Keeping track of who owns patents around the world

Would real estate be valuable if there were not accurate records that allow anyone interested in discovering who owns a particular piece of property? I’m sure there would be some value, but we know from experience that property that has a cloud hanging over the title is less valuable and unlikely to be maximized. It is hard to imagine spending hundreds of thousands of dollars to buy real estate without the certainty that is provided by a recording system and associated laws.

Who owns what and whether the rights are perfected simply cannot be a question if you want to have a market economy that recognizes patents as an asset class. For assets to be traded to the party who can best maximize value transaction costs must be kept low enough to facilitate a deal. Simply stated, if ownership information is spotty, incorrect or incomplete, there is no way to maximize the value of any single asset or patent portfolio.

But things may be about to change. Indeed, this week could mark an important milestone in the evolution of IP as an asset class. At least that is the hope of those supporting a free, open, worldwide registry of patents are hoping.

The Open Register of Patent Ownership, or ORoPO, opens its doors and becomes the world’s first global register of patent ownership information. The goal of this new endeavor is to help make patent ownership information more open and transparent. If that can be accomplished it would bring a much needed real property tangibility to patents, thereby making the rights more like the property rights they were once viewed to be.

David Kappos, former director of the United States Patent and Trademark Office (USPTO) and current partner at Cravath, Swaine & Moore, and Nigel Swycher, CEO of Aistemos, explain what led to this initiative, what they hope to achieves, and what it means moving forward for data quality and transparency.

QUINN: Thanks David and Nigel for taking the time to chat with me today. I understand that you are involved in a new endeavor that if successful will keep and collect information on patent ownership in jurisdictions all around the globe. That sounds like a daunting task really.

KAPPOS: Thanks, Gene. I don’t know how daunting a task really, we have strong support from major corporations, but it is certainly an important project. During my tenure in government, I had the opportunity to make an objective assessment of many of the impediments to an efficient innovation marketplace. One of the issues that we came up against was data quality. Both at a national and international level, there were major obstacles to accessing accurate and reliable information about patents, their ownership and encumbrances (such as litigation and licensing). And being at the USPTO gave me the opportunity to influence change – this led to the US opening its patent data (with the help of Google Patents) and to proposed reforms targeting patent ownership (now referred to as Attributable Ownership). These reforms are well intentioned, but progress is slow and only directed at US patents. So when I was asked by Nigel Swycher to help with ORoPO, I jumped at the opportunity.

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QUINN: What exactly is ORoPO?

SWYCHER: ORoPO stands for the Open Register of Patent Ownership and the website is oropo.net. It is a not-for-profit set up to build on a voluntary basis a register of who owns the world’s patents. Initial participants include IBM, Microsoft, ARM, BAE Systems, Shazam, Conversant, Patent Properties and Finjan.

QUINN: This sounds interesting, and industry regulation to provide better transparency is always preferable than government regulation in my opinion, but isn’t this really the job of national and regional patent offices?

KAPPOS: That is an excellent question. At the risk of sounding like a lawyer, the answer is ‘yes’ and ‘no’. Patent offices generally make their patent data public, although it is not always easy to access and often not for free. There are, however, two major problems. First, there are few mandatory requirements which compel patent owners to ensure that ownership information on the local registers is correct. Secondly, there are no rules that require unique corporate identifiers – so two companies with the same name can look exactly the same on the public register. On this basis, WIPO estimates that 25% of ownership information on public registers is incorrect.

QUINN: Will ORoPO compete with the patent offices around the world?

SWYCHER: Not at all. ORoPO is in close contact with the USPTO, WIPO, EPO and UKIPO who are all supportive of the initiative.

KAPPOS: And having a single open register of patent ownership information is good for everyone. We should not forget that there are 100 patent authorities around the world, and having all ownership information in one place will make the data significantly more accessible.

QUINN: I understand that greater transparency and openness is a good thing, but will ORoPO really be able to help, or will this become just another place that contains partial, frequently incorrect ownership information?

SWYCHER: To coincide with the launch of ORoPO, we commissioned a survey and a report: Who owns the world’s patents? Based on a consensus that patent transparency is likely to lead to a 6% increase in licensing, we believe this translates into over $300 billion of untapped economic benefit.

QUINN: That’s a large number, but are you just speculating to arrive at that number, or is there some basis in fact for the estimate?

SWYCHER: To some extent economic estimates are always speculation on one level or another, but we do have reason to believe that increased patent transparency will unleash previously untapped economic benefit. For example, there are volumes of economic analysis that establish for a whole range of assets that clear line of sight as to ownership and title is an essential step to evolution of an asset class, and a prerequisite for engagement of the financial markets.

QUINN: That makes sense I suppose. The first step to a thriving marketplace for an asset is certainty in the stability of the asset, which perhaps is a matter for another day, but another critical piece is knowing who owns the asset and whether the asset is owned free and clear so that it can be transferred.

SWYCHER: Your question highlights the fact that transparency has many dimensions, and patents struggle at every level – encumbrances, including licences is certainly another area that requires more attention. But ownership is an obvious first step – and all journeys have to begin with that.

QUINN: What are the plans for ORoPO?

KAPPOS: ORoPO is open, voluntary and free. We hope that every patent owning organization will take the opportunity to submit details of patents they own. It is encouraging to see such a broad range of participants at launch. I think the idea that there are vast numbers of organizations that are hiding their IP as a matter of strategy is outdated. They just need a simple, easy, low-friction way to make their ownership information known.  ORoPO provides that.

QUINN: I’m in favor of anything that treats patent ownership more openly and transparently because knowing who owns what is an essential component of a property rights based system. I’d like to see us get back to treating patents as a real property right. That seems long overdue if you ask me.