IP P®OSPE©TIVE

I have discovered a very interesting post from a couple of weeks ago on the 12:01 Tuesday Blog, written by Chicago IP attorney Aaron Feigelson.   The post is titled “Patenting the Business of Patents”, and discusses tangible evidence of the burgeoning IP marketplace by way of 14 U.S. patents (11 of which have been issued in the past 2 years) covering the method and business of valuing IP.  Feigelson lists all 14 of the patents, which I will recreate the list here:

7,493,262
Method for valuing intellectual property

7,386,460
System and method for developing and implementing intellectual property marketing

7,346,545
Method and system for payment of intellectual property royalties by interposed sponsor on behalf of consumer over a telecommunications network

7,346,518
System and method for determining the marketability of intellectual property assets

7,315,836
Method for obtaining and allocating investment income based on the capitalization of intellectual property

7,292,994
System and method for establishing value and financing of intellectual property

7,272,572
Method and system for facilitating the transfer of intellectual property

7,269,566
Method for obtaining and allocating investment income based on the capitalization of intellectual property

7,228,288
Method of repeatedly securitizing intellectual property assets and facilitating investments therein

7,216,100
Method for obtaining and allocating investment income based on the capitalization of intellectual property

7,188,069
Method for valuing intellectual property

6,959,280
Method of protecting against a change in value of intellectual property, and product providing such protection

6,330,547
Method and apparatus for establishing and enhancing the creditworthiness of intellectual property

6,018,714
Method of protecting against a change in value of intellectual property, and product providing such protection

The fact that 11 of these were issued in the past two years is a testament to the IP marketplace that continues to take shape.  More importantly, however, and as Feigelson points out,  the secondary market for IP continues to grow as  a result of these R&D investments.  This secondary market will be a driver for, and possibly a replacement of, the primary marketplace, as we have already seen the PE firms and investment banks put IP on their radars as less contentional but promising and diversifying investment tools.  These firms have invested their own resources to own a part of the market for themselves.  For observation purposes, see many of the firms frequently discussed on this blog, including Altitude Capital Partners, Royalty Pharma, Ocean Tomo, and Acacia.  As Feigelson points out on his blog:

Of course, the irony here is that, by patenting these methods, this secondary market in some ways becomes a primary market, as well. Another way of thinking of it is that the non-practicing entities who are often involved in the valuations and exchanges of IP covered by these patents may now actually be practicing entities with respect to some of those patents.

Feigelson also asks a question I have been pondering:

One has to wonder if these patents collectively can be used as a proxy to indicate the total value of the burgeoning IP transactional marketplace. For example, the amount for which these IP-related patents may be licensed or sold is probably a good indicator of, say, how much money is expected to pass through at the next IP auction.

The timing and issuance of these patents is ironic.  For one, they lock down pure business methods, and coming after the much debated Bilski decision the proprietary value of some of these patents is in doubt.  Second, they seem to place boundaries on an IP marketplace that we all hope will continue to grow without hinderance or friction.  The IP marketplace should capitalize on creation and innovation, not on exclusion (but then again, thats what the marketplace is built around).  In some ways, these patents show that the IP market is becoming a product of its own product, if that makes sense.  To this end, Feigelson adds the following:

I’m all for at least some barriers to entry at the PTO . . . [b]ut it doesn’t feel quite right when the barrier is put up by a third party with the PTO’s blessing. Just my thoughts.

 . . . and mine as well.