PublishedMay 7, 2020

PTO Patent Licensing Marketplace Shows Potential, But Will Licensors Embrace It?

This month, the PTO announced that it would be opening up an online licensing market, “Patents 4 Partnerships.”  The market, which will initially focus on COVID-related patents, is intended to provide a centralized and easily accessible database of U.S. patents and published patent applications that have been voluntarily made available for licensing.

There’s a number of reasons to think that this would be good for the patent system—if patent owners actually use it and if license information is public.  Unfortunately, that seems less than likely.  And there’s some concerns with what’s already there.

A Public Patent Licensing Market Has Real Benefits

One of the problems in patent licensing is that the market is extremely opaque.  It’s extremely hard to find information about licensing rates and thus patent value.  Even though a patent isn’t property in the same way a house is, the analogy to appraising a house is meaningful—you can’t really appraise a house without information on comparable houses, and trying to do patent valuation without information about comparable licenses can be extremely difficult.

So having insight into what’s being made available for sale or license, and what those terms look like, would be incredibly helpful.  Even information about the limited subset of patents offered on the brokered market is valuable.  Having that information more broadly available would make it easier to set fair license rates without needing to go to litigation because you’d be able to have an idea what similar patents cost to license.  And even if license rates aren’t public, simply knowing what’s out there might help in some industries, allowing them to limit the need for freedom to operate searches and clearance opinions.  Bringing transparency to patent licensing would likely lead to increased licensing.

Will Patent Owners Use It?

The real question is whether patent owners will actually put their patents up for license.  It’s possible that some will, but many patent owners treat licensing activity as highly confidential and wouldn’t want to provide a list of the patents they’re licensing, much less making the terms or licensees public information.  And they often have little interest in having a fixed set of license terms, preferring to negotiate extremely specific licenses that use differential pricing (i.e., different parties pay different prices) in order to maximize their profits.

Given all that, it’s questionable whether many patent owners will participate.  And if major licensors aren’t participating, it’s not clear what the value of this marketplace would be.  

Even if licensors were interested in openly announcing their patents and terms, it’s unclear whether potential licensees will use the marketplace.  Engineers don’t tend to say “I want to make a robot arm, let me go look for robot arm patents to license,” they just figure out how to make a robot arm.  (That’s reflected in the high rate of independent invention—most cases of infringement aren’t cases of copying, they’re cases of someone inventing the same thing a little later.)  And if there’s no customers for licenses, it’s one more reason that patent owners won’t list their patents for licensing.

The Patents 4 Partnerships program isn’t a bad idea if it sees use, but it’s not at all clear that it will.

A Couple of Concerns

As of the writing of this article, the only patents listed (or at least the vast majority) are patents owned by the U.S. government.  Rather than trying to license these patents for money, it seems like it would be far easier for the government to dedicate them to the public for the COVID response—perhaps via the Open COVID Pledge or a similar mechanism.  In a time when private industry is committing to giving access to relevant technology for free, it’s awkward to see the federal government trying to make money off of COVID responses.

And while each listing contains a link to licensing information, the actual information varies widely—in some cases, it isn’t even clear who to contact for licensing information, and a quick review didn’t show any patents where a license rate was public.

Separately, it’s unclear whether the PTO is actually allowed to spend money on setting this up.  The Office operates under the same spending authority as the rest of the U.S. government—it can spend money only as authorized by Congress.  And I’m not aware of any Congressional authorization through either a statutory or appropriations mechanism for the PTO to spend money on this kind of program.  Questions over whether the marketplace is permissible might chill its use as well.

Josh Landau

Patent Counsel, CCIA

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

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