IP Exchange International will today announce that it is to begin operations in 2012, having secured agreements from two corporations and three universities to sponsor the Unit Licence Rights (ULRs) which will be offered through the exchange. Philips and Com-Pac International are joined as IPXI founding members by Rutgers University, Northwestern University and the University of Utah. In addition, IPXI has also secured $10 million of funding from a group of investors that includes Philips and the Chicago Board Options Exchange.

Today’s news is a major breakthrough for IPXI. It was established back in 2009 and since that time CEO Gerard Pannekoek has been seeking to persuade IP-owning entities that it represents an ideal way in which to quickly and transparently offer IP rights for licensing purposes, with rights owners listing patents available for license on the exchange. Central to the proposition is the ULR, which is described on the IPXI website like this:

… ULR contracts allow patent owners to license select technology in a non-discriminatory manner via standard form licenses on publicly disclosed terms. ULR contracts address the current inefficiency of technology transfer including the time, expense, redundancy and uncertain outcome of traditional bilateral licensing negotiations. IPXI serves as the intermediary between patent owners and potential licensees, listing the ULR contracts and facilitating one or more offerings of consumable “license rights” – the ULR contract. Each ULR contract purchased gives the buyer the right to use a pre-established unit of IP, for example the right to make and/or sell up to an established quantity of products covered by the patents in question.

The ULR contract market mechanics are designed to permit the market to guide ULR contract prices to the long-term fair value of the underlying technology rights to the ultimate consumer of the rights while simultaneously preventing artificial supply-side constraints. In sum, ULR contracts represent a quantum leap forward in the monetization and recognition of the value created by patented technology.

Although the exchange and the ULR have attracted a lot of interest, up to now it has proved difficult to get IP owners to commit to the project. Pannekoek and his team will be relieved that they are finally able to make today’s announcements. Getting started is always the hardest bit and with Philips, Com-Pac and the three universities in the bag, it should now be easier to attract further members – although a number of potential listees will no doubt wait until they see how the exchange works in practice before signing up. My understanding is that the two corporations are committed to making ULR contract submissions within a year, while the universities have up to three years to do the same (though all are currently in advanced negotiations with IPXI about making their first offerings).

If licensees do start to purchase ULRs then it is easy to see how things could snowball very quickly. Ease of deal-making, accessibility and transparency are very strong selling points. In fact, if things work out it's not hard to see how IPXI might change the entire face of a certain kind of licensing transaction forever. If you run a corporate IP group and are looking for potential in and out licensing deals, you stand to save a lot of time and money by using the exchange.

In the past Pannekoek has talked about taking the IPXI idea to Europe and Asia. Given today’s news, that may be closer to happening than I had previously thought.

Sectors

Licensing, Patents, IP business, IP finance