R.I.P. Ocean Tomo - Intangitopia Special Report

Last week Ocean Tomo sold their patent auction part to ICAP. This created some stir in the news and blogosphere, examples and very few (bloggers) actually seemed surprised. IP Law&Business , and Managing IP among others, have good pieces on the deal. That articles also feature commentary, also found elsewhere, by Ron Laurie from Inflexion Point who says that the major reasons were:
* The Ocean Tomo business model of targeting the low end of asset quality
* The difficulty to conduct diligence.
He also mentioned Intellectual Ventures' likely withdrawal from bidding at Oceant Tomo auctions as. That rumor, which fueled the debate of IV "puppetmastering" the auctions, led to another good IP Law&Business piece (pdf), an interview with IV chief of acquisitions Kevin Barhydt.

The 5$ million in cash and possible 5$ million in stock is a fire-sale price for OT, which for long time where hyped as the saviours of IP liquidity (also by myself, as found in previous posts here and here). Personally I must admit that I believed in the OT model for a while, but in hinsight it was more likely due to lack of experience. Regardless if it was IV in disguise who bought the OT patents or not, it seems as if buying patents "blindly" is not something people are less interested in doing - also likely related to the recent drop in financial strength of many firms. Regardless of that, I still would like to cast some light, in form of Ocean Tomo statistcs, on what I believe to be the death of the public IP marketplace.

Please find a Intangitopia Special Report - where 8 full Ocean Tomo auctions are analyzed inside and out in order to provide you with a better and objective view on what once was the great Ocean Tomo.

Complete Ocean Tomo Auction Analysis

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IP as a financial asset will be discussed further by prominent IP thought-leaders during CIP FORUM 2009, 6-9 Sep, Gothenburg, Sweden

Thoughts on building an IP marketplace

In light of recent Ocean Tomo success and the ever growing interest in IP and intangibles (especially as it makes out 80 percent of market cap.. or what did Pat say ;) ) there are many ideas floating around and lot of effort put into thinking about an IP-marketplace. This will be a first post of hopefully many as I will try to focus on the financial / transactional side of IA / IP.

One could go on in eternity regarding the contextual nature of IP valuation and whether accounting principles are up to date - but that is not my intent. In this post I'm thinking about the actual markets. In light of CDOs I won't debate the future existance of securitzed IP to generate leverage - that is bound to happen. What I am interested in is governance, transparancy and liquidity.

First of all I would like to tip my hat to Ocean Tomo - true pioneers and deserve all appraisal. But what if (or when?) success (i.e. hight returns) leads to competition (as market theory has shown) and we all of a sudden have multiple OT's where some only take 8% of the cut and others 7% etc. Where would the buyers and sellers want to be?

How would markets attract both buyers and sellers if they require physical presence?
Would it be entirely online-based with a search function for all markets?
Would biotech complexity always be handled at high end 10% marketplaces with nice prospectuses?
Will we see an overall "garage sale effect"? (i.e. steep fall in percentage of lots sold as companies would try to sell all kinds of "crap" IP - perhaps to boost liquidity in light of the turmoil).

I personally trust market forces on this one out. But wait a minute - there might be a regulatory issue overruling it all as Ocean Tomo have some interesting pending applications.
As interesting they are on their own I see the following two key issues:
1) How will the infamous Bilski ruling affect these applications
2) If granted - will OT go open (á lá DNA), closed or somewhere in between?

Interestingly, they are not alone in this field. Wonder how Bilski influences this one?

Finally, some food for thought. It could be an interesting system if:
1) All corporations understand the potential in leveraging IP (i.e. not only as a legal necessity)
2) IP markets start growing
But the markets and securitization are privately owned (and governed ?) and you have to pay a royalty for calculating a value on IP you want to acquire.

Please share your thoughts on where the "IP market" ship is heading.
All aboard !?

Marcus Malek