Difference between revisions of "Intellectual Property Exchange International, Inc."

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{{Infobox_Company   
 
{{Infobox_Company   
 
| company_name = Intellectual Property Exchange International
 
| company_name = Intellectual Property Exchange International
| company_logo =  [[Image:Ipxi_logo.gif]]  
+
| company_logo =  [[Image:IPXI_Logo.png|190px]]  
| key_people =    [[Gerard Pannekoek]], CEO<br>[[James E. Malackowski]], Chairman
+
| key_people =    [[Gerard Pannekoek]], CEO<br>[[James E. Malackowski]], Co-Chairman
 
| foundation =    2007  
 
| foundation =    2007  
 
| location =      Chicago
 
| location =      Chicago
 
| employees =      <!-- Approx number of employees -->
 
| employees =      <!-- Approx number of employees -->
| products =      Yet-to-be-launched financial exchange with an intellectual property focus
+
| products =      Unit License Right (ULR) contracts
 
| homepage=        [http://www.ipxi.com www.ipxi.com]
 
| homepage=        [http://www.ipxi.com www.ipxi.com]
 
}}
 
}}
  
The Chicago-based Intellectual Property Exchange (IPXI) is aiming to become the world’s first [[financial]] [[exchange]] with an [[intellectual property]] focus. The exchange expects launch its first [[trading]] products in 2012.
+
Chicago-based Intellectual Property Exchange International, Inc. (IPXI) was the world’s first financial exchange for licensing and trading intellectual property rights.<ref>{{cite web|url=http://video.cnbc.com/gallery/?video=3000062181|name=IPXI: Trading Patents in 2012|org=CNBC|date=March 23, 2012}}</ref>  The exchange closed in March 2015.  
  
The IPXI marketplace is designed to allow owners of IP to monetize their IP [[asset]]s more efficiently and give them access to [[risk management]] tools to [[hedge]] their [[exposure]]. On the [[buy-side]], it will give [[investor]]s access to new [[trading]], [[investment]], and [[arbitrage]] opportunities.<ref>{{cite web|url=http://www.ipxi.com/home|name=IPXI|org=IPX International|date=December 13, 2011}}</ref>
+
The IPXI marketplace was designed to allow owners of IP to monetize their IP [[asset]]s more efficiently and give them access to [[risk management]] tools to [[hedge]] their [[exposure]].<ref>{{cite web|url=http://www.ipxi.com/home|name=IPXI|org=IPX International|date=December 13, 2011}}</ref> It also invited investors to speculate on the value of emerging technologies and invest directly in those IP rights instead of in the equity of the companies managing those technologies, with the ability to trade those rights as the value appreciated.<ref>{{cite web|url=http://www.ipxi.com/system/files/SDR_50_IPXI.pdf||name=New IP exchange offers transparent and efficient alternative to litigation|org=Swiss Derivatives Review|date=February 20, 2013}}</ref>
  
IPXI was created by [[Ocean Tomo]] LLC. IPXI aims to meet the [[transaction]] and data needs of the IP marketplace including issuers, investors, [[trader]]s, [[market maker]]s, and brokers. According to early IPXI press releases, the IP market has a value of $5 trillion in the United States alone.
+
IPXI’s membership included some of the world’s leading innovative companies with IP assets representing a variety of technology markets, university research institutions and national laboratories. By the time it shut down, it had more than 70 member firms signed on including names such as Ford, JP Morgan Chase and electronics giants Sony and Philips.
  
In December 2011, IPXI announced that it had secured $10 million in funding from the [[Chicago Board Options Exchange]] (CBOE). The five founding members - who have pledged to trade at least one [[Unit Licence Rights]] (ULR) contract on the exchange - are [[Philips]]; [[Com-Pac International]], the packaging group, as well as Rutgers University, Northwestern University and the University of Utah.<ref>{{cite web|url=http://www.ft.com/intl/cms/s/0/731e578c-24ba-11e1-ac4b-00144feabdc0.html#axzz1gQuC09Rn|name=CBOE backs new intellectual property bourse|org=Financial Times|date=December 13, 2011}}</ref>
+
IPXI President and CEO Gerard Pannekoek, told staff and members in a memo that the exchange was forced to close because the "time was just not right, and the obstacles – including potential licensees who challenged us to litigate instead of work with them – simply too insurmountable. IPXI’s business model offered fairness and transparency and relied upon patented technology users to be good corporate citizens. In the end, potential licensees made it clear that the only way IPXI would really get their attention was through litigation, and that’s exactly what our business model tried to overcome."
 +
  
== Anticipated IPXI Products ==
+
=== Unit License Right (ULR) Contract ===
 +
IPXI's products were based on an instrument called a Unit License Right contract, or ULR. A ULR contract is an exchange-tradable non-exclusive license right product offered at a market-based price and with standardized terms. The contracts were priced and sold on a technology-unit basis, where each unit-base was determined by IPXI in collaboration with the sponsor, according to the underlying technology. This allowed the use of the technology to be easily monitored.
  
=== Unit License Right (ULR) ===
+
Each purchaser of a ULR contract was granted the right to use the underlying technology for an established number of instances: for example, the right to manufacture and/or sell a certain number of product units incorporating the patented technology. As soon as one instance of use occured and was reported to IPXI, the ULR contract was consumed and retired from the purchaser's registry account. If a ULR contract is not consumed in its entirety, a purchaser could choose to trade the ULR contract on IPXI's electronic trading platform.
[[Unit License Right]] issuance would replace the bilateral negotiation process in IP licensing. IPXI would act as the issuer’s master licensing agent, managing an initial sale of ULRs as well as post-sale [[secondary market]] activity.
+
  
Upon approval of a candidate deal, IPXI would work with the issuer to structure the terms of the [[issuance]]. IPXI, in coordination with the issuer and IPXI affiliates, would then conduct a [[road show]] with probable buyers seeking indications of interest for the initial [[sale]]. IPXI and its affiliates would [[underwrite]] the ULR issuance and manage the initial sale as well as the [[secondary market]] for post-sale ULRs.
+
Through the ULR contract model, IPXI wanted to operate an exchange under two core principles that do not exist in traditional bi-lateral licensing: transparency and efficiency. IPXI determined the quality of all patent rights listed as ULR contracts.
+
IPXI and its affiliates would manage the enforcement of the IP on behalf of the issuer against alleged infringers. IPXI, in coordination with the issuer, would determine whether additional issuance is warranted and permissible under the contingencies prescribed in the original ULR issue.
+
  
=== Tradable Technology Basket (TTB) ===
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ULR contracts were introduced in the form of initial offerings, similar to an IPO of a company. Once an initial offering was priced, IPXI maintained a secondary market on its electronic trading platform, where purchasers and sellers could trade the products.  
Tradable Technology Baskets (TTBs) are [[financial futures]] products that will allow IP owners, investors, and traders to gain exposure to, or [[hedge]], emerging technologies. TTBs would come in a variety of flavors defined by the basket of IP behind the contract. The baskets are groups of related patents covering a particular technology or technologies, and the futures product [[cash settles]] to the value of the IP in the basket. Rather than piecing together indirect exposure from a combination of [[equities]] and [[commodities]], TTBs would give [[buyer]]s and [[seller]]s direct exposure to [[solar energy]] or Blu-Ray or glucose monitoring or RFID or [[bioethanol]].  
+
  
Technology baskets would build upon the model developed for patent pools such as MPEG-LA or DVD6(C). Using proprietary tools and in-house IP expertise, IPXI would first assesses whether a candidate technology could be effectively fenced in by a pool of 1,000 to 5,000 issued U.S. patents. Following IPXI’s determination of patents to be included in a specific TTB, historical pricing and a product specification sheet would be developed. Finally, research tools and data would be made available to market participants to drive model development and [[trading strategies]]. By focusing product development on the IP, TTBs would provide access to emerging technologies that may or may not have resulted in marketable products and services. Further, TTBs could cover patents that are owned by [[public]] corporations, [[private]] firms, universities, and the public sector.
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The secondary market let market participants trade the ULR contracts. The secondary market also increased the primary market demand for ULR contracts, maximizing revenues to the contract's sponsor. IPXI issued follow-on primary market offerings of ULR contracts as demand required.
  
=== Single Corporation Intellectual Property Index (SCIPI) ===
+
Finally, a rules-based approach to directed enforcement allowed IP rights to be enforced with different choices to fund litigation, including either self-funded enforcement, IP insurance or third-party funded enforcement.
IPXI will offer financial futures products tracking IP [[asset]]s held by qualified public companies, private firms, universities, public sector entities, and those embedded within [[venture capital]] and [[private equity]] [[portfolio]]s. The SCIPIs would represent a new generation of financial products - synthetic exposure to the IP driving [[economic]] growth in the 21st century.
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Using [[proprietary]] tools and analysis, IPXI has the ability to link patents with their proper owners, whether they be public companies, private firms, small businesses, universities, public sector entities, or inventors. Once IPXI has assembled the appropriate patents in one bucket, i.e. all patents owned by Microsoft or all patents owned by MIT or all patents owned by NASA, the same valuation methodology used for TTBs is applied to the patents in each bucket. Similar to the development process for TTBs, historical pricing, research tools, and data for each SCIPI are made available to market participants.
+
  
 
== History ==
 
== History ==
 +
IPXI was founded in 2007 by [[Ocean Tomo]].<ref>{{cite web|url=http://www.ipxi.com/system/files/w27960.pdf|name=An Intellectual Property Exchange|org=The Economist|date=February 22, 2013}}</ref>  The development of the exchange began with support from the State of Illinois in 2006. Two public town-hall meetings were held with several hundred corporate IP owners, inventors and others participating. Fourteen national and international corporate and university IP managers attended the initial rulebook meeting in March 2010. Beyond these formal meetings, hundreds of IP ecosystem participants have contributed to the development of the exchange and the initial product, the ULR contract.
  
== Products and Services ==
+
In December 2011, IPXI completed funding for its U.S. operations from strategic investors including Royal Philips Electronics and [[CBOE Holdings]].  IPXI’s founding members met frequently in early 2012 to develop and approve the release of the IPXI Market Rulebook Working Version 1.0.  IPXI plans to launch a new version of its IPXI Market Rulebook and its first offerings on the exchange in 2013.
 +
 
 +
By February 2013, IPXI had more than 45 members.  Among the IPXI’s 20 Founding Members were: Ford Global Technologies, LLC; J.P. Morgan Chase & Co.; Philips Intellectual Properties & Standards; Sony Corporation of America, and Hewlett-Packard Company. The founding members committed to sponsor offerings on the exchange with an aggregate target market value of more than $750 million.<ref>{{cite web|url=http://www.ft.com/intl/cms/s/0/731e578c-24ba-11e1-ac4b-00144feabdc0.html#axzz1gQuC09Rn|name=CBOE backs new intellectual property bourse|org=Financial Times|date=December 13, 2011}}</ref>
 +
 
 +
In March of 2013, IPXI announced that the U.S. Department of Justice Antitrust Division had concluded an eight-month business review of the exchange and issued its Business Review Letter highlighting many "innovative and efficient" aspects of the IPXI's licensing model. The exchange initiated the business review process to provide certainty to its members and market participants that IPXI's model did not warrant enforcement action by the DOJ, IPXI said.<ref>{{cite web|url=http://www.reuters.com/article/2013/03/27/il-ipxi-us-justice-idUSnPnCL84206+160+PRN20130327|name=U.S. Department of Justice Concludes Eight-Month Review of IPXI Licensing Model|org=press release|date=March 27, 2013}}</ref><ref>{{cite web|url=http://www.chicagobusiness.com/article/20130605/BLOGS11/130609898|name=Chicago at center of new IP exchange|org=Crain's Chicago Business|date=June 6, 2013}}</ref>
 +
 
 +
The exchange successfully held its first two initial offerings of unit license rights on July 18, 2014. The offerings were based on patent rights to prepaid stored value card (SVC) technology owned by [[JPMorgan Chase Bank, N.A.]]<ref>{{cite web|url=http://www.prnewswire.com/news-releases/ipxi-prices-first-offerings-intellectual-property-market-opens-for-trading-267914691.html|name=IPXI® Prices First Offerings; Intellectual Property Market Opens for Trading|org=IPXI|date=July 21, 2014}}</ref>
  
 
== Key People ==
 
== Key People ==
*[[Gerard J. Pannekoek]], President & CEO <br>
+
*[[Gerard J. Pannekoek]], President & CEO; Co-Chairman <br>
*[[James E. Malackowski]], Chairman <br>
+
*[[James E. Malackowski]], Co-Chairman <br>
*[[Michael D. Friedman]], Director <br>
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*[[Robert A. Moore]], Managing Director <br>
*[[Ian D. McClure]], IP Transactional Associate <br>
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*[[Ian D. McClure]], Director <br>
  
 
== References ==
 
== References ==
 
<references />
 
<references />
  
[[Category:FIA Associate Members]]
+
 
 
[[Category:MarketsWiki Page of the Day]]
 
[[Category:MarketsWiki Page of the Day]]
 +
[[Category:Exchanges]]

Latest revision as of 13:20, 31 March 2015

Hanweck-LogoTagSM.jpg
Intellectual Property Exchange International
IPXI Logo.png
Founded 2007
Headquarters Chicago
Key People Gerard Pannekoek, CEO
James E. Malackowski, Co-Chairman
Products Unit License Right (ULR) contracts
Website www.ipxi.com

Chicago-based Intellectual Property Exchange International, Inc. (IPXI) was the world’s first financial exchange for licensing and trading intellectual property rights.[1] The exchange closed in March 2015.

The IPXI marketplace was designed to allow owners of IP to monetize their IP assets more efficiently and give them access to risk management tools to hedge their exposure.[2] It also invited investors to speculate on the value of emerging technologies and invest directly in those IP rights instead of in the equity of the companies managing those technologies, with the ability to trade those rights as the value appreciated.[3]

IPXI’s membership included some of the world’s leading innovative companies with IP assets representing a variety of technology markets, university research institutions and national laboratories. By the time it shut down, it had more than 70 member firms signed on including names such as Ford, JP Morgan Chase and electronics giants Sony and Philips.

IPXI President and CEO Gerard Pannekoek, told staff and members in a memo that the exchange was forced to close because the "time was just not right, and the obstacles – including potential licensees who challenged us to litigate instead of work with them – simply too insurmountable. IPXI’s business model offered fairness and transparency and relied upon patented technology users to be good corporate citizens. In the end, potential licensees made it clear that the only way IPXI would really get their attention was through litigation, and that’s exactly what our business model tried to overcome."


Unit License Right (ULR) Contract

IPXI's products were based on an instrument called a Unit License Right contract, or ULR. A ULR contract is an exchange-tradable non-exclusive license right product offered at a market-based price and with standardized terms. The contracts were priced and sold on a technology-unit basis, where each unit-base was determined by IPXI in collaboration with the sponsor, according to the underlying technology. This allowed the use of the technology to be easily monitored.

Each purchaser of a ULR contract was granted the right to use the underlying technology for an established number of instances: for example, the right to manufacture and/or sell a certain number of product units incorporating the patented technology. As soon as one instance of use occured and was reported to IPXI, the ULR contract was consumed and retired from the purchaser's registry account. If a ULR contract is not consumed in its entirety, a purchaser could choose to trade the ULR contract on IPXI's electronic trading platform.

Through the ULR contract model, IPXI wanted to operate an exchange under two core principles that do not exist in traditional bi-lateral licensing: transparency and efficiency. IPXI determined the quality of all patent rights listed as ULR contracts.

ULR contracts were introduced in the form of initial offerings, similar to an IPO of a company. Once an initial offering was priced, IPXI maintained a secondary market on its electronic trading platform, where purchasers and sellers could trade the products.

The secondary market let market participants trade the ULR contracts. The secondary market also increased the primary market demand for ULR contracts, maximizing revenues to the contract's sponsor. IPXI issued follow-on primary market offerings of ULR contracts as demand required.

Finally, a rules-based approach to directed enforcement allowed IP rights to be enforced with different choices to fund litigation, including either self-funded enforcement, IP insurance or third-party funded enforcement.

History

IPXI was founded in 2007 by Ocean Tomo.[4] The development of the exchange began with support from the State of Illinois in 2006. Two public town-hall meetings were held with several hundred corporate IP owners, inventors and others participating. Fourteen national and international corporate and university IP managers attended the initial rulebook meeting in March 2010. Beyond these formal meetings, hundreds of IP ecosystem participants have contributed to the development of the exchange and the initial product, the ULR contract.

In December 2011, IPXI completed funding for its U.S. operations from strategic investors including Royal Philips Electronics and CBOE Holdings. IPXI’s founding members met frequently in early 2012 to develop and approve the release of the IPXI Market Rulebook Working Version 1.0. IPXI plans to launch a new version of its IPXI Market Rulebook and its first offerings on the exchange in 2013.

By February 2013, IPXI had more than 45 members. Among the IPXI’s 20 Founding Members were: Ford Global Technologies, LLC; J.P. Morgan Chase & Co.; Philips Intellectual Properties & Standards; Sony Corporation of America, and Hewlett-Packard Company. The founding members committed to sponsor offerings on the exchange with an aggregate target market value of more than $750 million.[5]

In March of 2013, IPXI announced that the U.S. Department of Justice Antitrust Division had concluded an eight-month business review of the exchange and issued its Business Review Letter highlighting many "innovative and efficient" aspects of the IPXI's licensing model. The exchange initiated the business review process to provide certainty to its members and market participants that IPXI's model did not warrant enforcement action by the DOJ, IPXI said.[6][7]

The exchange successfully held its first two initial offerings of unit license rights on July 18, 2014. The offerings were based on patent rights to prepaid stored value card (SVC) technology owned by JPMorgan Chase Bank, N.A.[8]

Key People

References

  1. IPXI: Trading Patents in 2012. CNBC.
  2. IPXI. IPX International.
  3. New IP exchange offers transparent and efficient alternative to litigation. Swiss Derivatives Review.
  4. An Intellectual Property Exchange. The Economist.
  5. CBOE backs new intellectual property bourse. Financial Times.
  6. U.S. Department of Justice Concludes Eight-Month Review of IPXI Licensing Model. press release.
  7. Chicago at center of new IP exchange. Crain's Chicago Business.
  8. IPXI® Prices First Offerings; Intellectual Property Market Opens for Trading. IPXI.