You never know which ideas are the most
important to protect.
The United States Patent and Trade- mark Office has now granted more than 9 million patents. The main
idea behind pursuing a patent is to provide the legal basis to keep competitors
from using your technology, but a recent
study found that only about 2 percent of
patents are ever used in litigation.
You couldn’t fault a program manager,
then, for questioning why his company strives for quality patents or even
wondering why the company is incurring
the significant costs associated with
patenting the company’s technology at
all. The odds are, the patents will never
be litigated, and if you do litigate there is
also a fair chance your patent could be
held invalid or not infringed upon.
I spend a fair amount of time building patent portfolios, conducting due
diligence patent studies, and keeping
my clients clear of charges of patent
infringement. Based on that work, I have
some good reasons for believing that
patents are still a good thing.
For some technology companies, their
intellectual property is often their most
important assets. Banks and venture
capitalists will want to inspect this IP
before investing and a possible acquirer
will surely be put off if there is no protection for the technology being purchased.
I’ve seen deals fall through because,
Second, a given patent may not be
litigated against a competitor but it still
might be reconnoitered by the competi-
tor. I have been tasked many times to
study a given patent (or patent portfolio)
owned by a client’s competitor.
I once had a client who wanted to develop a relatively simple kitchen product.
The market was basically owned by one
company with—count ‘em— 36 patents.
Designing around one patent can be
relatively easy. Designing around 36
patents is close to impossible. Two years
later, the client concluded that designing
around all 36 patents made for a product
that didn’t work very well and the project
Some patents, then, can cause competitors to shelve attempts at competing
without any need for litigation. Those
patents did their job.
I also have some clients who never
manufacture anything. As technologists,
their only revenue stream is licensing
their patent rights.
Big corporations collectively generate billions in patent licensing revenue,
sometimes licensing out patents covering
technologies outside their core business
sectors. Universities will often hold patents of ideas developed on campus, then
license the patent to a startup—as often
as not headed up by the professor or
graduate student who hit upon the idea in
the first place.
Even claims of infringement are often
resolved through licensing rather than
litigation. There is no hard data on the
number of patent license agreements
in existence but it is probably safe to
say more patents are licensed than are
With all the bad press patents are getting lately, one might be tempted to rely
on trade secrets. But trade secrets don’t
usually work with products. A competitor who reverse engineers your product,
for example, rarely runs afoul of trade
secret laws. Think you can encrypt or
otherwise hide your secret sauce in your
product? Think again: if it is that good,
someone will figure out a way to expose
it and then rip it off.
At the end of the day, the hard truth is
that at the outset you never know which
of your patents will be valuable enough
Indeed, the aforementioned study
concluded that (except for software)
patents which were repeatedly asserted
in infringement litigation lawsuits win
more often than they lose. So, if you have
50 patents, the chances are that only
one will ever be litigated. But it might be
litigated a lot. As for the other 49, maybe
they will do their job in other ways. ME
KIRK TESKA, the author of Patent Project Management and Patent Savvy for Managers, is an adjunct
law professor at Suffolk University Law School
and is the managing partner of Iandiorio Teska &
Coleman, LLP, an intellectual property law firm in
COMPETITOR WHO REVERSE ENGINEERS YOUR PRODUCT, FOR
TECH BUZZ // PATENT WATCH BY KIRK TESKA