The Intellectual Property Exchange International - or IPXI for short - has announced that Gerard Pannekoek has been appointed as its president and CEO. Previously, Pannekoek was behind the groundbreaking Chicago Climate Exchange, which describes itself as "North America’s only cap and trade system for all six greenhouse gases".

The IPXI is a fascinating idea. Essentially, it is a forum for the licensing of all types of IP right. However, it seems that the most activity is expected on the patent front. Here, companies place properties that are available for license on the exchange. The licences are then offered by IPXI through what are called Unit License Rights (ULRs). Licensees buy access to the licence through these ULRs, which they can then sell on if they find they have too many or purchase more of if they need to. The whole process is entirely transparent as each unit price is clearly posted and the patents themselves are fully accessible. The contracts involved are standardised. This should make the process much more efficient, timely and less expensive than the vast majority of bilateral licensing deals. IPXI undertakes to market all the patents it lists and, if needs be, to enforce them. Its pay-back is a percentage on each transaction done.

In a recent article published on CNN Money, Pannekoek is quoted as saying that IPXI expects to have between 10 and 15 industry leaders involved by February 2010. But while indusry leaders would be good publicity, the really key thing is that people have to want what the exchange is offering. That means getting the right types of patents, whatever the size or status of the owner. IPXI itself states that "the characterisitcs of a strong ULR candidate" are:

• The size of the offering exceeds $25 million.

• There is observable use of the IP and a large number of potential licensees.

• The IP has at least 5-7 years of remaining life.

• Usage of the IP can be “unitized.”

• Usage can be readily monitored.

• The due diligence process reveals one or more of the following qualities in the IP: successful existing licensing history; successful judicial determination; or successful patent office reexamination.

In other words, patents that are probably already being successfully licensed. If that is the case, the rights owner is going to need a very good reason to change its monetisation model. And that's where being a new exchange with no track record may well be a major drawback.

More likely candidates for listing, I would have thought, will be patents that are just a small way into their life span, those that are are owned by smaller companies and other entities that do not have the means to run full-scale monetisation programmes themselves, and non-core patents owned by larger organisations. IPXI's challenge will be to work out which rights it is offered that fall within these categories do have potential and are, therefore, worth listing. It's here that patent rating expertise will come into play; and Ocean Tomo, which co-owns the exchange - does have a good deal of this (for disclosure's sake I should add that Ocean Tomo is IAM's official ratings partner).

IPXI is certainly one to watch over the coming months. Pannekoek and his colleagues have a lot of work to do, but the model is a compelling one. If and when the exchange starts to offer good quality patents, it will bring a hitherto unknown level of transparency to the patent licensing market - something that a lot of people have been calling for over a protracted period of time. Indeed, if they are serious about transparency, now they have an opportunity to put their money where their mouths are.

Sectors

IP management, Licensing, Patents, IP business, IP finance, IP valuation