The Intellectual Property Exchange International (IPXI) has been launched after nearly five years preparation after gaining $10m in funding from corporations and universities, including Nasdaq-listed CBOE, parent of the Chicago Board Options Exchange, and Anglo-Dutch company Royal Philips Electronics.
IPXI said it would issue its first Unit License Right (ULR) contract offerings this year so private licensing of technology can be more easily traded.
Each ULR Contract purchased gives the buyer the right to use the intellectual property (IP) offered for a pre-established number of instances in the manufacturing and/or sale of a product or service. The exchange then allows prices to be market-based and a secondary market to form so investors can speculate on the value of technology before it comes to fruition.
Gerard Pannekoek, executive president of IPXI, said: "The initial commitments from ULR contract issuers have an aggregate targeted market value in excess of $250m with numerous additional company portfolios in various stages of the submission process."
Ruud Peters, chief intellectual property (IP) officer of Philips, has joined IPXI’s board and said: "ULR contracts enable IP holders like Philips to more efficiently monetize patents and other IP brought to the market through non-exclusive licensing, while also allowing buyers to purchase at market-established prices."
Philips has committed to issue one or more ULR Contracts having an aggregated target market value of $50m or more.
Other founding members are packaging manufacturer Com-Pac International, Rutgers University, Northwestern University and the University of Utah.
Caisse des Depots and Propriete Intellectuelle said they would try and sponsor or purchase ULR contracts but not necessarily issue them.
Ian McClure at IPXI said: "The market size for IP licensing through one-off transactions is enormous at about $500bn but the potential is even bigger."
However, McClure warned the market would take time to take off but IPXI would be profitable within 12 to 24 months.
Richard DuFour, executive vice-president of CBOE, in an interview with news provider John Lothian News said: "The IP space has changed dramatically over the past few decades and now represents a significant asset class.
"The changes have a number of facets: the role of IP in the economy, the laws governing IP, the digitization of products, etc. These changes have focused attention on the inefficiencies inherent in the traditional ways in which IP was transferred. IPXI recognized the need for standardization and transparency in this process."