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A new system allowing anonymous online bidding for patents across the globe is expected to boost both patent purchases and behind-the-scenes legal work. Ocean Tomo LLC launched the online Patent/Bid-Ask system on April 8. Chicago-based Ocean Tomo bills itself as an “intellectual capital merchant banc,” but is perhaps best known for the half-dozen live patent auctions held since the company’s 2003 launch. The Patent/Bid-Ask system differs from the auctions because it’s a continuous online market and it allows sales of individual patents, instead of the lots sold at auction. According to Ocean Tomo, Patent/Bid-Ask lets prospective buyers make unsolicited, anonymous bids and allows sellers to post sale offers on more than 33 million patents from about 80 countries and patent-issuing agencies. The company sets a $10,000 minimum for bids or asking price for patents, but charges only $50 to $250 for bids or asks, plus $495 if the seller sets up an online-data room for secure electronic negotiations. More patent sales? The Ocean Tomo Patent/Bid-Ask system will likely increase patent sales in some industry sectors, because it’s an easy, automated path for patent sales, akin to resale shopping on the Internet, said Matthew Lowrie, a partner at Cambridge, Mass., intellectual property boutique Lowrie, Lando & Anastasi. More patent sales also generate prior due diligence legal work and licensing after the purchase, Lowrie said. “As people are considering buying patents it may be that patent attorneys are called in to look at them to see if they’re well done or have validity,” Lowrie said. Companies sometimes use patent brokerage and consulting companies to buy and sell patents, but Ocean Tomo is trying to make the process easy, less expensive and transparent, said Billy Schwartz, a partner in the San Francisco office of Morrison & Foerster. “What’s new is that they’re trying to position themselves as the market maker,” Schwartz said. In the first three days after the launch of the Patent/Bid-Ask system, many sellers submitted “asks,” or asking prices, for small lots of patents and a smaller pool of prospective buyers submitted bids for many patents, said Ocean Tomo’s president and chief executive officer, James Malackowski. Within the next month, Ocean Tomo expects to post more than 1,000 bids and a few hundred asks in the database, he said. Buyers see Patent/Bid-Ask as an easy way to amass enough patents in a technology to ensure a strong competitive position, Malackowski said. “Once you can buy or accumulate 50 patents in the space, that can become really valuable,” Malackowski said. Although Ocean Tomo’s existing auction format works well for U.S.-based patents, particularly those in the information technology, data management, video and telecommunications sectors, the company rolled out the Patent/Bid-Ask system to make it easier for buyers to find sellers in other markets, Malackowski said. Buyers are looking for Chinese, European, Japanese and Taiwanese patents and the Patent/Bid-Ask system allows them a low-cost way to find potential sellers, he said. Ocean Tomo’s plans to post bid prices and final transaction prices could dampen enthusiasm for participants in major patent deals who don’t want the market to know what their intellectual property is worth, but the online bidding process could work for more routine transactions, said Schwartz. “What is sometimes difficult when you want to go out and buy patents is to figure out how to make an approach to the patent holder that’s anonymous,” Schwartz said. A system like Ocean Tomo’s Patent/Bid-Ask “probably can’t help but increase the volume of patent transactions” and related legal work, said Matthew Sant, a Newport Beach, Calif., partner in the intellectual property transactions practice group at Irell & Manella of Los Angeles. “It may increase the volume of due diligence because you’re increasing the volume of sales,” Sant said. Potential buyers interested in making bids using the new Ocean Tomo system will need lawyers to investigate any licenses associated with the patent and both sides will need lawyers for strategic advice, said Malackowski. “If someone gave me an offer from my patent [they'll ask the lawyer] should I sell it?” he said. “It will elevate the attorney’s role as counsel or adviser.”

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