Sunday, April 09, 2006

Auctioning patents

A few days ago, Ocean Tomo held a well-publicised auction of 68 blocks of patents. Many sales were transacted with prices ranging from a few thousand to over $1 million (that one for compressing movies on television). Such things have generated concerns over patent trolling (see my previous posts on that).

In actuality, they represent a good way for smaller innovators to commercialise their innovations without the whole issue of entering product markets themselves or searching for established players who would be interested. That is, they contribute to the smooth functioning of markets for ideas. This is something that Scott Stern (Kellogg) and I have been advocating for years.

The trolls may still be out there but an auction hardly ensures that they get greater benefits. After all, they need to compete against other trolls for those patents with the returns flowing back to individual innovators. The basic idea is that these auctioned patents are sold prior to any further development and not after it. Hard to imagine how that in-of-itself can be a bad thing.

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