Many law firms still seek to participate in the outcome of clients’ patent litigation, but few are willing to share the cost of obtaining and maintaining invention rights, which frequently turn out to be worthless.
A new book by an innovative Colorado attorney and inventor suggests that patent lawyers need to have more skin in the prosecution game, and that filing patents just to have them is a waste of their client’s time and money.
Russ Krajec, author of Investing in Patents: Everything Startup Investors Need to Know About Patents, says that the high cost of obtaining, maintaining and defending patents is prohibitive for most young companies. But without patents they can undermine their future, the value of their enterprise, and the fate of their investors.
Recent studies indicate that 30 percent of U.S. “unicorns” (start-ups with greater than $1B in valuation) have no patents and 62 percent have fewer than 10 patents.
(David Kappos, et al. the New York Law Journal)
In the January issue of IAM magazine, available this week, you will find my Intangible Investor review of Krajec’s deft book and industry-challenging strategy, “A strong case for a new approach to patent investing,” accessible to IAM subscribers, here.
Investing in Patents, deceptively spare at just 139-pages, is relevant to all patent filers, lawyers and investors, in addition to young companies, many of which are choosing to forgo patent protection. (See excerpt from The New York Law Journal article above.)
Patents are more expensive than ever, just over $56,000 for the average one over the course of its life. Defending them has reached new highs of cost and risk. A case through IPR(s) to trial can cost several million dollars and require more than five years, with a reduced likelihood of success.
Average Cost of a Patent Over its Life – $56,000
Engineer, Inventor, Financier
Investing in Patents is available at Krajec.com or on Amazon.com, here. In addition to being a patent attorney who has worked for H-P and other companies as a practicing engineer, Krajec has more than 40 patents to his name and, earlier in his career, was a USPTO patent examiner. He also runs BlueIron, LLC, an IP finance and management company.
While the suggestion of joint or fractional patent ownership is compelling, it is not entirely new or simple. As in most agreements, the devil is in the details.
It is unclear how Krajec believes ownership of a patent should be divided and who has the right to license, enforce, sell or otherwise leverage it – and when. Perhaps, most importantly, who gets to define success?
Given the current high-risk/low return scenario for obtaining and licensing patents most high-tech patents, this lawyer’s ownership alternative may be just what is needed to realign interests and enhance performance.
Image source: aipla.org; krajec.com