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Patently Oblivious

2007 July 16
by John Wallbillich

The first thing any serious business does it file a patent on its inventions, right?

Maybe not so fast.

The New York Times has an interesting take on the real value of patents.

A profile of research directed by James Bessen (on the faculty of Boston University law school) shows something that many GCs have seen over the years:

The two researchers have analyzed data from 1976 to 1999, the most recent year with complete data. They found that starting in the late 1990s, publicly traded companies saw patent litigation costs outstrip patent profits. Specifically, they estimate that about $8.4 billion in global profits came directly from patents held by publicly traded United States companies in 1997, rising to about $9.3 billion in 1999, with two-thirds of the profits going to chemical and pharmaceutical companies. Domestic litigation costs alone, meanwhile, soared to $16 billion in 1999 from $8 billion in 1997.

This certainly explains why many law firms have moved to expand their IP practices: you bill to file, prosecute, get the patent, watch for infringers, send out cease & desists, and file again (only this time it’s a lawsuit). Then you wade into discovery unlike anything you’ve ever seen, and likely settle at some point.

Meanwhile, has the client done anything to actually monetize the patent?

For some inventions, licensing may be a better option.

It may be time to add a ROIP metric to the pre-filing patent review process: articulating a realistic calculation of the likely return on intellectual property.

Until then we know who always wins.

Who wins every time?

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