By Kenneth Lee, Analyst, Intellectual Property Exchange International, Inc. (IPXI®)

The efficient and secure transfer of knowledge and expertise is essential for a thriving innovation ecosystem. The patent system plays a critical role in technological knowledge transfer by offering protections and incentives to inventors and businesses that seek to use their inventions in developing new products. This system is also critical for universities seeking to protect and reward their researchers while making their discoveries of use to society.

In recent years, the proliferation of patents and the increased importance of technological know-how to business competitiveness have changed the technology transfer landscape and created new risks and challenges for innovators. The current market for patent licensing and technology transfer is predominantly private transactions between two parties that require extensive negotiation costs. While patents are publicly accessible, their licensable value is not known to existing and potential market participants due to nondisclosure of transaction terms.

The courts occasionally provide guidance on royalty rates or definable economic rules with respect to the practice of certain technologies. However, this model is not sustainable as courts are confrontational in nature and require large legal costs acting as barriers to entry. The potential risk of litigation and difficulty in achieving fair monetization reduces the incentives for market adoption of new technologies and discourages investment in research and development.

Instead, recent innovations in Illinois, encouraged by the corporate and university communities, are creating new solutions to help streamline and optimize the technology licensing process. Intellectual Property Exchange International, Inc. (IPXI® or Exchange), headquartered in Chicago, IL, represents a market alternative to litigation or private licensing transactions. IPXI is the world’s first financial exchange for licensing and trading intellectual property (IP) rights. IPXI is supported by more than sixty (60) members, including some of the largest corporate and university IP holders such as Philips, Ford Global Technologies, Sony Corporation of America, Northwestern University, University of Chicago, Columbia University, and Regents of the University of California, among others.

IPXI seeks to help level the playing field for innovators and facilitate technology transfer by improving market transparency in relation to the commercial exchange of patent rights. IPXI accomplishes this by providing price and information discovery and standard terms to all potential licensees for each portfolio offering. Moreover, all of the completed analysis demonstrating the quality of the assets and aggregate purchasing and trading data is made readily available for all market participants to review. These benchmarks facilitate more accurate R&D and IP management decisions to accelerate the innovation process.

This transparent licensing process particularly benefits university technology transfer offices. It allows universities to outsource marketing and monitoring responsibilities, legal costs, and transaction costs that typically deplete technology transfer office resources and budgets. Marketing to a large licensee base at market-based pricing ensures that a technology transfer office is adhering to its mission to fairly commercialize the university’s research assets for the benefit of the university and the public.

Today’s patent licensing landscape is a closed and inefficient system where the only certainty is large legal fees and a great deal of dead weight costs. The Exchange and other proposed changes in federal legislation such as the Innovation Act (see ‘Learn’ section below) are beginning to address the risks in the patenting and technology licensing landscape. It is inevitable for the market to adapt to a more open, cost effective, and innovation friendly model. IPXI and the Illinois business and university communities are leading the licensing and technology transfer world into a new culture which considers efficiency and transparency as its principal tenets.

Did You Know? 

Patents from Illinois’ academic institutions, including Argonne National Lab, have consistently displayed above average commercial viability, ranging between a high rating of 111.5 (100 is the average) and a low of 109.4 (see ‘Watch and Listen’ below for more details on Ocean Tomo’s patent rating system). This places the average quality and commercial viability of Illinois’ academic patents in the top 20th-40th percentile from amongst more than four million active patents. In the forthcoming issue of the Illinois Innovation Index, which will be released on January 9th, ISTC and Ocean Tomo will examine the average quality and commercial viability of Illinois’ academic patenting in specific technology areas and identify our strengths across different technologies.

Note: the data for 2013 was retrieved in October and does not reflect the full extent of all patents issued to Illinois’ academic institutions and national labs for 2013.

Watch and Listen:

How patent’s commercial viability is rated 


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Each month, the Illinois Science and Technology Coalition features a service or resource available to innovators and entrepreneurs in the state of Illinois on the Illinois Innovation Network. To learn more and add your resource to the Network, click here.Ocean Tomo, LLCEstablished in 2003, Ocean Tomo, LLC, is the Intellectual Capital Merchant Banc™ firm providing an industry leading array of financial products and services related to intangible assets. Ocean Tomo assists clients – corporations, law firms, governments and institutional investors – in realizing Intellectual Capital Equity® value broadly defined.Continue reading at the Illinois Inovation Network