The technology industry is at war over intellectual property. On May 7th the first【C1】_____of a three-part fight between Oracle and Google over patent and copyright claims relating to the Java programming language ended in a decision that denied outright victory to either firm. Apple, Samsung and others are【C2】__over smartphone patents. Facebook are at【C3】__with Yahoo! over internet patents. Accusations abound【C4】__innovation is taking a【C5】_____seat to lawsuits. Only the lawyers are smiling.

All of【C6】_____makes this a good time to【C7】__a new approach to trading intellectual property, says Gerard Pannekoek, the boss of IPXI, a new financial【C8】__that lets companies buy, sell and hold patent rights, just like any other【C9】__. The idea is to offer a patent or group of patents as “unitlicence rights” (ULRs), which can be bought and sold like【C10】__. A ULR【C11】__a one-time right to use a particular technology in a 12 product: a new type of airbag sensor in a car,【C13】_____. If a company wants to use the technology in 100,000 cars, it buys 100,000 ULRs at the market price. ULRs are also expected to be traded on secondary markets.

This is simpler, faster and cheaper than the lawyer-intensive process of negotiating bilateral licences for intellectual property, the high cost of which discriminates【C14】_____small companies, leaves patents unused on the shelf and【C15】__innovation. IPXI’s approach does not【C16】__for all types of intellectual property—it does not【C17】__exclusive licensing, for example—but should make it【C18】_____for companies to make money from their inventions. “It’s a good form of funding for start-ups,” suggests Mr. Pannekoek.

The exchange has【C19】_____30 members including Philips, an electronics giant, and several universities and research laboratories. On May 4th IPXI published the rulebook that【C20】_____how the exchange will work, and it expects to open for business later this year. Its novel approach is ideal for the open, non-exclusive licensing of smartphone-related patents, says Ruud Peters, chief intellectual-property officer at Philips.

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