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Improved Marketability for Patents

Posted Monday, October 1, 2007 by Jim Ruttler

There are three traditional ways for an inventor to profit from his or her patent. The first is to create and sell the product covered by the patent and preclude others from doing the same. The limited monopoly provided by the patent permits the seller to command higher prices in the market. This route requires significant resources to both bring the product to market and to enforce the patent against infringers. Given that this is an obstacle to many inventors, a second method is to license or sell the patent to a company that has the resources and know-how to exploit it in the marketplace. This arrangement is ideal in that it rewards the inventor for his or her contribution, rewards the consumers with a better product, and rewards the company with increased profits. However, there are sizable barriers for inventors pursuing this option. First and foremost, it is difficult for an inventor to contact the right person within a company. Further, a company is not incentivized negotiate with an inventor unless the company both needs the patent and believes that the inventor is willing and able to enforce it. Given these difficulties, it is not surprising that a third method has become popular: do nothing, wait for infringement, and file a lawsuit. This route is attractive given that no resources are required to make a product or to negotiate with potential manufacturers and because there is a strong incentive for an existing infringer to settle. Unfortunately, this route introduces substantial chaos in the business world through legal uncertainty and precludes consumers from benefiting from new inventions.

Improved marketability for patents has the best potential to eliminate inventor reliance on patent lawsuits, permit consumers to benefit from new inventions, and allow companies to earn higher profits. Two companies in particular are making significant headway to achieve patent liquidity: Ocean Tomo® and Intellectual Ventures®. Ocean Tomo® promotes the first live public auctions for intellectual property where inventors can offer patents for sale and buyers can research and purchase the same. Intellectual Ventures®, on the other hand, is a well-funded organization which purchases intellectual property and markets the same to other entities. Both auctions and intellectual property intermediaries are likely to play an important role in improving the marketability of patents.

Intellectual Ventures Website
Ocean Tomo Website

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