Intellectual Property Intermediaries Case Study

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1. Why is the market for intellectual property (IP) so illiquid and inefficient today? - It is difficult to assign value of the patent or invention, and it is hard to convert this value into money - Patent holders have to defend patents themselves which is often very expensive and hard when an infringer is a big company with qualified attorneys, - At the trial, patentees face a 33% chance that their patents will be invalidated - Economy nowadays changed to intangible assets - Presence of patent trolls - Cross license agreement might not be fair, because it is the number of patents owned by the company that is taken into consideration, not the value of them. This leads to very weak position of smaller companies (no financial assets to protect patent, shut out of patent pools, hard to find a big company to build or license their inventions) - Lack of transparency in the industry and lack of an aggregator of information - There are no strict regulations, so it is hard to say if IP market is a market at all 2. Briefly describe the business model and relative strengths & weaknesses of each category of IP intermediaries a) NPEs or patent trolls (e.g. Acacia) BM: acquiring patents and asserting the corresponding intellectual property rights by seeking licensing revenues from companies, often through litigation or the threat of litigation. Their strategy often consists of waiting until a company had made large investments in certain technology before asserting their claims. Obtaining patents: sometimes their own inventions, but mostly acquiring patents from e.g. bankrupt companies. Strengths: no using patent for commercial success, so no risk connected to development of the technology and putting it on the market; gaining a lot of money on trials; high bargaining power. Weaknesses: bad reputation; there is no certainty that the patent they register will be
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