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Do we even need IP marketplaces?

There is a lot of talk about the future of IP marketplaces, but not all rights holders are convinced of the benefits

At Hong Kong’s public briefing about its plans to be a hub for IP deals, advocates such as Secretary of Commerce Gregory So and IP Department director Peter Cheung touted the benefits of IP marketplaces and the importance of intellectual property to economic competitiveness. However, although a number of government and private entities around the world are looking to build such marketplaces, some rights holders are more sceptical as to what benefits they will bring to companies.

“There’s a lot of talk of IP trading, but I’m not sure what this will actually mean,” said a senior IP counsel from an international lifestyle brand. “IP has been sold and licensed for years, so it’s unclear how Hong Kong’s plan to be an IP marketplace will change things.”

From the perspective of larger companies with expertise and resources, the exchanges envisioned by governments such as Hong Kong and Singapore may not be as useful.

“My company has bought a number of brands in recent years, and you have to do your due diligence each time and work out all the details in the deal,” the IP counsel explained. “If we’re buying a trade mark, we’re obviously buying it for the goodwill that it has built up; I’m not sure companies need a marketplace that will help them buy an unknown trade mark that doesn’t have any associated goodwill.”

Of course, advocates argue that the marketplaces can help in a number of ways, such as reducing transaction costs by providing matchmaking for rights holders and service providers. For example, in Germany, the Fraunhofer MOEZ Institute’s IP Industry Base (IPIB) provides a database of service providers. The IPIB allows users to use IPC codes to find legal professionals that have experience with a specific type of patent. Similarly, both Hong Kong and Singapore’s visions stress the need to build up the professional infrastructure. Singapore has been working on this for a number of years now since the establishment of its IP Academy back in 2002.

Proponents of IP marketplaces also say that they also provide a valuable service by helping to bring exposure to IP generated by SMEs and helping small inventors find licensors or buyers. The logic makes sense for patents where even large companies are looking for rights they can use to strengthen their portfolios. However, the mechanism is often extended to the buying and selling of trade marks, where it is more uncertain. While companies buy uncommercialised technology for a range of purposes, there is some doubt as to whether many companies are searching for and buying unused trade marks.

Despite the doubts, there is considerable interest from governments in IP marketplaces and ways to make it easier to trade IP assets. What value does an exchange need to bring to attract users? Should exchanges focus on providing easy access to support services? Or should they take a completely different form, such as IPXI’s financial exchange model? Let us know what you think.

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