Investing in Patents

ScreenShot175I’m sitting now with my copy of Russ Krajec‘s new book titled “Investing in Patents.” (released on April 26 on Amazon).  I have known Russ for more than a decade – throughout that time he has been a creative force in rethinking the business of patent law.

The book is designed to be read by business leaders, entrepreneurs, and investors and is the type of book that patent attorneys should be recommending to their clients.  Of course, is will force those patent attorneys to step-up and explain how the patents being sought will serve as good business assets rather than worthless cost sinks.

Congratulations Russ on this great addition.

17 thoughts on “Investing in Patents

  1. 5

    Any hints as to the broad principles? Perhaps someone would like to do a mini-book review?

    To contrast with the unobvious/revolutionary ideas of the book (of which I am not aware at all), I’ll ramble on here about some basic ideas everyone already knows.

    Patent rights are a very strange kind of property right. A startup often will have designers, engineers, or scientists and generally provide products or services, but whether they have inventors and inventions is not something that is somehow automatically alerted to them. As such the property rights the startup has or does not have at any point in time of its operation is, absent some investigation, unknown. With limited funds, pursuing what potentially are rights can turn out to be a waste of money when it turns out that there are no rights, i.e. no invention was invented re. some particular product or service. Finding out what patent rights a startup has, and understanding the risks and returns of finding, securing, and exploiting those patent rights requires investment.

    All rights to property have some value, which can be rightfully exploited, licensed, or assigned away for profit. Securing, maintaining, and enforcing patent rights to inventions also has associated private and public fees. The potential value of the property right in the marketplace should be assessed against these fees. Since it is an exclusionary right the products made by the start up are somewhat irrelevant, whereas the market of products of the competitors are. Patents also have some value (insofar as the USPTO is respected as a reliable institution fulfilling its mandate) as a third party assessment of the inventiveness of the startup, i.e. a trusted account of the start-up originating innovations which are new, unobvious, and useful – which can deservedly attract investment.

    Now someone can contrast the above clumsy and obvious ramble with the new ideas of the book.

    1. 5.1


      I largely agree with you, except for the comment about start-up’s products.

      I think you dismiss this possibility out of hand (and much too quickly).

      While the patent right is indeed a negative right, rather than a positive right, products may or may not reflect and interact with that right – even for start-ups. It is a bit more nuanced – even as the rest of your post smartly indicates a high degree of nuance.

      1. 5.1.1

        Conceded. Let me rephrase: narrowly, whether or not the invention is actually present in the product of the start up is not as important as broadly, having patent rights to an invention in the same technology space as entities who produce products which directly compete with those of the start up.

  2. 4

    As a former in house attorney, I’d like to comment on this statement:

    “Of course, [th]is will force those patent attorneys to step-up and explain how the patents being sought will serve as good business assets rather than worthless cost sinks.”

    We had a very difficult time determining what would and would not be “worthless” or a “good business asset”. It’s hard to know at times what is a good idea that will be very good for the company and what’s not. When we selected patents to be drafted by outside counsel, we had diverse reasons for selecting these, and many times consideration of being “worthless” or a “good business asset” did not come into play.

    Note also that we selected invention disclosures for the outside counsel. They had no part to play in that process.

    1. 4.1

      I agree with your comment PB. Value is difficult to see in real-time and in the absence of hindsight. Narrow claims can become very valuable, and broad claims can be worthless.

    2. 4.2

      PatentBob, we had patent committee composed of executive from engineering and marketing. There first criteria for approving any disclosure was whether management was spending money on it to go into products. The second criteria was whether the feature had legs — that’s where marketing came in.

    3. 4.4

      Yes, I’ll take my snark typo free. Also, who are these attorneys pushing the “file anything” agenda? Edison knows how many cases are for meeting budgets and other bean counter metrics. Perhaps this is partly driven by ip attorneys, but we’re not the only ones with some ‘splainin to do. Regardless, this book definitely sets startups on the right path by exploring different patent strategies. Thanks for sharing and apologies from the peanut gallery.

  3. 3

    Russ is a great attorney. Had the pleasure of talking with him a couple times about prosecution strategy. His new business model is going to make waves, and rightly so. It doesn’t work for everyone, but if you have the right mix of clients it’s an awesome option for some.

  4. 2

    According to Russ – “Good patents capture the business value of a company, and this comes from what the customer deems is important, not what the “cool” invention is.” I generally agree, and by focusing on the inputs and outputs of the product from the customer’s perspective – i.e., the user experience and its utility, it may be possible to reduce subject matter eligibility issues.

  5. 1

    Thanks for the recommendation Dennis. Quick question – did the timing of publication of this book enable Russ to include considerations of increased uncertainty in valuations following Alice and other subject matter decisions?

    1. 1.1

      Grab the book and give it a read. It turns the business as usual patent game on its head. The attorney is incentivized to prosecute only the best of ideas, rather than every joke of an idea that walks in the door.

Comments are closed.