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More than three dozen key patents and patent applications for doing business over the Internet have sold for $15.5 million at an auction in San Francisco’s bankruptcy court. The patents belonged to Commerce One, a Santa Clara software firm that is closing its doors. The high price reflects the value of the core patents, which cover basic technology such as standardized electronic documents that automate the sale of goods and services over the Internet. An entity identified only as JGR was the winning bidder on seven patents and about 30 pending applications. JGR was represented by Mark Mullin, a partner at Dallas’ Haynes and Boone. The auction, held in early December, had reportedly caused a stir among Silicon Valley technology companies that worried that whoever acquired the patents might use them in infringement lawsuits. There was no immediate indication of what JGR intends to do with the patents. Peter Detkin, former assistant general counsel of Intel Corp., was one of seven other bidders. Detkin bid on behalf of Brissac Electronics, an acquisition arm of Intellectual Ventures, a Seattle-based company co-founded by former Microsoft Chief Technology Officer Nathan Myhrvold. Detkin bid as high as $14.9 million before JGR came in with the final offer. The auction drew attention to the value of IP assets and also reflected controversy in selling patents through a bankruptcy proceeding. The auction “sets the pattern for what’s to come,” says Ronald Laurie, who works for Inflexion Point Strategy, an IP investment consulting company. “It validates the market for buying patents.” Laurie says the number of bidders and the high level of interest in the patents were unusual in a bankruptcy proceeding. Commerce One hired an investment bank, Ocean Tomo, to evaluate its patents and oversee their sale. Ocean Tomo’s Nathan Cann says ComVest Investment Partners had made an offer, but “we felt they hadn’t placed enough value in the Web services patents.” ComVest acquired the remaining operating business of Commerce One. One of the inventors of the patents, Robert Glushko, would like at least some of the patents to be available on a non-exclusive, royalty-free basis. Glushko is the husband of Pamela Samuelson, a professor at Boalt Hall School of Law and a leading proponent of preserving access to information via the Internet. Deirdre Mulligan, director of Samuelson’s Law, Technology and Public Policy Clinic at Boalt and an attorney at the Electronic Frontier Foundation, sent a letter to the Office of the U.S. Trustee in an effort to keep any buyer from demanding royalties on the patents. “Commerce One encouraged people to build around” the patents, says Mulligan. The purchasers of the patents should provide “a royalty-free license to at least some of this technology.” The Boalt clinic was established in 2000 with an endowment from Samuelson and Glushko, who had benefited financially after Commerce One went public. Brenda Sandburg is a senior writer at The Recorder, where she covers developments in IP law.

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