Copyright (c) 2007-2008 Patent Kinetics, LLC What Every CEO Needs To Know About The Value Of Patents Extended Version 2/22/2008 Robert P. Weber Managing Director Patent Kinetics, LLC www.PatentKinetics.com An earlier, condensed version was presented at the December 4, 2007 meeting of the IEEE Boston Entrepreneurs’ Network
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Copyright (c) 2007-2008 Patent Kinetics, LLC
What Every CEO Needs To Know About The Value Of Patents
Extended Version 2/22/2008
Robert P. WeberManaging DirectorPatent Kinetics, LLCwww.PatentKinetics.com
An earlier, condensed version was presented at the December 4, 2007 meeting of the IEEE Boston Entrepreneurs’ Network
Copyright (c) 2007-2008 Patent Kinetics, LLC 2
Notices and Disclaimers Patent Kinetics, LLC is a patent and domain name broker. See www.patentkinetics.com for more information
Bob Weber, its Managing Director, is not an attorney
Nothing in this presentation or related remarks tonight constitutes, or shall be construed as, the giving of legal advice and/or the practice of the Law
Copyright (c) 2007-2008 Patent Kinetics, LLC 4
Surprise!
MOST PATENTS ARE MOST PATENTS ARE WORTHLESS!WORTHLESS!
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Survival Analysis: Most Patents Are Worthless!
Half (54%) of patentees allow their patents to expire early through failure to pay maintenance fees
Expiration reflects a judgment by the patent owner that the patent has little or no value
The Patent Paradox: Why do CEOs continue to invest resources in patent-related activities if so few patents have any real value?
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US Utility Patents Granted 1963-2005By US/Foreign Assignee
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Patents Granted
1963 1973 1983 1993 2003
US Foreign
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Per Cent US / Foreign Utility Patents Issued1963-2005
0%
20%
40%
60%
80%
100%
Per Cent U
tility Granted
1963 1973 1983 1993 2003
US Foreign
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US Utility Applications 1963-2005By US / Foreign Applicant
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Utility A
pplications
1963 1973 1983 1993 2003
US Foreign
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Per Cent US/Foreign Applications1963-2005 – USPTO Data
0%
20%
40%
60%
80%
100%
Percent Applications
1963 1973 1983 1993 2003
US Foreign
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US R&D and Patenting Kept Pace Since Late 1970s (BHall,2004)
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Per Cent of Patents Expiring By Class of Patentee / Assignee (Moore, 2005)
Unexpired Expired in Expired in Expired in ExpiredPatents 12 Years 8 Years 4 years Patents
In some circumstances, patent assertion has become a way to monetize the investments in IP
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“Super-patents” –A Collection Of Related Patents (Parchomovosky &Wagner)
Advantages include:– Eases subsequent in-house innovation– Attracts related external innovations– Avoids costly litigation– Improves bargaining position– Improves defensive positions– Enhances efforts to attract capital– Expands the freedom of research inquiry– Addresses uncertainty related to future market conditions and
competitors– Addresses uncertainty in the patent law– May lay a foundation for patent assertion
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Building Portfolios Of Related Patents Typically Leads To Greater Value
Develop inventions in-house– Develop, implement, and evolve a patent strategy– Manage innovation
Outsource innovation but retain ownership– Some firms can do it better for a price
The M/A route– Some companies have been acquired mainly for their IP
Acquire portfolios– From owners– Through brokers, auctions, etc.
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Where Individual Inventors Go WrongInventors substantially overestimate the value of their patent(s) and/or pending applications
Although there is no obligation to search, many fail to locate prior art that should be cited
– Negates the longer term value of their efforts
Not able to leverage guidance from patent counsel– Short sighted, economically constrained– Unwilling and/or unable to expand team– Make common mistakes despite guidance
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Common Mistakes
Publish results or details prior to filing
Publicly offer for sale too soon
Disclose details to investors before filing without NDA
Use resources of their employer to develop inventions
Have duty to assign to employer with no carve-outs (CA a bit different)
Incorporate claim elements suggested by individuals not named as inventors
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ConclusionsMost patents are worthless
Building portfolios of related patents typically leads to greater value