Coinvision sat down with Erich Spangenberg and Dan Bork, respectively, the CEO and the CTO of IPwe, a new venture creating a blockchain and AI enabled global patent market that has been attracting a lot of attention in recent months.
This is what Eric and Dan had to say about their project and their ambitions for the future:
Coinvision: Can you give us a short overview on IPwe? Maybe a little on how you came up with the business?
Erich: IPwe is creating the patent asset class. We are using AI and blockchain to answer basic questions about patents – Do they exist? Who owns them? Are they valuable? How do you transact?—so that more people can participate in the market. With greater transparency, lower costs and it being easier to transact, our thesis is that more people will get involved with patents. They will get involved not just in traditional transactions like licenses and acquisitions, but also new transactions like financings and innovation projects, that will benefit owners, investors and the society as a whole.
Dan: Most of the team at IPwe has been working together for years. Erich bought our company that was originally a spin-out from the University of Minnesota in 2007. We invested over $20 million in coming up with better artificial intelligence solutions to analyze patents that were used to make hundreds of millions of dollars in the patent space. Back in the early days of developing these analytic tools, we would often talk about how inefficient the patent market was and we were amazed it operated in the way it did. When we started working on IPwe in early 2017 we realized that the market conditions and technology finally existed to enable the global patent market.
Coinvision: What advantages can the blockchain bring to the patent market and what problems can it solve?
Dan: It is hard to believe it in 2018, but there is no single reliable registry of the world’s 20 million patents. You have about 200 independent government agencies issuing patents. Blockchain is an ideal solution to handle building a registry for the world’s patents. For the IPwe Global Patent Registry we are taking it further and not only listing if a patent exists, but also engaging in an effort to also make it easy to find out who owns it.
Erich: Part of our thesis is that if before you even start, you have to incur significant expense to establish if a patent exists and who owns it, few are going to transact.
We are taking it a step further and not only will IPwe incur the millions in expense to create and build the Global Patent Registry, we will make it available for free for all forever
Why? We think it is worth it and an essential first step to creating the patent asset class. Without this critical simple first step, the patent asset class will not develop. As a society we spend billions on regulating, obtaining and maintaining patents – and an acceptable return is just not present and we are going to fix that.
Coinvision: The proposal of establishing a world-wide blockchain-based patent registry is very interesting, but it being a government designed process in most countries, how can you bridge over the differences between different regulatory systems and procedures?
Dan: IPwe’s plan is not to replace patent offices — like many intermediaries in the patent space, they perform a critical function. All the Global Patent Registry is doing is providing the infrastructure to make the information available in a single registry that is free for all to engage with. The goal of Global Patent Registry is to let anyone determine if a patent exists, in which patent office it exists and who owns the patent. It’s a platform that works with patent offices to give a unified view of patents from a market perspective. We are seeking to work with the world’s patent offices. They are maxed out and resource constrained – we do not charge them and in fact we give them analytical tools to help make them more productive.
Zuse Analytics is our patent AI analytic tool and we have a customized version we make available free of charge to patent offices
Erich: We work with patent offices to make things better – and we do it without charging them anything.
Ultimately, we think regulations will change and the entire patent space will be tokenized — this will not happen overnight, but it will happen
IPwe is working with regulators, owners and other interest groups to make this happen in an intelligent manner. Before that transition to a tokenized system occurs, we are working with the system to make it better. We admire the optimism of the people who are proposing to immediately tokenize the patent system and even more interesting ideas like a global patent – we just believe that there is an important interim step while those significant changes are further evaluated.
Coinvision: What value does your application Zuse bring to the patent industry? What has been the feedback from users so far?
Dan: With a team out of the University of Minnesota that includes Prof. George Karypis, we have been working exclusively on AI patent analytics since 2007. Our systems have been used to generate hundreds of millions of dollars in patent transaction, but these systems were never made available to the public. We have developed tools that answer basic and critical questions about patents. We think these tools should be available free of charge. For many participants, the information Zuse provides will be adequate or be enough to get them to be comfortable that it is worth spending additional capital or resources on a possible transaction.
The feedback from our users has been really fulfilling. We are working on new analytic tools and new UX/UI’s that we think will advance critical understanding about patents beyond the traditional participants
Erich: We realize that we could create a business selling patent analytic services, but that this was not of interest to us. We want transactions to happen and we think IPwe should not get paid unless a transaction happens. We think Zuse Analytics is a great tool and are building API’s into Zuse so that if you want to leverage what we built to build some custom solution, you can. We are also analytics agnostic—if you are in love with another patent analytics system, use it. We are not interested in Zuse as a source of revenue—we do not charge, we do not track and we do not advertise on Zuse.
Coinvision: What is the IPwe Platform? How does it fit with the Global Patent Registry and Zuse Analytics?
Dan: IPwe Global Patent Registry and Zuse Analytics are up and running today and available to the public. Once you know there is a patent and who the owner is, you can use Zuse to get some basic answers to basis and critical questions.
The IPwe Platform – which we anticipate will be available in late June for simple transactions—is where you will go to transact
Working with owners, inventors, corporations, universities, financers, insurance companies and a long list of service providers, the IPwe Platform will handle traditional patent transactions like acquisitions and licensing but also transactions that simply do not exist in today’s market. It will consist of both user interfaces and API’s that will integrate the Global Patent Registry blockchain, the transaction blockchain and elements of Zuse.
Erich: Platforms are complex to build and even more complex to execute on. The IPwe Platform is not going for “nice to have;” we spent millions of our own money and a lot of our time thinking about and developing “must have” elements for the IPwe Platform that will cause the market to take notice and ask “why would you transact anywhere else?” That is our goal.
Coinvision: What partnerships has IPwe already established or is looking to establish? What do you expect to gain from them?
Erich: We are working with patent offices, large and small patent owners, service providers and intermediaries of all types. Our goal is not to eliminate all the intermediaries in the patent space.
We are involved in a unique market where only 2% of the world’s 20 million patents transact and only 5% ever find their way into a commercial product. What we can do with the support of the market is increase these percentages dramatically and the market expands for everyone
Of course, intermediary costs are going to fall—that is a good thing—but if IPwe is successful, transaction volumes are going to increase dramatically. We want to work with all of the intermediaries, owners and other interest holders to expand the market. That will, of course, benefit IPwe, intermediaries and owners, but also society.
Dan: Our AI analytic tool — Zuse Analytics — is a great example. For most intermediaries, Zuse is going to return to you laptop work that was going to be outsourced to a cheaper labor center and never be done by them. What Zuse’s AI does is let you focus on the higher value and more interesting work and services that your client actually wants. For patent offices, Zuse can aid in patent quality and more efficient access to patent information for their communities.
Coinvision: So far IPwe has been exclusively privately funded. Why have you not sought crowdfunding initially through an ICO as most blockchain projects have done so far?
Erich: It was hard to avoid the temptation of an ICO, but ultimately, we decided an ICO was not for us. IPwe works extensively with large companies and government agencies. A government agency and most large companies are not going to get near you if you have a potentially significant regulatory compliance issue. Put aside whether governments are right or wrong on “all tokens” being securities. For a government agency or most corporate customers, they are not going to accept “headline risk” – being part of a news story for the wrong reason — no matter how compelling your offering. We are B2B and B2G – we have to be fully compliant in all phases of operation. Now—this does not mean we are not interested in a security token or that, when regulation catches up, we will not pursue a utility token. We believe ICOs are a really interesting development and, in general, a very positive development—it is just not for IPwe right now.
Dan: We think we are witnessing a natural progression of the market. The curious people that were getting paid a fortune to promote you on Telegram or Twitter are being replaced with serious people and we think that is a really good thing. The market will mature, We are fortunate to have the capital to fund our R&D and 20-person headcount without having the need to pursue an ICO.
Coinvision: Will it be possible for the broader community base to invest in the company in the mid-term?
Erich: We have made our required SEC filing and just can’t comment on IPwe fundraising specifics.
We want to open up the patent asset class to capital and a new group of investors. This is something we are working hard on and I hope this will be a reality in Q4 2018 or early in 2019
Ultimately, our goal is to make the patent asset class investable for a larger group of people. Patents are a non-correlated investment opportunity that should open up to more than the handful of funds that currently invest in this asset class. This will benefit investors, inventors and owners, but also have a potential tremendous impact on innovation and macro societal benefits that are just not being realized today.
Dan: IPwe has a very long-range view of the market. Every day I am deep in our technology roadmap and working with our team to develop systems that will meet the significant objectives being set for IPwe.
And that's it from our talk with Dan and Erich, the CEO and the CTO of IPwe. We will continue to follow their work with great interest. Stay tuned and be the first to get our upcoming articles, interviews and alerts about high ROI opportunities.
We are stating our vision and opinions, we are not giving you financial advice and if you invest in this project it is your full responsibility. You are investing at your own risk. Always invest only what you can afford to lose and try to diversify your investments. Finally, do your own homework and learn about the project use case, roadmap and team.