Jeremy makes some interesting points, such as (using my words):
the most appealing IP assets will not need an auction;
IP auctions can not be compared to fine art auctions (fine art is unique, appreciates in value, does not expire); and
the most valuable IP assets (trade marks associated with brands) are usually sold along with the business supporting them - and so would more likely be the subject of a take-over bid than an auction bid.
Jeremy suggests that one result of all of this may be that IP auctions end up as low-end commoditised affairs done online (again, my words). This has been tried and failed in the past (pl-x.com), though admittedly in the hands of different management.
Picking up the above points in turn:
I think Jeremy is spot on about the types of assets that will end up at auction - in general.
However, I can envisage situations in which one might wish to force an auction between bidders for a particular IP right, which is indeed of high value. The key factors for this scenario would obviously have to be (a) a strong validity position, and (b) a guranteed minimum number of bidders. Why hold the auction in public, though? Again, as part of an overall IP strategy, this may be very valuable - for example in the context of future rights to be licensed, sold, enforced, or to generate a higher valuation for an entity, etc.
Jeremy's comparison with fine art is really interesting.
Jeremy says that in contrast to IP, fine art is unique. I mostly agree. Although a valid IP right is theoretically 'unique' it almost never covers the only way to acheive a particular result (whether it be a patent, trade mark, copyright, Design, or whatever) - technology will always find a way around an IP monopoly.
As Jeremy says, apart from trade marks, most IP rights do have a limited life. (Having said that, even fine art will deteriorate beyond recognition at some point..) Also, confidential information doesn't really have a set expiry, though the idea of auctioning it brings about some interesting problems... However, I think many IP rights do appreciate in value. One of the most practical ways to value an IP right is by the sales of the product associated with it - which always go up over time. The patents covering Lipitor are worth a lot more to Pfizer right now ($20 Billion per annum?), than they did when they were first filed, and the same applies to the Coca Cola trade marks, etc.
The most valuable IP assets are usually trade marks in association with a high-value, well managed brand (and all that supports it). I agree with Jeremy that it is hard to see high value brands going by way of auction.
A further thought would be to use an auction forum to grant a certain number of licenses, carved up according to field, geography, time, or whatever. Such a system could well favour higher value IP, as it gives the bidders the chance at a slice of something that is clearly valuable and which retains exclusivity.
What do you think?
You can join the conversation about the strategic implications of this at my blog,
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