Ocean Tomo LLC, the Chicago-based IP merchant banker, generated sales of $2.8 million at its March 27 auction in San Francisco after sponsoring an event last year that raised seven times as much.
Although the company had 85 lots of IP for offer, only six actually sold during the auction itself. The highest winning bid for a single item was $1.5 million for the IP related to a prepaid wireless-phone system. Total revenue from the 2008 event was $19.6 million.
The auction catalog was printed last autumn, before the fourth-quarter economic slowdown, Ocean Tomo's president and chief executive officer, James E. Malackowski, said in a post- auction interview on March 27. The IP market "needs to adjust," he said.
Ocean Tomo, "as a market mover, is in a position to evaluate the market in robust and recessionary times," he said.
Most lots were patents, although there were also offerings related to gospel music and the Christian television program founded by Jim and Tammy Faye Bakker. Neither received any bids.
Many of the patents were offered for sale by individual inventors or universities. Applied Materials Inc. of Santa Clara, California sold its patent 6,199,157 for $100,000.
Malackowski said there were more bidders registered than at any previous Ocean Tomo IP auction.
"But they never raised their hands" to bid, he said.
Mark Gottlieb was a spectator at the auction. He's president of LogicMark of Fairfax Station, Virginia, and has sold patents at past Ocean Tomo auctions "in the six-figure range," he said in an interview March 27. A self-professed "serial inventor," he said he'll be back with more patents for sale at future auctions.
One bidder was Ronald S. Laurie, former IP practitioner at New York's Weil Gotshal & Manges LLP, and Skadden, Arps Slate, Meagher & Flom LLP. Laurie now heads Inflexion Point Strategy LLC, a Palo Alto, California-based IP investment bank.
The paucity of bidding represented "a flight to quality," Laurie said. 'People were not here to invest in the future, but were buying for immediate goals."
He said people who acquired patents bought them as either a "sword or a shield" to use in patent litigation. "It's all about pain," he said.
Ocean Tomo will hold a Web-based auction in the summer in place of a live auction originally set for Hong Kong. In November, a live Ocean Tomo auction is scheduled in Paris.