What a Patent Exchange Is Not

InvestinIP’s patent exchange has nothing to do with IPXI’s exchange.

IPXI’s exchange is no different from patentauction.com or some other clearinghouse to sell licenses and equity in portfolios.  IPXI’s model is the same solution we’ve seen over and over again, and is fact no different than a litigation-driven model.

Don’t be fooled–the IPXI’s patentauction.com model is not based on open, free-market principles.  Instead, it is based on a closed, monopoly-driven principles.

(1) Monopoly-Driven Principles

The only ones incentivized to purchase a Unit License Right (ULR) from IPXI’s exchange would be those that potentially infringe.

But why would a potential infringer want to pay for the ULR, if no one is threatening that they actually infringe?  And if the potential IPXI buyer could potentially keep doing what it’s doing, avoid paying a royalty, all while having no one complain, it would clearly be incentivized to not raise its voice regarding its “desire” to purchase a ULR.

(2) Closed Market

Moreover, IPXI’s exchange is a closed market, because only a particular segment of the population (potential infringers) would be interested in purchasing a ULR.  The general investment community has no incentive to purchase a ULR.

IPXI’s exchange, our current litigation-driven system, and all other closed, monopoly-drive models fail to (1) enable participation from the general investment community, and (2) promote investments into technology, both as a market and asset class.

→ On the other hand:

An open, free-market patent exchange would incentivize non-infringers and, any investor for that matter, to purchase shares of technology-classified, patent-backed assets.  For example, you’d be be incentivized to invest in a technology sector, if you believe it will explode in the marketplace, and more particularly if you believe you have inside knowledge re the technology’s potential impact.  After the technology explodes, you’d be able to sell your shares for much higher than the amount you purchased them.

Take away: when you see the words “patent exchange” used freely over the Internet, discern whether those models are closed, monopoly-driven principles, or open, free-market ones.


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