Politicians around the world increasingly tout the importance of intellectual property as a 21st century economic engine. As interest in IP grows, so has the desire to form marketplaces that where IP producers can sell or license their intellectual property.
However, according to some observers, the goal of the well-running IP marketplace is still a way off.
One challenge is that SMEs, often held up as the foundational players in these exchanges, often do not have the IP knowledge that Managing IP readers take for granted. Elton Leung (no relation), an inventor in Hong Kong, said that a lot of inventors he met, though good engineers with innovative ideas, were not very savvy about the business aspects of their work. One consequence is that properly securing IP rights is a secondary concern, if at all.
Erin-Michael Gill of MDB Capital also noted this problem. Speaking with Managing IP last year, he said that start-ups need to secure IP protection in order to ward off early competitors and secure investors, though many may not do so due to limited resources.
Hidero Niioka of IPEXC makes a similar point, arguing that IP is a needed stepping stone for growth. When speaking to start-ups, he warns them that many venture capitalists will not back companies that do not have their IP rights in order.
“Until you secure your IP, most investors will not seriously consider you, because as a start-up, your only real assets are your ideas,” he said.
This challenge was highlighted at a talk at Hong Kong’s Cyberport Entrepreneurship Centre on Wednesday on the importance of IP for start-ups. The audience, made up mostly of local entrepreneurs, were very interested in the subject, but it was clear that many understandably spend the bulk of their energy on building their products rather than studying IP law. At one point, one audience member asked about for an explanation about the difference between a patent and a trade mark.
Even SMEs that understand the importance of IP often have trouble finding the needed services for securing protection and to participate in an IP marketplace. The Fraunhofer MOEZ Institute’s IP Industry Base (IPIB) attempts to address this issue by providing a database of service providers, from legal professionals to financial services to IP consultants. The database launched a new feature this week called “Who has experiences” that may help SMEs find legal services suited to their inventions. The feature allows user to enter an IPC code, which then generates a list of legal professionals that have experience with that specific type of patent.
Lutz Maicher of Fraunhofer MOEZ explained the data behind the feature: “It’s quite simple, really. If you have a patent application in the EPO, it always states who supported the application, and for each patent, we have the IPC category. We crawled through the EPO’s data for the last 20 years, and then tallied how many filings a firm has done for each category.”
Of course, the need for better SME engagement with IP is just one obstacle to mature and well-functioning marketplaces. Other observers, such as Guy Proulx of Transpacific IP, said that he thinks there are other challenges, such as the need for more investors with both resources and sophisticated IP management strategies on the buy side of the equation.
What do you think? What else is needed to build a robust IP exchange?