Patent auctions: business and investment strategy in IP commercialization

Legal context. This article concerns patent sale and licensing,asset deals connected with M&A and intangible asset transactions. Key points. Patent owners might find patent auctions a fastway to sell or license their patents. There is a high probabilitythat bidders will purchase or license low- or no- value patentsbecause patent auctions set a very tight time frame for bidders’due diligence. The nature of the patent right creates a bigimbalance in terms of knowledge between owner of the patentand the purchaser or licensee; the latter party can only minimizethe risk of purchasing or licensing a "zero" or low value patentby receiving sufficient time to investigate the patents. IPauctions may however be a better and safer means of purchasingor licensing domain names or trade marks, due to their legalnature. Practical significance. Many companies might believe that patentauction is a swift and effective way to find a purchaser ora licensee for their IP rights. Even so, it is imperative thatthe bidders themselves conduct a proper due diligence of thepatents offered, corresponding to their needs and to their assessmentof their true financial and business value.