2. History
• Established on 2003 by Malackowski, a management consultant and a
forensic accountant specialize in intangible assets, with a co-
founder, Andrew Carter, an adjunct-Professor teaching courses on
intellectual property management.
• By the end of 2007, Ocean Tomo had 100 employees and generated 22.9
million US dollars in annual revenue.
• In 2008, one of the IP lots auctioned by the Ocean Tomo has reached $6
million, making it the largest IP transaction ever conducted through a live
public auction.
• As the strong development of IP industry, Ocean Tomo expected its
business departments summing up to generate about $160 million by
2012.
3. Mission
• Ocean Tomo dedicate to building the market of IP by adding liquidity of the
industry. It acts more than typical “patent licensing and enforcement
companies ” (P-LECs) since it not only obtain patents and offer legal services
but also provide customers with various way of IP transactions and financial
products.
Why so?
• IP activities grow fast among companies. For example, in 1990 Microsoft
received 5 patents, but by 2005 the company was filing over 3,000 patent
applications each year.
• This phenomenon is quite correlated with the situation: in 1975, more
than 80% of the market value of S&P 500 companies was composed of
tangible assets. By 2005, many of these companies hold their tangible
assets only to 20% of their market value. What became the main
components are those intangible assets, especially IP.
4. IP types
Name Patent Copyright Trademarks Trade Secret
Definition and Patent is a right provided by Right protects authors The right is given to Means of protecting
Usage government to the inventor from unlicensed prevent others use the confidential items such
for excluding others from duplication and same or similar words, as price lists,
making, using, or selling the distribution of their sentence, symbols or prototypes, drawings
invention, including product creative expressions. even slogan to identify or formulas.
claims, method claims, and one’s own item.
product-by-process claim.
Legal New, useful, non-obvious and Original, non- trivial, Distinctive and used for Security measures
Requirement fully- disclosed. and recorded in or identification. must be taken for
expressed through protecting secrets.
tangible medium.
Protecting Period 20 years. Full term needs Endured for author’s Won’t expire as long as Endured as measures
annual renewal, costing $930 life plus 70 years after the item exist. keep taken.
after 3.5 years, $2,360 after death.
7.5 years and $3,910 after
11.5 years.
Establishment Filing application is needed. Established once the Filing application is No applications needed.
creative expressions needed.
finished.
5. Service & Product (1)
Category Opinion Service
Name Expert Testimony Valuation Data Offer
Feature Providing financial opinion as Providing appraisal , and Selling analytical data to
Expert Testimony in legal analytical report for a company companies, which is
disputes, and survey analyzing about its IP portfolio. The developed as Intellectual
the quality of IP or IP portfolio estimation is often base on the Property Quotient (IPQ- score)
(a group of related patents). comparable transaction in indicating the quality ratings.
comparable markets.
Charge The Expert Testimony fee Base on the appraisal project size, A simple data report cost
often calculated on an hourly frequently coming up with a 30-50 $125-$200. Subscription to the
basis. page report costing $50,000 to database costs $200,000 each
$300,000 per portfolio. year.
Performance In early 2008, it was projected $3.6 million projected in 2008. $2 million projected in 2008.
to be the largest contribution $4.6 million expected to be $4.7 million expected in
to company’s revenue about generated by 2012 with steady revenue with 40% operating
$12 million. It is expected to 40% operating margin. margin by 2012.
be $15 million by 2012 with an
35% operating margin.
6. Service & Product (2)
Category Agency Services-1
Name Investment Risk Management
Feature Using ratings of IP, Ocean Tomo build three equity indices(e.g. Patent Royalty Trust helps
OT300) priced and listed on the American Stock Exchange. With companies transfer the risk of
a outside firm’s assistant, it created two investable exchange infringements to third party, namely
traded funds (ETFs) base on OT300. In addition, the ratings of IP the Ocean Tomo. The third party will
help Ocean Tomo work on several public and private equities handle the payments to other
funds. The rating system serves as a information provider claimant, which prevents the cost of
helping fund managers make their decisions. conflict , and work like insurance.
Charge About equity funds, 2% of the value of the assets under 2%-4% of total revenue of a company.
management is charged, as well as an incentive fee of 20% of This portion will be accrued in trust
profits. and managed by trustee Ocean Tomo.
Performance In early 2008, the assets of ETFs were about $30million. OT300 In 2008 revenues were projected to
Patent index serves as a more accurate predictor of value be $200,000, growing to $5.3 million
among S&P 500 than traditional ways. Totally, $2.7 million was by 2012. Malackowski even
expected to be generated in 2008. $80 million was anticipated predicted it will become one of the
by 2012 with 80% operating margin. biggest sector in future.
7. Service & Product (3)
Category Agency Service-2
Name Transactions
Type The Private IP Brokerage The Live Multi-Lot Auctions takes The Patent Bid/Ask The Dean’s List serves
service provided to those place among multiple parties platform work by phone as a bulletin board
with complex IP portfolio through an auction format. The or Internet. Every primary for
but only want to sell some seller need to give Ocean Tomo all potential buyer can see universities to post IP
of them. Transaction will available data in a secured way for patents from 81 for sale or licensing. It
take half or even one year buyers to review. All buyers on countries or issuing enables buyers to
since extensive due the auction occasion needn’t to authority. Buyers need contact the IP owner
diligence is required. wear name card in order not to to put some fund in an directly.
There will be extensive disclose the company plan. Ocean escrow account(with
negotiation between the Tomo hired a company “Gooding high interest) in order to
two parties. and Company ” to manage each initiate the transaction.
auction. Confidential manners
take place.
Charge Most revenue come from Listing fee for sellers is from $250 for each initial bid, Need to be charged to
transaction fee up to 15%- $1,000-$6,000 and a 15% and $50 for each post, and 10%
20% of the total price if a commission on each sale. Buyers subsequent offer. $495 commission from
deal consummated. pay a 10% commission for each per patent for using the successful transaction.
sale, too. data room examining
transaction records. 15%
commission split evenly
between seller and
buyer.
Performance In 2008, projected to be $15million with a 49% operating margin. It is expected to generate $35 million by 2012, with a 76%
operating margin in transactions.
8. The Key to Business model: PatentRatings System
• In 2005, Ocean Tomo expanded by acquiring an IP tech company called
PantentRatings, which used proprietary algorithms to calculate relative value of a
patent.
• This software of PantentRating system also uses various inputs to assesse whether
or not the patent is going to be renewed, which is a proxy for the quality or value
for a patent.
• It also provides a “relevance engine” that determine which patents were linked to
others.
• Right now this system has been patented by Ocean Tomo.
9. Related Business:
Intellectual Property Exchange International(IPXI)
The first global exchange focus focused on IP.
Items Equity Listing Trading Technology Unit License Right
Basket (TTB)
Content IPXI plans to offer IP rich Each Basket consists of a Unit license help companies
companies trading group of $50-$5,000 US saving their time making
equity that would co- list patents covering particular cross- licensing. The Unit
in addition to NASDAQ or technology (e.g. Blue- Ray Licenses right work like
NYSE. Disc). Using the rating system, stock, can be separated into
IPXI issue 12-36 month different units which can be
futures contracts base on the sold back in the secondary
basket. market.
Charge At least to pay $25,0000 IPXI plans to make money by IPXI charge 15%
to be listed in IPXI charging small transaction commission to company
exchange. fees base on many which launches the public
perspectives of each exchange offering through it’s
of TTB. exchange.
Performance By 2008, IPXI sold its first seats on exchange for 100,000. IPXI planned to sell about 200
seats in the future. Malackowski projected $170 million from exchange, with operating
margin 50% by 2012.
10. Conclusion
• It will be an inevitable trend that companies rely more and more on intangible
assets. Malackowski believes the value Ocean Tomo creates will comes largely
from adding liquidity in IP industry.
• Three main profession requirements for establishing Ocean Tomo are law , finance
and accounting.
• Comparing to other companies, Ocean Tomo is the first one which provides
comprehensive services from valuation, transaction to financial assets
management.
11. 3LL
• In Taiwan, though the IP liquidity still need promoted, there is already some
organizations handling licensing affairs which is potential to be the Ocean Tomo
(despite the financial sector) in Taiwan, e.g. Music Copyright Society of Chinese
Taipei.
• It maybe hard for Ocean Tomo to continue its advantage by using PatentRating
system. Though the proprietary algorithm is patented, other competitors can still
develop their own one, which with a different algorithm structure but can reach
similar effect of the system. Ocean Tomo will need to make efforts differentiating
it’s service from others.
• However, it’s still a smart move establishing IPXI. It serves as an exchange for IP
rich company. The exchange can reach the effect of an open platform. As more
companies join, the more difficult for other competitors to create similar exchange
since more companies attract more users. It will have a first mover advantage.
