Monday, March 30, 2009

Economic Slowdown Hitting Patent Brokers Hard: Post Mortem From Ocean Tomo's Spring Auction

Last Friday, Ocean Tomo conducted one of their high-profile intellectual property auctions at the Ritz-Carlton in San Francisco. Normally, bidding activity is relatively brisk, but this year expectations were set lower in light of the current economic conditions (as much as a 50% drop was anticipated). For a pre-auction report, see Joe Mullin's blog post here (link).

It turned out conditions were even worse than expected, resulting in a "bleak event": Of the 80-odd high-tech patents offered, only six sold and just eight others attracted bids. Auctioneer Charlie Ross commented after the event that "I haven't talked to myself so much in years."

The patents that sold were:

(1) "Cellular telephone with programmable authorized telephone number"
Seller - Royal Thoughts, LLC
Price - $200,000.00
Lot Size - 1 patent

(2) "Universal memory card interface apparatus"
Seller - SCM Microsystems
Price - $300,000.00
Lot Size - 2 patents

(3) "System, method and medium for managing information"
Seller - Applied Materials
Price - $100,000.00
Lot Size - 1 patent

(4) "Portable communication unit with discrete allocable blocks of airtime"
Seller - Ronald R. Kelly
Price - $85,000.00
Lot Size - 3 patents

(5) "Personal medical device communication system and method"
Seller - Royal Thoughts, LLC
Price - $600,000.00
Lot Size - 13 patents

(6) "System and method for managing prepaid wireless service"
Seller - Telemac Corporation
Price - $1,500,000.00
Lot Size - 15 patents

Stuart Soffer from IPriori, Inc. provided some interesting "on the scene" commentary about the event:

The big surprise was the anemic number of sales. Historically there have been 709 lots offered at all 9 OT auctions, with 268 of those lots selling (40%) at the live auction part. Yesterday, of the offered 85 lots, 14 generated bids, and only 6 sold (7%). In spite of the underlying financial malaise, I expected stronger results. According to OT management there were plenty of buyers registered (buyers need to escrow funds or have a letter of credit when registering). It was not clear to them at the time the reason for buyers sitting on their paddles. Various pundits point to corporate desire to conserve cash, the effect of a major buyer staying out of the market, and effect of the loss of key transactional staff as a confluence of reasons for
a low number of bids.

The auction started out on an upbeat note, with Lot 1 selling for $200,000. Bidding then flat-lined, followed by occasional bursts of bidding heartbeats. The live auction results are not the end of the sales story. There were examples of bidding not reaching the reserve price, and Ocean Tomo attempts to broker deals between unsuccessful buyers and sellers together afterwards.

* * *

Lot 59A (US 7,406,305) is a lot of Prepaid Wireless patents. Five of the patents were previously litigated in four suits. Also, 3 of the patents were reexamined, suggesting as strong validity vetting.

Lot 22 (US 5,659,750), a set of 10 NVidia I/O control patents including four patents
previously asserted against S3 and 3DFX, was valued in the catalog at $2.75 Million. Zero bids.

Lots 67 (US 7,134,092), 9 (US 6,922,815) and 68 (US 6,938,218) with “Method and apparatus for three dimensional internet and computer file interface,” whose embodiment was demonstrated at the exposition. The embodiment was a special web browser that displayed and projected multiple pages in cube form, where each internal facet displayed a web page. Since the original filing of the patents I feel that technology has caught up with the potential of the inventions, for example with graphics speed and display size. One can navigate through sites, automatically attaching additional cubes in the process . . . As the dimensions of [exemplary embodiments] are the same as an iPhone, this would be a possible method of browser navigation, even with the small display. I’m surprised these had zero bids.

Lot 40 (US 7,324,000), comprising two patents where Jonathan Zittrain is lead inventor, titled “State adaptation devices and methods for wireless communications”. Some may recognize Jonathan as noted IP law professor at Harvard. The lot received zero bids. When I first saw the patent in the catalog I recognized its applicability to social networking and the exciting field of teledildonics. (Google teledildonics and patents).

Read SFGate: "Few buyers at Ocean Tomo high-tech auction" (link)

Daily Herald: "Ocean Tomo auction generates $19.6 mil" (link)

AmLaw Daily: "Bummer Before the Summer: Ocean Tomo Patent Auction a Big Bust" (link)

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