New Exchange to Trade IP

Terry Flanagan

An exchange that will be trading intellectual property and other patents assets will launch next year.

Intellectual Property Exchange International, or IPXI, will launch in 2012 with the goal of creating “a marketplace for a unique portfolio of financial products and services that facilitate investment and risk management in IP assets, helping buyers and sellers to efficiently allocate IP rights,” according to the company, which is to be based in Chicago.

The company announced last week that it had completed a $10 million round of financing led by a group of U.S. and European-based investors, including CBOE Holdings, the operator of the Chicago Board Options Exchange and CBOE Stock Exchange, as well as Royal Philips Electronics, a global healthcare, lifestyle and lighting manufacturer.

The round of financing will allow the IPXI to fund the building of its infrastructure, which will be set up to issue what it calls Unit License Right Contracts. ULR contracts will provide for a more transparent way to monetize and license patents and other intellectual property.

“By participating in IPXI, we contribute to shaping a transparent marketplace for licensing IP in a new and innovative manner and which creates a new channel for generating revenues from our IP assets,” said Ruud Peters, executive vice president and chief intellectual property officer of Philips.

CBOE executive vice president Richard DuFour will also be a part of the IPXI’s board of directors.

“Intellectual property has an estimated $9 trillion market value, making it one of the largest U.S. asset classes,” said DuFour. “The creation of standardized contracts should bring tremendous efficiencies to both buyers and sellers of intellectual property, much like CBOE’s introduction of exchange-traded options did in 1973. CBOE’s investment reflects our desire to be in on the ground floor of IPXI’s effort.”

The IPXI plans to launch sometime during the next year, with no specific date set.

According to the IPXI, 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 will serve 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.

In addition to helping companies raise capital, the IPXI will also support a secondary market for investors.

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