Succeed in business, and others will copy you. Patent protection, therefore, is vital to any company dealing in IP.
Steve Steger knows how to sell patents.
The proof: he’s fresh from selling bankrupted Canadian telecommunications company Nortel’s patent portfolio for US$4.5 billion.
In comparison, Nortel’s operating businesses sold for a total of just US$3.2 billion.
While this example is at the high end of the scale, there’s an important message for Kiwi businesses and innovators here: patents can make you money.
Steger is a co-founder and managing partner of the Global IP Law Group, based in Chicago.
Global IP helps their clients monetise their patents, Steger says.
“That basically means turn patents into money, through either selling them or licensing them to other companies."
Global IP does litigation, too – but its primary business is selling patents.
Steger was in New Zealand at the NZ IP Commercialisation Roundtable this week giving presentations to both the public and private sector about how to generate cash from new technology and innovation, outside of using it in products and services. In other words, how legal protection, in the form of patents, can be used to make money out of new developments.
Steger says there are four categories of intellectual property: patents, trade secrets, copyrights and trademarks.
“It’s important to have, as you develop your technology, all of those things in mind of how to protect it.”
Patents, he says, are the most critical, because they provide the strongest protection, but they are the hardest and most expensive to get.
“They give you the strongest protection because you can prevent everybody from doing what you’ve invented for a period of time, where copyrights and trade secrets require actual copying or actual access to confidential information.”
The biggest risk, if you end up being successful, and you don’t have a patent, is that people will copy you.
“You invest in developing technology and developing some way to differentiate yourself in the marketplace so you can be successful,” Steger says.
“But then once you’re successful, if you don’t have the legal protection, everybody’s going to copy you and you won’t realise your return on that investment you’ve made.”
That’s the traditional reason why people have gone out and got patents. But Steger points out that, in the last four or five years, the market for buying and selling patents has really evolved.
“The more liquid patent marketplace now, where people are buying and selling patents more freely, allows companies a different exit strategy from just introducing products or services into the market,” he says.
“They can sell their patents, they can license them and generate revenue outside of implementing their technology in their own products and services.”
Kiwi companies and innovators need to muster the courage to dive into the patent market and incorporate it into their strategic planning.
“I think there is some skepticism – is it really worth my time and money to file patents?” Steger says.
“I think people are skeptical that they’ll ever generate a return.”
But think back to the Nortel case. There are rewards to be reaped.
“People haven’t bought completely into how critical this is,” Steger says.
“The end game is you want to succeed in business and if you succeed people will copy you – it’s just a fact of business. This is the only way to mitigate that risk – by getting strong patent protection.”