Intellectual Property: Patents hit the auction block

The event, taking place on 5 and 6 April in the upscale Ritz-Carlton Hotel in San Francisco, is being billed by Chicago merchant bank Ocean Tomo as the world's first live, multi-lot technology patent auction.

Buyers can place their bids in person, online, by phone, proxy or absentee instruction. And among the lots on auction are patents from Motorola, Siemens and AT&T as well as from individual inventors

While patents have been sold in the past in private, or as part of bankruptcy sales of assets, a live event is a new approach that Ocean Tomo says may speed up the process of selling patents by more quickly matching sellers and buyers, and creating a more of a liquid market for patents.

The auction could be particularly helpful to individual inventors who don't have the extensive networks and resources of corporations.     

The sellers include a Who's Who of Fortune 500 companies such as BellSouth, Kimberly Clark, 3Com., Caterpillar, Ford Motor Co. and Clorox Company, as well as mid-sized companies and individual inventors.

One of the individual sellers is William Reber, a former Motorola vice president who has 53 patents up for auction.      

Ocean Tomo has published some of the patents for sale on its Web site in the "Featured Lot of the Day." Lot 50, for example, includes at least 15 patents for mobile and wireless telecom technology.

Wait for it

Some of the sellers have been approached before the sale by buyers who want to purchase the patents in advance of the event. "The effect of the auction as a marketplace is already being felt," James Malackowski, CEO of Ocean Tomo, said in a statement. "Several of the companies have already been contacted by buyers seeking the equivalent of a 'buy it now' opportunity. They will have to wait until April."      

Among the patents for sale are wireless, cellular, optical and other telecommunications technologies; semiconductor/semiconductor manufacturing; medical/bio-chip/biotech; financial services; display/multimedia technologies; bar code/RFID/Smart Card technologies; automotive/industrial machinery; advanced materials and chemicals; computer-based systems and technologies; oil and gas; food science; Internet; and memory technology.

Secondary markets

Some of the patents for sale are those large corporations don't intend to develop. Others are a sort of secondary market of patents originally transferred from their original inventors or assignees to research labs, universities or secured investors.      

The lots range in price from several hundred thousand dollars to more than $5 million. Ocean Tomo prescreened about 1,200 patents submitted for sale and pulled out the best of the group. The company, which rates and assesses intellectual property, used its own system to devise an "Intellectual Property Quotient (IPQ)" which scores and rates patent assets, which it compiled into a report.      

While Ocean Tomo will approve the sale of patents meeting a minimum IPQ, sellers will be asked to provide documentation in a basic due diligence package that qualified bidders can review.      

All bidders must qualify by completing registration forms and providing a Bank Letter of Guarantee. The event is expected to be attended by hundreds of decision-makers including executives, Fortune 500 IP professionals, large investment funds, well-known inventors, and IP thought leaders.      

Since many of the bidders may want to remain anonymous for competitive reasons, they will be given numbered paddles, or they can have a member of Ocean Tomo or other designated person such as their lawyer bid for them.      

The auction itself will be preceded by a day-and-a-half of viewing exhibits and of workshops. Workshops on 5 April workshops include technical patent evaluation and statistical techniques for measuring and managing patent quality, the auction process, intellectual property valuation, and IP utilisation in Japan. Those on 6 April include spinning out IP from government and universities, followed by the live patent auction. Both days will include one-on-one due diligence sessions.      

The price for entry is $500, covering admission to the auction, exhibits, reception and dinner; $500 for the 316-page auction catalogue (which includes the patent numbers and renewal dates, diagrams, patent summaries and inventor profiles); or $1,500 for a package that includes the catalogue, and admission for two to the events, including the auction.      

Those selling patents pay $1,000 per single patent listing without reserve of $3,000 with reserve. The sellers will get two passes to the auction and events.      

Overseas buyers are responsible for obtaining and paying the cost of permits or licenses for export, as well as any duties.