San Francisco Billed as an historic first, the multi-lot auction for patents held here Thursday afternoon (April 6) was a snoozer for the average auction go-er. But for Douglas Ballantyne, it was a career-shifting $1.4 million payday.
Ballantyne was one of the few sellers to catch some action in the patent auction organized by the Chicago intellectual property firm called Ocean Tomo. Most of the more than 70 lots of patents that went up for sale at the event at San Francisco’s Ritz Carlton hotel attracted few if any bidders, and many were withdrawn because they failed to fetch the minimum prices set by their sellers.
Attendees packed a ballroom set for about 200 people, but less than a third sat in a roped-off front section reserved for pre-authorized bidders. “Eighty percent of the people here are just observers. This is an experiment,” said Victor Hwang, an observer of the auction and president of the Larta Institute (Los Angeles) that works with the government, universities and industry to commercialize new technologies.
Buying and selling patents is typically conducted in secret negotiations that can take weeks or months at prices that remain closely guarded secrets. Ocean Tomo’s chief executive, Jim Malackowski, has argued auctions will be a new vehicle for creating a broader patent market that could for the first time set open, realistic prices for patents.
The company plans six live patent auctions over the next three years and said it will discuss possible plans for online auctions in May. But the lack of bidding activity and the relatively high minimum prices set by many sellers leave it an open question as to whether Ocean Tomo will be able to ignite the new market.
The auctions come at a time when many observers agree the U.S. patent system is overburdened (see March 20 story) and many have called for patent reform (see April 3 story).
In the first hour of bidding about a dozen patents were sold typically on a first bid of $10,000 or less from an absentee buyer with few or no bids from the floor. About 20 lots were withdrawn by sellers because they failed to hit a minimum asking price, although some were bid up to several hundred thousand dollars in relatively short spurts of bidding.
“It looks like you all are going to have a pretty restful afternoon here,” quipped auctioneer Charles Ross at one point.
But lot 30A, a single patent on a method for distributing movies over a network for viewing on a TV, attracted a few moments of contentious bidding and one of the highest prices of the auction. After years of efforts, it was the first patent Ballantyne ever sold. The $1.4 million a paycheck is big enough to propel the two-man company behind it into their dream giving up the consulting business to become full-time inventors.