starters, it protects patent holders against legal expenses to pursue infringements by other parties, to…Read moreAs the importance of IPR increased for innovators, the growth of intermediary services to IPR gained momentum. One such intermediary service is that of IPR Insurance. it almost sounds paradoxical to have protection for a protective instrument. But, IPR insurance does have its advantages. For starters, it protects patent holders against legal expenses to pursue infringements by other parties, to defend infringement accusations, or even just to cover damages and financial loss. In the light of the existence of “patent trolls”, for example, it is easy to see how IPR Insurance would be a boon to patent holders. I do think though that this in a way encourages patent trolling. It would not be far-fetched to imagine a situation where an organisation profited from both patent troll organisations, as well as from the organisations that provided insurance against the same – much like the situation of some of the leading financial institutions in the US during the sub-prime crisis. Show less Reply Vandan Jain 5 October 2016 Through an attempt to shed light on the topic, I would like to comment on the value generated by IP Auction houses, IP based M&A advisory firms and Analysis Software and Services firm. Some of the biggest challenges faced by any patent holder is finding the right buyer and estimating the true value of the patent as has been pointed out…Read moreThrough an attempt to shed light on the topic, I would like to comment on the value generated by IP Auction houses, IP based M&A advisory firms and Analysis Software and Services firm. Some of the biggest challenges faced by any patent holder is finding the right buyer and estimating the true value of the patent as has been pointed out in the article. The idea is to see whether the intermediaries are able to solve the problem or not. Talking about IP auction houses, they can solve the first problem i.e. matching the right buyers and sellers. It does create trust among buyers and sellers thereby making the whole process smooth during which it saves a lot of cost. When we talk about IP based M&A advisory firms, I don’t really think that they add a lot of value because they should be plagued by exactly the same problems that the patent holder / buyers must be facing that is of lack of information. It seems like they act as intermediary just to make some money out of it. When it comes to IP based analytics and software services, they can provide some value by providing additional data points. But on the whole, it seems questionable as to the value they actually generate. Patents have no history and hence any king of projections with respect to its valuation is deemed to be faulty. Patent valuation is more like valuing a startup. You don’t really know how to attribute a value to it. Conventional methods of valuation do not work. There is a lot of subjectivity. This combining with the dangers of litigation can attract a lot of intermediaries looking to make a quick buck. Show less Reply Philipp Flesch 5 October 2016 It seems that IP intermediaries have built a huge side-business within the IP industry. The number of about 38 different (main) IP typologies, registered at Fraunhofer MOEZ, shows the size of this “sub-industry” in IPR. However, the core of Intellectual Property Rights (IPR), is still the same: “protect a firm’s tangible assets” and “allowing enterprises to profit from their creative and…Read moreIt seems that IP intermediaries have built a huge side-business within the IP industry. The number of about 38 different (main) IP typologies, registered at Fraunhofer MOEZ, shows the size of this “sub-industry” in IPR. However, the core of Intellectual Property Rights (IPR), is still the same: “protect a firm’s tangible assets” and “allowing enterprises to profit from their creative and broadly innovative activities”(European Commission on IP, http://www.ec.europa.eu). To get an impression of the IPR landscape was formerly done in a more old-fashioned and less sophisticated way: companies, wanting to invent new products or services could see a “patent book” at the town hall, which contained all registered patents, to see whether a certain patent is already registered in the market or if there might be opportunities for new inventions. Nowadays, and that is the IPR typology I would like to focus on, a rising business opportunity within this industry are IPR exchanges. Those exchanges are similar to stock exchanges, such as the NYSE and the NASDAQ or simply put: marketplaces to match IP sellers and buyers. Exchanges also allow to hedge IP exposure (risk management), speculate on the value of developing technologies or invest in patents directly as an alternative to equity markets. Now when we ask for social values, that are IPR exchanges might carry I consider three major ones: Sharing, Community and Social Contribution (“giving back”). To illustrate each of the values, I selected the following three stakeholder groups, which sort of represent those values: IP buyers/sellers, investors and the society in terms of technological development. Let me quickly address each of those stakeholders to see the social value that IPR exchanges contribute: Small or large businesses have an interest in IPR exchanges, as they can monetize their IP or know-how in an easier way and, if done in a more professional way (e.g. patent trolls) even create a new revenue stream. In markets we often find big companies seeking for technologies, that are often discovered by smaller companies in fragmented markets. IPR exchanges display a broad range of patents highly transparent and therefore enables buyers to have a first impression about the IP market in general. The same approach can be considered for the seller. Investors have different intentions to participate in exchanges. Among others, investors can speculate or manage their risk. Investing in IPRs is similar to invest in knowledge of firms for the future. When speculators put their money in a certain IP, this could create some buzz around it and companies start to show more interest. This could work as marketing machine: The more speculators invest their money, the more the markets show interest and a patent could have more support. When talking about hedging risk, usually bigger companies are interested to diversify their risk. Often, technology companies run the risk to be specialized too much in a certain technology. By investing in IPRs that are anything, but not tech-biased, larger companies can diversify properly. Last but not least, where IPR exchanges probably brings most of its social values is the society. As mentioned in the previous two aspects, the exchange helps to make the IPR market more transparent and accessible for the society. Patents are used more efficient by small and big companies and overall accelerate the progress of future technologies or industry changing achievements. At the end it’s the society, that benefits from the R&D of companies and specialized firms. The IPR exchanges play an important and supporting role within this process. Show less Reply Cocquereaux Camille 5 October 2016 As we know markets for patents are unstable for different reasons (high cost research, uncertainties of patents' value,...).These article is about the role of the IP intermediaries in the organization of these markets. The IP intermediaries are people who makes money by solving problem came from market failures. The question we want to answer is what kind of social value…Read moreAs we know markets for patents are unstable for different reasons (high cost research, uncertainties of patents’ value,…).These article is about the role of the IP intermediaries in the organization of these markets. The IP intermediaries are people who makes money by solving problem came from market failures. The question we want to answer is what kind of social value do they bring? There are many kind of IP intermediaries so we will analyze the social contribution of the IP-Backed Lending firms. According to Raymond Millen IP-Backed Lending firms are “…entities that provide financing for IP owners, either directly or as intermediaries, usually in the form of loans, where the security for the loan is either wholly or partially IP assets.”. The IP-Backed Lending firms is the link between the firms and commercial lending institutions. In my opinion these kind of IP intermemiaries brings social value by providing ressources to firms which don’t have funds. Indeed it can be difficult for them to received money for banks which take into account only accounts receivable and tangible assets. In the contrary, the IP-Backed Lending firms also consider a borrower’s or target company’s IP assets. In this way firms can develop new project, improve their productivity, invest money, be competitive on the market, support cost research… However all the IP intermediaries doesn’t bring social value. As example the patent trolls which can be defined as “companies that do not invent anything but instead purchase patents and use them to sue big companies with deep pockets”. In these case, these IP intermediaries only aim to make money by suing firms which uses technologies protect by patent. In the contrary of IP-Backed, patent trolls don’t use patent to help firms, to solve problem or to improve productivity and innovation. In conclusion, IP intermediaries as IP-Backed Lending firms can provide social value by giving opportunities to firms to have funds for innovation,project,….but on the other hand other IP intermediaries as patent trolls may also have negatif effects by stifling innovation. Sources : http://www.ipwatchdog.com/2013/01/23/ip-landscape/id=33356/#F11, consulté le 5 octobre 2016. http://www.ipdigit.eu/2011/10/what-to-think-of-patent-trolls-the-return/, consulté le 5 octobre 2016. http://www.ipdigit.eu/2010/11/what-to-think-of-patent-trolls/, consulté le 5 octobre 2016. http://www.ipdigit.eu/2013/03/a-typology-of-ip-intermediaries/ Show less Reply van Raemdonck Marion 5 October 2016 Firstly, I think that patents encourage people to develop ideas, to make some researches, to innovate and that they protect them from the copyright. Patents reassure these thinkers and makers which is in itself a great invention. According to the text, “markets for patents are typically difficult to organize” and it exists some intermediaries. In my opinion, this is a…Read moreFirstly, I think that patents encourage people to develop ideas, to make some researches, to innovate and that they protect them from the copyright. Patents reassure these thinkers and makers which is in itself a great invention. According to the text, “markets for patents are typically difficult to organize” and it exists some intermediaries. In my opinion, this is a big business to develop. It is difficult for companies and freelancers to take correctly care of this because they often have other knowledge that how to get a patent? So I think that intermediaries are helpful. However, a patents is a right which everybody should have access. And with all these complex procedures and the business developed around it, patents are not enough accessible anymore. I think that this is a problem that the governments should solve because it will be harder and harder to regulate this business. Governments could simplify the procedure to reduce the business and to make it more accessible. Finely, public could be more educate and better informed about all of this. Like that all this discussion will perhaps be avoid one day. Show less Reply Antonia Entorf 5 October 2016 As it became clear through many other comments, IP intermediaries in general can be very useful and important for companies. On the other hand, there always remains the question whether they are harmful too. In my analysis, I want to focus on intermediaries for IP rights (IPR) Litigation and especially on the advantage of arbitration and mediation over proceedings in…Read moreAs it became clear through many other comments, IP intermediaries in general can be very useful and important for companies. On the other hand, there always remains the question whether they are harmful too. In my analysis, I want to focus on intermediaries for IP rights (IPR) Litigation and especially on the advantage of arbitration and mediation over proceedings in a court. At a first glance, receiving help by a person with the relevant expertise for IPR seems completely reasonable. Consider the case of an infringed IP owner. In this case, one appreciates the availability of a specialised expert that argues in favour of your position. You might trust in the protection of your IPR because you are confident of the ability of your legal aid. One would therefore be less frightened about imitation attempts. Thus, your incentive to innovate might rise since the risk of imitations declines. As a result, society can benefit from innovative products and more sophisticated technologies that help them tackle tasks more efficiently. By considering only this side, you would forget that the other party (the alleged infringer of IPR) can profit from such experts as well. Lemley and Shapiro (2005) expressed this problem the following way: “Litigation often implies that patents are best viewed as ‘probabilistic property rights’ or ‘lottery tickets’.” One could assume that the probability for a IPR litigation increases when there are experts on this topic acting as intermediaries. Here I want to present an example: Hoffmann Eitle is a German company supporting entrepreneurs in protecting their IPR. In this case study, they helped a client who has not yet had a granted patent. A competitor wanted to sell a product which was similar to the one this client was selling. (For more details, follow this link: https://www.hoffmanneitle.com/en/case-study/cosmetics/) Now, one could assume that this client wouldn’t have acted against his/her competitor in the absence of well trained supporters. It was very risky to start a litigation without the granted patent since the legal basis was dubious. This time it turned out well for the innovator. But with the number of litigations the uncertainty rises too. Thus, the question whether intermediaries for litigation increase social welfare or not remains unresolved. Let’s analyse for what reason one should try to solve a dispute through arbitration and mediation before going to court. One advantage is that both parties can decide on the language used during this litigation. Due to globalisation, it is likely that an entrepreneur has a dispute with someone from a different country. Therefore, it might be important that it is not the court deciding on the language. One’s opponent might be discontented if someone makes decisions about her/his company s/he can’t understand precisely or not at all. This can make tradeoffs more difficult. A second advantage is that arbitration and mediation can be much faster than a court litigation. In the latter, much time can go by with waiting for the next meeting. This long period of uncertainty regarding the outcome of the litigation obstructs the companies’ production. As soon as the litigation is settled one can restart selling the product or collecting ideas for another innovation what makes arbitration and mediation more efficient. The last advantage I would like to mention -and this one might be regarded as an advantage for the society- are the costs. In a court, you need judges who are payed (at least in some countries, e.g. Germany) by the government and eventually with taxes. In contrast to a mediation, the parties need to be represented by lawyers if the case is to be settled in court. For a mediation, you need only one person, the mediator. I hope that I was able to convince you of arbitration and mediation. Even more advantages can be found here: http://www.wipo.int/amc/en/arbitration/why-is-arb.html http://www.wipo.int/amc/en/mediation/why-mediation.html other resources: https://euipo.europa.eu/ohimportal/en/ip-mediation-conference http://www.uil-sipo.si/uploads/media/Ristin_MediatonArbitrationPatentDisputes_3-6-2014.pdf http://docserver.ingentaconnect.com/deliver/connect/aea/08953309/v27n1/s3.pdf?expires=1475430754&id=88767555&titleid=6117&accname=Guest+User&checksum=39DD2550CF7FF257DF298FD1F65B9363 Show less Reply Akalibu Guélord 3 October 2016 With this article, we can conclude by two differents ways: a positive way and a negative way. In other words, Ip intermediaries is improving the social value by solving market inneficiencies but also decreasing that by "stealing" patent which they don't exploit basically. Its a particular problem which becomes increasingly discussed, mostly in universities place. Positive: As it is said,…Read moreWith this article, we can conclude by two differents ways: a positive way and a negative way. In other words, Ip intermediaries is improving the social value by solving market inneficiencies but also decreasing that by “stealing” patent which they don’t exploit basically. Its a particular problem which becomes increasingly discussed, mostly in universities place. Positive: As it is said, search cost are very high and, therefore, it becomes very difficult to find ideal trading partner. With thoses new companies, so-called patent troll, it facilitates the incentive of investment for partners. Also, with patent troll’s occurence, reals basics authors will be more careful to not make market failure and ensure patent clearly. Finally,it is absolutely benefic for social value that patent are combinated by another patent which create value Negative:Mostly, Ip plateform or patent troll are seen as a money buisness where companies serve itself by taking back patent of company author. It seems to work as a public good. Anyway, It still possible to make a patent auction which facilitate decisions of buyer and seller because a lot of website were been made to control that and also make a clear transparence information. For more information for Ip and Innovation: http://www.crai.ca/sites/default/files/publications/IP-Literature-Watch-September-2014.pdf Show less Reply Alicia Bastings 30 September 2015 As the IP marketplace bears inefficiencies, some actors are trying to make money out of it. These actors are called IP intermediaries. It is greatly discussed, whether those intermediaries bring any social value. In this comment, I’ll try to analyze the case of the technology/IP spinout financing firms. First of all, according to Raymond Millien, technology/IP…Read moreAs the IP marketplace bears inefficiencies, some actors are trying to make money out of it. These actors are called IP intermediaries. It is greatly discussed, whether those intermediaries bring any social value. In this comment, I’ll try to analyze the case of the technology/IP spinout financing firms. First of all, according to Raymond Millien, technology/IP spinout financing firms are ventures “specializing in spinning out promising (non-core) IP which has become “stranded” within larger technology companies, or creating joint ventures between large technology companies to commercialize the technology and monetize the associated IP ». Then, what I find interesting with this kind of intermediaries is the contrast with some other ones such as the patent licensing and enforcement companies, also known as “patent trolls”. Such firms buy patents with one goal in mind: getting the opportunity to sue big and rich companies for rights infringement. They do not own this IP in order to use them. Therefore, they are deeply criticized, and also by politicians such as President Obama and the US Senate. And that is, in my opinion, understandable. Indeed, as said by Daniel P. McCurdy “patents are created for a single purpose—as an incentive to encourage innovation and, through such innovation, to increase the general economic well-being and prosperity of the nation. » However, when patents are only used to gain profits from suing other entreprises because they are using technologies protected by them, innovation may, in actual fact, be refrained because of this patterns and these loose thus their main raison d’être. Also, these innovations could have, in most cases, improved production processes, and thus productivity. And that is then a loss when patent trolls operate. But when looking at the case of the IP spinout financing firms, when can notice that we have the opposite effects happening : These firms allow some technologies to be use whereas these might not have been without them. They therfore foster innovation even more and simutaneously productivity. In conclusion, I’m in the opion that technology spinout financing firms actually bring social value to the pratice of issuing patents. Then, we cannot say that IP intermediaries should all be prevented from doing their job. Sources: Millien, Raymond. “Landscape 2013: Who are the Players in the IP Marketplace?”. [En ligne]. http://www.ipwatchdog.com/2013/01/23/ip-landscape/id=33356/ (accessed September 30, 2015). Belleflamme Paul. “What to think of ‘patent trolls’? The return”. [En ligne]. http://www.ipdigit.eu/2011/10/what-to-think-of-patent-trolls-the-return/(accessed September 30, 2015). Belleflamme, Paul. “A typology of IP intermediaries”. http://perso.uclouvain.be/paul.belleflamme/Patlicinfo/Papers_files/IPIntermediariesTypology2.pdf (accessed September 30, 2015). McCurdy, Daniel P.. « Patent trolls erode the foundation of the U.S. patent system ». http://www.scienceprogress.org/wp-content/uploads/2009/01/issue2/mccurdy.pdf (accessed September 30, 2015). Show less Reply BEKKAL Abdelfettah 30 September 2015 There are many kind of IP intermediaries, however I will focus my analysis on patent brokers .In fact ,patent brokers are defined as “ organizations whose business is to match supply and demand of technology and to facilitate IP based transactions” (Rush et al.2007).On the one hand ,brokers can buy patents from some technological firms and sell them to other…Read moreThere are many kind of IP intermediaries, however I will focus my analysis on patent brokers .In fact ,patent brokers are defined as “ organizations whose business is to match supply and demand of technology and to facilitate IP based transactions” (Rush et al.2007).On the one hand ,brokers can buy patents from some technological firms and sell them to other firms. On the other hand, they can transfer a patent without buying it. The presence of brokers in some fields became essential to achieve the transactions like in real estate,where the sellers usually don’t have any idea about the value of their buildings or in which conditions they can sell them…,but why the presence of a broker is necessary in this case as in much other cases? To find answers to this question, we should do a simple economic analysis. If there are two parties included in a given transaction and the both are perfectly informed, therefore the presence of a broker is not required.So,there is a broker where there is a market failure, especially with the existence of incomplete information and externalities namely the free riding effect . However, some brokers may be the cause of this market failure if they hide the relevant information ,but with the mature of the concerned industry this problem begins to disappear. Despite the high number of brokers in the patent market ,there is a lack of sufficient liquidity and transparency ,in addition to the high fee required after each transaction . ”Burt (2005) suggested two possible ways to control for the effects of brokerage.One is to study returns to the people connected by brokers,the other is to study returns to the broker”. I finish this commentary by this sentence stated by Lemeley in 2007 “a market for right of exclusion has a lower value for society than a market for knowledge“. Mario Bennasi,Alberto Di Minin(2009),“Playing in between:patent brokers in markets for technology”, Journal Compilation ,<> ,30/09/15. Andrei Hagiu and David B. Yoffie ,”The New Patent intermediaries”,<>.30/09/15. Julien Pénin (June 2011),strategic uses of patents on markets for technology:Technological firms,brokers and trolls,University of Strasbourg,<>.30/09/15. Show less Reply Quentin Gilbert 30 September 2015 The problem here is that knowledge is a public good which means that it is not really possible to exclude anyone from using it. Because of that, the original inventor will not be rewarded for his investment and the incentives for further research will become low. This will result in an underinvestment of knowledge. That is the reason why IPR…Read moreThe problem here is that knowledge is a public good which means that it is not really possible to exclude anyone from using it. Because of that, the original inventor will not be rewarded for his investment and the incentives for further research will become low. This will result in an underinvestment of knowledge. That is the reason why IPR have been created but we can see that those tools are not fixing the issue entirely. Work has to be done and people are thinking about it as this article proves it. After reading this article, I understood that some means are slowly put in place in order to make the patents more efficient. I think the patents do not work that well because they are at the heart of a dilemma. Indeed, the patents are useful and precious for the innovative firm. With the protection of a patent, the firm will make sure it can cover its costs and has thus the right incentive to innovate. Without the patent, it is not sure that the firm would dedicate big money for a project with an uncertain outcome. The uncertainty is one of the main characteristic of an innovative process. On the other hand, patents are harmful for the society and the consumers in particular. The patents are decreasing the competition among the firms and thus the protected firm is willing to charge a higher price than in perfect competition with full information. The consumers pay more and the social value is not optimal. So with the patent tools, there is always a looser. I was thus wondering if instead of trying to make the patents more efficient, we should not work on other intellectual property rights. To protect their innovation, firms could use informal ways such as secrecy, lead time, complexity or continuous innovation. The problem of appropriability is a real issue today because innovation is crucial in our society and we must fight to give the incentives to firms to innovate bearing in mind the consumers’ welfare. Show less Reply Delphine Struyf 29 September 2015 We all know the market for patents is unstable for multiple reasons (uncertainty about prices, difficult valuation of patents because of their uniqueness, owners and buyers that can't come together...). These patent market failures can lead to failure of small companies or individual inventors, that depend highly on those patents. But society needs small firms because they create jobs and…Read moreWe all know the market for patents is unstable for multiple reasons (uncertainty about prices, difficult valuation of patents because of their uniqueness, owners and buyers that can’t come together…). These patent market failures can lead to failure of small companies or individual inventors, that depend highly on those patents. But society needs small firms because they create jobs and revenue for the country. As small firms also contribute to economical and social development, we need to protect them. Therefore, several Patent Intermediaries tried to find a way to have small companies and independent inventors to be paid for their findings, which is essential if we want them to survive. I think standard-setting organisations can be helpful for small organisations because of the shared knowledge in this system. If firms create standards that every participant has to agree on, it means that they’ll all share the same technology. And this could possibly foster innovation among the participating firms. Standard-setting organisations earn money thanks to payments of firms that agree to align those standards. Some will argue that small firms won’t participate in this kind of organisation. But if some rule imposes that this Intermediary has a limited access (namely to small firms), I think it could help those firms (and individual inventors) to be paid for their ideas. Social value will be increased because (1) small firms will survive, which may foster our economy, (2) shared knowledge can lead to more innovation, (3) different firms with different cultures share the same knowledge and can thus give their opinion on the standards, and (4) participating firms face lower transaction costs and have access to affordable patents. For these reasons, I think standard-setting organisations are a good solution to an unstable patent market, if the access is limited to small firms. Therefore, laws or government intervention can be useful. Moreover, the use of the Internet can accelerate the process of sharing knowledge. This would help small firms to focus on developing better standards rather than losing time to look for buyers for their patents. Show less Reply Gaetan 26 September 2015 They are differents types of IP Intermediaries such as Patent brokers, Non-practicing entities (NPEs), Defensive patent aggregators, Online IP platforms and so on. It would take a lot of time to explain each of them. Then I’ll focus on the most interesting one I’ve discovered : Intellectual Ventures. Intellectual Ventures (IV) is technically an hybrid between NPE and Defensive patent…Read moreThey are differents types of IP Intermediaries such as Patent brokers, Non-practicing entities (NPEs), Defensive patent aggregators, Online IP platforms and so on. It would take a lot of time to explain each of them. Then I’ll focus on the most interesting one I’ve discovered : Intellectual Ventures. Intellectual Ventures (IV) is technically an hybrid between NPE and Defensive patent aggregators. Before describing IV, let’s take a look at the NPE and Defensive patent aggregators concepts. First, NPE is the most controversial IP intermediaries today. It acquires patents and gets incomes by seeking licensing revenues from operating companies through litigation or threat of litigation. Secondly, Defensive patent aggregators charge its clients an annual subscription fee like most of the traditionnal intermediaries. They identify patents that might be threatening to subscribers. They acquire them and then they provide them to all of their subscribers with licences to those patents. Patent aggregators can provide a certain ‘objectivity’ that others players in the patent ecosystem cannot. They have an expert eye and provide efficient access to the long tail of patents. As an hybrid of those two concepts, IV works as a NPE and a Defensive Patent aggregator. It is structured as a serie of funds. The two largest funds are dedicated to acquiring existing patents from all possible sources. It develop intellectual property in cooperation with scientists as well, who gets funded by the third fund. The fourth is used to purchase pre-filing inventions from universities and the last two funds concentrate on supporting in-house R&D laboratory. The fundamental feature that sets IV apart from other NPE sis that many of its investors are strategic and include prominent technology companes. IV works as Defensive patent aggregators for, at least, those strategic investors. They are, at least, three different ways to creates values for the IVs : 1. IV has developed a larger controlling position of patents than any non-operating company in history. 2. IV’s sheer scale allows it to capitalize on huge portfolio and learning effects in aggregating patents. 3. IV leverages scale economies to reduce not only its own search and transaction costs, but also those of third-party sellers and buyers of patents. IV has become a brand. I’ll finish with the point of view of an inventor. Lev Bolotin, Founder & President/CEO of ClevX held IV in the back of his mind as a potential buyer for his patents. He said : ‘’Intellectual Ventures taught businesses to treat IP as a tangible asset. They opened the door, and now people can see new horizons through it.” Bolotin consulted a company to help him monetize its patent portfolio, including some of his own inventions, while preserving access to the IP for its own needs. He believes IV would see value in these market-proven assets, and he was right. Sources: 1. Hagiu, A. and Yoffie, D. (2011) ‘’ Intermediaries for the IP market’’ Harvard Business School Working Paper (12-023) http://www.hbs.edu/faculty/Publication%20Files/12-023_0e95cdce-abbf-46ea-b8cb-15a3ebb054ed.pdf 2. http://www.wired.com/2012/12/why-the-patent-system-needs-non-practicing-entities/ 3. http://www.intellectualventures.com/inventor-network/inventor-spotlights/lev-bolotin/ 4. http://patent-business.eu/category/npes-and-patent-aggregation/ Show less Reply Bernard Vonèche 9 December 2014 In some literatures (Wang, 2010; Hagiu & Yoffie, 2011), IP intermediaries are categorized in 3 types: brokers, who play a bridging role between sellers and buyers of intellectual property; defensive aggregators — like PLEC’s or privateers (see previous comment) — who acquire patents to payback their subscribers with revenues and give them safety from litigation; and finally aggressive aggregators, who…Read moreIn some literatures (Wang, 2010; Hagiu & Yoffie, 2011), IP intermediaries are categorized in 3 types: brokers, who play a bridging role between sellers and buyers of intellectual property; defensive aggregators — like PLEC’s or privateers (see previous comment) — who acquire patents to payback their subscribers with revenues and give them safety from litigation; and finally aggressive aggregators, who acquire patents to realize revenue through filling lawsuits, licensing or asserting their portfolios. It seems that the majority of these IP intermediaries share the objective of rewarding patent owners/inventors, which satisfies at least one goal of the patent system. Indeed, “there is little evidence, however, that their activities fulfil the other goal of the system by encouraging members of the public to innovate outside of exclusive rights” (1) I will not focus my comment on a specific category of IP intermediaries, as in my opinion: the perfect intermediary being able to bring social value in IP markets is an hybrid model. In the past decade we have already seen an hybrid alternative to NPE’s and defensive aggregators so called “platform transaction facilitator” such as online exchange platforms or live auctions. Nevertheless, they did not meet a large success as Hagiu & Yoffie explained: “While the idea of creating platforms for matching and facilitating transactions between patent buyers and sellers is in principle quite appealing, so far none of these platforms has been able to gain significant traction.” I personally think that before trying to find the best “social responsible” IP intermediary, legislators all around the world — like the US International Trade Commission (ITC), should do a strong effort in order to improve the “shadow” on IP market. As Laurie (3) said : “The current patent trading market is inefficient and immature, due to the lack of transparency and liquidity as compared with real estate or corporate securities.” It seems now clear the liquidity and transparency of the IP market can only goes through common legislation. As, the social value is a large concept; we can imagine that people can find different advantages into various IP intermediaries. An “open access bank” model can be an good alternative as it can lead to mutual exchange between firms. With an annual membership (i.e.), they will benefit of other firm’s patents if they five also free access to their patents. This model can lead to social value to the end-consumer, as producers will no more support licencing and royalties costs. Bibliography: 1) Allen W. Wang, Rise of the Patent Intermediaries, 25 Berkeley Tech. L.J. 159 (2010). Available at: http://scholarship.law.berkeley.edu/btlj/vol25/iss1/7 2) Andrei. Hagiu & David. Yoffie. Intermediaries for the IP market: Working paper, 12-023. Harvard Business School (2011). Available at http://www.hbs.edu/faculty/Publication%20Files/12-023_0e95cdce-abbf-46ea-b8cb-15a3ebb054ed.pdf 3) Ron Laurie, Foreword to Matthew Y. MA, Fundamentals of patenting and licensing for scientists and engineers, at xvi (2009). Available at http://www.worldscibooks.com/etextbook/6993/6993_foreword.pdf Show less Reply Ivan De Meunynck 9 December 2014 In this comment, i will analyze "defensive patent aggregators" by naming the principal aggregators, explaining how they proceed and the benefits they provide. Based on article written in 2013 (things might have changed since but i didn't find anything more recent...), the two main defensive aggregators are RPX (for-profit firm) and Allied Security Trust (or AST, not-for-profit firm). These firms give…Read moreIn this comment, i will analyze “defensive patent aggregators” by naming the principal aggregators, explaining how they proceed and the benefits they provide. Based on article written in 2013 (things might have changed since but i didn’t find anything more recent…), the two main defensive aggregators are RPX (for-profit firm) and Allied Security Trust (or AST, not-for-profit firm). These firms give a guarantee against patent troll risk to large companies such as Nokia, IBM or Panasonic. Annual subscriptions can be very expensive (as high as $6.9 million). If the fee is paid, RPX finds the patenat that could be considered as threats to subscribing firms, takes possession of these and gives licenses to those patents to its subscribers. However, RPX can’t be concerned about liability if a subscriber is sued or loses a patent… The offers of AST are a little bit different from those of RPX. The first difference is that RPX choses unilaterally the patents it buys and uses its own capital to do so. On the other hand, AST finds patents and then organizes bids from its subscribers. In the cases where the bids for a patent enables the transaction, all the subscribers which participated to the bid will be given a license. With RPX, all members would receive a license. The second difference comes from the fact that once AST has acquired a patent, it looks to sell it to the highest bidder, then the second if the first refuses, and so on… If none of them is interested, it places the patent for sale with a broker. In the same situation, RPX waits to be sure that its subscribers won’t need this patent before selling it. This happens very rarely. The major problem of this approach is that it is very difficult to verify the value of RPX or AST for the subscribers… Another important limitation is that the system is only based on subscription revenues Finally, at the moment that article was written, it was difficult to know if RPX had done a good job because the subscriptions were established for three years and there are no datas about eventual renewals. Show less Reply Pierre-Ami Maudoux 9 December 2014 In this humble take on the subject, I would like to explore the role and value brought by Online IP Platforms and IP Auction Houses. Both instruments work as transaction facilitators in IP markets and I will argue that they perform complementary services in order to reduce failures in their markets. On the one side, the function of online IP platforms…Read moreIn this humble take on the subject, I would like to explore the role and value brought by Online IP Platforms and IP Auction Houses. Both instruments work as transaction facilitators in IP markets and I will argue that they perform complementary services in order to reduce failures in their markets. On the one side, the function of online IP platforms is to help potential patent buyers connect with the adequate seller in order to purchase the patents they desire, and vice-versa. Examples of such platforms are http://www.patentauction.com/ and http://www.ideaconnection.com/. IP auction houses, on the other side, organise online or onsite public sales in which (groups of) patents are sold to the highest bidding participant. ICAP Patent Brokerage and Ocean Tomo, LLC are examples of such institutions. These mechanism thus address the two biggest sources of inefficiency in IP markets: the high costs of matching buyers and sellers and the difficult valuation of patents. Indeed, online IP platforms greatly limit the cost of matching buyers and sellers of patents by providing structured marketplaces which these actors can enter against reasonable fees (registration, memberships, etc.). Once potential buyers have found the right patent for their development needs enter IP auction houses, which will allocate the patent in question to actor with the highest willingness to pay for the patent. Online IP platforms thus enable companies to save time, money and other resources in their process of finding potential buyers or sellers of patents. This may lead to the production of cheaper and better products, as the saved time and manpower can be allocated to the further development of products and the lower costs of finding patents may drive product prices down. Also, patent auction mechanisms act as effective proxies to determine the value of (groups of) patents and therefore considerably limit the probability of disagreement over their prices among buyers and sellers. This may contribute to decrease the number of legal rows over intellectual property, which would have similar resource-saving consequences for companies involved and, subsequently, for society. Sources: Belleflamme, P. (2013). A Typology of IP Intermediaries – Report for PATLICINFO. Retrieved from http://perso.uclouvain.be/paul.belleflamme/Patlicinfo/Papers_files/IPIntermediariesTypology2.pdf on 06-12-2014. Maicher, L., Tonisson, L., Bartsch, F., Jha, P. (2014). Intellectual Property Services Classification (IPSC). Fraunhofer MOEZ. Retrieved from http://ipib.ci.moez.fraunhofer.de/ipsc on 06-12-2014 Show less Reply Alexandre Germys 9 December 2014 There are three « traditional Patent Intermediaries » Firstly, there are patent brokers. Their job is to find buyers for their clients who want to sell their patents or license. They ask for a fee contingent for each sale successfully completed. They bring social value by facilitating the transfer of knowledge, which increase innovations, but they also reduce costs of search…Read moreThere are three « traditional Patent Intermediaries » Firstly, there are patent brokers. Their job is to find buyers for their clients who want to sell their patents or license. They ask for a fee contingent for each sale successfully completed. They bring social value by facilitating the transfer of knowledge, which increase innovations, but they also reduce costs of search and transactions between sellers and buyers of patents. They often offer consultancy services to help the firm to establish and sell their patents. A second intermediary that has been created is the patent pools. Patent pools are pool in which firms come together to license patents to each other or to a third party. For example, if I want to buy the patent to use MP4, I don’t have to deal with all the contributors of this technology, but only with the patent pool they represent. The social value is that prices will be lower ton acquire those patents because all the contributors involved in the technology I want to buy will not exercise their market power to the fullest but only one entity (the pool) will exercise it in a normal way. Which permits the buyer to have easily access to the technology. By this way it also improves the incentive to innovate. The third important intermediaries are standard-setting organizations. They make possible for different participants in an industry where a big synergy is needed between them to voluntary come to a consensus to create a technological standard. When those organizations endorse a technological standard, participants in the relevant industry adopt that standards and pay the royalties to the standards owner. That technological standards are often patents pool created by standard-setting organizations. Those intermediaries create a social value by helping firm in the same industry to create patents pool to facilitate the transactions of the patents used in this industry. Source: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.1.45 Show less Reply Charlotte Irgens 9 December 2014 Currently, as pointed out in this blog post, markets for patents are not functioning well. This kind of market failure creates opportunities for intermediaries, and there exists several types of IP intermediaries that try to intervene and offer solutions for mitigating the impact of the malfunctioning IP markets. An important type of intermediary is the so-called “transaction facilitators”. Here I…Read moreCurrently, as pointed out in this blog post, markets for patents are not functioning well. This kind of market failure creates opportunities for intermediaries, and there exists several types of IP intermediaries that try to intervene and offer solutions for mitigating the impact of the malfunctioning IP markets. An important type of intermediary is the so-called “transaction facilitators”. Here I will provide some comments about this kind of intermediary and look into to what extent transaction facilitators can contribute with some social value. Transaction facilitators are an important category within the IP intermediaries as one of the main reasons mentioned in this blog post for why patent markets work badly, is that search costs are very high. This means that potential buyers and sellers of IP have troubles finding the right trading partner. In this respect, transaction facilitators are helpful as their main role is to match buyers and sellers of IP through either direct matchmaking or by providing a market place, hence they contribute to lowering search costs (Belleflamme 2013). There are four different main types of transaction facilitators (Belleflamme 2013). The first one is online IP platforms. These are online sites made to match potential buyers and sellers of IP and make it easier for sellers and buyers to find each other. This is an important function that can be argued to add social value, as a common problem within IP is that sellers and buyers have troubles finding each other in the first place. Online platforms can facilitate the interaction between IP sellers and buyers and make the whole process faster and easier, thus arguably contributing to social value as search costs are lowered. A second kind of transaction facilitator is IP auction houses. It functions like any other kind of auction house where you can either bid for a single IP asset or a bundle of several IP assets. This kind of intermediary can be claimed to contribute to social value because it also facilitates the interaction between potential sellers and buyers. However, I would argue that the online IP platforms seem to have a greater potential to reduce search costs and add more social value than an IP auction house can. This because the online platforms more easily reach a bigger pool of sellers and buyers than the auction houses do. IP patent brokers and licensing agents are another type of transaction facilitator, and they help patent owners to sell or license their technologies in exchange for a fee conditional on successful sale of the relevant patent. In my opinion this kind of intermediary do not necessarily add much social value as it is acting as a middleman that could have been eliminated in this process. The price of the patent likely increases due to the patent broker/licensing agent’s involvement, and thus had the sellers and buyers of IP managed the process without these middlemen the patent price could have been cheaper as there would be no middlemen cost to cover. However, if it would prove very demanding for sellers/buyers to manage this process in addition to their normal work, it could be argued that having middlemen taking care of the sales process could give the sellers and buyers more time to focus on their IP work, and like that contribute to social value if the IPs they are working on are valuable for social welfare. Still, I would argue that both the IP online platforms as well as the IP auction houses seem more likely to be more beneficial for aiding the creation of social value than patent brokers and licensing agents. The fourth and last main type of transaction facilitators is IP transaction exchanges and trading platforms. This kind of intermediary does not yet exist, but there have been ideas to create traded exchanges (could both be physical and online exchanges) where IP-based financial instruments would be listed and traded similar to what is done on stock markets today. When it comes to social value, I am doubtful to whether this particular kind of intermediary would be helpful, as being able to trade IP-based financial instruments does not seem to me as something that necessarily will enhance social value. However, this could be an interesting mechanism to implement and the future will show what it could lead to. Conclusively, one can say that transaction facilitators are intermediaries that in many cases can contribute to social value because they help sellers and buyers of IP to find each other and like this lower search costs that often tend to be very high when it comes to the field of IP. When search costs are lowered the social value would also commonly increase. Belleflamme (2013) identifies four main types of transaction facilitators which have been analysed above. It is concluded that they can all bring about social value, but that the online IP platforms probably hold the highest potential for this. Additional sources to the blog post: Belleflamme, Paul (2013): PATLICINFO Research on markets for technologies in Belgium – A Typology of IP Intermediaries (presentation made January 2013, revised February 2013). Show less Reply Beili Zhang 9 December 2014 Given the highly profitable nature of the intellectual property market, it’s not a surprise that these last ten years, a variety of IP intermediaries has emerged in order to facilitate the transaction between the buyers and sellers of IP. One these intermediaries are the patents pools, where firms come together so that they can “pool all their relevant patents”(1). But while…Read moreGiven the highly profitable nature of the intellectual property market, it’s not a surprise that these last ten years, a variety of IP intermediaries has emerged in order to facilitate the transaction between the buyers and sellers of IP. One these intermediaries are the patents pools, where firms come together so that they can “pool all their relevant patents”(1). But while these pools indeed create social value by reducing the licensing fees, they also have an inverse effect, such as a “cannibalism” possibility between some firms if their patents are substitutes and not complement, or the facts that the large companies have a huge advantage against smaller one and finally, only the markets that fits in the mold (where there aren’t firms holding almost all the important patents in the sector in their hands.) benefits from these intermediaries. (2) There are also the patent brokers who assists the intellectual property owners to find buyers in order to sell or license their technology. (3) They also as provide consulting services. The positive social effects are that the reduction of two specifics cost: the patent owner’s search cost and the learning effect costs in structuring patent sale and licensing deals. But in the other hand, the facts that these firms are, most of the time, really small, results in the facts that they only focus on really expensive licensing or selling transactions, ignoring the others .Moreover, a large part these transactions are linked with other intermediaries including some who don’t generate social values such as NPE’s. (4) In addition, there are also the Non- practicing entities (NPE’s) or patent trolls, who are perhaps the most controversial of all the intermediaries. The business plan of these firms are to acquire patents on the sole purpose to seek revenues for IP’s infringement. I already made my point with the last comment about the patent trolls and the facts that in my opinion, they don’t create any social value and, even worse, by preventing innovation they also impede consumer well-being. (5) In addition, there are also the defensive patent aggregators who emerged as direct consequences of the patent trolls. Indeed, in order to defense themselves against NPE’s or patent’s infringement litigation, some firms use the services of these intermediaries. One example is the RPX firm. For an annual subscription fee, it will identify patent that will potentially hold prejudice to the firms and will see to acquire them and provide license to their subscribers as well as make them available for use in counter-lawsuits in case of IP infringement lawsuits. (6) What differentiates these firms the most from NPE is the purpose of the patents acquisition: they don’t acquire the patents in order to pursue some firms for infringement but for a protective purpose. Finally, there’s the intellectual venture (IV), which is a mix between NPE and Defensive patent aggregator. NPE, because they seek to acquire large patents port-folio on the sole purpose to license them. But also defensing patent aggregator because they have investors like Microsoft, Samsung, Apple etc. which takes part in them in order to defense themselves against litigations. As a conclusion, I will say that even if some business models of the intermediaries can bring social values by preventing the hindering of innovation such as the defensive patent aggregator’s, the patent pools or the patent brokers, some like the NPE’s do not hold social value and are used only for the intermediaries own quest for revenue. (1) http://www.forbes.com/sites/freekvermeulen/2013/01/22/patent-pools-do-they-kill-innovation/ (2) http://books.google.be/books?id=px7HAgAAQBAJ&pg=PA151&lpg=PA151&dq=Shapiro+%282001%29,+Lerner+And+Tirole+%282004&source=bl&ots=Abb_2Q_cmh&sig=nYjwytn6CmLce42wvuhymPQCnNg&hl=en&sa=X&ei=7y2HVIyZEsXnUr7_gNgO&ved=0CCQQ6AEwAA#v=onepage&q=Shapiro%20%282001%29%2C%20Lerner%20And%20Tirole%20%282004&f=false (3) http://www.btlj.org/data/articles/25_1/0159-0200%20Wang_Web.pdf (4) http://www.hbs.edu/faculty/Publication%20Files/12-023_0e95cdce-abbf-46ea-b8cb-15a3ebb054ed.pdf (5) http://www.ipdigit.eu/2013/11/will-patent-trolls-soon-appear-on-the-european-market/#comment-25616 (6) http://bits.blogs.nytimes.com/2009/03/30/trolling-for-patents-to-fight-patent-trolls/?_r=0 Show less Reply Thomas Boreux 9 December 2014 Creating a stable market for patents is a major challenge in the innovation management. Supply and demand are intensive, but why is it difficult for them to meet ? Why does the patent market works badly ? There are different reasons. Firstly, there are many uncertainties about patent values as patents are idiosyncratic and they must sometimes create value in…Read moreCreating a stable market for patents is a major challenge in the innovation management. Supply and demand are intensive, but why is it difficult for them to meet ? Why does the patent market works badly ? There are different reasons. Firstly, there are many uncertainties about patent values as patents are idiosyncratic and they must sometimes create value in combination with other patents. Secondly, search costs are very high, it is thus difficult for sellers and buyers to find an interested person on the market. Thirdly, the fear of litigation creates lots of pressure around patent transactions and thus distorts the value. Let’s analyse this complex situation by analyzing the roles of new actors on the market trying to play the role of IP intermediaries and to make patent transactions easier. We can wonder first how can patent be evaluated ? One possible way is to evaluate a patent according to the monetary return, but as we explained it in the first paragraph, it is difficult to put a real value on patents since returns are different according to the combinations with other patents. Another way to evaluate patents is to focus on the social welfare: we can put a value on a patent according to the increase of social welfare it induces. Despite this method seems to be fairer, there are still some difficulties: increase in welfare can be variable according to patent combinations as well, and a patent which maximizes the social welfare by creating positive externalities but not that much returns for the company wouldn’t be interessant to buy for firms in the sense that they would pay without the certainty to have enough return on investment. Let’s focus on the new intermediaries : are they benefic for the implementation of a patent market and for the society ? we can differentiate different kind of intermediary according to their goals and their methods on the market. First, let’s talk about patent platforms . The goal of two-sided patent platforms was to facilitate patent transactions without taking titles or ownership of the patents involved. We can differentiate two types: online marketplaces and patent auction. Nevertheless, despite the fact that meeting between supply and demand is facilitated, there are still some weaknesses: online market have limited scale, while patent auction collect small amounts of money in comparison with huge amounts collected thanks to some patents. After, let’s give more details about « defensive aggregators ». These kind of intermediaries try to collect patent before NPE get them. « Thus, these pools result in multiple operating companies – who may not previously cooperated, done business or even respected each other – joining financial and other resources to create an independent entity to acquire potentially « problematic » patents, and license them to anyone willing to share the financial cost of acquiring the patents and the management overhead of administering the pool ». In my opinion, this kind of actor represents a good intermediary between supply and demand, even if there is still little kind of weaknesses: difficult valuation, limited scale, but nevertheless, a fair transaction is possible, and the purpose of this method stimulates innovation. Finally, let’s focus on « offensive aggregators ». The patent offensive aggregators are NPEs (non practicing entity) which obtain patents without practicing or producing on the inventions. They acquire the patents with the goal of suing the other companies of infringement and thus obtaining large profit. We can call these companies patent trolls. In practice, this is not an illegal method, but there is a harmful effect on innovation and social welfare. Indeed, getting patents without using them and threating other companies impedes the innovation process and is the source of a fear climate. Nevertheless, where is the limit for an enterprise to be a patent troll ? For example, a firm which invested in R&D and finds an innovation useless for his activities has the honest right to keep his patent and expect a return on investment on the R&D fees. In my opinion, if a company doesn’t practice a patent related to an innovation funded within this company, we can’t consider it as a patent troll. But if a company buys patents but doesn’t plan to use them, we can consider it as an offensive aggregator. As a conclusion, I would say that some IP intermediaries can facilitate patent transactions between interested actors, but it is still an inefficient measure. Indeed, there are lots of welfare lost despite the fact that these actors play an important redirecting role between supply and demand. I think the whole problem is that we must make an arbitration between « individual profit (money) » and social welfare. Unfortunately, in my opinion, implementing strong measures is inefficient because people will always find a way to circumvent the problem: the solution would be to change mentalities and values…  http://www.ipdigit.eu/2013/03/a-typology-of-ip-intermediaries/  Yoffie D. B., Hagiu A., “The New Patent Intermediaries: Platforms, Defensive Aggregators, and Super-Aggregators », Journal of Economic Perspectives, Vol 27, No1, pp. 53,54. http://www.ipwatchdog.com/2012/12/10/defensive-patent-pools-there-are-surprisingly-few-options-2/id=31233/ http://patents-in-china.com/patent-trading-facilitator/patent-offensive-aggregator/ Show less Reply Aurélia Job 8 December 2014 Patents intermediaries bear a crucial role in the social welfare as they facilitate the diffusion of IP material. They are facilitating platforms that provide opportunities to exchange IP material. Very often they are advertised by PR in the media and in specific business circles, which makes the information available to private and public investors but sometimes also to interested consumers.…Read morePatents intermediaries bear a crucial role in the social welfare as they facilitate the diffusion of IP material. They are facilitating platforms that provide opportunities to exchange IP material. Very often they are advertised by PR in the media and in specific business circles, which makes the information available to private and public investors but sometimes also to interested consumers. We will very briefly illustrate the negative and positive social externalities IP intermediaries carry. Intermediaries, by definition, facilitate transactions. However, it must not be forgotten that they do so in order to maximize their own profit (monetary or not) sometimes at the expense of that of their customers. For instance, in the case of IP auctions, the highest bidder is not necessarily the one that optimizes the IP material utilization for society at large. In the case it would be underused, the societal value of the protected good decreases. Besides, IP material price won’t be sold at its market value, as it could in a pure and perfect competition setting, but at the market value for a small (or not so small) set of insiders that have access to the bidding platform. Therefore, the bidder may set a price that will be over- or under-estimating the intrinsic value of the IP material. Indeed, as the seller is the price-taker, he cannot know the real value of the IP material, that may indeed be sold again almost immediately to a selected target for a much higher price. Finally, the auction is a way for competitors to access the result of research without investing any R&D costs. This may lead to free rider situations or result in a socially negative externality because it allows them to avoid investing in order to find a better and more efficient idea. More specifically, in the case of copyrights, it limits creativity. Nevertheless, the very same example of the bidding process also has positive externalities with respect to social welfare. Indeed, as people will be in direct and transparent competition in an auction room, they will need to strive to evaluate the correct price of the IP material in order to make their bid, so we expect the IP good to be used by the party that can make the most monetary value of it. This will enforce a degree of efficiency. Moreover, the auction provides an opportunity for competitors who were not fast enough in their research process to win a patent race to “buy the IP material back”. Moreover, because of the inherent transparency mentioned before, the bidding process discloses a part the seller’s and bidders’ strategies. Indeed, it shows the seller thinks they will get more value from selling the patent whereas the bidders have the converse point of view. This decreases the asymmetry of information and may allow financial analysts to improve the accuracy of their opinion on both the seller and the bidders. Finally, IP auction spreads the IP material which allows it to be built upon, eventually providing innovation that society benefits from. The same reasoning can be easily extended to other kinds of IP intermediaries or IP material. Indeed the social value of the transmission of a copyright is not necessarily the same as for a domain name, patent, trademark or right. It would also be interesting, although quite lengthy, to further analyze with respect to the value of the IP material to the diverse industrial sectors. Show less Reply Wenzheng Wang 8 December 2014 I want to analyze the Super-aggregator which is a type of patent merchants for defensive,but actually it combines the defensive and the aggressive attitudes.Super-aggregator means that a company acquires lots of patent,typically from individual inventors or small companies,and then seeking licensing revenues from operating companies through the investment.People always think that the super-aggregator is the same as the NPE which…Read moreI want to analyze the Super-aggregator which is a type of patent merchants for defensive,but actually it combines the defensive and the aggressive attitudes.Super-aggregator means that a company acquires lots of patent,typically from individual inventors or small companies,and then seeking licensing revenues from operating companies through the investment.People always think that the super-aggregator is the same as the NPE which is always called ‘Patent troll’.However,there are some differences between super-aggregators and patent trolls.Patent trolls are more aggressive than super-aggregators,they gain profits from operating companies through litigation or the threat of litigation,they just like enemies for big companies,but super-aggregators seems more ‘friendly’.Many big and powerful companies would like to invest in super-aggregators to make sure that they can use its huge patent trove.So the relation between super-aggregators and companies is more like cooperation. The best example of this type is Intellectual Ventures which is the patent holding company founded by ex-Microsoft CTO Nathan Myhrvold.This company has raised more than $5 billion from a variety of investors and as of mid-2012 it has spent approximately $2 billion building the world’s third largest patent portfolio—roughly 35,000 patents.It seems that this company make itself become a large patent union to attract the investment from big companies.And this strategy is undoubtedly successful,many of its investors are strategic and include prominent technology companies such as Amazon, Apple, Cisco, eBay, Google, Intel, Microsoft, Nokia, SAP, Sony, Samsung and Verizon.For these companies,Intellectual Ventures functions as a defensive patent aggregator.These investors use licenses acquired by Intellectual Ventures to against lawsuits from patent trolls or competitors. In my opinion,super-aggregators have obvious social value.The enormous scale of the super-aggregator helps reduce search and transaction costs,and the super-aggregator make it become a linkage between innovators and buyers.Because of its size,the super-aggregator can single-handedly create the illusion in the patent market.It seems like a credible outlet for those small patent owners because the super-aggregator can provide legal and technical support for them,and of course,it can give the nice price to their innovations.So,in a sense,the super-aggregator can stimulate the innovation.And on the other side of the patent market,the super-aggregator can provide patent buyers a simple and efficient process for their licensing needs.So the buyer can find patents quickly and clearly through the super-aggregator,and buy it just through a negotiation.It really can saves costs and time for buyers.That the reason why I think that super-aggregator make the patent market more efficient. However,there are still some problems and risks with that type.As I mentioned above,super-aggregators have lots of patents,but most of these patents were bought from other companies or individuals,and none of innovation has been turned into a commercial product.For instance,Intellectual Ventures holds more than 30,000 patents,about 1,000 of them were developed in house,the rest were bought.And some critics think the Intellectual Ventures is the world’s largest patent troll because it just seeks patents and holds them,but never put these innovations into production.Indeed,there are many famous companies are investors of Intellectual Ventures,but from another point of view,these companies are forced to be investors.Because if they do not have relation with Intellectual Ventures,they might face a lot of lawsuits. All in all,I think super-aggregators can help companies reduce the threat of patent trolls and many unnecessary lawsuits.Moreover,it can also help buyers find useful patents quickly and efficiently.It seems that cooperating with super-aggregators is a feasible strategy for big technology companies. Reference: 1.Who does patent-trading firm intellectual Ventures work for,anyway? http://www.businessinsider.com/intellectual-ventures-2011-7 2.The new patent intermediaries. http://www.law.northwestern.edu/research-faculty/searlecenter/workingpapers/documents/Hagiu_Intermediaries_IP_market.pdf Show less Reply Florian Barthélemy 7 December 2014 From my point of view, pre-patent intermediaries are, between all the different types of IP intermediaries, those who create the most social value. There are several reasons supporting this claim: 1. The implementation of innovation portals for example can be subsidized by public entities for which the main goal is not to make profit, 2. By "connecting companies with technology/science problems…Read moreFrom my point of view, pre-patent intermediaries are, between all the different types of IP intermediaries, those who create the most social value. There are several reasons supporting this claim: 1. The implementation of innovation portals for example can be subsidized by public entities for which the main goal is not to make profit, 2. By “connecting companies with technology/science problems with individuals or firms which can propose solutions”, pre-patent intermediaries find a solution to a problem and not the opposite: find solutions (through R&D) and then search for a problem to solve as it is the case for most of the researches. 3. Linked with the second argument, such IP intermediaries can try most of the time to avoid redundant researches by two firms on the same problem. For the moment each firm does often not know that the other one is searching at the same time on the same project. But solutions brought by pre-patent intermediaries are not responding to all social failures that are existing in the patent market. What about the price that the solution provider will ask to the company with the technological problem? It could be hard for both of them to find an agreement on a research that has not been lead yet. The counterpart is that if there is no agreement, the solution provider company has no need to start investing in researches. Secondly, it is utopist to think that R&D investments in order to sell the results’ patent/license will disappear thanks to pre-patent intermediaries. In other words, there will be still a lot of patent’s troll, privateers and other IP intermediaries with, as unique goal, make the highest margin as possible whatever the consequences are from a social point of view (infringement, no added-value, lawsuits). Here, the pre-patent proposition is not a solution to these issues. Finally, I would like to make a parallel between pre-patent intermediaries and a concrete example: the “Data Tank” which is an open-knowledge platform developed by iMinds (http://www.iminds.be/), the public autorithies of Gent and Open Knowledge Belgium (http://okfn.be/). This project has not perfectly the same goal than IP intermediary and is still far away from what would be an ideal service offered by a pre-patent intermediary. But it shows that the participation of public institutions is possible to support open innovation. Show less Reply Yick Tang 6 December 2014 A patent would be not useful, if it did not use in the real world. For more efficient to release patents’ functions, the patent market needs intermediaries to do some trade. Patent intermediaries also solve three main problems as the post said: 1. Many uncertainties surround the value of patents. This is mainly because patents are idiosyncratic (and escape thus any…Read moreA patent would be not useful, if it did not use in the real world. For more efficient to release patents’ functions, the patent market needs intermediaries to do some trade. Patent intermediaries also solve three main problems as the post said: 1. Many uncertainties surround the value of patents. This is mainly because patents are idiosyncratic (and escape thus any type of metrics) and because they often need to be combined with other patents to create any value (so-called “portfolio effects”). 2. Search costs are very high. That is, potential buyers and sellers have a hard time to find the right trading partner on the other side of the market. 3. The fear of future litigation puts a heavy weight on patent transactions and bias their valuation. However, some patent intermediaries are more like “privateers”. They don’t create any new technology don’t produce patent products or offer patent services. They get patents by buying bankrupt companies which own patents or the using right of patents and then they obtain profit by incessant patent infringement litigations. Even though intermediaries have that many disadvantages, they are still in society. That means intermediaries have their own value for society so they aren’t eliminated. What value do they bring for society? As we all know, intellectual property is not the same as normal products or goods. When an undertaking focuses on its new technology, it might has extra ability for protecting its patent. In the 21st century, every products are produced by the division of work. In that product, patent, is also no exception. The function of intermediaries is to help allocating resources called patent. As a consequence, Inventors can acquire capital by selling their patent and producers can create technological products by buying patents from intermediaries. That will be a cyclic market economy. In conclusion, with patent development and complication, intermediaries to patents are more and more important. Patents can apply more and more efficient on producing and reduce search costs, thus producers can let more capital on invention. By intermediaries’ management, Buyers and sellers can acquire objective prices on trade. Preventing market failure is also one of intermediaries’ advantage. If we say patent is the mechanism of invention, intermediaries will be its lubricant. Anyway, both patent system and intermediaries are the essential elements for balancing the invention market. Each of them are necessary for the market growing healthily. Reference: http://www.ipdigit.eu/2013/03/a-typology-of-ip-intermediaries/ http://www.ipdigit.eu/2013/11/markets-for-technologies-do-they-really-work/ Show less Reply Zaniewski Jan 20 November 2013 I would like to develop the case of the "Defensive Patent Aggregators"which is a defensive merchant intermediary that reduces the risk of owning a "risky" patent that could be attacked by an IP acquisition fund. This type of intermediary has been developed due to the high risk of spending a lot of money defending against a patent infringement suit. In…Read moreI would like to develop the case of the “Defensive Patent Aggregators”which is a defensive merchant intermediary that reduces the risk of owning a “risky” patent that could be attacked by an IP acquisition fund. This type of intermediary has been developed due to the high risk of spending a lot of money defending against a patent infringement suit. In some situations in the United States, this can cost up to $1 million or more before trial, and $4 million or more for a complete defense. To avoid spending too much money in those juridic fights, a new business model has recently emerged. A third-party, the defensive patent aggregator, purchases the patents to mitigate the risk and cost of litigation associated with non-practising entities. It provides licenses to members against a fixed annual membership fee. The real social value brought by those companies is a service, designed for innovators to avoid facing the problem and the risks of the patent trolls. This structure gives concrete incentives for innovation and innovation patenting, limiting the risks of patenting new technologies. The social value can be resumed in more innovation, less risks, and thus a positive effect on the society. On the other hand, one of the biggest disadvantages is that this kind of intermediary makes the whole model even more complex than it was before. It tends to make the patent market a very tricky place where new business models are being created just to counter other business models that are developed on that market. Show less Reply Chirag Sachdeva 20 November 2013 Intermediaries in any trade may perform a bunch of activities, and the most basic one would obviously be to bring the seller to the buyer. As the complexity of the commodity/service under consideration increases the role of the intermediaries is bound to get more extensive and complicated. The above statement actually puts some perspective to the fact that why intermediaries…Read moreIntermediaries in any trade may perform a bunch of activities, and the most basic one would obviously be to bring the seller to the buyer. As the complexity of the commodity/service under consideration increases the role of the intermediaries is bound to get more extensive and complicated. The above statement actually puts some perspective to the fact that why intermediaries hold special importance in case of patents. Patents, these days, tend to involve leading edge technologies; this fact leads to a number of repercussions in itself: one being the fact that how to fairly place a value for the patent, how to rationally understand the importance of the patent and where it would be an ideal fit considering the heavy technology dependence, and to finally paint a picture which would simplify the USPs of the technology under consideration to the would be buyers to complete the trade cycle. The above few lines refer to the responsibilities of one very important intermediary – Patent broker – the fact that brokers involved in patent business have to ensure a lot more than just bringing the would-be-sellers and would-be-buyers on the same table, shows how much intermediaries have to contribute to the patenting cycle in its entirety. I have just discussed the role of the brokers, but the fact remains that and which can be further substantiated with extrapolation, is that intermediaries are as much important to the patent business as are the buying and selling entities, and there proper functioning is necessary for the economic good which patents are supposed to bring about. Show less Reply Ankit Gupta 20 November 2013 Market is defined as a place where two parties exchange their offerings. In this particular article one of the offerings is IP. There are several challenges, as mentioned in article, for functioning of IP market without intermediaries. IP brokers and Online IP Auctions are examples of the market intermediaries which alleviate the problems of IP marketplace by: 1. Connecting buyers and sellers…Read moreMarket is defined as a place where two parties exchange their offerings. In this particular article one of the offerings is IP. There are several challenges, as mentioned in article, for functioning of IP market without intermediaries. IP brokers and Online IP Auctions are examples of the market intermediaries which alleviate the problems of IP marketplace by: 1. Connecting buyers and sellers – search of potential buyer/seller by Ip brokers or through the listing of patents on auctions 2. Contributing to estimation of fair value of transaction/patent on the basis of comparative data present with them for past transactions of similar kind and industry expertise of IP brokers or through the online tracking of prices on IP auctions 3. Facilitating negotiations of transaction through the platform 4. Solidifying patent portfolios of their clients by ease of access to latest developments – suggestions by IP brokers with industry expertise 5. Minimizing likelihood that an infringement claim will be made 6. Promoting the mobilizations of valuable patents (acting as a catalyst for IP marketplace) 7. Enhancing transparency in markets of IP All of the above mentioned points clearly establish that IP market place without intermediaries is full of uncertainties. Hence, intermediaries like IP brokers and online IP auctions are indeed creating and extracting value for the society by indirect but evident contribution. Show less Reply Domien Frederix 20 November 2013 I would like to talk about Litigation finance/investment firms. Litigation is the process through which litigants can finance their legal costs through a third party funding. The third party funders provide the litigant with cash in exchange for a percentage of the settlement. In case the litigant loses in trial, however, the third party receives nothing and loses the investment.…Read moreI would like to talk about Litigation finance/investment firms. Litigation is the process through which litigants can finance their legal costs through a third party funding. The third party funders provide the litigant with cash in exchange for a percentage of the settlement. In case the litigant loses in trial, however, the third party receives nothing and loses the investment. A litigant finance firm is therefore a firm that consists of people with law and finance backgrounds that invest in litigation on the plaintiff or defendant side. Lately there has been a growth in this relatively new industry (http://www.dandodiary.com/2012/04/articles/securities-litigation/litigation-funding-a-us-growth-industry/). Legal financing has several advantages and disadvantages. One of the most important advantages is the fact that legal financing can cause a levelling of the playing field for smaller firms against bigger opponents. Losing a lawsuit or even the longevity of certain lawsuits can be a big financial burden for smaller companies sometimes resulting in financial troubles or even foreclosures of these smaller firms. Litigation funding can also provide a financial means to allow meritorious cases to go forward. However, there are also several disadvantages : The most common concern is that the spreading availability of litigation funding will encourage non-meritorious or even frivolous litigation, by removing litigants’ financial constraints. Although litigation funders argue that they are in this to make money and that the funders’ financial incentives will act as a screening mechanism through which only cases likely to provide an appropriate return on investment will be funded. Recent facts have shown that legal financing is indeed likely to result in an increase of litigation cases : In a 2010 study of securities class action litigation in Australia, NERA Economic Consulting identified the emergence of litigation funding as the most significant development behind the increase in securities class action litigation. Another problem with litigation funding is that it may take a large chunk out of plaintiff’s settlement. The amount of interest may often be high and build up over the years of litigation. After paying attorney contingency fees and the amount owed to the legal financing company, the plaintiff may recovery very little of the original claim. There is also no guarantee that the parties will settle for a greater amount when litigation is prolonged. http://dealbook.nytimes.com/2013/04/08/new-firm-plans-to-invest-in-lawsuits/?_r=0 http://online.wsj.com/news/articles/SB10001424127887324031404578483492868041194 http://www.lexology.com/library/detail.aspx?g=fa1f2541-00ad-4a81-a956-aaeaf653372c http://abovethelaw.com/2013/05/third-party-litigation-financing-the-latest-chimerical-lifeline-for-the-legal-profession/#more-244523 http://www.huffingtonpost.com/bradley-t-borden Show less Reply Willems Margaux 20 November 2013 I've decided to speak about "IP insurances" and in particular about insurances for inventors. IP insurances are in the "finance services" category (http://ipib.ci.moez.fraunhofer.de/ipst). This type of intermediaries allows anyone who wants to be very protected in the case of a suit. Mistakes are human and then it is very common to have error during lawsuit. I think that if there are…Read moreI’ve decided to speak about “IP insurances” and in particular about insurances for inventors. IP insurances are in the “finance services” category (http://ipib.ci.moez.fraunhofer.de/ipst). This type of intermediaries allows anyone who wants to be very protected in the case of a suit. Mistakes are human and then it is very common to have error during lawsuit. I think that if there are some rules, everyone has to respect them but of course as we know it is not always the case. Companies can lose a lot of money and call for insurance company is the solution to be well defended and obtain what we have the right. This is an extra protection because if you have damage the insurance pays for you an indemnity. In this case, I think that the social welfare can increase due to the higher security to protect the right of company. Of course, consumers are not really involved but maybe can have some damage too due to copy, etc… from other company. Thanks to insurance, this issue can be regulated and avoided. Insurance is place in the inventor side, I find that it is a good security to have this kind of protection. If I were an inventor, I probably use insurance to be sure that my company or my idea will be very protected. The world need inventors and insurance can help them. To conclude, the total welfare is increased due to consumers and inventors well “protected”. http://www.insurecast.com/ Show less Reply Justine Costeur 18 November 2013 In my comment I would like to talk about a new, powerful and above all controversial kind of super-aggregator that is currently raising lots of debate about the role of intermediaries and their effect on innovations in the patent market. These new intermediaries are investment firms that do not engage in the manufacturing of products nor conduct research, but help…Read moreIn my comment I would like to talk about a new, powerful and above all controversial kind of super-aggregator that is currently raising lots of debate about the role of intermediaries and their effect on innovations in the patent market. These new intermediaries are investment firms that do not engage in the manufacturing of products nor conduct research, but help scrutinize and navigate the published landscape […] by assembling portfolios of relevant inventions and providing access through licensing (1). I will focus on today’s most known super-aggregator which is Intellectual Ventures. We can wonder if a firm like IV [Intellectual Ventures] contributes to any social value to the society. IV is a private company that was founded about ten years ago and whose goal is to link all kind of patent owners with firms which may use their innovations. One positive impact of Intellectual Ventures is that its huge size and influence helps to decrease search and transaction costs for people who want to buy or sell patents. It can as well be a way to reduce patent valuation uncertainty for innovators and therefore benefit both side of the market.(2) For these reasons, this firm has become an attractive tool for small patent owners who don’t have enough expertise to monetize their IP on their own. It makes patents more liquid and enables small businesses to be known and sell their ideas. The negative aspect of Intellectual Ventures is that it can be seen as a big “patent troll” because as seen before, it acquires, creates, and seeks to license patents without directly making any products or services itself (2) (Definition of a patent troll) In fact, some of the revenue of the firm comes from licensing its patent portfolio to other companies, but a big part of it also comes from lawsuits for infringement of patents. I found this example interesting because Intellectual Ventures is currently the most hated company in the US (3). Indeed, its tactic is very controversial; the company often threatens patent owners with lawsuits when a patent shows enough weaknesses, so that it has the opportunity to buy it for almost nothing. Its targets are often small businesses which can’t afford all the costs that come with a lawsuit. Having the prospect of having their ideas robed is surely not a way to incentivize small businesses to innovate. References: (1) R. Hegarty (2012), Intellectual Ventures: Why the Patent System Needs Aggregators (2) A.Hagiu and D.Yoffie (2011) Intermediaries for the IP market (3) J. Marin (2013), Intellectual Ventures : l’épouvantail de la Silicon Valley, Le Monde http://en.wikipedia.org/wiki/Intellectual_Ventures http://www.generation-nt.com/patent-troll-intellectual-ventures-royalties-brevets-plainte-actualite-1807642.html Show less Reply Antonio Ouwerx José de Mello 18 November 2013 I would like to talk about Defensive Patent Aggregators as an answer to Patent Licensing and Enforcement Companies. Patent Licensing and enforcement Companies, also known as Patent Trolls, are companies that base their business model on making money on patent infringements. These companies, basically, built big portfolios of patents. Their unique goal is to look for companies that infringe their…Read moreI would like to talk about Defensive Patent Aggregators as an answer to Patent Licensing and Enforcement Companies. Patent Licensing and enforcement Companies, also known as Patent Trolls, are companies that base their business model on making money on patent infringements. These companies, basically, built big portfolios of patents. Their unique goal is to look for companies that infringe their IP as a way of making money. Their main advantage is that they do not infringe any patent because they do not have an activity that produces a product or service, so to say it is impossible to go against these kinds of organizations. They can bring social value by controlling and enforcing the role of patents in our society. But there is a main problem in this business model: huge quantities of time and money are lost on trials. In the end, what really happens is organizations’ fighting for money and their unique way of protection is by spending huge amounts of money; and this creates a lost in social value for companies and the economy. This is when Defensive Patent Aggregators come into the game. These companies copied the same business model than Patent Trolls but with a different value proposition: that is to protect instead of attacking companies regarding IP. They do it the same way as Patent Trolls by building huge portfolios of patent. Their way of making money is by selling an access to their IP for a fee to companies. The IP war changes and in this situation it’s Patent Trolls against Defensive Patent Aggregators. By being specialized in the field of IP, Defensive Patent Aggregators allow a reduction in the numbers of conflicts or when there is one, they know how to minimize costs on trial. In addition, the fact that they own a large number of patents, it is easier for them to defend themselves through other patents. Moreover, common companies can avoid these problems that do not concern their field expertise and keep focus on their business. To put in a nutshell, a truly believe that these kind of services brings the IP war to a much more fair fight, where the role of patents is legitimate by Patent Licensing and Enforcement Companies and the impacts in the economy reduced by Defensive Patent Aggregators. Show less Reply Rachit Khare 18 November 2013 Indeed, a market for patents and technology should be very different from the market of goods and commodities. These markets are in their nascent stage and can been seen only in few countries places like US and Europe. Companies still prefer to deal with firms or patent-holders on individual basis which is obviously not an efficient way for trade of…Read moreIndeed, a market for patents and technology should be very different from the market of goods and commodities. These markets are in their nascent stage and can been seen only in few countries places like US and Europe. Companies still prefer to deal with firms or patent-holders on individual basis which is obviously not an efficient way for trade of technology. As it has been rightly put by various researchers mentioned in the above article, there is a need for intermediaries who can act both as facilitators and catalyst in the market of technology. I came across some really interesting articles on how an efficient market for patents can be created through intermediaries. Some of the feasible mechanisms that I could figure out have been mentioned in the following text- 1. Patent Expos and Fairs: They can provide excellent opportunities to the patent-holders to present their innovations to the representatives of various organisations. They can also enables firms looking for technology to get easy access to the latest developments happening around the world. The biggest welfare that these kind of arrangements can bring about is the opportunity for the independent patent-holders who do not enough resources to broadcast their findings. Thus these fairs can give them the desired platform and help them derive both recognition and monetary value from their innovations. 2. E-Market for Patents: Internet can be an easy medium for the people wanting to sell or license their patents to market their innovation where in they can publish the information and interested buyers can be approach the patent-holders. I believe just like e-commerce websites like Amazon and E-bay we can have a similar platform for the technology products. The channel can save a lot of transaction cost for both buyers and sellers of patents and thus increase both producer and consumer surplus. 3. Patent Dealers/Brokers: Patent brokers can act as facilitators in the trade of patents. Further, brokerage firms can be setup to stimulate the market. The brokers can be industry experts specializing in fields like software, semiconductors, nano-technology etc. Let me explain how brokers can help in trade of technology. The major issue that affects the patent market is that most people (decision makers in the organisations) find it hard to understand the technical content of the patent and consequently it becomes difficult for them to put a fair value to the patent. The brokers who may be industry experts can help firms in this regard. They can also favourably affect the market price of the patents to bring them to the fair value. There are already over 500 patent brokers in the US, helping the prospective patent buyers and sellers come together. There can be many more such intermediaries that can help in developing an efficient patent market. I believe these intermediaries are must for the market of technology and without them it would be extremely difficult for firms to find the right technology as well as for patent-holders to derive right value for their innovation. Reference: http://www.wipo.int/export/sites/www/freepublications/en/intproperty/834/wipo_pub_834_ch9.pdf Show less Reply Jean-Benoit Valschaerts 17 November 2013 I want to deepen further the comprehension of what is an IP auction house. Well, IP auction houses are for patents exactly the same as Christies, Sotheby's etc. are for art and antiquities. They are places were sellers try to find a buyer for his products that is ready to give him the best possible price, except that in this case,…Read moreI want to deepen further the comprehension of what is an IP auction house. Well, IP auction houses are for patents exactly the same as Christies, Sotheby’s etc. are for art and antiquities. They are places were sellers try to find a buyer for his products that is ready to give him the best possible price, except that in this case, the products are intellectual property, mainly patents instead of tangible assets. Even if there are various formats and structure, IP auctions follow in general the same principle as art auctions; They are held live and patents are being sold in lots. The business model of these special auction houses is also similar to those of standard auction houses. The house charges listing fees, attandance fees, buyers premia and sellers commissions, according to their own will. Of course, in the 21st century a lot of transactions happens on the web. There are some websites proposing IP auctions. For instance ipAuctions.com, ipofferings.com,… Are IP Auction Houses good? They are certainly for the seller, because he generally gets a better price for his patents than he would have if he had negociated one-to-one. But on the contrary the buyers generally are worse off because of the so-called ‘winner’s curse’. The buyer who gets the bid either pays a price that exceeds the value of the patent or he just pays a price that is below his reservation price but higher than he would have payed when negociating directly with the seller. So we can conclude that this system favours sellers, that generally are innovators and thus encourages R&D spendings rather than the actual use of the patented technology. A solution to this, are sealed-bid action, where the potential buyers each make a secret proposition. This system is already widely used in other industries. Sources: http://www.ipwatchdog.com/2013/01/23/ip-landscape/id=33356/#F9 http://gametimeip.com/2011/11/21/icap-continues-to-struggle-for-live-patent-auction-relevance/ http://www.ipauctions.com/ http://en.wikipedia.org/wiki/Winner%27s_curse Show less Reply Miguel Moreira 17 November 2013 I have decided to write about the Transaction Facilitators, more concretely about IP Auctions. This type of companies were created because their leaders observed a flaw in the IP market, which was the lack of a common marketplace for buyers and sellers to meet. They have been successfull because they provide the companies the opportunity to reach their potential buyers/sellers with…Read moreI have decided to write about the Transaction Facilitators, more concretely about IP Auctions. This type of companies were created because their leaders observed a flaw in the IP market, which was the lack of a common marketplace for buyers and sellers to meet. They have been successfull because they provide the companies the opportunity to reach their potential buyers/sellers with zero effort, therefore reducing the waste of money and time previously spent on this activity, making the market much more efficient. These companies hold online live auctions, with different formats and structures, and offer their sellers the opportunity to sell a pre-determined number of patents while they charge listing fees. It is said that the aim of some IP Auction Companies is to become “the e-Bay of patents”. We can think of them as useful to society in terms of efficiency, because if we link every improvement to which they contribute we conclude that their business makes the IP market more efficient, therefore improves the companies’ efficiency as well, which results in positive consequences to society. We can also think of these companies as providers of “value insurance” for the patents, in the sense that they make much easier a potential sell of a patent. Having the (almost) certainty that if they file a patent they will be able to sell it, companies are more willing to invest in R&D as they have greater chances of making profit out of it. Again, if the companies are more predisposed to use their money in favor of innovation, society will most surely benefit from it. This being said, I believe the IP Auctions play an important role in current days, as they offer a solution to an obvious problem in the market, therefore contributing to the creation of value for society. Some examples of these companies are PatentAuction.com and IPAuctions.com. Show less Reply Sourav Das 17 November 2013 My comment is regarding the role of university technology transfer initiatives. Part of the reason why I have chosen to comment on their role is the fact that I was part of such a student run initiative in my undergraduate institution. The aim of the initiative was simple – to act as a link between the industry and the academia…Read moreMy comment is regarding the role of university technology transfer initiatives. Part of the reason why I have chosen to comment on their role is the fact that I was part of such a student run initiative in my undergraduate institution. The aim of the initiative was simple – to act as a link between the industry and the academia to facilitate transfer of industry ready technologies. Such an initiative was really needed especially at a university like ours. For starters, although a lot of good research was being done; it was not always from the perspective of molding into a product/service. Once the industry is made aware of the potential of technologies being developed in the university; invariably there is a flow of knowledge transfer thereby kick-starting the process of thought of further developing the said technologies into viable market ready products. Industry participation provided inputs on how to streamline certain technologies for general use and sometimes even signaled out those which were going nowhere. Most importantly some of the research which had been sitting on the back burner for long would get revived if the industry participants saw it fit. Additionally, once a technology was identified to be industry worthy; our group would volunteer to help out in the documentation process necessary in obtaining IP protection. Many of the researchers were unaware of the existing patent laws and we as volunteers filled that void. Commercialization of university knowledge received a fillip once the Bayh-Dole Act was introduced in the US. Before the Act, federal research funding contracts and grants obligated inventors to assign inventions they made using federal funding to the federal government. Bayh-Dole permits a university, small business, or non-profit institution to elect to pursue ownership of an invention in preference to the government. Gradually, university based technology transfer offices sprouted up with the aim to provide policy making and assistance that would enhance chances of achieving successful commercialization of technologies. According to a paper titled ‘Technology Transfer & Technology Transfer Intermediaries’ by Stephen Bauer and Jennifer Flagg, the critical events/activities that are part of the technology transfer model are as follows: 1. Technology Applications (Theoretical or basic research activities) 2. Idea event (New/novel application identified using developed technology) 3. Technology Research (Activities leading to proven concept prototype) 4. Prototype Event (Working prototype demonstrating proof of concept) 5. Product Development (Development activities leading to final product) 6. Product Event (Refining the working prototype) 7. Product Commercialization In my opinion, university technology transfer initiatives are critical to the steps 2, 3, 4 and 5. However, one thing that’s not mentioned in this model but nevertheless constitutes the most important point of my argument is that these initiatives also help out the researchers/ inventors in acquiring adequate IP protection which in itself is a matter of great significance since often such researchers are blissfully unaware of the intricacies of patent laws and such. Sources: – Wikipedia – http://www.atia.org/files/public/ATOBV6N1ArticleSix.pdf Show less Reply Tomè Clarissa 13 November 2013 My analysis focuses on IP brokers. Examples of IP brokers are “Inflection Point Strategy”, “iPotential”, “Ocean Tomo”, “Patent Freedom”, and “Thinkfire”. IP brokers are public or private companies bridging supply and demand of intellectual capital. The role played by brokers in the patent market is very similar to the one they play in most other markets: they establish the value…Read moreMy analysis focuses on IP brokers. Examples of IP brokers are “Inflection Point Strategy”, “iPotential”, “Ocean Tomo”, “Patent Freedom”, and “Thinkfire”. IP brokers are public or private companies bridging supply and demand of intellectual capital. The role played by brokers in the patent market is very similar to the one they play in most other markets: they establish the value for patents and remove information asymmetries, reducing patent owners’ search costs; they help patent owners to sell or license their technologies in exchange for a fee in case of a successful transfer. They add their expertise and skills in patent market, contributing to its improvement. Without IP brokers, a market for knowledge would be more difficult to develop and some ideas could remain unexploited. Brokers can also provide legal assistance and control for free-riding behaviour. Therefore it can be argued that IP brokers can have a positive social contribution because they help reducing uncertainties about the value of patents (filling structural holes) and reducing transaction costs. As for the first point, IP brokers produce positive outcomes for the patent system because they establish a more consistent system for determining market value, which is difficult for intellectual property. In this way the patent market can become more fluid and the number of successful transactions can increase. Furthermore, brokers reduce the lack of transparency which characterizes this market. As for transaction costs, due to the limited resources of independent investors and of companies in dealing with other companies, transaction costs may be high. Brokers can intervene helping to reduce these costs. There is however a disadvantage in the activity of IP brokers because they can exploit a monopolistic position, as they temporarily own information that is crucial for a transaction. This can produce distortions on the market because brokers can convey limited information or hide relevant information, becoming an obstacle to market efficiency. However, it has been argued that this IP brokerage is doomed to disappear as industry matures. As knowledge of the market diffuses, the bridging function of brokers looses its appeal and companies can skip the intermediaries and directly manage their IP transactions. Therefore I conclude that, also considering the probability of bad behaviour of brokers, their (maybe temporary) activity has beneficial social effects, leading to a better functioning of the patent market. Show less Reply Goergen Stephanie 9 November 2013 The following analysis focuses on online IP platforms. IP platforms belong to transaction facilitators whose main role is to match buyers and sellers of IP either through direct matchmaking or by providing a marketplace. More precisely, these online IP platforms are portals designed to match potential buyers and sellers of patents. In other words, they provide a place where buyers…Read moreThe following analysis focuses on online IP platforms. IP platforms belong to transaction facilitators whose main role is to match buyers and sellers of IP either through direct matchmaking or by providing a marketplace. More precisely, these online IP platforms are portals designed to match potential buyers and sellers of patents. In other words, they provide a place where buyers and sellers of patents can meet and interact. Typically, IP platforms are among two-sided markets. Two-sided markets have implications in terms of causing intermediaries to adopt particular pricing strategies that will get both sides of the market on board, and that balance the interests of the two sides. They serve as a bridge between the two sides of the market, i.e., the sellers who post detailed information about the patents they want to sell along with any special conditions, but without revealing their identity and the buyers who can find information about patents that are in the market for sale, search by keywords and patent classes. On the one hand, the buying side, which is looking for a patent, can reduce its R&D budget by using the innovative capacity of the network in order to find solutions to its problems. On the other hand, the selling side is spurred to provide more and more valuable patents. IP platforms create significant market efficiencies by bringing buyers and sellers closer together. They provide value to consumers in terms of patent information and varied choice, thus decreasing transaction costs such as the cost of searching for a buyer or a seller. By facilitating access to detailed information about the patents, these platforms provide opportunities for new innovative activities and social interactions that, otherwise, wouldn’t occur. They ensure that markets work better and create more competition as well as allow for a greater internationalization of markets. Moreover, they allow market entry and starting business for small and medium-sized enterprises, as well as start-ups. In this context, they enable collaboration to flourish among individuals and enterprises. The IP platform leverages its intermediary position to foster communication with other agents in the marketplace that will lead to transactions and exchanges that create economic and/or social value. More precisely, these platforms create value by – aggregating the information on buyers, sellers and patents; – facilitating the search for appropriate patents. They collect, organize and evaluate dispersed information and make it available through search by keywords and patent classes; – reducing the information asymmetries through the provision of patents and transactional expertise; – matching buyers and sellers for transactions; – providing trust to the marketplace in order to enhance transactions. – taking into account the needs of both buyers and sellers. An interesting example of an IP platform is: http://www.tynax.com/ Show less Reply Lutz Maicher 26 August 2013 Thank you Paul for putting this important topic on the table. At Fraunhofer MOEZ we did a very similar work and built a taxonomy for all services which are provided by IP practitioners. You can see the current version of this IPST here: http://ipib.ci.moez.fraunhofer.de/ipst When you click on the headlines of the several service descriptions you will find a lost of…Read moreThank you Paul for putting this important topic on the table. At Fraunhofer MOEZ we did a very similar work and built a taxonomy for all services which are provided by IP practitioners. You can see the current version of this IPST here: http://ipib.ci.moez.fraunhofer.de/ipst When you click on the headlines of the several service descriptions you will find a lost of companies which are already practice the according service. It would be great to further discuss with you and your team the IPST. Show less Reply Paul Belleflamme 26 August 2013 Thanks a lot for the link, Lutz. You’ve done an impressive and very useful work! Leave a Reply Cancel reply Your email address will not be published. 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