Are patents valuable of not? IBM tops 2010 list.

Image representing IBM as depicted in CrunchBase

Image via CrunchBase

A question often asked by start-up entrepreneurs, and also others as they come up on an opportunity to patent “something”, is whether it is worthwhile.

By “worthwhile” we really mean will it generate extra wealth compared to the alternatives.

It’s often felt by those who lean towards not patenting that a patent will make your “secrets” public. So it’s seen to be better to proceed in “secrecy” and rely on that “trade secret” approach to make money and then to realize an exit of some kind.

I might say that the art of writing a patent includes making the understanding of its meaning as tortuous as possible while still claiming the most general coverage and utility possible. Meaning: anyone capable of understand it would have figured out what you are up to with or without the patent filing becoming public.

The patent process is not for everyone, and it is an expensive process – budget $250,000 from beginning to end for global coverage for one patent – and takes attention over many years – 4 or 5 years. In fact if you start without realising all that you are creating a significant liability for your business. Once started patents have to be fed and watered, and if left to die then all the sunk cost is lost. So until they are fully granted in all your target jurisdictions then they are actually a liability.

The answer to the $64 question is that it takes analysis which is specific to your business and its environment, goals, cashflow and your personal ambitions/goals.

However, overall, the big guys tell the story – IBM was awarded a record 5,896 U.S. patents in 2010, that’s quadruple Hewlett-Packard’s and exceeding the combined awards of Microsoft, Hewlett-Packard, Oracle, EMC, and Google!

They ain’t doing that just for fun or egos!!!

And I think that Ric Richardson who is winning in his $388 million patent infringement battle against Microsoft would think that patents are worthwhile (mind you he filed his patent 18 years ago so it’s a long road!). As would the CSIRO who as of May 2010 had earned over $250 million in royalties and settlements arising from the use of a patent which is part of the 802.11 standards “with as much as a billion dollars expected after further lawsuits against other parties”.

For really practical patent and IP advice I recommend following Duncan Blucknel and the IP Think Tank on twitter.

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About Walter Adamson

Call me (AU) +61 403 346 632 Follow me @adamson My social web: http://xeeme.com/walter Linked: http://linkedin.com/in/adamson
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