Do Startups Need Patents? Rigorous Study Presents Real Data on Startup Company Patenting Behavior

As an IP Strategy advisor, I am often asked by the leadership of startup companies what the return on investment is from patenting.  While I can confidently provide recommendations as an expert, my opinions are anecdotal based on my almost 20 years experience as an IP professional.  Certainly, I have advised a number of startup companies over the years for which comprehensive patent coverage was critical to financial and market success.  On the other hand, I have advised a much larger number of startup companies over the years where patenting made little difference to their fortunes. The subjective nature of IP advice holds for other patent professionals.  Our respective years of experience results in tacit knowledge that becomes “expertise.”   This expertise guides clients to us for advice and allows them to trust in our counsel.   Missing from my knowledge base–as well as that of my IP attorney peers–have been data-driven assessments of whether, when and to what extent patents really matter to start up success. Similarly, startup companies are typically inundated with the advice of peers, mentors and investors about whether patenting is recommended in a particular business situation.  Such non-specialist expertise is even more fraught with subjectivity Continue Reading →

Lean Startup Methodology: How Patenting Decisions Fit into this New Business Framework

  One of the first questions start up entrepreneurs usually ask sounds something like this:  “Is it worth the effort and expense to get a patent on this business idea?”  In countless conversations with clients in my years as a patent attorney, I could usually articulate multiple reasons why the person seeking to to start a new business venture unequivocally needed to file a patent application as soon as possible.  Moreover, I could recite a litany of ills that could follow from failing to follow my advice.   Following this conversation, I could typically expect a fat check from the client, whereupon I would dutifully draft strong patent on the subject invention.  It was a nice living. These days, I work as a startup technology company CEO and look at patents much differently than I did in the past:  as a consumer of patent services myself, I now examine patenting issues from the vantage point of an entrepreneur, not as a lawyer whose business model centers on patents.  My viewpoint has been further honed in the last year as I have become a practitioner of the Lean Startup Methodology, a startup business framework that, in short, states that if an Continue Reading →

Patents–Who Needs Them? Not Most Startup Entrepreneurs.

A recent article in TechCrunch indicates that entrepreneurs are less likely to file patents than in the past.   Nonetheless, there remain countless patent lawyers and agents who will argue convincingly that an entrepreneur must obtain a patent in order to succeed and who will take their $5-15K to file a darned good patent application that won’t provide them a bit of business value in the long run. Even worse, the resources expended in the patent process robs the entrepreneur of needed cash that will allow them to gain customers, and of their most valuable asset: time.  But when the only tool you have is a hammer, everything looks like a nail–which is why those still in the business of writing patent applications will continue to make their case to entrepreneurs (and investors) who lack the domain expertise to know better. Now that I no longer make money obtaining patents–instead, I am the CEO of a startup battery charging company–I understand that patents are generally a poor way for a startup company to expend scarce resources.  I rarely, if ever, recommend that my startup colleagues file for patent protection for any tech/web-based ventures. Further, when asked what they should do Continue Reading →

A Startup Company’s Experiences with Open Innovation-Part 2: Adventures of a Chief Frog Kisser

After many years of counseling small companies on how to license their technology to large companies as an IP attorney, the tables are now turned.  My new role is as CEO of a startup company with breakthrough battery charging technology available for licensing.  I am finding that many of the things I knew to be true as an expert, really aren’t true at all now that I am an entrepreneur.  This is the second post in what I hope will be an ongoing narrative that tells of my journey through the world of Open Innovation as we attempt to find one or more licensing partners for our company’s breakthrough battery fast charging technology.  (The first post is here.) One piece of advice that I knew even before embarking on this entrepreneurial journey that was absolutely not true was”build a better mousetrap and the world will beat a path to your door.”  As I have written about before, ideas themselves mean little when 90 % or more of the “better mousetraps” covered by patents are worthless.  So, I knew that our technology destined to become “shelfware” unless we did something to get our name out there.  An old friend with sales experience Continue Reading →

New Study Reinforces Value of Patents in Venture Capital Investment

Regular readers of the IP Asset Maximizer Blog will know that I am a strong advocate of the use of IP analytics by venture capital investors, as well as others.  Clearly, VC’s need better ways to gauge the appropriateness of an investment when more than 50% of venture investment is a loss. My point of view is based on personal experience with various clients, as well as external review of a few investments that I thought signaled that a review of the IP landscape should have been conducted prior to completing the deal.  So, I was glad to see my opinions backed up by real data.  Specifically, my friends at IP Vision, a patent landscaping and data company originally out of MIT, conducted an extensive study of 9,000 venture backed firms.  The study was done with investors, corporate executives and members of the faculty at MIT Sloan School of Management. Joff Wild discusses provides an overview of the results on his IAM Magazine blog.  (The original article is behind a pay wall at IAM Magazine, but I will post a link to it when it available for review in the future.)  What I find interesting, is that the baseline for Continue Reading →

Guest Blogger: How Patent Vulnerability Impacts Valuation by David Wanetick of IncreMental Advantage

(This week, David Wanetick, Managing Director of IncreMental Advantage provides readers if the IP Asset Maximizer Blog with an excellent overview of the various factors that he believes affect patent valuation.  Please let me know if you would like to be a Guest Blogger.) How Patent Vulnerability Impacts Valuation by David Wanetick of IncreMental Advantage As I often tell business leaders who attend my course on Valuing Early-Stage Technologies, valuing patents isn’t rocket science. It is much more difficult. Or to paraphrase Winston Churchill, valuing patents is a riddle, wrapped in a mystery, inside an enigma. Measuring even a well-delineated permanent entity is much more difficult than may be imagined. As Neil deGrasse Tyson (a renowned astrophysicist) and Benoit Mandelbrot (the father of fractal geometry) have discussed, no one really knows what the circumference of the coastline of the United Kingdom is. The tides will cause varying degrees of erosion on the coastline depending on the hour of measurement while the cumulative affect of choosing which rock formations to measure around will have a dramatic impact on the final assessment of circumference. Patent valuation is infinitely more difficult to determine than the measurements of a given land mass due to Continue Reading →

The NY Times is Wrong: Patent Auctions Do Not Provide Indendent Inventors with “Protection”

Patent auctions will do little to help independent inventors sell their patents Those seeking ways to generate revenue from their patentable ideas will find the recent NY Times article entitled “Patent Auctions Provide Protections for Inventors,” written by Steve Lohr, to be an interesting read.  However, as someone who works with entrepreneurs and corporations wishing to monetize their patent rights, I find it necessary to comment on the assertion that patent auctions can operate to “provide protections” for independent inventors, as well as the underlying premise that these it is generally possible for non-corporate inventors to generate value from their patent rights irrespective of the underlying subject matter of the patents.*  As an initial matter, the NY Times article states that “[independent inventors] can often find themselves in court, battling big corporations, spending piles of money on lawyers and leaving it up to judges and juries to determine the value of their hard-won patents.”  This makes me wonder if the fact-checkers took a break when this article was presented for publication.  The story of the lone “David” inventor battling in court against the evil “Goliath” corporation that steals a patented idea not only does not occur “often,” relative to the number of patents issued each year, it almost never occurs–a Continue Reading →

An IP Strategist’s Economic Forecast for 2010: An Outsider’s View and How One Can Outperform the “Experts”

In remembrance of the 1 year anniversary of the Financial Meltdown, Forbes.com has included me in a list of bloggers asked to provide an economic forecast for 2010 and also to provide some insights as to what economic markers I use in my work.  This is an interesting assignment for me:  few who know me would consider me to be an economist and, indeed, such training was wholly absent from my many years of college, graduate and law school.  This might actually be a good thing, however, because, as discussed in this recent Robert Lezner StreetTalk post, none of the so-called “experts”–even those at the highest levels of power and prestige (except perhaps Dr. Nouriel Roubini)–predicted the financial instability that would result from Wall Street’s increasing reliance on innovative, high yield financial instruments.  Notwithstanding the vast reliance put on financial expertise, based on the results of the last couple of years, it now seems like financial predictions are akin to what William Goldman said about entertainment experts who are paid to forecast whether a movie will be a blockbuster:  “Nobody knows anything.”  Since none of the highly compensated experts successfully predicted the performance of the financial markets in recent years, certainly my lack of expertise on the subject should not bar Continue Reading →

IP Quality Must be a Key Feature in Any Financial Product Based on IP Assets

Neil Wilkof of the great IP Finance blog brought up a couple of interesting issues in his latest blog post entitled Securitization of IP: Urban Legend, or Playing Soon in a Theatre Near You? Specifically, he wonders if the desire for innovative (and not discredited) financial products today will result in the emergence of IP securitization as a model for raising capital and, if so, if the there will be a place for IP professionals in the process of valuing such IP.  I recommend Neil’s post to anyone who is interested in how IP assets might be leveraged to create opportunities outside of the usual protection of the IP owner’s products and technology. Moreover, I agree with Neil’s view that if IP is going to be a recognized as a means to raise capital, improvements have to be made in the way finance and IP professionals interact. Put simply, if IP forms the basis upon which companies raise money, the quality of the IP must be well understood so as to allow development of a reality-based risk profile for the transaction.  This cannot be accomplished without putting someone who understands IP in the center of the process. To use a simple Continue Reading →

Start-up Entrepreneurs & CEO’s: If Your Goal is Investment or Acquisition, You are Probably Patenting the Wrong Things

Do you treat your patents as a fence or a tollbooth? If you wish for your start-up technology company to obtain investment from or acquisition by a bigger player, you had better understand the difference. Most start-up technology company entrepreneurs and CEO’s understand that patents can be key to establishing the value of a new business idea. Typically, entrepreneurs and CEO’s such as yourself will engage patent attorneys to build an IP portfolio that protects the start-up’s technology and products to the fullest extent possible. The motivation for this effort and expense is, of course, to to protect your start-up’s idea from use by others. As management of a start-up you may be seeking to build an ongoing business around the patented technology, but often the goal of building a solid patent portfolio is to make your business an attractive target for investment or acquisition by a larger company. I believe that such an inwardly focused patenting strategy is a misguided approach for companies that wish to obtain investment from or be acquired by larger companies. Why do I think this? Let me use a simple analogy. Tweet This Buzz This Delicious Digg This Reddit Stumble This