December 6th, 2007
The first intellectual property rights auction in Europe is to be held in Munich in May 2007
At a hotel in Munich Webasto, a German auto parts maker plans to do something nearly unthinkable: license the rights to one of its best-selling products - a roof-top solar panel for cars and trucks - to the highest bidder at a public auction.
For a decade, Webasto, based in the Munich suburb of Stockdorf, has spent millions negotiating the sale of licenses for its vehicle solar panels to automakers like Mercedes-Benz, Volvo, Opel, Volkswagen and Audi. But it is now set to sell nonexclusive rights at the first intellectual property, or IP, auction in Europe. Organizers of the auction hope it will open a new sales channel to speed the transfer of intellectual property in a cheaper, more transparent marketplace.
“The knowledge society is becoming more and more important,” said Manfred Petri, of IP Auctions, the Hamburg company that is organizing the event and that is owned by a group of European patent lawyers, IP assessors and private investors. “The values being created by intellectual property are becoming too large to trade in a clandestine market.”
Global sales of IP surged with the rise of the digital economy, with annual transactions rising from just $10 billion in 1990 to $200 billion this year, according to Petri.
The auction has attracted the interest of 84 sellers who are trading licenses and patents for technologies ranging from industrial coating machinery to treatments for psoriasis and skin cancer.
The minimum value of the IP being auctioned in Munich is more than €5 million, or $6.7 million, according to organizers. A third of the sellers are large companies like Bayer, Rolls-Royce Deutschland and ABB; a third are individuals; the rest are universities and research institutes.
Many sellers are hoping for a new sales channel for IP, which is costly to market through the traditional method of hiring patent attorneys to negotiate with potential buyers. Webasto is hoping to get a seven-digit sum for the license to its sun-roof solar panel, which generates electricity to ventilate parked cars on hot summer days.
“Climate change is a very big topic right now and we are approaching this auction with that in mind,” said the director of intellectual property services for Webasto.
Smaller sellers, who often lack the clout to obtain large IP royalty fees in negotiations with corporations, are also hoping for better profits. That includes Ipal, an organization that markets patents developed by researchers at universities and teaching hospitals. In Munich, Ipal is auctioning rights to inositolized phospholipids, a substance developed by researchers at Charité Hospital that has shown promise in treating skin ailments.
To join the auction, Ipal is paying a €1,000 entry fee, which is a small fraction of the normal cost, said Marcel Tilmann, a manager at Ipal. “An auction brings together buyers and sellers in one room,” said Tilmann. “That means that there will be pressure to come to an agreement, which is often half the battle.”
A Chicago company, Ocean Tomo, held the first IP auction in the world last year in San Francisco. An Ocean Tomo auction in April netted a record $11.4 million for sellers, including the largest single fee paid at such an auction, $3 million. Ocean Tomo plans to hold its first European auction on June 1 in London.
“The auction is a unique platform; it creates a sense of urgency. It is appropriate not just for patents and licenses but for brands and catalogues.
But Lothar Steiling, chief patent counsel at Bayer, who is also president of the German Association of Intellectual Property Experts, said auctions would probably fill a niche only for smaller IP sales, with larger sales remaining subject to protracted one-on-one negotiations.
But even Bayer is willing to experiment. On Tuesday, it will auction off a license for electro chromic systems, a nanotechnology used to tint windows and enable car mirrors to be used as digital displays. Besides royalties, Steiling said Bayer wants to cut the cost of maintaining 80,000 patents.
“If this auction is successful,” Steiling said, “we will be back.”
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