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 →

We’re Measuring the Wrong Things: Inventiveness and Patents Do Not Equal Innovation

Few things infuriate me more than supposed experts who make statements along the lines of “patents are critical to innovation.”  I have avoided stating my views widely in this forum because I didn’t want to get into a contest of one upmanship with my patent lawyer peers.  However, in the last couple of weeks, several pieces of information have hit my radar screen that make this seem like the right time to go public with my views. Let my position be very clear:  we create a false dichotomy when saying “innovation is not possible without patents.”  The issue is much more complex and nuanced than this:  in a particular instance, patents may be critical to innovation, but they might also be only slightly important or–likely in the majority of situations–they might be wholly irrelevant to innovation.  (I talk more about this in this recent interview in Innovation Management Magazine.) Unfortunately, where you stand also depends on where you sit, and sitting behind a desk writing or examining patents may color your belief that patents are the cure for America’s innovation ills.  (The cynic would likely note that relying on a patent practitioner or the Commissioner of the US Patent Office 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 →

How to Improve the Performance of M&A: Determine Whether the Target Really Provides Durable Competitive Advantage

Recently, I was asked to speak to a Georgia Tech MBA class about IP Strategy–specifically about the inter-play of IP in M&A.  A significant portion of my talk addressed how poorly existing due diligence and IP metric methodologies traditionally perform to predict the financial success of M&A transactions.  There is no question that improvements are needed in this regard.  For example, in 2006, Inc.com reported that 60-70 % of acquisitions fail and more than 90 % of acquired businesses lose value. These somewhat dismal results leave no doubt that acquiring companies need better sources of information to properly vet and select acquisition targets. Having been involved in M&A transactions as a legal and business advisor over the years, I have developed unique insights on the the due diligence and IP metric processes from both sides of deals.  In these deals, the highest (and presumably most expensive) advice of investment bankers and M&A attorneys directed the deal flow.  Significantly, however, much like a real estate transaction, these advisors took their money at the close of the deal and left my client with the property.  These advisors had no incentive to ensure the house was in good shape after they walked away 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 →

IP Strategies for High Growth Companies

As an IP Business Strategist, I frequently speak to CEOs of high growth/start-up companies. I have prepared this short deck to walk them through the basics of how IP Strategy can be implemented in their organizations, and where in their organizations their intangible assets might reside. [slideshare id=1889869&doc=intangibleassetprotectionstrategy-090821080206-phpapp02] IP Strategy Basics for High Growth Companies View more presentations from The Hutter Group: IP Business Strategy. Tweet This Buzz This Delicious Digg This Reddit Stumble This

50% of Venture Capital Investment is Lost: How Your Clients Can Improve These Odds by Using the Right Patent Analytics

THE SKINNY ON THE QUALITY OF VENTURE CAPITAL-RELATED INVESTMENT DECISIONS If you are a counselor of venture capital firms or entrepreneurs who owning start-up companies that are targets of venture capitalists, you might already be familiar with the high rate of failure associated with such investments. Nonetheless, you may be surprised to find out that 50% of all money invested in venture capital is a loss. This figure, which is based upon separate research projects by a Chicago Graduate School of Business (“GSB”) professor and a former Chief Economist at the Securities and Exchange Commission, indicates that the actual return on venture capital investment is not much different from the average annualized returns on the smallest NASDAQ stocks. In particular, the return on venture capital investment from 1987 to 2001 in these smallest stocks was 62% as compared to the 59% mean return of venture capital funds. This 59% figure certainly does not reflect the investing public’s general perception that venture capital return on investment markedly outweighs what one can obtain on the stock market. And, it is this apparently erroneous assumption of perceived higher return that presumably justifies the higher risks your venture capital and entrepreneurial clients associate with Continue Reading →