The Chicago-based Intellectual Property Exchange International — the first financial exchange to sell patent licensing rights — is poised to launch early next year. In return for a share of the revenues, the exchange will promote the patent and sell the license rights in individual units issued like stocks. The exchange also will enforce its protections with litigation, when necessary, and publish sales and price data online. “It’s like an initial public offering for a patent,” explains Jim Malackowski, chief executive of Ocean Tomo, the Chicago-based merchant bank backing the exchange. The exchange has soft commitments from four or five companies and expects to have 10 to 15 “industry leaders” pledged by February, according to Gerard Pannekoek, CEO of the patent exchange and former president of the Chicago Climate Exchange.
Some in the patent industry worry that transactions on the exchange will generate ripples of litigation as it pursues profits from its accumulated portfolio. “Whenever anybody aggregates patents, there’s always that suspicion,” says Patrick Thomas, principal at 1790 Capital, a hedge fund that invests in companies based on their IP. However, Ocean Tomo’s current business based on valuing companies’ patent assets lends credence to the new venture, Thomas adds. And the exchange could provide insight into the often murky world of patent valuation. “Any time that you are in a bilateral agreement with another party you never know whether you got a great deal,” Pannekoek says. “An exchange will offer that price transparency to the market and ultimately establish the real value of a patent.” The exchange may be most useful for small companies or universities without the means to promote or enforce patents on their own. “It’s really a very interesting and creative model,” says Ron Laurie, managing director of Inflexion Point, an IP-oriented investment bank in Palo Alto, CA.
Source: CNN Money