14 October 2021

News

Traditional patent pools have helped change how we approach patent licensing and monetization. Importantly, they are in legal and business compliance with government and industry standards. The central idea behind patent pooling was to provide an efficient route towards licensing for technology implementers, while collectively rewarding the innovation of patent holders. However, given the high and inefficient costs in which the administrators of traditional patent pools economically prevail over participants, the model for patent pools is ripe for change.

With the increasing complexity and interoperability of modern innovation, patent pooling needs to do much more than just bundling patents and sharing licensing revenue.

For context, the modern smartphone consists of nearly 250,000 distinct patents.[1] 5G technology, which is only a small part of smartphone functionality, is expected to add an estimated 30,000 patents [2] to the fray. Fully unlocking the value of these interconnected patents requires more than just a patent ledger on a worksheet and payment links. It calls for smart patent management, and that’s where IPwe’s Smart Pools come into play.

What are IPwe’s Smart Pools?

IPwe’s Smart Pool is an intelligent program that delivers the benefit of exponential technologies to innovators that want to encourage adoption, maximize business opportunities, and generate a return on their investment, while maintaining maximum flexibility to change direction as future business and market conditions dictate. Like traditional patent pools, Smart Pools consist of two key groups: Founding Members (i.e., patent contributors) who agree to bundle their patent rights – without losing patent ownership – and Members (i.e., licensees), who take a license to the patents contributed to the pool, at an agreed-upon price.

Traditionally, patent pools functioned as a means of facilitating access to interconnected patent technology – a one-stop-shop. But many innovations involve an ecosystem of complementary patents. Some of these patents might be critical to the implementation of innovations, while others are enabled by the sum of its parts. Smart Pools allow the monetization of these patents without the need to pursue licensing on a one-to-one basis and the exorbitant expense that this might entail.

Traditional patent pools are incentivized to allay a fear of patent litigation; but they also encompass high fees and narrow focus and are inefficient in their ability to expand the licensing opportunities available to patent holders. Instead, in a world of more and more complex innovations, patent holders require tools that help them better understand their IP, license them in more innovative ways, and derive higher value from their monetization. Thanks to IPwe’s Smart Pools, they can benefit from a more efficient process that reduces transaction costs and enables a better structured and more coherent licensing strategy. Smart Pools provide cutting edge tools that help patent holders and implementers enjoy these benefits and more.

Why are they important?

Prolific institutions and corporate organizations frequently maintain a portfolio of tens to thousands of active patents. The process of combining and efficiently extracting the value of these patents through licensing is often expensive and inefficient. For instance, patent pools rely on incredible human effort to maintain licensing and revenue sharing activity – often at a cost of millions of dollars yearly. [3] This expense typically contributes to higher licensing costs which are then passed on to licensees.

IPwe’s Smart Pools introduce a more efficient, tech-enabled process that saves on the annual costs of pool maintenance. They ensure that innovators can sidestep the need to build expensive licensing structures, while earning revenue that fuels innovation instead. With these cost savings, patent holders can offer more competitive licensing prices, which can in turn facilitate broader adoption and license saturation.

In addition, Smart Pools provide both patent holders and implementers with the tools they need to make the most of their patent portfolio. These organizations often do not have efficient tools to manage their patents’ assets, and very few entities have the means and expertise to create such tools.

Due to IPwe’s proprietary algorithms and success data, including 14-year accumulating analytics and data – at an investment of $40 million – Smart Pools provide advanced analytics and data-oriented insights that help organizations identify, research, evaluate, and transact in patents. With the AI tools that Smart Pools provide, organizations can easily learn where their patents are best utilized, historical licensing data, and all the information they need to improve productivity for increased transactions and investment. The IPwe Platform productizes Erich Spangenberg’s previous IP strategies in selecting and taking principal positions in companies based on their IP value.  Erich and the IPwe team have earned companies $2.5+ billion.

What are the benefits for patent holders and licensees?

– Lower transaction costs: AI makes pool management easier, removing all of the inefficiencies that drive costs upwards. As a result, more licensees can enjoy access to the bundled patents at competitive rates that preserve their ability to profit from implementation efforts. Two broad areas in which Smart Pools provide an advantage to are search costs and negotiation costs:

– Search costs: Due to the fragmented and incomplete information that patent registries typically include, identifying issued patents is often tasking. Because patents typically use ambiguous titles, and new patents are being issued constantly, implementers require a coherent database that provides a complete and updated list of applicable patents.[4] In Smart Pools, IPwe not only publishes a comprehensive list of included patents and identities of their owners, but also provides detailed references on how each patent is related to the underlying technology.

– Negotiation costs: Innovation is increasingly compared to attempting to climb a pyramid. Each level consists of underlying patents that makes each succeeding innovation possible. However, for sequential innovators to improve on existing processes, they must often negotiate numerous licenses with preexisting patent owners and this likely results in higher licensing fees.[5] Smart Pools remove this barrier to innovation by enabling a single bundled license that benefits from the efficiency gains of a tech-enabled process and its resultant competitive pricing.

– Broader monetization base: Although patent holders wield considerable influence over the patent pooling process, they are not all created equal. Compared to large corporations that can monetize their patents on their own through mass production and implementation, other institutions like SMEs do not have this luxury. To facilitate this mission, IPwe gives SMEs the unprecedented opportunity to get free membership in its Smart Pools, which means free access to top industry patent portfolios, but also peace of mind that high litigation fees will not encompass SMEs’ funding and revenue, while allowing their proprietary ideas to be protected. Full and unfettered access to the Smart Pools’ technology for SMEs is a foundational design of this offering.

– Transparency: IPwe’s Smart Pools implement cutting edge tools based on blockchain and NFT technology to introduce greater transparency and ease into the patent licensing process. All licensing transactions on our platform occur through NFTs which allows patent and licensing information to be centralized in one place. This slashes discovery costs and helps mitigate the risk that some patent information might slip through the cracks.

– Adoption and Innovation: Smart Pools help facilitate faster adoption in tech areas that are very early in the adoption cycle, where there hasn’t been a significant amount of licensing activity. By providing access to cutting-edge technologies on standard terms, Smart Pools drive further innovation in two ways: first, the Pool’s revenue incentivizes and funds the Founding Members’ R&D; second, a single license to a wide patent portfolio encourages implementers to adopt new technologies, safe in the knowledge that they will have access to IP at a transparent and known cost.

[1] Robert P. Merges & Michael Mattioli, Measuring the Costs and Benefits of Patent Pools, Ohio St. L.J., Vol. 78:2, 281, 284 (2017).

[2] See https://www.justice.gov/atr/page/file/1298626/download.

[3] See supra note 1, at 312.

[4] Weimin Wu, Patent Pools and Cumulative Innovation, 46 Rutgers L. REC. 40, 57 (2018-2019).

[5] Id. at 58.


 

Author: Lavinia Meliti, Global Head of Business & Legal Affairs

Lavinia Meliti leads strategy and execution of IPwe’s business and legal initiatives. Passionate about Intellectual Property, she strives to explore its disruption through the escalating integration of Artificial Intelligence and Blockchain technology. She holds two Juris Doctor degrees in Europe and in the United States, and previously worked as an Attorney in Miami, Florida, focusing on IP and Competition Law matters.

 

About IPwe

IPwe is quickly emerging as creating the industry standard for patent NFTs. IPwe recently announced its partnership with IBM to represent patents as non-fungible tokens (NFTs). IPwe also has a partnership with CasperLabs  to further improve the patent registration process and create a chain of custody (CoC) Solution by using the Casper public blockchain to store, secure, and trace patent data, thereby creating a new approach to patent ownership verification. Patent NFTs are stored and shared on the IPwe Platform, running on the IBM Cloud and Blockchain services such as the Casper Network. IPwe anticipates tokenized IP to become commercially available in Q4 of 2021. IPwe operates in more than 50 countries with offices in Asia, Europe, North and South America. To learn more about how IPwe can provide the answers to your IP-related business decisions, Request a Demo of the IPwe Platform on www.ipwe.com

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