Patenting the Business of Patents

My post from a few weeks ago on Syracuse University's patent on a method for valuing intellectual property "refreshed my recollection" of a topic I'd considered a while back.  Although it is clear that there has been a recent growth in the secondary market for patents (see, e.g., holding companies such as Acacia, or exchanges such as OceanTomo), perhaps less known is that this secondary market is actually generating its own IP, too.  At least 14 patents are known to exist that are directed to valuing or marketing intellectual property:

7,493,262	Method for valuing intellectual property
7,386,460	System and method for developing and implementing intellectual property marketing
7,346,545	Method and system for payment of intellectual property royalties by interposed sponsor on behalf of consumer over a telecommunications network
7,346,518	System and method for determining the marketability of intellectual property assets
7,315,836	Method for obtaining and allocating investment income based on the capitalization of intellectual property
7,292,994	System and method for establishing value and financing of intellectual property
7,272,572	Method and system for facilitating the transfer of intellectual property
7,269,566	Method for obtaining and allocating investment income based on the capitalization of intellectual property
7,228,288	Method of repeatedly securitizing intellectual property assets and facilitating investments therein
7,216,100	Method for obtaining and allocating investment income based on the capitalization of intellectual property
7,188,069	Method for valuing intellectual property
6,959,280	Method of protecting against a change in value of intellectual property, and product providing such protection
6,330,547	Method and apparatus for establishing and enhancing the creditworthiness of intellectual property
6,018,714	Method of protecting against a change in value of intellectual property, and product providing such protection

A sign of the times: 11 of the 14 issued in the last two and a half years.

Note that this list does not include several other IP-related patents, such as a few dozen that relate to maintaining an inventory of IP assets, or R & D (e.g., allocating resources for IP development) or patent prosecution (e.g., tracking annuity payments).  These 15 are just the ones I'm aware of that specifically target the patent transactional marketplace.  Of course, the irony here is that, by patenting these methods, this secondary market in some ways becomes a primary market, as well.  Another way of thinking of it is that the non-practicing entities who are often involved in the valuations and exchanges of IP covered by these patents may now actually be practicing entities with respect to some of those patents.

There is something beautiful in the recursion here, particularly with the Escherian thought of trying to value or transfer one of these patents by the very methods it teaches. Cool.  Would such a patent then become "auto-claiming?" or "Self-descriptive?" [and to you logicians out there, if every patent is either 'self-descriptive' or 'non-self-descriptive' then what about a patent claiming "a method of transacting IP using at least one unpatented technique"?]

The main player in this space appears to be a St. Louis-based outfit called TEQ Development, with lead inventor Douglas R. Elliott.  Mr. Elliott appears to have been involved with Ocean Tomo through its S\LB Partners private equity fund.  He is listed as inventor on six published applications, four of which have issued and are in the list above.  Other players, based on recently published applications, are Ocean Tomo (e.g., U.S. Pub. 2009/0024513 and 2008/0243642) and Detroit-based e-IP (U.S. Pubs. 2009/0024486 and 2009/0024534).  An interesting application comes out of Connecticut to the Ipie Mae Corporation on securitizing IP assets (U.S. Pub. 2008/0201209).  (I won't comment on how the claims of these apps may be affected by Bilski.  It ain't pretty.)

One has to wonder if these patents collectively can be used as a proxy to indicate the total value of the burgeoning IP transactional marketplace.  For example, the amount for which these IP-related patents may be licensed or sold is probably a good indicator of, say, how much money is expected to pass through at the next IP auction.  On the other hand, based on reports from recent auctions, the patent market bubble may have burst along with the rest of the financial services industry. (Hat tip: Peter Zura).

From a policy perspective, there does seem to be a fundamental problem, however.  (Yes, I am going against my general avoidance of commenting on normative policy here.)  To the extent that these patents may artificially limit a patent owner's ability to sell his property, it would run somewhat counter to one of the underlying principles of the patent system, namely the opportunity for an inventor to obtain value for his invention.  This is different from the situation when, for example, Hootman's patent on a buggy whip lost value because of an industry improvement like, say, the automobile.  Instead, this says that although the underlying invention may be just as valuable to the end user, the value of the patent is worth less because it cannot be sold at a particular kind of auction/securitized/valuated in a certain way/etc.  It's as if the PTO jacked up issue fees by a few bucks, and diverted the difference to a handful of auction operators and fund managers.

I’m all for at least some barriers to entry at the PTO – it’s an easy out for some of the cold calls I get from quacky garage inventors (no offense intended there; I've had several entrepreneurial clients who have been great).  But it doesn’t feel quite right when the barrier is put up by a third party with the PTO’s blessing.  Just my thoughts.