Michael Risch


Companies of all types are buying, selling, and licensing patents— not just individual patents, but many patents bundled into large portfolios. A primary problem with these transactions is that the market is illiquid: parties cannot identify holders of relevant portfolios, they cannot agree on the value of portfolios, and the specter of litigation taints every negotiation.

This Article presents a new way to improve market formation and integrity by proposing that patent portfolios be treated as securities. If patent-portfolio transactions are treated like stock transactions, sellers steering clear of fraud laws may be forced to disclose information about patent value. Furthermore, patent transactions previously consummated in “dark markets” might now be traded in public clearinghouses. Ultimately, parties that openly transact will develop objective pricing methodologies that reduce the costs of negotiation and decrease the leverage that portfolio holders exert on potential licensees.

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