ICO Spotlight | Loci - The Premier Platform And Asset Exchange For Intellectual Property

Over the years I’ve often heard that the U.S. patent system was broken, but I never had an interest to investigate the issues. It took an interesting new ICO -Loci - to cross my path to finally get me to take a deeper look.

The U.S. was one of the last countries to hold on to the “first-to-invent” (FTI) systems. That was until 2013, when the U.S. patent system changed from FTI to “First-Inventor-To-File” (FITF under the Leahy-Smith America Invest Act (AIA)). Under FTI, proving and defending that had authority over “prior art” of an invention was the deciding factor in being granted a patent. Under FITF, speed is now paramount. A person or entity that has a timestamp just a second after the another submission will get awarded the patent.

FITF has also made today’s U.S. patent process a very expensive endeavor as illustrated in the table below:

PATENT STAGE	APPROXIMATE COST (USD)
Prior art search – a comprehensive search of existing patented technologies	2,500
Provisional patent application	1,000 to 5,000
Non-provisional utility patent application	5,000 to 50,000
Additional patent fees	10,000 to 30,000

Complex inventions that are more technical and comprehensive in nature can easily cost hundreds of thousands of dollars. That being said, inventing is now:

1. Hurting innovation. The high cost hurts innovation as the average person won’t take the monetary risk.

2. A huge gamble. The existing patent system provides little to no transparency to the risk of time. In a process that averages 6-16 months, an entity might discover that they are racing for nothing when they discover someone else filed first. At that point, whatever expenses were paid up to that point would be lost.

3. A deep-pockets-only race. FIFT favors entities with capital that can easily afford to pay for speed in order to get more patents submitted first.

Even worse, liability and risk of litigation lead to spiraling legal costs where median damage reward is $9.2M USD. In 2015, there were over 5,600 intellectual property (IP) litigation cases in the U.S. alone and the cost of defending a patent has led to the spawn of non-practicing entities (NPEs) (or more commonly known as “patent-trolls”), whose main form of revenue is derived from settling patent infringement cases that inventors are not able to afford to fight in court.

With the application of blockchain, Loci wants to democratize innovation and make the patent process more transparent, affordable, immutable, and efficient by becoming the gold standard platform that empowers inventors and promotes the effective match-making of ideas, capital, and talent.

THE LOCI SOLUTION

Loci’s founder, John Wise, experience the frustration of navigating the patent process first-hand and saw an opportunity to fix and stabilize a broken and unfair system. In 2008, John and Dennis Van Dusen developed the idea of “Fuzzy Concept Mapping” – the core of Loci’s platform, and after a decade of work and money, the U.S. Patent and Trademark Office (USPTO) granted U S9461876 (System and Method for Fuzzy Concept Mapping, Voting Ontology Crowd Sourcing, and Technology Prediction). They then decided to name the platform InnVenn.

InnVenn is a patent search tool, and thanks to blockhain, an integrated public disclosure platform. The “Venn” part of the name comes from using Venn diagrams to display search results from active user’s disclosures as well as results gathered from published sources.

The “whitespace” between identified patents and claims indicates where there is room for further innovation. InnVenn also has the ability to run up to four (4) searches simultaneously.

On the public disclosure side, a disclosure starts the 12-month grace period for filing a patent, but with the FITF rule, only getting that application to a patent office can establish a priority date. InnVenn will improve the communication between client and attorney which will result in getting that application to the patent office sooner.

The sum, InnVenn platform greatly improves the efficiency/speed by reducing the drudgery of deeply analyzing the thousands of results that inventors and patent attorneys often sift through before an invention’s novelty can be determined.

Loci Workflow

The following steps are what an inventor will typically take using Loci’s InnVenn platform:

1. Prove novelty and meet the other statutory requirements necessary to being a formal patent application with the USPTO.

2. InnVenn users then have the option to publicly disclose the invention or mark it non-searchable.

3. Package information about the disclosure and verification events to ready it for the InnVenn platform.

Once recorded (using blockchain) on InnVenn, the user will have the ability to keep track of his/her ideas with the disclosure by tracking and differentiating the novelty of his or her invention. This can be accomplished by building searches that would expose similar concepts.

Loci Ecosystem

IP, native to InnVenn, or otherwise will be a tradable asset. For bids placed on inventions that are staked within the platform, Loci will analyze the value of the IP and reach out to the owner with the valuation, at or below, the maximum bid. If accepted, Loci will purchase the invention on behalf of the bidder and transfer ownership to the successful bidder. The transaction between the bidders and buyers is anonymous. For existing patents, Loci will reach out to the owner or agent on behalf of the bidder and connect the two parties. In that case, Loci does not act as a patent agent and will not negotiate and broker the transaction.

Besides inventors, the two other main actors that Loci envisions as an integral part of their ecosystem are consortiums and investment pools as described below:

Consortiums: Loci’s algorithms will assist with grouping ideas or inventions that have a high probability to work together or complement each other. Loci uses the example of a medical scanner and smartphone. Both were filed years apart but Loci’s algorithms could realize that there is an opportunity to create a smartphone that has a medical scanner built into it for the medical market.

Investment Pools: An investment fund entity to provide investing or licensing funds to consortiums. Investment pools could allow various types of licensing deals. This will allow inventors early revenue options and even a chance to sell their idea outright.

LOCI TOKEN SALE DETAILS

TOKEN: LOCI

TOTAL CIRCULATION: 100,000,000 (pre-mined)

TOKEN TYPE: ERC 20

ACCEPTED CURRENCY: ETH

FUND USE BREAKDOWN

AREA	PERCENT
Product Development	40%
Marketing & Operations	35%
Legal Affairs & Advocacy	10%
Intellectual Property Services	10%
Security & Audit	5%

ROADMAP

DATE	MILESTONE
DEC 2017	Token Sale
Q1 2018	Strategic partnerships with IP firms
Q2 2018	Research grants to inventor communities
Q3 2018	International Expansion
Q4 2018	Decentralization alliance network

FINAL THOUGHTS

There is a lot to like about the Loci project, however I’m left with several questions:

• On average, how much time, does an inventor save by using Loci’s InnVenn platform? I know it’s difficult to quantify because every patent is, by nature, unique. One patent might need additional technical drawings while another might require extra prior art research. Yet, I think Loci can illustrate how much time can be saved using InnVenn vice the a normal agent search by comparing searches side by side.

• How much money does an inventor save? The Loci monthly subscription cost is $249 a month (cancel anytime), and without Loci the cost is $1000-2500 per agent search. Therefore, if an inventor can finish their prior art search phase within a month, they can conceivably save approximately $750-2250. However, Loci doesn’t save an inventor money once an inventor submits their formal USPTO application. The subsequent stages are the costliest. I’ll concede that the first phase is a race and arguably the most critical, but the inventor will still have to shell out a lot of money from start to finish. It’s possible that I don’t understand the potential savings.

• Will Loci have a subscription level that is for non-inventors? I can’t see a non-inventor paying a $249 a month subscription unless their main profession is to search for patent related investments. To encourage ecosystem use, Loci might need to consider a free level, or eliminate the subscription entirely. If Loci needs search revenue perhaps they will consider allowing users to buy searches on the marketplace as an auction. Buyers can then use them or sell them on the marketplace. The marketplace will dictate the free market price. In essence, searches can be made into a tradable asset using blockchain.

• What is the cost to use Loci’s consortium algorithm? The whitepaper was not entirely clear if it was a service that users had the ability to use or if it was something that Loci uses themselves. Hopefully it's the former.

• If Loci’s algorithm builds a consortium of existing patents outside of InnVenn, how does Loci plan to bring them into the ecosystem and monetize them?

• How effective is Loci’s algorithm at building consortiums? By far, Loci’s algorithm could be the largest source of revenue. Think about it: there are millions of patents that have been filed globally. How many of those might be the solution to one of the many problems in the world? Humans don’t have the capacity to know the entire global patent collection, but a It’s impossible for a human to know the entire patent library, but a computer might be able to “see” links that would be impossible for humans to ever do. For example, cancer’s cure might be hidden in an entirely different sector than biology and medicine. How much is that link worth? Trillions?

I can’t imagine that Loci’s algorithm is at the level of sophistication to be able to make that type of link – yet. If it is, Loci should drop everything else and work on improving their algorithm to be able to link ideas - not just one or two links, but hundreds – a level that no human can possibly imagine. The majority of the links might be worthless, but imagine the ones that are at a breakthrough level. Those level of discoveries would be worth billions. Even if Loci’s algorithm is less sophisticated at this point. It’s an area that I think has a lot of potential on its own.

I hope Loci considers a less expensive option for non-inventors looking to run searches and use their algorithm to discover links that might solve today’s problems. Loci should also consider running monthly contests for the best consortium ideas to increase InnVenn use.

The bottom line is that using InnVenn should be as open as Loci can afford to make it, because I’m the type of person that might tinker around to see if something sticks, but I won’t do it if it will cost me an arm and a leg.

To conclude, it’s not difficult to see the potential value in what Loci is creating. Loci’s vision of reducing research time and creating a marketplace for IP where market actors can transact and communicate with each other in a transparent, efficient, and immutable way is long overdue.

REFERENCE LINKS

Loci Website
ICO Details
Whitepaper

These posts have greater value when you comment! Please share your thoughts with the Steemit community.

Traversing the Cryptosphere,
Kryptonaut