Essay on Intellectual Property

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1. Why is the market for intellectual property (IP) so illiquid and inefficient today?
IP is becoming increasingly important in the world economy. This can be seen in the increase of patent application and granting. Contrary to the growing IP assets, the market for IP was still con-sidered small and illiquid. Obstacles hindering the uptake of the IP market are:
• High search and transaction costs for both sides, seller and buyer: There is no transparent mar-ket providing fair value estimates such as where inventors or patent owners can look for a market for their IP rights. Further, standardized licensing deals do not exist: most IP trans-actions are based on customized deals and thus require long periods of negotiation and
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Live auctions (e.g. Ocean Tomo)
IP auctions are similar to live auctions including an auctioneer. The patents were sold to the high-est bidder if the reserve price was reached. Reve-nue was made through
1. fees charged for selling and bidding
2. buyer’s/seller’s premium for successfully closed transactions  about 3 auctions a year since 2004
 $14.3 million revenue at last auction in 2010
 Very sensitive to economic changes: auction after financial crisis in 2009 only sold 7% of its lots (average sale-to-listing ration: 38%)
d. Online IP platforms (e.g. Tynax)
Companies offering the service of an online IP market designed to match buyer requirements with sellers’ offerings. Revenue is achieved through commissions on completed transactions and registration fees in case of  Tynax lists over 10.000 patents for sale
 No acquisition of IP – solely mediator
 Create transparency and reduce transaction costs to match buyers with patents
 Revenue from commission range from $100.000 to $10 million
e. Intellectual Property Exchange Interna-tional (IPXI)
Independent company, created by Ocean Tomo to establish the first global exchange of IP thus trading contract rights in patents, trademarks and copyrights.
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