ICAP Ocean Tomo Auction Sees Record Bidding

It's good to see that Patent Auctions are apparently back up running again. ICAP OceanTomo issued a press release yesterday to highlight the USD 11.43 Million received in their 11th auction.

The press release highlights two sets of lots. An exclusive licence to a group of patents owned by the University of Southern California on a multimedia architecture went for USD 7.7 Million in a pre-auction sale.

A set of patents owned by Walker Digital LLC for which Ocean Tomo is the exclusive sales agent, according to this report. The bidding for this group started at USD 50 Million according to the press release, and stopped at USD 350 Million without reaching the reserve price. No doubt post-auction bidding will be continuing by some parties to access the portfolio. Indeed ICAP OceanTomo Managing Director Dean Becker clearly states that he plans to finish work on this lot within weeks.

Patent auctions have been criticised for allowing patents to fall into the hands of "trolls" who then exploit them. They do provide a means, however, for researchers and universities to monetarise their assets and allow the generation of cash which can be ploughed back into research and development, as the deal with the University of Southern California clearly shows.

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Patent Auction, ICAP Ocean Tomo, Walker Digital

Photo Credits: Dean Becker from www.oceantomo.com and Jay Walker from Inventors Digest (www.inventorsdigest.com)

End of the New Era? Ocean Tomo under the hammer

Law.com reported earlier this week that Ocean Tomo has sold its high-profile patent auction business to entrpreneurial British information brokerage ICAP for $10 million. The purchase, described (perhaps a little unkindly but probably honestly) as a "distressed-asset sale",comes not very long after Ocean Tomo appeared to be riding high, having sold more than $40 million worth of patents at three auctions during 2008, raking in between $12 million and $14 million in revenue. Loss of key personnel and the economic downturn have however combined, with devastating effect.

Ocean Tomo keeps its lesser-known lines of business, such as its expert-witness service.

OceanTomo

I have not yet seen Ocean Tomo's comments on its recent auction held last week, but the IAM Magazine already includes a post which reports that the record number of lots on sale went for USD 12.8 Million. IAM comments that it is interesting to see that the desire to purchase patents has not (yet) dried up. OceanTomo have not yet issued a report - at least their website is not showing anything.

The purchasers of the patents probably still have funds available for spending - at least that seems to be the case for a number of funds in the VC industy. It is not suprising that money was spent at this auction. More interesting will be the developments over the next few months and year. I would not be suprised to see more patents come onto the market as companies "rightsize" their portfolio - but that the funds for purchase becoming more limited.

Next live IP auction coming up

The Ocean Tomo Fall 2008 Live IP Auction & Conference will be held on October 29-30 in Chicago. According to the company's email, the event includes a one and a half day CLE approved conference at the Trump Hotel, a gala dinner at The Art Institute and a Live IP Auction at the Chicago Cultural Center.

Ocean Tomo expects some 500 IP and business professionals to attend, including Fortune 500 IP and licensing professionals, C-level executives from small and mid-size companies, investors, individual inventors, attorneys and members of the press. The three concurrent conference programme tracks include

* Managing IP Risk
* Buying & Selling IP
* Maximizing IP Value for Business Professionals

The full programme can be viewed here. For various reasons, most of them connected to the facts that (i) I have to earn a living, (ii) I'm neither buying nor selling any IP and (iii) no-one invited me to speak, I won't actually be there. But if any readers of this weblog are going to be there and would like their brief reflections on the event to be recorded here for posterity, can they please email me here and let me know.

Patent Quality

Day 2 of the LESI Conference in Chicago and I have spent part of the morning with OceanTomo (about which I shall blog separately). The afternoon's session included a fascinating talk about patent quality.

Christopher Ainsley of the the Patent Board reviewed their work on patent quality which seems to be mostly citation based. The Wall Street Journal has started publishing their patent scoreboard (as does the IAM magagzine). The thesis is that patents with a large number of forward citations are worth more than those with fewer citations when normalised across the industry.

Christopher pointed out patents in new technologies cannot be cited as often as technologies with a long history of patenting. They have developed the concepts of momentum patents which are those younger patents attracting a higher degree of interest.

Jonathan Barney of OceanTomo noted that their research on quality factors refelcted in higher prices in the OceanTomo auctions. In addition to citations, one of the quality factors is the renewal rate of the patents. He pointed out that the wacky patents granted over the past few years are often not renewed on payment of the first renewal fee.

During the ensuing discussion, criticism was made about forward citations being used as a quality factor. Both Christopher and Jonathan clarified that they broke their data out into Examiner citations and Applicant's citations (as Information Disclosure Statement). Both OceanTomo and the Patent Board stated that they also used data from outside of the United States (such as that from the EPO and WIPO). Christopher made the point that we need also to consider India and China in the future.

One of the main points that was made is that all of the tools on offer are using quantitative metrics rather than actually reading the claims and the specification. Christopher made the point that research showed that there is a correlation between the more subjective quality of the claims and the bibliometric approach. However, the point was made that the tools on offer are best used to pre-sort the patents. Ultimately a patent attorney is the best judge of the quality of the patent - her or his assessment may well depend on the current focus of the attorney.

The Ocean Tomo/Blueprint alliance: is it built on a sound premise?

The news has broken that Ocean Tomo and Blueprint Ventures have forged an alliance "to find, fund and accelerate the adoption of Corporate IP Spinouts within the technology sector". The alliance was announced at the IBF Corporate Venturing & Strategic Investing Conference held in Palm Springs. The idea is that

"Leveraging Blueprint Ventures' investment focus on Corporate IP Spinouts, this partnership will allow Ocean Tomo to present its clients with an additional monetization strategy for dormant IP beyond the company's highly successful IP auction and private sale capabilities. Blueprint's corporate partners will benefit from deeper access to Ocean Tomo's IP valuation, auction and private sale services in cases where a Corporate IP Spinout is not feasible".

IP Finance notes this development, but -- having digested the news, --wonders if this notion is based on a simple model that sees each item of IP as the basis of a business model of its own. The one-patent (or other right) business is highly vulnerable to challenge to that right's validity, just as a one-product company is vulnerable to sudden market shifts, government regulation and other events that lie outside its control. Arguably unutilised IP is best put to use, and its value best realised, when it is absorbed into a business in which it provides complementary support for market presence or R&D products that already exist -- though it is conceded that this cannot always be the case.

Ocean Tomo Spring auction catalogue here

Deutsche Patentbewertungstage = German Patent Valuation Days

The German company ratingwissen.de is organising its second patent valuation days at the European Patent Office in Munich on 19-20 February. An action-packed programme - mostly in German - is promised with contributions from Triumph-Adler on financing a company using IP, Andrew Rayner from the Ocean Tomo auction house, Christian Klawitter (Freshfields) on legal problems, Alexander Wurzer of Patev on patent evaluation as a service, as well as many others.

Registration of the conference - which is mostly in German - can be done here.