November 27, 2015
MIT Venture Capital & Innovation Conference Blog
Authored by Elliot C. Cook and Darren M. Jiron
Savvy investors and technologists understand the power of patents. They appreciate the extraordinary value that blocking a competitor from the market can yield, and they also understand the link between company value and sound patent protection.
Fundamentally, patents provide a right to exclude. Their exclusionary boundaries are defined by their claims, which must be precisely worded to capture the essential features of an invention while avoiding unnecessary verbiage and other perils. Strategically minded companies understand that their patents must be carefully developed and placed at critical access points to their technology in order to impact competitors. Patents directed to technological features that a competitor doesn’t need in order to compete may provide little or no value to the company. On the other hand, when patents are aligned with a company’s business strategy, the company can realize super-competitive power. By excluding others from practicing its technology, the company can more safely build a customer base, obtain financing, develop a brand name, establish market power, and grow revenue. Such power can set the company up for profitable operation in the marketplace or a lucrative exit.
Savvy investors and technologists also understand that not all patents are created equal. While some can offer extraordinary opportunity for their owners, others have little or no value. And, there are many ways to render a patent valueless. For example, failing to establish a connection between a company’s business strategy and its patent strategy can result in patents far afield from what matters to the company’s competitors. Patent value can also be impacted by missteps in the drafting and application processes. Patent “lemons” of this type represent costs without benefits.
Growing technology companies cannot afford to ignore patents and their potential for creating real company value. At the same time, however, pursuing patents without razor-sharp strategy and execution can result in patents that fail to impact competitors, and thus offer little or no value.
Originally printed in MIT Venture Capital & Innovation Conference Blog. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
June 10-12, 2024
San Francisco
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
Workshop
Life Sciences Workshop: Updates and Key Trends in Pharmaceutical and Biotechnology IP Law
May 2, 2024
Cambridge
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.