Barely 18 months ago there had never been a patent auction held in China. Next month, CTEX, (the China Technology Exchange, a state-owned technology and IP transfer organisation) will launch the country’s third, in an example of the PRC’s increasingly sophisticated IP transactions marketplace.

The first patent auction in China was held by CTEX in 2010, and saw 28 out of 70 lots sell for a total price of RMB 3 million (US$450,000). Although not a huge sum of money, the rights that were sold covered just China, while the percentage of lots acquired represents a success rate higher than the international average. At the time, IAM remarked that the auction “shows that the Chinese IP transactions market is developing at a rapid pace”.

A second auction took place in October 2011. Josh Li, vice president at CTEX, explains that this one featured 100 patents, largely in the electronics sector, of which 15 were sold at a live event. This was followed by an on-line auction of the remaining patent lots, of which a further two were sold, generating total revenue of RMB 1.5 million. “Most of the patents lots we auctioned came from industry, not from research institutions,” Li explained, “some from Huawei, some from TCL, for example, mostly in consumer electronics.” So, although the number of lots sold and the amount of money raised was less than the first auction, this was as expected by CTEX, Li said, because the quality of the patents generally was not as high.

Now CTEX is about to launch its third auction – and it promises to be the biggest yet. Li says that the process will begin in August with a roadshow across China, while the actual auction is likely to take place during September and October. “We have a total of 247 patent lots for sale this time,” Li said, “and all come from the Institute of Computing Sciences of Chinese Academy of Science, which was our partner for the first auction.” Many of the lots, therefore, are in the computer science and internet space, covering areas including integrated circuits, human-computer interaction, video processing, network security and management, and next-generation internet.

As well as the increase in the number of patents available, the structure of the auction has also been expanded. “This time we have designed several different transaction types which consist of live auctions in five cities in China, and three online auctions,” Li said. These live auctions will ensure that China’s regions are able more easily to participate. The cities that will host the auction have not been chosen yet, however, as this will depend on information gathered over the next few weeks. “We have asked the local governments to help us to get more and more companies to attend our roadshow,” Li explained. He also hopes that CTEX’s patent auction will change from being an annual event to a more frequent occurrence. “Currently we are trying to organise an auction once a year,” he said. “In the future - perhaps from next year - we will try to organise two per year.”

This is all pretty impressive from a company that was only established in 2009. The majority of CTEX’s clients are local (including a significant number of start-ups), but it also works with big-hitting international names including HP, IBM and Microsoft, helping them to identify potential buyers for their patents in China.

Issue 55 of IAM, which is just about to hit the newsstands, carries an exclusive interview with two of the key figures behind the creation and development of CTEX: Yan Xiong, the president and a founder of China Beijing Equity Exchange (CBEX), under whose umbrella CTEX operates as one of 10 trading platforms; and CTEX’s president Shugui Guo. Although independently-controlled, CTEX (and CBEX) are closely linked to the Chinese state and have a remit to transfer state technology and IP assets into third-party Chinese ownership. CTEX has two specific briefs: to commercialise the results of R&D and to increase the liquidity of technology and IP assets. “To awaken the sleeping giant of technology and IP is a major task for us,” as Guo puts it..

Unlike an organisation run strictly on commercial grounds, CTEX’s wider remit gives it the luxury of time and also a latitude to try things to see if they work. “We are not a specific, professional evaluating institution or intermediary; we are a platform,” Guo says. “We serve as the mechanism for the government to manage the market economy. We work for state-owned enterprises, investors, the government, enterprises and intermediaries. Our job is to organise and support technology exchange and financing in IP rights. We should be the organiser, developer, promoter and consolidator of new products and new services.”

Sectors

IP management, Patents, IP business, IP valuation