Buying and selling patents can sometimes resemble online dating—from the multitude of options, you seek out the one that seems the best fit and hope it all works out. And while optimistic singles might turn to matchmakers for advice, those in the patent world can seek out the wisdom of IP3.
The Industry Patent Purchase Program, as IP3 is officially called, is an online platform that connects patent sellers with large tech companies such as Ford, Google, Philips, Spotify, and Verizon. Run annually, the program’s latest iteration kicks off on 15 July.
“IP3 is a collaborative patent buying program with a fixed duration and fixed price,” says Russell Binns Jr., CEO of Allied Security Trust (AST), the company that launched the platform three years ago. Based in New Jersey, AST helps companies analyze the risks involved in patent purchases and carry out acquisitions.
Google approached AST with the idea for IP3 in 2015, after the tech giant ran its own patent purchasing program and realized that it would work “a lot better [if coordinated] among a number of companies” and that AST was suited to the task as it was “already set up as an entity that could facilitate doing this type of collaboration among a large number of companies,” says Binns Jr.
The way IP3 works is that inventors and brokers first offer up their patents for sale at a price they determine during the 11-day submission period in July. AST then selects which portfolios to purchase based on the interests of IP3’s participating companies, which work in a variety of industries including automotive and health technology, semiconductors, and social media. Participants, numbering around 20, receive the licenses to everything AST purchases. Transactions are typically completed in less than half a year, compared with the six to 24 months most patent deals take.
“The program itself helps with making transactions very efficient and cost-effective,” says Andrew Wojnicki, director of patent strategy and defense at IBM, which has participated in IP3 since its inception. AST examines submissions to ensure buyers are reviewing accurate information about the patents, sets the terms and conditions of deals upfront, and draws up patent assignment contracts and non-disclosure agreements, among other tedious administrative tasks.
“They handle a lot of the mechanics, and that makes it very, very efficient for us,” says Wojnicki. But the bigger benefit IP3 has to offer, he says, lies in its ability to alleviate what he calls “the filtering problem.”
“There are so many patents out there. Only some of them are going to be potentially interesting to us,” explains Wojnicki. Separating the wheat from the chaff is “a very human process,” he says, and “IP3 helps with that in a number of ways.”
But others question the quality of submissions that such a program could bring in. “I’ll be surprised if there were any groundbreaking inventions coming through [the program],” says IP specialist Ian Harvey, who headed the world’s largest technology transfer organization, the British Technology Group, in the 1980s and 1990s. Someone who’s come up with a potential game-changer wouldn’t sell their patent on such a platform, but rather approach individual companies and negotiate a deal via patent lawyers, he says.
To that end, AST has altered this year’s program to allow sellers to continue marketing their patents to other potential buyers even while participating in IP3—a move that Binns Jr. hopes will “drive higher-quality submissions.” Previously, inventors had to take their patents off the market while AST mulled over the offer—a waiting game of up to three months and a “deterrent for sellers who have an active selling program,” he says. But this year, the exclusivity period is limited to the 11 days immediately prior to when AST announces its initial purchasing decisions in October.
Other changes to IP3 2019 include a near doubling of submission categories, from eight to 14. The new areas in which AST is seeking patents include cloud computing, location-based services, and medical devices and imaging. Software and web services emerged as the most popular category in last year’s program, with 230 patent submissions. In total, 31 portfolios (also called lots) were purchased for an average of US $99,000 each.
“I don’t know how attractive that is to an inventor,” says Stephen Key, who has more than 20 product licenses to his name. A good patent “with a lot of claims” is worth at least $25,000, he says, possibly more if prototyping has been done. “It’s very difficult for the seller to determine a patent’s worth,” he adds.
Harvey agrees: “The drawback [to IP3] is that sellers may not be maximizing the revenue they could otherwise make.” But on the flip side, the patent purchasing world is currently a buyer’s market, with a glut of patents up for sale. “So for the sellers,” he says, “IP3 allows them to put their assets in front of a much larger audience than they could easily find themselves.”