The much ballyhooed Ocean Tomo Patent Auction was conducted with great professionalism today, but appears to have failed in a general sense. Most patents did not receive bids that exceeded their reserves, most attendees were not bidders, and some patents did not even receive bids.

Unlike a tangible object like a car or a painting, patents tend not to be exchanged in simple purchase transactions. The norm is intricate schemes with carve-outs, grant-back licenses, and other related covenants, contracts, and side-deals.

Auctions don’t seem suited for these types of complex transactions, which require extensive negotiations and a level of attention to detail which auctions seem to lack. For instance, one auction seller desired a grant back license to his invention. During due diligence, it became apparent to us that no one had thought to actually draft proposed language for this license. In essence, the buyer was being asked to purchase land with an easement, not knowing whether the easement was for a sidewalk or a superhighway.

Nevertheless, Charles Ross, the auctioneer, did a superb job. Maybe the next time the trick will be to mix in a few antiques with those patents.

posted by Charles Eldering @ 11:35 PM | Patents

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