Ocean Tomo is birthing the index as a means to better capture the value of companies' intellectual property. Created by Ocean Tomo's managing director, Keith Cardoza, the index is intended to comprise 300 companies that own the most valuable patent portfolio relative to their book value. Thus, the index fund highlights IP value.

Ocean Tomo: "The idea behind the index is that as the U.S. and other major industrialized economies have transitioned to knowledge-based economies, intangibles have replace tangible assets as the source of companies' competitive advantage - yet the S&P 500's balance sheet only reflects the tangible assets that account for less than 20 percent of market capitalization. Because the index enables investment professional to benefit from inefficiencies in the intellectual property asset class, it will quickly attract investment interest."

Ocean Tomo, a merchant banking firm, is rooted in IP, particularly patents. Its first patent auction, in April at the Ritz Carlton in San Francisco, was at best a mixed success, selling just a third of the lots offered, for total sales tipped over $3 million.

Last month, Ocean Tomo started a patent arbitration service, called Alternative Dispute Resolution (ADR). ADR is intended as alternative to the multi-million dollar patent litigation process. Provision for appeal in included in ADR.

Ocean Tomo's President & CEO James E. Malackowski said the aim of the ADR service is to make IP a more liquid asset class. That is really what Ocean Tomo is about in toto, though it offers a range of patent-related services, including counseling on mergers & acquisitions, valuation, and technical research.

In August, 2005, Ocean Tomo initiated an investment fund, the Ocean Tomo Capital Fund, to provide venture capital and mezzanine debt to companies assessed as having undervalued IP. Ross Perot kicked in as the principal investor in the fund, which has attracted $200 million.

Ocean Tomo is pushing the envelope in patent monetization. Awareness of patent profit potential has grown in recent years, thanks, ironically, to the wailing of infringers for patent reform, and Luddites against software patents. To the degree that awareness translates into investment will be answered by the activity in the new 300 Patent Index, and future auctions.