IP Fridays - your intellectual property podcast about trademarks, patents, designs and much more Interview with James E. Malackowski, the Founder of Ocean Tomo – Patent Auctions, Managing Patent Portfolios, Blockchain in the Field of IP, the Market For Data Rights – IP Fridays – Episode 160
My co-host Ken Suzan and I are welcoming you to episode 160 of the IP Fridays podcast!
Today`s interview guest is James E. Malackowski, the founder of Ocean Tomo, in my view the first successful patent auction venue. We talk about monetization and auctioning patents, use of blockchain technology for IP and especially for licensing, the economics of data rights and much more. But before we jump into this interview, I have news for you:
The EUIPO and the EPO just released a new study ““Intellectual Property Rights and Firm Performance in the European Union.” on how intellectual property rights (IPRs) boost business performance in the EU. It looks at trade marks, designs, and patents, and shows that companies owning IPRs earn more revenue per employee and pay higher wages. Small and medium-sized enterprises benefit the most, with a 44% increase in revenue per employee compared to firms without IPRs. Yet, fewer than 10% of SMEs use registered IPRs—showing big untapped potential.
The USPTO has unveiled a new strategy to guide the responsible development of artificial intelligence. This plan aims to clarify patent rules for AI inventions, foster public-private collaboration, and address ethical considerations like transparency and fairness. By creating clear guidelines and balanced regulations, the USPTO hopes to empower innovators and bring more AI-driven solutions to market. This strategy underscores the growing impact of AI on all industries and highlights the USPTO’s commitment to shaping the future of innovation.
The European Patent Office (EPO) has introduced a new investor-mapping initiative to strengthen Europe’s innovation ecosystem. By identifying key investors, the project aims to bridge the gap between invention and market, helping inventors and businesses find the right funding and partners. The report introduces a new metric, the Technology Investor Score (TIS), which is the proportion of companies in an investor’s portfolio that have filed patent applications. This effort is designed to boost Europe’s competitiveness and foster greater collaboration across industries, research institutions, and venture capital.
In this episode of IP Fridays, I speak with James E. Malackowski, an intellectual property (IP) pioneer best known for founding Ocean Tomo. James shares how Ocean Tomo introduced the world’s first large-scale public auctions for patents, trademarks, and copyrights. He also explains how these auctions helped create market-based “price discovery” for IP assets—something that had never been done so openly before.
Beyond auctions, James discusses strategies for CEOs of mid-sized tech companies to extract real value from their R&D and patents. He emphasizes the importance of planning ahead, understanding your own portfolio, and making IP a regular topic at the board level. We also talk about why early, strategic patent filings can protect your company from missing out when others file first.
Another major topic is the potential of blockchain technology for patent licensing. James outlines how blockchain can offer an immutable and transparent way to package and transfer patent rights—potentially even creating an “IP coin” to finance innovation. He notes that while blockchain is already starting to be used in data rights, it could reshape the entire licensing landscape by allowing more efficient trading and tracking of IP.
We also cover the idea of the complete economic chain for IP licensing, which means recognizing everyone’s contribution from the first supplier all the way to the final product manufacturer. James says it may be more efficient to handle royalties and costs at the beginning rather than chasing every link in the chain later.
Finally, we explore how the merger with J.S. Held has expanded Ocean Tomo’s services. With over 500 in-house engineers, J.S. Held brings deep technical expertise to help Ocean Tomo’s clients in areas such as valuation, expert witness services, litigation support, and more.
Key Topics
- How Ocean Tomo’s patent auctions changed the market
- Strategies for CEOs to plan and manage their patent portfolios
- Blockchain’s role in creating more transparent and tradable licensing rights
- The “complete economic chain” concept for fair and efficient IP royalties
- Why data rights and new marketplaces for data are becoming more important
- Ocean Tomo’s expanded offerings and partnership with J.S. Held
Connect with James
- Email: james.malackowski@jsheld.com
- Website: www.oceantomo.com (or www.jsheld.com)
Enjoy the episode, and let us know your thoughts on these emerging trends in the IP world!
Jim Malackowski: Hello everyone, my name is Jim Malackowski. I am the co-founder and senior managing director of Ocean Tomo, and I’m thrilled to be here on IP Fridays.
Rolf Claessen: Today’s interview guest is James Malackowski, the co-founder and senior managing director of Ocean Tomo, a part of J.S. Held. Before founding Ocean Tomo over 21 years ago in 2003, Jim had several positions in the IP field. He holds a degree in business administration from Notre Dame in Indiana, and in 2022, Jim was inducted into the IP Hall of Fame. Thank you very much for being on our IP Fridays podcast, Jim.
Jim Malackowski: Rolf, thank you for having me. I’m excited for the conversation.
Rolf Claessen: Alright. So, I already mentioned that you are the founder of Ocean Tomo, and you introduced the world to the first public auctions of patents, trademarks, and copyrights. In my personal recollection, it was the first patent auction site that really worked on a larger scale. I think there were some tries before that, but no one really succeeded. So, tell me more about the story behind Ocean Tomo and why you think it was successful.
Jim Malackowski: Sure, and Rolf, your question is actually a question within a question. Let me tell you about Ocean Tomo, and then let’s talk specifically about the auction, because that itself is a really interesting story. With respect to the firm, the history of Ocean Tomo is really very similar to the history of my career. So, we can trace our activities back to the Court of Appeals for the Federal Circuit in the United States changing and forming a new way of looking at intellectual property back in the 1980s.
Jim Malackowski: I started my career as an accountant shortly thereafter and opportunistically happened to work on calculating damages for patent infringement litigation. I was the first in a very small team to do that straight out of college. Because I worked on the first assignment, they gave me the second. After the second, the third, and then I was declared a member of a small expert team as a result. So, I spent the early part of my career, the first three years, doing nothing but looking at intellectual property in a litigated situation.
Jim Malackowski: In the late 1980s, a client came back and asked me to value a patent, not for the courtroom, but for a business transaction. I can remember that day well. I literally ran down the hall to the senior partner’s office talking about my first piece of revenue credit. His answer was no. He said it’s not something that we do. It wasn’t something covered by the accounting standards or their insurance. So, a week after my 25th birthday, I left the firm. Four of my peers came with me, and we started what was the first-ever intellectual property dispute accounting and valuation boutique. We got lucky. That firm grew from five people, later partnered with private equity, and ended up selling nearly 300 people in the late 1990s.
Jim Malackowski: After that, I went to work at one of the investment houses that had invested in us and really had my eyes opened to the power and impact of intangible assets and intellectual property, particularly as it relates to investment decisions. I worked on that for two years. Then, when the non-compete was over from the sale, literally to the day, we started Ocean Tomo in 2003. My history has been an amalgamation of those experiences.
Jim Malackowski: Your question also asked about the auction, which is one of our favorite chapters within the firm in the early 2000s. One of my partners at that time, our vice chairman, was a very serious car collector. As we were explaining to him the frustration we had of selling patents as a broker, he basically said to me, “Jim, why do you make it so hard? Why don’t you try to sell patents like Sotheby’s would sell art, or like Gooding & Company sells cars? Publish a catalog, pick a date, hire an auctioneer, and let the buyers determine the market.”
Jim Malackowski: That idea stuck with me. Within six months, we had our first auction in San Francisco in 2006. We published a fancy catalog, hired a British-accented auctioneer experienced in antiques and automobiles, and assembled 80 lots of patents for sale. That day, more than 400 people showed up, including CIPO’s, former directors of patent offices worldwide, and a large media presence. When the auction started, the room went silent—it was the first time anyone understood what manageable patent portfolios were worth. Up to that point, patent sales weren’t disclosed, and this was true price discovery.
Jim Malackowski: At that first auction, we sold about a third of the catalog for several million dollars. In the years that followed, we sold over $100 million on the auction floor. That event was a game-changer in recognizing intellectual property and patent value.
Rolf Claessen: Fascinating. So, what do you think attracted those 400 people to that first auction?
Jim Malackowski: There were three reasons: First, it was price discovery—they wanted to know what these patents would sell for. Second, it was a market-building networking opportunity, as dedicated IP brokerage and valuation conferences didn’t exist back then. And third, fear—fear that a patent that could impact their business might sell, and they’d miss the chance to acquire it.
Rolf Claessen: Very interesting. And it’s always a recurring question: How much is a patent worth? Many of my clients, especially medium-sized companies with maybe 500 to 1,000 employees, ask me, “We’ve filed all these patents—how much are they worth?” My response is often that the value of a patent is what someone is willing to pay for it. Do you agree?
Jim Malackowski: Absolutely. The worth of patents can be evaluated in two ways. First, how do they help you build value in your business? If you’re able to raise capital or introduce products with unique features that maintain a proprietary position, there’s obvious value. Second, how do they create value for others? If others are using your intellectual property to generate revenue or capture market share, then it’s valuable to them. Ideally, those situations lead to win-win transactions where value is shared.
Rolf Claessen: That’s a great point. Now, imagine you’re the CEO of a medium-sized, tech-driven company. What would you tell yourself to maximize the value of your research and patents?
Jim Malackowski: Great question. Let’s break it down into three levels. At the highest level: Plan for it. Failing to plan is planning to fail, and that applies to intellectual property. I recommend designating someone on your board or advisory team to oversee IP. This ensures it becomes a regular part of board discussions and elevates the role of intangibles in your company strategy.
Jim Malackowski: Next, develop a strategic IP plan. For us, that starts with a landscape analysis—understanding what you own and what your competitors own. Then, determine your principles: Are you willing to out-license, enforce, or in-license? Are you managing IP holistically across the business or within divisions? Once you know these principles, you can align your IP strategy with your business plan. Finally, educate your team about the importance of IP. Share your plan with the board, the C-suite, and even the broader organization so everyone understands the role of intellectual property in supporting the business.
Rolf Claessen: That’s incredibly helpful. Now, let’s shift to new technologies like blockchain. I believe blockchain has great potential for patent licensing. Can you explain why blockchain is suitable and why it’s not widely used yet?
Jim Malackowski: I agree that blockchain holds tremendous potential for IP, including patents, copyrights, data, and trade secrets. Blockchain is efficient, transparent, and immutable, making it ideal for documenting and packaging IP for transfer. For example, it allows you to wrap trade secrets or know-how into a blockchain container, ensuring everyone understands its scope and creation date.
Jim Malackowski: Blockchain also enables valuation, balance sheet recognition, and secondary trading. Imagine licensing a patent wrapped in blockchain data—you could later sell that right to a third party. While adoption has been slow, it’s starting to gain traction, especially in data rights. Blockchain tools are now being used to codify, package, and transact data, and I believe we’ll see similar developments in patents.
Rolf Claessen: That’s exciting. You mentioned earlier the idea of a blockchain-based IP coin. Could you elaborate on that?
Jim Malackowski: Sure. An IP coin could function as a cryptocurrency secured by patents. For example, you could create a portfolio-backed cryptocurrency where each token represents a specific IP right. This could be used for financing, with patents serving as collateral. While we’re not there yet, it’s an area we continue to explore.
Rolf Claessen: Interesting. But the legal framework for blockchain-based licensing seems outdated, at least here in Germany. Do you think the law will adapt?
Jim Malackowski: It will have to. One exciting concept is using blockchain to unitize IP rights. For example, if a patent portfolio covers automotive technology, you could create a million unit license rights using blockchain. A manufacturer could buy 100,000 units today and sell unused rights to a competitor later. This approach benefits patent owners because they get paid upfront while allowing buyers flexibility. Blockchain makes this possible by enabling transportable, easily tradeable rights.
Rolf Claessen: That’s a compelling vision. Before we move on, you mentioned the idea of considering the complete economic chain for IP licensing. What does that mean?
Jim Malackowski: It’s about ensuring value is recognized and royalties are shared across the entire supply chain, from the original innovator to the final product manufacturer. Today, patent owners often have to approach each link in the chain separately, which is inefficient. A better approach would involve assigning royalties at the start and passing them along the chain in a clear, explicit way. This would reduce litigation and uncertainty while ensuring everyone is fairly compensated.
Rolf Claessen: That makes sense. Now, let’s switch to data rights, another emerging topic. You’ve mentioned the need for a market for data rights. Can you explain what you mean by that?
Jim Malackowski: Sure. Data rights can be viewed from two perspectives: personal and business. On a personal level, we often give apps permission to collect our data without receiving any compensation. There’s an opportunity to create a market that recognizes the value of individual data.
Jim Malackowski: On the business side, there’s already an active market for data—like mailing lists or data sets used for AI and machine learning. Blockchain and other tools can make these markets more efficient by enabling secure, transparent transactions. We’re excited to see these markets evolve.
Rolf Claessen: That’s a fascinating area to watch. Finally, Ocean Tomo is now part of J.S. Held. What services do you offer beyond auctions?
Jim Malackowski: Ocean Tomo has always been known for different things by different people. Lawyers know us for litigation expertise, while others associate us with valuation or auctions. Today, as part of J.S. Held, we’ve expanded our offerings. We have four main practice areas: opinion services for litigation, management consulting for IP strategy and valuation, investment banking for transactions, and technical services like patent analytics and reverse engineering.
Jim Malackowski: The partnership with J.S. Held has been transformative. With over 500 engineers on their team, we can now tap into deep technical expertise for any industry or technology. It’s been a very effective collaboration.
Rolf Claessen: That’s fantastic. If listeners want to connect with you or learn more, what’s the best way to reach you?
Jim Malackowski: They can email me directly at james.malackowski@jsheld.com or visit our website, where they’ll find an option to connect with us. We’re always happy to brainstorm and see how we can help.
Rolf Claessen: Jim, thank you so much for this excellent interview. We covered so many exciting topics, and I’ve really enjoyed our conversation. It was a pleasure having you on IP Fridays.
Jim Malackowski: Thank you, Rolf. It’s been a pleasure, and I look forward to doing this again.