Going, going, gone?

Online auction websites can provide amateurs with an easy way of making a quick buck. But, are they the appropriate forum for selling IP, asks Richard Brass

Online auctions have brought remarkable benefits to some aspects of life. If you want to get rid of your wreck of an old bike, for example, putting it up on eBay tagged as a vintage collector’s piece could earn you a little unexpected cash, and is a far more productive route than the traditional one of throwing it in the canal.

Auctions can also play a helpful emotional role. There’s no shortage of newly single people who have found a previously unreachable level of closure by putting their ex-partner’s clothes and other effects up for sale, leaving the place nice and tidy and a few quid in the PayPal account long before the ex comes round looking for their stuff.

But can the environmental, emotional and low-level commercial benefits of online auctions be safely extended to the intellectual property (IP) marketplace? Can what works for items of unwanted household junk and the detritus of yesterday’s entanglements work just as well for the valuable property represented by patents and trademarks?

Auction watch
If the pre-recession success of OceanTomo’s IP auctions is any indicator, they certainly can. Launched in 2004, they have become keenly anticipated events for many IP professionals and are attracting attention from some remarkable new quarters.

Along with the many companies attracted to the prospect of the higher returns available by auctioning their IP, the US government has now joined in, turning in November 2008 to one of OceanTomo’s auctions to sell a portfolio of patents built up by NASA. The success of that sale makes it likely that we can expect more interesting government IP to be under the hammer before long.

CAN WHAT WORKS FOR ITEMS OF UNWANTED HOUSEHOLD JUNK AND THE DETRITUS OF YESTERDAY’S ENTANGLEMENTS WORK AS WELL FOR THE VALUABLE PROPERTY REPRESENTED BY PATENTS AND TRADEMARKS?

And the online auction is about to take over yet more ground. As part of its plan to radically overhaul the world of internet domain names, the Internet Corporation for Assigned Names and Numbers (ICANN) is also turning to the auction mechanism to boost its revenue.

ICANN announced last year that, alongside the familiar .coms, .orgs and .govs, it would be allowing any combination of letters to become Top-Level Domains (TLDs), provided they satisfy some basic criteria such as lack of confusion with existing domains. Anticipating a likely rush for the best-sounding .whatevers, the regulator has decided it would like a slice of the impressive returns available to vendors at the OceanTomo events and that competing claims for the same domain will, therefore, be settled by online auction.

You can see the appeal. For vendors, an online auction provides lower administration costs, less paperwork, reduced scope for complaints about unfair practices and, most crucially, the prospect of the highest possible price that the market can provide.

The advantages for buyers are largely similar. No tiresome schlepping around the world, no Byzantine application processes and you don’t even need to go to the office. You can take a full and responsible part in an online auction from the comfort of your dressing gown.

And there’s the rub. Whatever sober, considered benefits online auctions might have, in reality, as any committed eBayer knows, their main attraction is as a non-stop game, closer to online poker or World of Warcraft than to an efficient market mechanism. For most online buyers and sellers, the real appeal is the excitement of getting up at 4am to see how the bids are progressing, counting down the hours or minutes to the deadline, wondering who’s bluffing and considering whether it’s worth upping your offer just a little.

Is that an appropriate atmosphere in which to conduct the serious business of dispensing valuable intellectual assets or potentially lucrative marketing channels? Possibly not. But it might be a lot more fun.


This article first appeared in IP Review, issue 26