Auctions to sell assets have been known for long. Goethe proposed the publisher Vieweg in 1797 to sell his manuscript of his poem Hermann and Dorothea via an auction (later to become known as “a second-price auction”). In IP no doubt auctions have become a household practice thanks to Ocean Tomo‘s regular auctions of patents. They at least deserve praise for being the facilitator of “EBay” type of auctions of IP assets saleable like any other asset. And the public acknowledgement that comes with it that IP is like any other asset, it can be valued, it can be sold and bought online, by auction, by different bidding processes. In the past we have been critical on this business model as the model of choice for successfully selling IP. We still believe it serves only a small market. However, other viable market initiatives have yet to make the same break through as Ocean Tomo did for making IP as easy a selling object as my aunt’s old furniture. We wish there was one. Gathering 2.0 is such an initiative. I do not know whether its broadly used not what it’s “success rate” is. My guess it is still the same old thing in selling IP. We have seen consultants, brokers, valuators, accountants and attorney firms offering IP. Even investment bankers, well known for their M&A practices, have entered the sellers market as Sellers’s agents for those wiling to find willing buyers for their IP. Not all selling procedures deliver the same success and many of them raise concerns of their own. Take “closed auctions” where the seller or its agent approaches only a few selected buyers to bid on the IP they are willing to sell. Apart from asking the question whether this business model is desirable alternative to open auctions like Ocean Tomo, there is one thing some seem to overlook. It’s the issue of making yourself known as a potential bidder. Is the fact that you have been “selected” as a potential bidder mean anything as to whether the Seller potentially believes you are using the patented technology ? Should you make appropriate arrangement with the bidder or it agent before actually accepting the participation in the closed auction? What if you were not and simply accept the invitation? You supposed to make your due diligence before making a bid. SO, what happens if a NPE (see earlier blog, alternative to Troll) is actually the highest bidder and he becomes know of the fact that you are the party that tried to overbid him? You obviously did your due diligence. Does that mean you are “aware” of the patents and become in dangerous areas of willful infringement?
We do not know how popular are closed auctions in selling patents in fact are. We also have no idea whether sellers or their agents are aware of the inherent risks. Or are we seeing ghosts?