The Intellectual Property (IP) market is currently a very illiquid asset class with a very inefficient marketplace. Barriers concerning the uptake of the IP market are numerous:
- Owners of IP rights are sometimes unable to find a market for IP rights that is transparent and provides fair value estimates. IP transactions are characterized by long periods of negotiation and endless due diligence activities as these operations are more than simply the sale of a physical product or service.
- There are difficulties in setting up contract standardisation for those operations: more care and variables have to be taken into account in the agreement decision. Moreover, there is no secondary market for IP licenses.
- The propensity of different sellers to enforce and the wide discrepancies in the manner of enforcement increase the complexity and the inefficiency of traditional modes of IP trading.
Intangible assets represent an untapped source of capital for companies and unrecognised opportunity for investors. The challenge today is to raise awareness, understanding and willingness to develop the financial system and products that will capture the value of this class of assets. The Commission needs therefore to study possible public involvement that provides an innovative approach to the commercialization of IP.
The Commission will make proposals to foster a (financial) market for IP based on the results of an external study and evidence gathered from consultations of experts in case a clear necessity for EU policy actions in that area is established. Therefore, should the conclusions of the study and the consultation of experts be positive, possible actions to provide for a more transparent market place, to stimulate owners of IP to monetize their IP assets more efficiently, to give access to risk management tools, to hedge their exposure and give investors access to new trading, investment, and arbitrage opportunities might be envisaged.
Studies indicate that a large share of all granted patents remain unused. Some of these may potentially be of interest to third parties for commercialisation. Europe may therefore benefit from a market mechanism which would allow the supply and demand side of unused patents to meet to enable the establishment of purchase or licensing agreements.
The objective is to better exploit existing knowledge and technologies. To this end, it would seem necessary to examine the present situation and identify if matters can be improved by building upon existing initiatives launched by MS or in other parts of the world, and investigate if/how they can be brought up to a European level.
In order to achieve the possible creation of markets for IP, the European Commission is carrying out a study that will examine possibilities for setting up a financial market. In addition an expert group will be convened which shall examine approaches towards the exploitation of IP rights as well as actions to stimulate value generation of IP. Initiatives for IP market places exist in different Member States and with different market mechanisms (e.g. exchange platform, patent fund). In addition, in the US first steps are undertaken to create a financial market for IP.
Based on the results of an external study and evidence gathered by the expert group underlying clear necessity for EU policy actions in that area, possible policy actions may be initiated in early 2012.