Leadership Laboratory

Leadership Lab: Intellectual Property Series

This series of essays can help the IT manager learn how to identify and protect intellectual property and intangible assets.

Valuation of Intellectual Property Case Study - IPWatchdog.com

Sep 29th, 2009
By Stephen Northcutt
Valuation of Intellectual Property Case Study - IPWatchdog.com

I was quite surprised when this press release came into my inbox: "Since 1999 IPWatchdog.com has provided individuals, small businesses and entrepreneurs with information to help them understand all areas of intellectual property and to become better consumers. IPWatchdog.com also leads the charge to inform individual inventors of invention submission scams.

(PRWEB) September 12, 2007 -- Since IPWatchdog.com was originally launched in October 1999, it has been owned and maintained by Gene Quinn, a patent attorney, law professor, author and inventor. The site has gained fame in the intellectual property community thanks to his writing original articles on such subjects as patents, trademarks, copyrights, trade secrets and invention submission. The site has flourished in recent years, making it one of the most popular intellectual property websites on the Internet. Now Quinn is selling the site and domain name via auction.

Since 1999 IPWatchdog.com has provided individuals, small businesses and entrepreneurs with information to help them understand all areas of intellectual property and to become better consumers. In fact, IPWatchdog.com leads the charge to inform individual inventors of invention submission scams. Indeed, if you type "invention submission" into Google, Yahoo or MSN, IPWatchdog.com's "The Truth About Invention Submission," a detailed expose and warning, is the first page that appears in the free rankings.

The Truth About Invention Submission
When asked why he is now selling IPWatchdog.com Quinn explained that “it is time for me to move on. I am embarking on a new business related to the mentored writing of patent applications via an interactive software platform. With this new business I will not have the time to dedicate to keeping IPWatchdog.com fresh. I have taken it about as far as one person can. I will miss it no doubt, but it is time.”

IPWatchdog.com has achieved extraordinary search engine ranking for highly desirable terms in the competitive marketplace of intellectual property advertising via the Internet. Paying for advertising through pay-per-click models for desirable search terms relative to intellectual property, particularly patents, ideas and inventions where IPWatchdog.com scores best, routinely costs between $3 and $6 per click.

IPWatchdog.com is up for sale at SitePoint.com. The starting bid is $10,000, but is expect to sell well above that price given that almost 19,000 unique visitors a month are gained by the site through free search engine rankings and links across the Internet."[1]

So, I went to www.sitepoint.com. The first time you visit that site it is a bit overwhelming. I found the marketplace section, bumbled around through domains and established sites for sale and finally used the site search and found it. IPwatchdog has a Page Rank of 6 with 84,000 page views per month. At this moment the bid is 15,000 with a Buy it Now price of 250,000.[2] The site is for sale with all of its original content.


So what is IPwatchdog worth?
According to WIPO, "There are four main value concepts, namely, owner value, market value, fair value and tax value. Owner value often determines the price in negotiated deals and is often led by a proprietor’s view of value if he were deprived of the property. The basis of market value is the assumption that if comparable property has fetched a certain price, then the subject property will realize a price something near to it. The fair value concept, in its essence, is the desire to be equitable to both parties. It recognizes that the transaction is not in the open market and that vendor and purchaser have been brought together in a legally binding manner. Tax value has been the subject of case law worldwide since the turn of the century and is an esoteric practice. There are quasi-concepts of value which impinge upon each of these main areas, namely, investment value, liquidation value, and going concern value."[3]

The very cheery divorceinfo.com site has some pragmatic advice about the market value concept, "The Market value 'method looks at other transfers of similar property for which the price is known and makes adjustments to determine what this property is worth. This method would yield accurate results if you really could apply it, because you would be (presumably) evaluating arm's length transactions involving well-informed buyers spending real money and well-informed sellers actually giving up their hard-won assets.

There are two fundamental problems with the market approach. First, it's often difficult to find transactions that are comparable where the actual purchase price is known. Many transfers of intellectual property occur privately, and prices aren't published. Second, every transaction is unique. The purchase price could be vastly different depending on whether there is a covenant not to compete involved, which industry is involved, or whether financing is involved. Also, as described below, values change over time, sometimes dramatically."[4]

Well, back to the press release, it turns out there is a comparable property to consider. "Many likely remember that the domain name “Patents.com” was up for auction in May 2007 and before the auction was closed the top bid was $350,000. The Internet Real Estate Group ultimately purchased “Patents.com” for an undisclosed amount reportedly between $1 to $2 million. While IPWatchdog.com differs from Patents.com, Quinn points out that “it has broader appeal in terms of traffic because it has traffic associated with copyrights, trademarks and trade secrets as well as patent and invention related traffic.” Quinn continued, “according to both Alexa.com and Quantcast.com, IPWatchdog is far more popular than Patents.com.” Quinn is also not just selling the domain name, but the sale also includes the content of the site (unlike the Patents.com sale), and he is willing to stay on in some capacity to ensure the buyer meaningfully captures the good will he has built up with IPWatchdog.com."[1]

Igor International describes the sale of patents.com:

"$350,000 is the high bid at the time of this post. The bid history and the highest bid now can be seen here.

For many years, the domain names patents.com and patents.net have belonged to the law firm of Oppedahl & Larson LLP and were used to provide information to individuals concerning patents and other aspects of intellectual property law. Now, following the dissolution of Oppedahl & Larson LLP, these two domain names are potentially available for purchase. A winning bid is anticipated to be accepted on or before June 15, 2007.

In 2004, the Federal Circuit affirmed the Trademark Trial and Appeal Board's (TTAB) refusal to register the mark "patents.com" to the firm. The court found that the proposed mark is "merely descriptive" and thus patents.com is not eligible for trademark protection."[5]

So the differences right off the bat would be:

• Patents.com is a more narrow name, IPwatchog has a broader focus
• Patents.com carried the right for the domain name, but the name in business as a trademark is not eligible for protection
• IPwatchdog is currently functioning, Oppedhahl & Larson were not
• Mr Quinn, who essentially is IPwatchdog will agree to stay in some context at least for the transition
• September 2007 is a time of economic uncertainty, June 2007 was before the subprime mortage fallout

The bottom line

We really will not know what will happen for 15 days, but I certainly enjoyed reading IPwatchdog, it was one of those mail messages that gives you a smile when it comes into your inbox.


1 http://www.prweb.com/releases/2007/09/prweb553064.htm
2 http://www.sitepoint.com/marketplace/auction/12764
3 http://www.wipo.int/sme/en/documents/value_ip_intangible_assets.htm
4 http://www.divorceinfo.com/fambusintellectualproperty.htm
5 http://www.igorinternational.com/blog/2007/04/patentscom-domain-name-for-sale-by-auction/