Costs and Benefits of Patent Trading
Patent trading is one way to increase firms’ R&D efficiency. Patent trading is also associated with an increase in firm performance. It can also promote the development of comparative advantage-based specialization. However, this research has some limitations. We need more empirical data to determine the effectiveness of patent trading. The first question is what are the costs and benefits of patent trading?
There are several risks involved in patent trading. Patent brokers should always keep their clients’ identities confidential. This way, they can negotiate a fair price with the seller. Moreover, they should be familiar with the technology behind the patented invention. Patent brokers must also have excellent research skills, as they need to match buyers with suitable patents. This knowledge will also help them evaluate patents for valuation purposes.
Several patent exchange websites provide considerable information about patents and their prices. However, most patent trading transactions involve in-person negotiations and meetings. This is because trading patents is more complex than trading tangible goods. Moreover, the tacit knowledge embodied in patents is difficult to articulate. In addition, commercial applications of patented technologies are often highly uncertain, which makes price negotiation challenging. Also, the transfer of patent ownership requires the signing of numerous legal documents.
A broker who represents the seller will solicit offers from different buyers. The selling client will then decide whether or not to accept or reject the offer or submit a counteroffer. In either case, the broker will act as a bridge between the two parties. They will also act as an advisor to their clients. This will allow them to get a realistic understanding of the patent market and determine what kind of price is right for them.
While the existing patent trading platform has many shortcomings, a bidirectional long-term memory network solves some of them. The network aggregates a company’s patents based on its history and addresses the company’s varied technology interests. The resulting model outperforms state-of-the-art baselines in terms of accuracy. It also demonstrates the effectiveness of this new method for patent trading.
However, recent patent reforms have reduced the amount of patent trading, making it a less profitable endeavor for patent brokers. However, litigation activity may result in a growth in the number of patents being traded. Patent wars are another reason for patent trading. Patent brokers may prepare claim charts for sellers, although some will outsource this process to research organizations overseas.
In addition to creating value, patent trading is also a method for monetizing IP assets. These investors add liquidity to the market by purchasing IP licensing and futures contracts with the intention of reselling them at higher prices in the future. Furthermore, some IP investors may act on behalf of licensors. They may purchase IP licensing for practice purposes, or to legitimize infringing operations.
Intellectual Ventures has received criticism for leveraging its patent portfolio to increase shareholder value. However, the company has a track record of investing in inventions and has a large list of super-smart inventors. The company also makes money by licensing patents to companies with the most to gain from patent litigation. It recently paid i4i $300 million in a lawsuit, and last year it booked $700 million in revenue.