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Journal of Intellectual Property Law & Practice Advance Access originally published online on September 1, 2006
Journal of Intellectual Property Law & Practice 2006 1(11):728-731; doi:10.1093/jiplp/jpl139
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© The Author (2006). Published by Oxford University Press. All rights reserved.

Patent auctions: business and investment strategy in IP commercialization

Dr. Hidero Niioka *

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 fast way to sell or license their patents. There is a high probability that bidders will purchase or license low- or no- value patents because patent auctions set a very tight time frame for bidders’ due diligence. The nature of the patent right creates a big imbalance in terms of knowledge between owner of the patent and the purchaser or licensee; the latter party can only minimize the risk of purchasing or licensing a "zero" or low value patent by receiving sufficient time to investigate the patents. IP auctions may however be a better and safer means of purchasing or licensing domain names or trade marks, due to their legal nature.

Practical significance. Many companies might believe that patent auction is a swift and effective way to find a purchaser or a licensee for their IP rights. Even so, it is imperative that the bidders themselves conduct a proper due diligence of the patents offered, corresponding to their needs and to their assessment of their true financial and business value.

*LL.M. (Stanford)


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