U.S. Department of Justice Concludes Eight-Month Review of IPXI Licensing Model
CHICAGO, March 27, 2013 /PRNewswire/ — Intellectual Property Exchange International, Inc. (IPXI), the world’s first financial exchange for licensing and trading intellectual property (IP) rights, today announced that the U.S. Department of Justice (DOJ) Antitrust Division has concluded an eight-month business review of the Exchange and issued its Business Review Letter (BRL), highlighting many innovative and efficient aspects of the IPXI licensing model.
The Exchange initiated the BRL process, while not required for IPXI to launch, to provide certainty to its members, market participants and prospects that the model that IPXI has developed provides efficiencies to the market and does not warrant enforcement action by the DOJ. In addition to noting many beneficial characteristics of the IPXI model, the DOJ also commented that there were three areas which it could evaluate only when put into practice.
Under the Department’s BRL process, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the Division currently intends to challenge the action under the antitrust laws. The Department stated that, “…though the proposal could potentially produce certain efficiencies,” it “declines to state its enforcement intentions” at this time.
IPXI President and Chief Executive Officer Gerard Pannekoek said: “We believe this letter from the Department of Justice confirms our long-standing view that IPXI is innovative and promotes efficiencies. With this review complete, we anticipate announcing very soon the official launch of the marketing period for our first offerings that will pave the way for trading on the Exchange.”
Pannekoek added: “While we recognize that our market model is new and innovative, and may be difficult to predict with precision, we are gratified that those few practices that the Department identified as potential ‘risks’ are largely practices in which IPXI will not engage. We are confident that when our Exchange is in full operation, we will meet the most stringent of any test under the competition laws.”
Marshall Phelps, an IPXI Holdings, LLC independent Board of Managers member, said: “IPXI’s members and prospective market participants can now conduct business on the Exchange with the added confidence that IPXI is a vehicle for bringing transparency and efficiency into what has always been an opaque market. The new model that IPXI offers is a major breakthrough in the way that IP will be licensed on a non-exclusive basis.” Phelps is widely known as a pioneer in the field of IP licensing, including implementing groundbreaking initiatives for two of the world’s largest IP companies, Microsoft and IBM.
The DOJ noted that, among other benefits of the IPXI model: “IPXI’s proposed exchange potentially could generate efficiencies for the IP marketplace and encourage innovation through increased licensing efficiency, sublicense transferability, and greater transparency.”
In regard to increased licensing efficiency, the letter stated: “…IPXI has the potential to benefit both patent holders and users of technology with lower transaction costs and more efficient matching of licensors and licensees. The result may produce savings for downstream consumers.”
The BRL went on to address the benefits to licensees price transparency in the IPXI model: “By increasing price transparency, licensees may be able to manage their IP budgets with more precision and make efficient research and development decisions that lower overall costs.” In addition, the letter indicated that if IPXI’s model can facilitate and advance licensing based on “F/RAND” or “fair, reasonable and nondiscriminatory terms”, “…it may generate significant efficiencies.”
The DOJ further noted certain potential benefits that IPXI can bring to the market when patents of more than one owner are offered together. Addressing this concept of Pooled Unit License Right(TM) (ULR(TM)) contracts, the Department stated: “IPXI’s platform for pooled ULRs has the potential to generate additional efficiencies by reducing the time and expense of acquiring and disseminating all the pooled patents to potential licensees, reducing the amount of stacked royalties, clearing blocking positions, and integrating technologies that are necessary to practice an industry standard or field of use.”
The IPXI Founding Members include some of the world’s leading innovative corporations and most prestigious universities, as well as cutting-edge national laboratories. The Founding Members have committed to sponsor offerings on the Exchange with an aggregate target market value in excess of $750 million.
Among the IPXI Founding Members are: Ford Global Technologies, LLC, Philips Intellectual Property & Standards, a division of Koninklijke Philips Electronics N.V. (Philips Electronics), Hewlett-Packard Company, J.P. Morgan Chase & Co., and Sony Corporation of America.
IPXI is the world’s first financial exchange for licensing and trading intellectual property rights. The mission of IPXI is to meet the price discovery, transaction efficiency and data distribution needs of intellectual property owners, investors and traders by creating the central marketplace for tradable IP assets. IPXI is funded by a group of U.S. and European investors, including CBOE Holdings, Inc. (Nasdaq: CBOE), parent of the Chicago Board Options Exchange (CBOE), and Royal Philips Electronics (Philips). For more information on IPXI, please see the Exchange Fact Sheet or visit www.ipxi.com.
SOURCE Intellectual Property Exchange International, Inc.