IBM and IPwe, believe that NFTs, Non-Fungible Tokens – one-of-a-kind limited digital editions – can transform stagnant patent monetization into a trillion dollar market.
Two IP icons have teamed up to tokenize patents on IBM’s blockchain. Precisely what that means for patent licensing and sales (and investing) is unclear. But given IBM’s depth in distributed ledger technology; its expansive patent portfolio and that of its clients; and IPwe’s global experience in patent transactions, the partnership can not be taken lightly.
A recent Intangible Investor column on IP Watchdog explores the rapid emergence of NFTs, many IP related, and what they might mean for patents, patent holders, creators and investors. Executives at IBM and IPwe provide their perspective. The column also looks at how other IP-related NFTs have fared.
The IBM-IPwe marriage is not about creating a cryptocurrency; it is more about creating a cryptoasset.
The NFT market for copyright and trademark holders looks promising. Thus far, everything from sports highlights to evention disclosures have been tokenized for sale. It is a little too early to consider resale data, but I am hoping that issuing parties will soon be making it available.
On June 8th an NFT for an invention disclosure for a patent on a Nobel Prize associated cancer discovery (not the patent or any of its affiliated rights) sold for $54,940.60 to a group of University of California alumni. It is unlikely there will be a huge market for this sort of collectible, but, nevertheless, there is a market, and a blockchain or distributed ledger is intended to make it easier to transact.
NFTs for patents are likely to differ somewhat. Bitcoin, the cryptocurrency that also trades on a distributed ledger. For example, Bitcoin focuses on anonymity, while blockchain in general, enables transparency. The IBM-IPwe marriage is not about creating a cryptocurrency; it is more about creating a cryptoasset.
Patent transactions need to better address transparency if there is to be a meaningful market for licensing and sales, and if they can emerge as a serious alternative asset class. Information like chain of ownership and prior art need to be readily accessible, and pricing and liquidity (or lack of it) clear.
Efficiency + Speed
NFTs trade on blockchains or distributed ledgers without the need for middlemen or brokers. The primary advantage of a blockchain is transparency and efficiency. Executed properly, blockchains engender confidence and facilitate speed, essentials for a compelling market in normally illiquid assets.
In an announcement IBM said that it and IPwe “seek to transform corporate patents with next generation NFTs using IBM blockchain.” These NFTs will be stored and shared on the IPwe Platform, hosted on IBM Cloud and powered by IBM Blockchain.
“The use of NFTs to represent patents will help create completely new ways to interact with IP,” said IPwe CEO Erich Spangenberg. “This is expected to benefit not only large enterprises that have significant intellectual property, but it will bring new opportunities to small and medium enterprises and even individual IP owners.”
Spangenberg believes that patent NFTs use of blockchain can turn the current patent monetization market of billions of dollars into trillions.
Until NFTs came along, a collector or investor could not find much in the way of authentication in the digital world. The Internet may be synonymous with copying, but NFTs are not. They enable authentication of ‘one-of-a-kind’ artifacts.
The IBM-IPwe partnership hopes to use Big Blue’s blockchain to speed individualized patent agreements – some providing partial ownership or capital – that are responsive to market conditions and that are capable of being transferred or traded like other alternative assets.
It would be a huge market transformation for patents, which, complex and contentious by nature, require special handling. But if anyone has the experience and motivation to make it happen it is IBM and IPwe. Non-patent IP-related NFTs are off to a remarkable start. IPwe says that there will be completed patent NFT transactions on the IBM blockchain before year’s end.
For the full Intangible Investor column, go here.
Image source: mediacenter.ibm.com