Intellectual Property Essay example

Words: 1243
Pages: 5

1. Why is the market for intellectual property (IP) so illiquid and inefficient today?
IP is becoming increasingly important in the world economy. This can be seen in the increase of patent application and granting. Contrary to the growing IP assets, the market for IP was still con-sidered small and illiquid. Obstacles hindering the uptake of the IP market are:
• High search and transaction costs for both sides, seller and buyer: There is no transparent mar-ket providing fair value estimates such as ebay.com where inventors or patent owners can look for a market for their IP rights. Further, standardized licensing deals do not exist: most IP trans-actions are based on customized deals and thus require long periods of negotiation and
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Due to that, they are able to list thousands of IPs for sale and requests by industry, making it attractive to both sellers and buyers.

3. How does Intellectual Ventures's (IV) business model compare to the other intermediary players?
Myhrvold’s views IV as a “new business model built around buying, developing and monetizing IPs” especially helping inventors to make money of their IP. How IV IPs:
• Buying of patents through
1. IP Financial Bridge: IV provides capital to the acquiring firm in a merge in exchange for taking ownership of the target firm’s patent portfolio. Acquiring firm would receive a per-petual non-exclusive license to those patents
2. IP to Earnings Per Share designed for R&D intensive companies willing to grant IV full control over a subset of their patents in exchange for obtaining more predictable revenue streams. IV could sublicense the IP assets to anyone in exchange for fixed guaranteed pay-ments, a