Researchers Submit Patent Application, “System And Method For Using Non-Fungible Tokenization To Improve Transfer Pricing”, for Approval (USPTO 20230177480): Patent Application

2023 JUN 27 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- From Washington, D.C., NewsRx journalists report that a patent application by the inventors BERMAN, BRIAN JOSHUA (LONG ISLAND CITY, NY, US); ROTTER, BRADLEY NOLAN (AUSTIN, TX, US); Spangenberg, Erich Lawson (PARIS, FR), filed on October 22, 2022, was made available online on June 8, 2023.

No assignee for this patent application has been made.

News editors obtained the following quote from the background information supplied by the inventors: “Traditionally, assessing and assuring the risks in the purchase of an asset often involves extensive and costly due diligence. Such due diligence may include manual and semi-automated searching of various and disparate records, databases and other sources. This problem is difficult enough to solve when the property is tangible, such as in the cases of real estate and personal property. However, the problem is further compounded when the asset is related to intangible property, such as patents, trademarks, and copyrights. This has been a long-term problem with few solutions, due to the governmental controls that often exist with respect to such assets, often on a country by country basis. Moreover, with patents, problems relating to joint ownership, joint inventorship, licenses, litigation and other invalidating proceedings (some not resolved), valuation of the intellectual property assets becomes very difficult without a real time online system, which would require that every registrar of every intellectual property right be encompassed within a single data hierarchy.

“It is increasingly common that such intangible assets comprise the subject matter of, or are used as the collateral in, significant business transactions. Moreover, such intangibles often comprise a significant portion of the assets of a business and are subject to litigation involving the validity and/or infringement of the intangible.

“Inasmuch as intangibles are gaining increasing importance in both domestic and international transactions, as well as in litigation, it is becoming increasingly important to provide parties to such transactions or who may be affected by litigation with more reliable, accurate, and cost-effective information through the due diligence process. Such information may include, for example, verification of the chain of title of the asset, identification of the encumbrances on the asset, the validity and enforceability of the asset, as well as past and pending litigation which involves or otherwise impacts the asset. Moreover, it becomes very desirable that valuation is ascertained across various decision-making boundaries, so that fair market value may be established, much the same way auctions are used for so many assets including works of art and automobiles. As the certainty among purchasers, investors, insurers and financers in the transferability and marketability of such assets increases, the market value of the asset should also increase, and should lead to more litigation being averted, transactions being completed, and investments being made. Eventually, such a platform would enable the trade of intellectual property rights (ownership, licensing rights, encumbrances, etc.), internationally, and in a transparent manner, akin to the manner in which securities are traded on stock exchanges across the world.

“Thus, there exists a need for a system and method of assessing the valuation and risks associated with trading intellectual property rights on an international basis, including ownership, licensing rights, encumbrances, validity assurance and a uniform manner to assess such valuation. There also exists the need for a system and method which provides greater assurance among purchasers, investors, insurers and licensees of intangible property that such intangibles have clear title, are unencumbered, and/or are valid and enforceable. By assuring the valuation and marketable title as to all aspects of a stake or ownership (or management or control interest) in intellectual property, the rights or stakes may be freely and openly traded, on an international basis.

“In addition, there exists a need for a system and method of improving the speed, accuracy and reliability of information delivered through the intellectual property assessment due diligence process so that decision makers can make better risk assessments, and more informed decisions, taking into account scope, validity, licensing rights, litigation, invalidity challenges and other potential adverse or beneficial proceedings, on an international and transparent basis. Traditional databases are often closed or proprietary, making them difficult for fulfilling this need. In this regard, there also exists the need for a system and method which delivers the results of such due diligence in real-time.”

As a supplement to the background information on this patent application, NewsRx correspondents also obtained the inventors’ summary information for this patent application: “The present invention relates to a system and method which facilitates the assessment of trading intellectual property rights or stakes in order to provide greater assurance among, purchasers, investors, licensees, insurers and financers of intangible property. Such intangible assets may include patents, trademarks, copyrights and other forms of intangible assets. The system and method of the present invention provides greater assurance that such intangibles have clear title, are otherwise unencumbered, are not the subject of litigation or other proceedings, and/or are valid and enforceable. While accomplishing this via traditional databases has been difficult for a myriad of reasons, use of NFTs (non-fungible tokens) is one optimal way to enable the preset invention. Indeed, NFTs are often transacted by way of at least one blockchain, including for example an Ethereum blockchain. More specifically, this invention is directed to at least one blockchain or multiple blockchains and/or databases (including as one example, an Ethereum blockchain) for trading tokenized intellectual property rights using NFTs, or non-fungible trading tokens. The invention is further directed to a system and method for enabling purchasers, licensees, investors, insurers and others with an interest in intellectual property to trade said interests via NFT trading, and to insure marketable title in said trade assets. In addition to trading, blockchain(s) can be used for IP tokenization, making IP (such as patents) easier to sell, license, commercialize, etc. (not limited to trading). Also, tokenization makes it easier to keep track of ownership, such as with fractional ownership. Tokenization can make it easier for crowdfunding/crowdsourcing of IP.

“The use of an Ethereum blockchain or at least one other blockchain is one way to overcome prior art attempts to transact intellectual property trades, which must take into account security and international transparency in a real time or near real time environment. Intellectual property assets are relatively difficult to trade, given the complex nature of their valuation, including ownership (including joint ownership and/or joint inventorship), litigation, validity proceedings, licenses, encumbrances, and other local, state and national law concerns across all the countries of the world. Indeed, no single database has ever stretched to all the necessary constituents to accomplish the present invention, but through the use of NFTs across, for example, an Ethereum blockchain or at least one other blockchain, the present invention may be enabled and optimized.

“The system and method of the present invention may comprise one or more of: (i) a blockchain and remote databases which comprise data and other information related to the valuation and risk assessment of the intangible property; (ii) a search engine which searches and retrieves from at least one blockchain or databases data and other information related to the valuation or risk assessment of the intangible property; (iii) a valuation ranking system or computational engine which utilizes objective assessment criteria to determine accuracies and inaccuracies in the information and data and generate a marketable title and valuation associated with the intangible property being assessed for risk; and (iv) an NFT based system which allows for the tokenization of all intellectual property rights of stakes under analysis by the present invention to enable the free trading of intellectual property tokens akin to the manner in stocks (equities) are routinely traded every day around the globe.

“The system and method of the present invention may also comprise a system and method for developing valuations, monetization routes and collateralization opportunities pertaining to the intellectual property at interest.

“In addition, the system and method of the present invention may further employ real-time or reactive computing systems and methodologies to enable due diligence to be conducted such that results generated by the system and method may be returned to the user during a single interactive computing session which accesses any number of networks or blockchains. While an Ethereum blockchain may be one optimal blockchain used to enable the present invention, any number of networks, a single blockchain or multiple blockchains may be used to transact the tokenized intellectual property rights or tokens, of NFTs.

“NFTs are tokens that can be used to represent ownership of unique items such as intellectual property rights or stakes according to the present invention. NFTs may have any number of official owners at a time or just one, and they’re secured by at least one blockchain, such as for example, an Ethereum blockchain, so that unauthorized users cannot modify the record of ownership or copy or paste a new NFT into existence. The word “fungible” in the definition of NFT is significant due to the fact that fungible items can be exchanged because their value defines them rather than their unique properties. For example, ETH or dollars are fungible because 1 ETH / $1 USD is exchangeable for another 1 ETH / $1 USD. By using an NFT, the ownership or ownership group of any set of intellectual property or any single piece of intellectual property may be baked into the content itself, so that the NFTs may be freely traded, and percentage ownership or fractional ownership of intellectual property or pools of intellectual property may be distributed across a multitude or owners or stakeholders across the world, dynamically in real time or near real time, so that ownership stakes (ownership, licensing rights, encumbrances, liens, etc.) may be freely traded and exchanges may be built to enable the NFT trading. According to the present invention, provisions may be made so that every time a trade is affected, a commission or royalty may be attributed to the ownership, management or control group of the underlying intellectual property and/or their associated NFTs.

“The system and method of the present invention transforms corporate patents into NFTs, applying tokenization to intellectual property (IP). An ecosystem to tokenize patents will allow intellectual property to be treated as business assets, making IP like patents easier to license, sell and commercialize. The application of NFTs to IP can also change the entire structure of the patent system and concept of a Global Patent Registry (GPR). NFTs are applied to Smart Patent Pooling, whereby the owner creates an NFT for the relevant patents via a smart contract. Once the NFT is created and on the blockchain-based GPR, digital title records are also incorporated into the overall system.

“The present invention is a system and method of NFTs for IP including patents and patent applications, including the incorporation of Master Title Tokens. The present invention can work with patent offices, however it can also exist independently of patent offices. NFT is the representation to the rights transferred to the NFT per the underlying contact between the patent owner and the NFT. The NFT can insure title at both the patent level the NFT level, as well as insuring owner engagement with the NFT. The NFT can be a subset of patents or all the patents owned by an entity. The present invention can record the NFT contract using smart contracts and make that data publicly available. NFTs can also have attribute tokens, whereby The attribute could be an exclusive or non-exclusive IP license, the encumbrance, or the right to a % of future earnings/revenue. The attribute token may be a separate token that ties back to the NFT Master Title Token (MTC). This is a separate token where something other than title is involved. This facilitates inventor engagement with IP and provides a possibility to participate in future earnings as an incentive. The present invention also facilitates the ability to have multiple owners of a patent, set up at the MTC level.

“In the preferred embodiment, the patent or patent application can become an NFT or can also be referred to as a Master Token (MTC). The title of the patent or application is insured, and the MTC is recorded at patent offices. Ricardian equivalence (Ricardian), which is an economic theory whereby financing spending out of current funds or future funds (and current deficits) will have equivalent effects on the overall value, is used in combination with smart contracts between the patent owner and MTC. A Patent or patent application MTC also allows for the possibility multiple existing or new patent owners. Once the patent or patent application MTC has been established, then attribute tokens can be incorporated. These attribute tokens can be many tokens or just many contracts with a master token. These attribute tokens can take the form of classic licensing, open source smart licensing, and investing. Classic licensing involves use of the patent by paying a set amount per year. Open source smart licensing involves licensing the patent to develop new technology, whereby the inventor has the rights to use the newly developed technology. Investors may also invest in the patent and get a percentage of future revenue generated by the patent. Other attribute examples include application tokens, inventor tokens, and tech area tokens. An application token is providing funding to get the application issued as a patent for future percentage or set amount return on investment. An inventor token is when the inventor gets a percentage of future income from the patent. A tech area token is a group of many MTCs together into one technology area.

“The present invention provides an automated valuation of patents to assist with transfer pricing, by utilizing NFTs. This is not limited to patents, and can cover all transfer pricing (not limited to IP) utilizing NFTs, including all kinds of royalties.”

There is additional summary information. Please visit full patent to read further.”

The claims supplied by the inventors are:

“1. A system for providing a tokenized intangible property monetization system comprising: defining and assessing revenue potential of intangible property through the use of a tokenized version of said intangible property; a blockchain and remote databases which comprise data and other information related to the valuation and risk assessment of the intangible property; a search engine which searches and retrieves from at least one blockchain or databases data and other information related to the valuation or risk assessment of the intangible property; a valuation ranking system or computational engine which utilizes objective assessment criteria to determine accuracies and inaccuracies in the information and data and generate a marketable title and valuation associated with the intangible property being assessed for risk; and a non-fungible token based system which allows for the tokenization of all intellectual property rights of stakes under analysis by the present invention to enable the free trading of intellectual property tokens.”

For additional information on this patent application, see: BERMAN, BRIAN JOSHUA; ROTTER, BRADLEY NOLAN; Spangenberg, Erich Lawson. System And Method For Using Non-Fungible Tokenization To Improve Transfer Pricing. U.S. Patent Application Number 20230177480, filed October 22, 2022 and posted June 8, 2023. Patent URL (for desktop use only): https://ppubs.uspto.gov/pubwebapp/external.html?q=(20230177480)&db=US-PGPUB&type=ids

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