Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 2 down vote favorite

Is intellectual property considered a commodity? Can intellectual property be bought and/or sold like other commodity type goods?

share|improve this question

1 Answer

up vote 3 down vote accepted

Intellectual property (patents, copyrights, trademarks) can be bought and sold, but I would not call it a commodity.

Since each piece of intellectual property is unique, placing value on it is very difficult and is much more art than science.

For example, consider a patent. A patent only has value if others infringe it (or want to practice it) and you can get royalties from them. There are a lot of variables in determining value:

  • Do others actually infringe the patent? Patents are often hard to understand and the only way to truly determine this is to litigate.
  • Is the patent valid? Many patents are invalidated in litigation as the patent office often misses key prior art.
  • Can the infringer design around your patent and accomplish the same objective without infringing?
  • Can the infringer afford to pay you a royalty or will it put him out of business?

Put a patent in front of 10 IP lawyers and ask them to place a value on it and you will get very different answers.

share|improve this answer
So as IP can have value, although complex find a value, does that mean it can be used as an exchange medium? For example, if company "a" offers 50% rights to their IP in exchange for 50% of company "b's" IP rights? – oshirowanen May 12 '11 at 15:28
@oshirowanen: You can do any deal you (both) like. IP is like a house, or a used car - ultimately the item is unique, and the deal has to be assessed on that basis. – Marcin May 12 '11 at 15:39
@oshirowanen: You wouldn't offer 50% rights as that doesn't make sense. You could offer 50% of any revenue generated from the IP. Or you could cross-license so you could each practice each other's IP. If you think your IP is worth more than theirs, you could cross-license plus ask for money. – user6603 May 12 '11 at 15:53

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.