Are Patents Losing Their Value?
Recently an article by the New York Times (membership required) called into question the value of patents for public companies. Over the past few months, several significant initiatives have gained momentum in the commercial, political, and judicial arena. Some of these reforms are no-brainers and are long overdue. Wikipatents and the Peer to Patent project are exciting new concepts that give us hope for increased efficiency from our patenting system. Unfortunately, many proposed changes are not straightforward and may have unequal and unintended consequences for early stage technology companies.
One initiative worth tracking is the post-grant opposition process that is incorporated in the Patent Reform Act of 2007. A good summary is available here. In a nutshell the post-grant opposition process gives companies the right to initiate a review of a granted patent without incurring the costs of a legal proceeding. Many believe that such a provision, inappropriately implemented, seriously weakens the presumed validity of issued patents. This translates into more risk for technology companies that rely upon patents and ultimately entrepreneurs will bear this risk, especially when seeking external capital to fuel their ideas.
Fortunately, this issue has been brought to the attention of our federal legislators and organizations like the NVCA are educating our lawmakers. If patents are important to your business, keep a tab on the Patent Reform Act, hire a good patent attorney, and make sure you get a thorough debriefing once all the dust has settled.
Full Disclosure: I am a patent attorney.
There are many "values" of a patent, but the bottom line is if it doesn't look as though it currently or will change the balance sheet in one way or another, the value may not there. A couple of things to keep in mind. First, outlay a solid, well-prepared strategy for the development of all your intellectual property, not just patents. The strategy should be derived from your business plan and economic situation. Second, do not patent just for the sake of patenting. All patents should fit within the strategy, with only minor exceptions. Third, just because the patent may not have value to your company, it may be valuable in the hands of another company. For patents that are not protecting current or future goods or services of your company, e.g. "defensive patents", it may be an oppurtune time to look at licensing possibilities.
There are a lot of good law firms, both GP and boutique, that will work with startups in a cost-efficient manner.