Can ideas be sold in auction?

Bloemenveiling auction

Auction is the most efficient market for any product. A mediated negotiation between buyers and sellers establishes a fair price for many commodities that form a fabric of the modern economy – from pork bellies to oil to money itself – prices fluctuate according to the laws of supply and demand.

Can a mechanism of auction be applied to ideas? If our technocratic society truly assigns value to pure knowledge as means of producing wealth, trading intellectual property seems a next logical step. Although commerce in inventions is a nascent industry, there were quite a few intriguing developments in recent years.
Many consider Ocean Tomo (www.oceantomo.com) the merchant bank of the IP world (for example Ocean Tomo, the Chicago based financial house organized and successfully ran the auction of Commerce One patents). To some, Intellectual Ventures Partners (IVP) is the venture capital firm of the intellectual property industry. IVP has assembled a group of scientists and technologists with the goal of discovering new inventions. Many global technology leaders – Microsoft, Apple, Intel, Google, Charles River Ventures etc., committed funds to the firm co-founded by Nathan Myhrvold, former CTO of Microsoft and Edward Jung, chief architect of the same. Rumored to be the owner of 3,000 patents IVP is certainly an entity to watch.
(An article by Lisa Lerer in the Oct-05 issue of IP Law and Business provides a good snapshot of the players in the IP-monetization industry and a series by Peter Spours, EVP of ThinkFire, former head of licensing at BT Group, in the Spring 2006 issue of IP Review discusses strategic considerations of exploiting patents for profits. )

Since I work daily with inventors, the evidence is all around me that rarely anyone invests in pure invention. Why are so few inclined to invest in intellectual property?
Quoting Nathan Myhrvold, invention is to technology what conception is to reproduction. Any parent knows very well that reproduction is just a first step in many trials and tribulations of raising a human being. Ditto technologies on their way to becoming products. For this reason alone, assessing the value of an invention is still akin to “black art” requiring specialized expertise, and, even more importantly, willing buyers. [Ironically, Novell, a winning bidder that paid $15.5 million for the CommerceOne patents, uses the patents only as a strategic deterrent to advance its open source business model.]

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Tags: advisors, commercialization, ip, Veronika Litinski