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INFORMATION FOR INVESTORS

To date, IPwe has been privately funded by its founders 

While the sirens of an unregistered Initial Coin Offering (ICO) are incredibly tempting, we do not believe this is the right path for us (if you don’t know what an ICO is, it’s described below).  Among other issues, we believe it will be difficult for some of our key patent ecosystem members to accept an unregistered token given the issues they will have to deal with in legal, compliance and finance.  Unlike previous ICOs in the market, our use cases are  different and involve participants who are unlikely to transact with an unregistered token.  

At this time, we are in the process of pursuing a private offering with “accredited investors” in the US and “professional clients” in the EU.  

We are currently evaluating the best way to execute a token offering and are working with US and EU counsels and other advisors on the best structures to use for completing a regulatory compliant offering in the US and EU.  While it will take more time and be more expensive, we think the investment is worth it and critical to our business model.  

If you are an accredited investor or professional client, please feel free to contact us at info@ipwe.com.

 

Introduction

Patents are fundamental to our innovation-based economy. Yet patents are often hard to get, find, value, and sell, license, or finance. The vast majority of patents are underutilized assets, producing no return on the owner’s R&D investments. 

IPwe will transform the global patent ecosystem by combining blockchain technology with artificial intelligence and advanced data analytics.

 

Unlocking Patent Value

Patents are a form of intellectual property. They're a government-granted right to prevent others from making, using, or selling an invention for a limited time.

Patents reward innovation -- and fund further innovation -- by allowing inventors to monetize their inventions. Inventors (or the companies they work for) can make the inventions directly (free of competition during the term of the patents) and/or license their rights to others.

Patents are valuable. According to the World Intellectual Property Organization (WIPO), cross-border patent licensing fees in 2009 were close to $200 billion. Billions more are spent on buying and selling patents.

However, only about 2% of all patents are involved in those transactions and most patents aren't sold or licensed across borders -- in part because foreign patents can be hard to find.

According to Forrester Research, US companies alone every year "waste $1 trillion in underused IP assets by failing to extract full value through partnerships."

Other assets, such as real estate, or accounts receivable, can readily be used as collateral to finance growth or working capital. There are well-established financial vehicles for financing the acquisition of other assets. Patents, for the most part, sit on a shelf, unused, financed almost exclusively out of a company’s internally generated resources or by equity investment.

So how can the potential value in 98% of the world's patents be unlocked?

To answer that question, we need to provide some background.

 

The Problem with Patent Offices

Getting a patent is a grossly inefficient process.

As the invaluable IPWatchdog blog discussed,

in many countries, including some of the world’s most important emerging economies, it takes so long to get patents that they approach irrelevance in many industries....

For example, in 2015, average time from application to grant ranged from Korea, at 2.8 years, to Brazil at 11.4 years. The U.S. ranked third in the sample at 3.2 years....

These delays eat into the usual 20-year patent lifespan (which starts on the filing date), depressing the return on the inventor's R&D investment.

Of course, these multi-year patent processes also use up significant government resources. For example, the US Patent and Trademark Office has close to 13,000 employees.

Another problem is that outside of the US and EU it can be hard to find information on patents. 

There are over 200 independent patent offices worldwide. The key information about most of the patents issued isn't available in a single database.  Even Google Patents only includes patents from 17 national patent offices. That lack of key information impedes the development of new technology and wastes time and money.

If you want to build a better mousetrap (or smartphone, or cancer drug), it's very helpful to know what's already been invented -- everywhere in the world. Buying or licensing technology that already exists may be far faster and cheaper than developing it on your own.

Previous efforts to create a global database of patent ownership failed. The technology involved (registration on a centrally maintained database) was too cumbersome, and there were insufficient incentives for patent owners to register.

 

The Problem with Patent Monetization

Once a patent is finally granted, it can be hard to make money from it.

The problem with the current system of patent monetization is that patents are highly illiquid as an asset class.

•    There's no centralized market (like a stock or bond market) for patent transactions.

•    Again, it can be hard to get information on what patents even exist.

•    Even in the US and EU, it can be difficult-to-impossible to determine who owns or has licensed a patent, since owners aren't required to register transactions.

•    Buying, selling, or licensing a patent can cost tens or hundreds of thousands of dollars in broker and legal fees -- and it can take months to finalize the paperwork.

•    It's hard to determine what a patent is "worth." Often, this is only established by a federal court after infringement claims and years of litigation -- at a cost of $1 million and up.

•    The difficulty in valuing and transacting patents has made them difficult to use for financing purposes.

Utilizing blockchain-enabled technology, IPwe is set to transform the patent world by putting every patent into a single blockchain database and capturing as many patent transactions as possible, making it easier to find patents and their owners. Our patent analytics software will make it easier to determine what a patent covers and what it’s worth.  

IPwe is going to make that global database – and the Zuse Patent Analytics System – available for free to anyone who wants to use them. This, combined with smart contracts will accomplish two things:

1.    Make it much easier/faster/cheaper to conduct traditional patent transactions of buying/selling/licensing patents.
2.    Enable entirely new types of patent transactions, allowing patents to function much more like other assets.

 

Understanding the Blockchain

Blockchain is simply an online database with some special features.  Many identical copies of the database exist and all are automatically updated when a change is made.

If the Internet can be seen as a global library, then the blockchain can be seen as a global spreadsheet.

Bitcoin is just one application of blockchain technology. It's a peer-to-peer system for making payments. The blockchain is used to record those transactions.

Bitcoin was the first decentralized cryptocurrency -- a digital asset that can be used to buy goods or services or exchanged for more traditional forms of currency, such as dollars.

Blockchain takes the place of “trusted intermediaries.” With blockchain I don’t have to go through a bank to send you money – I can transfer bitcoin directly from my digital wallet to your digital wallet. It therefore works, in a way, like digital cash. This gets rid of the fees that intermediaries charge – and it also affords a much greater level of privacy, as digital wallets are anonymous.

The value of a single bitcoin famously surged from $735 to over $19,000 in 2017 (and fell back to $9000 by early 2018).  As Fortune explained,

Bitcoin prices are driven by demand for a limited commodity. There are currently about 16 million coins in existence, and based on Bitcoin protocol, there can never be more than 21 million coins, ever. It’s truly Econ 101. There is a finite supply, and since Bitcoin has become a mainstream brand name, demand has increased, therefore driving up the price.

Bitcoin remains the most famous cryptocurrency, but there are now more than 1000 others and new ones are being created daily.

An initial coin offering (ICO) is a process for raising funds using cryptocurrency. Investors can buy cryptocurrency coins just as they can buy shares of stock. Cryptocurrencies can be either security tokens – which can represent equity in a company – or utility tokens, that are used to conduct transactions with a particular offering.

The money raised in ICOs in 2017 reached $1.5 billion by September.  The total market capitalization for cryptocurrencies is estimated to have increased from $18 billion to more than $111 billion from January to June of 2017.

Many cryptocurrencies, like Bitcoin, aren't backed by any assets. They're only worth what the market decides they're worth. That leads to considerable volatility in coin prices, and investing in cryptocurrencies can be very much like gambling.

However, cryptocurrencies are also being used in a far-more-interesting way -- to launch new businesses.

 

Beyond Venture Capital

As the Wall Street Journal noted,

Entrepreneurs seeking capital to build tech startups have long sought out elite venture capitalists on the famed Sand Hill Road in Silicon Valley. Now the many startups developing applications for blockchain technology have another option: They can go online and raise millions by creating digital tokens, for use as currency on blockchain platforms, and selling them in what is known as an initial coin offering, or ICO.

It’s a way for these companies to raise lots of money without giving up decision-making power to venture capitalists or surrendering any equity to them.

For example, as the Journal described, San Francisco's Protocol Labs raised $253 million in an ICO to build a blockchain-based platform on which digital storage space can be bought and sold using its Filecoins.

As the Journal notes,

Venture investors are dipping into ICOs as they try to learn more, either buying digital tokens directly in ICOs or investing in crypto hedge funds that buy tokens in the offerings.

With traditional initial public offerings (IPOs), it can take as long as ten years for a venture-backed company to go public and produce a return on investment.  In contrast, when an investor buys coins ahead of an ICO, the offering can take place in as little as nine months.

Regulatory authorities around the world – including the US SEC – are looking closely at ICOs. There have, unfortunately, been a number of scams and abuses. To try and circumvent falling under securities laws, many blockchain companies have raised money with utility tokens, claiming that since they don’t represent equity in the company, they’re not regulated. The SEC is not so convinced of this approach – consequently we’re working with counsel to do an offering that would be Reg D compliant, which will also give us much greater credibility than the vast majority of blockchain offerings in the marketplace today.

 

Smart Contracts

Another important blockchain concept is the "smart contract."

Smart contracts have been called "the blockchain technology that will replace lawyers." That's an exageration, of course, because lawyers do lots of things other than negotiate contracts, and not all contracts lend themselves to the blockchain.

But for certain types of legal transactions, smart contracts make a lot of sense.

Here's how a smart contract could carry out a patent transaction:

•    Amy has a patented data encryption algorithm. She's willing to license it to anyone willing to pay a set fee.

•    Bob wants to license a data encryption algorithm to incorporate into his company's smartphone.

•    Bob finds information about Amy's algorithm on the blockchain. He pays for a license in cryptocurrency.

•    As soon as Amy's account receives the cryptocurrency, Amy's account sends the algorithm to Bob's account, along with legal documentation giving him the right to use it.

The process is fast, easy, and doesn't require the use of lawyers or other middlemen.

Smart contracts also have the potential to be used in a variety of new and creative ways in the patent space – for everything from crowd-sourcing R&D funding to selling fractional interest in a patent to patent-based financing and more possibilities we haven’t even dreamed of yet. We’re going to make our platform available for others to use for these purposes as well.

 

Using the Blockchain to Unleash Innovation

After all that background, now we can get to the heart of the matter:

IPwe has developed a blockchain-powered solution to the problems with patent monetization.

Here's how it works.

•    The team behind IPwe has spent more than 10 years and $20 million creating the Zuse Patent Analytics System. It uses predictive analytics, artificial intelligence, and data management technologies to provide instantaneous evaluation of a patent or a portfolio of patents. Zuse already contains data on US and EU patents.

•    Most national patent offices don't have access to state-of-the-art tools (like Zuse)  for determining coverage and quality of patent applications. 

•    IPwe will offer free access to Zuse to anyone. Anyone will be able to get a look at not only the full text of patents, but at our system’s estimated value/strength of patents. We’re going to offer special features to national patent offices that can help to speed up and improve the quality of their patent prosecution process. In exchange, those offices and members will enter their patent information on the IPwe blockchain. 

•    The IPwe blockchain will support smart contracts to facilitate patent transactions – both traditional transactions and completely new ways of using patents.

 

How We Make Money

IPwe will monetize its patent blockchain by offering various types of transaction services using the Global Patent registry, not unlike how many companies have created businesses providing specialized software based on open source roots, e.g., Linux. 

All fees will be charged in IPwe's own cryptocurrency.

 

Why We Need Investors

IPwe is seeking investors in order to further develop Zuse and the IPwe blockchain. 

We also need funds to make the IPwe currency valuable enough to provide an incentive for national patent offices and patent owners to enter their data.

And of course we need funds to market and promote the IPwe solution.

 

Our Team and Our Record of Success

IPwe has assembled a world-class team of patent experts and computer scientists. 

Erich Spangenberg was the founder of IPNav, a very successful patent monetization firm that generated hundreds of millions of dollars of licensing, settlement, and enforcement revenue for its clients. 

Pascal Asselot led the patent licensing and development team at France Brevets, the world’s first sovereign patent fund. 

George Karypis is a globally-recognized expert in big data and artificial intelligence.

Daniel Bork is a technology expert with six patents and over 20 years of experience in advanced data mining and analytics software.

IPwe has over 20 full time employees working on the development and deployment of our platform.

 

More on Our Offering

If you’re an accredited investor (US) or professional client (EU) drop us an email and we’ll add you to our mailing list for more information when we finalize the terms of our Reg D compliant offering.
 

IPWe Inc.

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    Address 160 Greentree Dr, STE 101, Dover, DE 19904, USA 

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    Phone  USA: 1.214.438.8320

  • Email info@ipwe.com

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