The Patent Exchange is a Secondary Market for Patents
The patent market is an extraordinarily inefficient and opaque marketplace. Patents are unique - which is the very reason they were granted a patent in the first place. But that also means they are difficult to place a value on because there are no comparable sale prices for that patent. If a patent is a “performing patent” it means it is bringing in income either through product sales or licensing of the patent so performing patents can be valued by traditional Discounted Cash Flow methods. But those patents are rarely sold and are not the subject of sale on The Patent Exchange.
But what about “non-performing patents”? These are patents that have been neither developed, commercialized nor licensed and represent only ongoing costs to the patent owner. While it is the multi-million dollar patents that get all the headlines, the fact is that the majority of all patents are never successfully commercialized. Many of these patents are simply Abandoned when the owner decides not to pay the renewal fees – or they simply languish on the shelf and represent only ongoing costs to the owner. In fact according to USPTO statistics approximately 60% of all patents are Abandoned by the owner by the 12th year of the patent, resulting in a total loss of investment to the patent owner.
Uncommercialized, non-performing, non-income producing patents constitute the single most underserved segment of the patent world. How can one plausibly price such an asset? The truth of the matter is such patents are worth only what the highest bidder says their worth. Until The Patent Exchange owners of these patents had no ability to sell these patents as there was no viable marketplace to do so, and the time and effort to try and find a Buyer totally outweighed the potential returns. But The Patent Exchange makes this an easy process for both Buyer and Seller, so there is no longer any reason to simply Abandon because now there is a viable alternative to Abandonment. This creates a Win-Win for both Buyer and Seller.
