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We know that patents, like other properties, can be fluidly bought and sold. But where do patent transactions occur? Patent brokers and marketplaces are two popular entities that help facilitate these transactions. They act as an easy bridge between patent owners and buyers, allowing them both to reap solid benefits.
While patent brokers are basically professional patent transaction enablers and majority of their transactions are done privately, patent marketplaces are the online platforms on which interested buyers and sellers of patents list their needs and where ensuing transactions take place. You can easily access a plethora of industry-specific patents on marketplaces. Through this blog, we will discover how these two important entities spearhead the buying and selling of patents across geographies.
All About Patent Brokers
Patent brokerage involves the buying, selling, licensing, or other monetization of a patent. Although it is a stretch, patent brokers may be called realtors for patents. However, there remains an important difference between the two. The most important – over 90 % of properties find buyers in the real estate secondary market. Conversely, more than 90% of patents do not transact on the secondary patent market and further they have a limited time span.
This increases your dependence on patent brokers. A good patent broker becomes a key piece of the puzzle when it comes to selling or buying patents.
Let us now look at some benefits brokers bring to the patent landscape.
What Benefits Do They Bring?
Patent brokers use their business connections to actively manage patent portfolios. They showcase them in the market, and also advise clients regarding valuation, infringement, and licensing, among several other factors.
- Firstly, patent brokers bring expertise and market knowledge to the table. They provide you with updated information regarding laws and regulations surrounding intellectual property and the patent application process.
- Secondly, patent brokers conduct thorough due-diligence on the patents involved in the transaction. This helps save prospects the time in similar checks. These checks are usually done in patent databases such as PatSeer and involve checking the active status of the records, going through the entire legal history of the patent families to ensure there are no adverse events, evaluating the time left before expiry of the invention and finally also ensuring if the claims held by the patent are well written and robust to safeguard the invention from potential infringement and whether all the workaround loopholes are covered.
- Thirdly, patent brokers provide potent buying and selling advice and other strategic guidance. This can direct you regarding the types of patents you should go after to enhance your portfolio in order to create a better defensive or offensive position in the market you are active in. Patent brokers also negotiate with prospects on your behalf.
- Additionally, brokers bring protection from fraud and help mitigate risks on multiple fronts, such as during the licensing or ownership transfer process.
- Lastly, while hiring a broker involves initial and post-transactional costs, the overall cost savings in the long run easily balances out.
Now, brokers may be categorized into several types based on the role they play. Let’s take a look.
Types of Patent Brokers
Depending on what role they play for their clients, patent brokers can be categorized into two:
- Sell-side patent brokers represent patent owners. They approach potential sellers, formulate attractive patent packages, organize selling campaigns, and market them to potential buyers.
- Buy-side patent brokers, on the other hand, work for patent buyers. Their job involves identifying patents aligning with buyers’ interests, evaluating the patents being sold, and negotiating prices for the buyers.
All about Patent Marketplaces
Continuous innovation and the exchange of intellectual property creates a thriving patent landscape that requires efficient systems to drive IP transactions at a scale. Patent marketplaces offer such a solution by providing forums that facilitate seamless and transparent patent transactions. These marketplaces enable patent owners to generate revenue by connecting them with potential buyers and enabling them to sell their patents. The transparency and accessibility of these marketplaces are enhanced by providing legal expertise, pricing guidelines, and search functions. Some of the examples of these marketplaces are Xango, Inpama, and PatentAuction.
How Patent Marketplaces Revolutionize Patent Transactions?
Patent marketplaces offer several benefits to multiple stakeholders within the IP ecosystem.
- The most obvious benefit of marketplaces is the easier and faster monetization of intellectual property. They also help reduce the costs of acquisition significantly.
- Companies and research organizations can, as a result, get access to patents much faster.
- A unified marketplace can provide valuable insights into the market value of patents.
- Platforms often verify the patents listed on their pages. This improves transparency and mitigates risks related to fraudulent documents or misuse.
- lan also help diversify patent portfolios by enabling search for patents in various technological domains.
Apart from the benefits listed above, marketplaces are not fully advantageous. For instance, they can lower your profits if you are a potential seller because of their buyer-focussed nature.
Moreover, many marketplaces charge listing fees from sellers. They also take a portion of the sale price in the form of commissions.
Let’s now look at the types of marketplaces.
Types of Patent Marketplaces
Patent marketplaces are differentiated on a multitude of aspects, including their technological areas, geographical reach, and the clientele represented.
- The General Patent Marketplace provides a wide array of patents to select from. There are almost no restrictions on what types of patents you can post or purchase here.
- Some patent marketplaces focus on a singular industry or sector. These are called Industry-Specific Patent Marketplaces.
- University or Research Institution Patent Marketplaces are operated by the named entities. These serve to demonstrate patents created by their efforts.
- Patents from particular geographical areas can be found on Regional or National Patent Marketplaces.
All that we have covered so far makes brokers and marketplaces vital players in secondary transactions of Intellectual Property. Yet, they come with their own challenges.
Challenges with Patent Brokers and Marketplaces
Some of the challenges brokers and marketplaces come with include high costs and questionable quality of patents. Let’s look at them in more detail:
Cost Considerations
Patent Brokers often charge a good sum of money for the services they provide. Sell-side brokers usually take commissions or an upfront fee deposit. Buy-side brokers, on the other hand, almost always work on a fixed hourly rate and charge commissions along with them.
These costs eat into the revenue you generate from patent transactions or licensing deals. Even marketplaces may not offer you the best value as a seller since they are more centered around buyers.
Quality Control Issues
Not all brokers have the same level of expertise. It can be difficult to determine whether your broker truly has market expertise or not. It is important to be cautious, as inexperienced brokers can lead to losses instead of profits. Additionally, conflicts of interest can arise.
Furthermore, marketplaces themselves may not be completely reliable. Many patents in a marketplace may be of low quality and irrelevant as they may not have been professionally vetted by a subject matter expert. Sorting through these patents requires a significant amount of time and resources. Some patents may have been posted by Non-Participating Entities (NPEs) or trolls, which can not only result in heavy losses for participants but also damage the reputation of the platform.
It is therefore important to conduct your own due diligence before decided to proceed with either of the options.
Conclusion
Patent brokers and marketplaces primarily exist to simplify the complex legal web of patent buying and selling. Brokers help with appraising and negotiating the prices of particular patents for their clients and marketplaces make the patents accessible and prices transparent. They are essential in preserving the intellectual property ecosystem.
PatSeer’s AI integration in patent searching transforms patent strategy by quickly and accurately analyzing vast patent databases, identifying trends, and providing deep insights for informed decision-making in R&D and IP management. It is a powerful tool that unlocks untapped innovation.PatSeer’s provides insights into the quality and quantity of patents held by companies, inventors and NPEs. Companies or people involved in the secondary sale or purchase of patents can leverage the wide range of analysis tools and charts in PatSeer not only for customary due diligence but also to uncover untapped opportunities or areas that are not easily identifiable manually.