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Company auctions IP business methods

Anyone interested in purchasing a computer-based program that makes video game images more interactive with the user might want to visit Chicago on Oct. 29-30.

The patent is one of more than 100 lots that will be auctioned off by Ocean Tomo LLC, an Intellectual Property Merchant Banc firm, which markets everything from NASA computer systems to social networking programs.

Like many involved in the IP industry, executives at Ocean Tomo are awaiting a ruling by the United States Court of Appeals for the Federal Circuit on the case involving inventor Bernard L. Bilski.

Founded in 2003, the multi-faceted firm is best known for facilitating transactions of IP property from seller to buyer, including a number of business method patents which could be redefined by the court in the Bilski case.

Attorney Andrew T. Ramer is the managing director of the Transaction Practice at Ocean Tomo and suggested that regardless of whether the court rules to narrow the scope of business methods or uphold the current standard, there may be an impact on the IP patent market.

“It is certainly possible that buyers of business method-type patents would lower the prices they are willing to pay, basically as a hedger,” said Ramer of the upcoming auction.

“Once the decision comes out, prices could go back to where they were or people won’t buy them altogether.”

Ramer and Ocean Tomo co-founder Andrew W. Carter noted that only a small portion of the lots in the firm’s auctions are traditionally classified as business method patents, which could lessen the impact on both buyers and sellers.

“We have a handful of lots in the auction that are business method patents, but it’s a handful,” said Carter. “So would you categorize that as having a significant impact? Probably not.”

Since the company started its live auctions in 2006, more than 250 transactions have been made by companies and solo inventors. The seven auctions prior to the one in Chicago have netted sellers more than $100 million, according to Ramer.

Carter said the most value the Bilski ruling will provide is with regards to clarity.

The 1998 federal ruling in State Street Bank v. Signature Financial Group determined business methods could be patentable and Carter said the big question in Bilski is whether the court will reverse the trend.

Either way, he said the auctioning of business method patents will continue until the market evolves or dictates that there is not a need.

“We’ve been around before State Street and we’ll be around after Bilski,” said Carter, who previously served as an IP consultant. “If the court’s ruling is consistent with State Street, it will be business as usual, and if not, there might be a slight change.”

Ramer said even if the ruling “guts the value” of some business method patents, licensees will likely recognize their investments as obsolete and invest in the future and not the past.

He added that one of the differences in the Bilski case compared to others which Ocean Tomo has evaluated before and after past auctions is that the business method in question is not computer-generated.

“Depending on the ruling, sure, it might give licensees incentive to sell some of those patents, but everything we auction is very technology oriented,” said Ramer. “Besides, not all of the lots on auction sell.”

One comment

  1. Interesting piece. I’m a practitioner who advocates the Supreme Court’s “anything under the sun made by man” standard for patentable subject matter and hope the Fed. Cir. upholds State Street.

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