Patent Exchange–Supplying the Market (Part 3(ii) of X)

For a patent exchange to exist, there would need to be a number of patent holders that supply patent assets to the trading market.  A number of questions naturally arise: (1) Who would be the parties to supply the patent exchange?  (2) What are incentives to supplying the market, taking into account (i) disadvantages of traditional monetization means and (ii) advantages of a patent trading market?  (3) What are the logistics of placing a portfolio on the market, taking into account (i) mechanisms to generate revenue for patent suppliers, (ii) patent portfolio groupings, and (iii) how would patent holder enforce its publically-traded patent against a competitor, if it needed to?

In this post, I’ll be discussing (3)(ii) logistics of placing a portfolio on the market, taking into account patent portfolio groupings.

For a company to place its patent assets on the patent exchange, it will need to classify them according to technology classes.

These classes will enable investors to determine technology areas in which to invest.

Conceivably, to maximize returns on the patent exchange, a patent supplier may place as many portfolios onto the exchange as possible–the more portfolios being traded, the more opportunity for revenue generation.

How can a company divide up its portfolio for placement onto the exchange?

Again taking Cisco as a case study, its patent portfolio covers numerous technology areas such as network switching, authentication, bandwidth management, VOIP, video imaging, and a host of other technologies.

Taking just the patents covering video imaging, this again can be broken down into a number of technology subcategories such as video-technology display, video splicing, video streaming, video conferencing, video-frame transport, and a host of other video-related technology areas.

Conceivably, there is no limit to the granularity of its patent-portfolio selection for the exchange.  Hence, for its 10,000 patent assets, Cisco could conceivably group them into hundreds of different technology spaces.

From the patent trader perspective, these portfolio subcategories will enable such investors to trade on patent assets through a designated technology classification.

1 Comment

  1. Author
    Invest in IP December 9, 2013 Reply

    From the perspective of designating a technology class and selecting which patent families will belong to what class, remember that investors will be looking to how well you maintain your technology class-of-assets.

    Are you letting them expire? Are you paying the maintenance fees? Are you filing additional patent applications into the technology class? Is the number of patents in the portfolio increasing, decreasing, or remaining neutral?

    All these factors will affect investor perception re how much you value your own technology class.

    Be sure to designate the technology classes broad enough in areas where you are actually interested in continuing to research and maintain patent activity.

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