Abstract: Debt-bid is a kind of simple security-bid, which is often used by growing SMEs to participate in patent auctions. In debt-bid patent auctions, the winning firm pays its bid after the realization of its industrial profits. If its industrial profits are not enough to pay its bid, it pays all its industrial profits. Then the patent holder does not get the total bidpromised by the winning firm. On the other hand, the bidding firmis protected by limited liability, thus the firms have incentives to bid aggressively. So, does debt-bid bring higher expected revenues to the patent holder than cash-bid?

Key words: debt-bid; patent auction; equilibrium strategy; expected revenue