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Auction planned for 1,000 patents

Hammer time for IP

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An estimated 1,000 patents spanning software, hardware and networking are destined to be sold to the highest bidder in San Francisco by a merchant bank this spring.

Ocean Tomo is hosting the first in a series of two planned patent auctions this year, in a move the company believes will help - not hurt - innovation in IT.

The bank expects 300 attendees to attend its April auction, with patents being donated by a mixture of Fortune 500 companies, universities and venture capitalists who own defunct portfolios. Eight hundred patents have so far been submitted with the final tally expected to reach 1,000, according to Ocean Tomo.

Ocean Tomo president and chief executive James Malackowski told The Register the auction would help innovation and that the industry has been calling for such an event. "Patents are a constitutionally protected right and they have been an engine of innovation and economic development in this country."

However, news of the auction is likely to unsettle open source advocates and anti-patents campaigners, who believe that the existence of patents in software, in particular, hurts innovation because they lead to costly and frivolous patent litigation.

For example, open source risk assessment and compliance service Open Source Risk Management (OSRM) last year claimed there are 15,000 patent issues in the popular Linux, Apache, MySQL and Perl/Python software stack. Defending against patent claims - either genuine or frivolous - typically costs $2m, according to the US American Intellectual Property Lawyers' Association.

For its part, Ocean Tomo participated in the controversial fire sale of patents owned by defunct e-tailer Commerce One in 2004.

That auction saw Novell pay $15.5m for 39 patents to prevent them from falling into the hands of companies - branded patent trolls - who might charge vendors and end-users for their use. Commerce One's patents are used in XML Common Business Library (xCBL) and Universal Business Language (UBL) from the Organization for the Advancement of Structured Information Standards (OASIS).

Ocean Tomo, though, believes the auction process is the best way to protect users and developers, as patent trolls are actually priced out. Malackowski said: "Our theory is in the efficiencies of the market. We believe the highest and best use for any patent is with an opportunistic company and that the trolls will be priced out of the market."

He added: "The trolls have told us they are not coming [to the auction] and it's not going to work."®

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