Sunday’s New York Times Business Section included an article about an upcoming book by Professors James Bessen and Michael J. Meurer of the Boston University School of Law. Both the article and the book (which is expected to be published next year) argue that the value of a patent rarely exceeds the cost of obtaining it, that the cost of patent litigation does not justify the return on investment, and that courts too often permit patents – especially software patents – to have an overbroad or vague scope.
Only a few chapters of the book are currently available for public review, but the article and the authors seem to focus on individual patents rather than patent families or patent portfolios.
Although it may be true that a single patent – taken alone – often would not justify its cost, the overall value of a patent portfolio is often more than simply the sum of individual parts. A set of patents in a field of technical art can serve as an effective (1) licensing opportunity, (2) deterrent against being named a defendant in patent litigation, and (3) enforcement tool against infringers. All of these provide value that isn’t necessarily captured if you look at the exact return on a single patent.
Just as one or two “home run” stocks in an investment portfolio can raise the overall return of the portfolio, it’s not necessary for every patent to be a “home run” patent. In fact, the true worth of any invention is often unknown until the market has a chance to learn about and decide how to use the invention. As with any investment, diversification can raise the value of a patent portfolio. A company who implements an ongoing, well-managed invention review and patent filing strategy will certainly see value for its efforts.