Intellectual property is the primary reason most companies are valuable today, but investments in inventions and patents are not well understood.
Understanding the mechanics of intellectual property valuation and monetization is critical when formulating a roadmap for creators to profit from their work.
Bruce Berman, Efrat Kasznik, President of Foresight Valuation Group, discusses the intersection of startup funding, intellectual property, and litigation in Episode 8 of Season 2 of his podcast Understanding IP Matters. and Chicago-based GLS Capital, a leader in IP valuation, monetization and litigation funding.
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What other intellectual property rights, if not patents, do startups and large private companies like unicorns have these days?
Eflat Kaznik: “A lot of them have brands. A lot of them have data. The problem with data is that it’s not protected by anything. It’s not protected by patents. But data is just the new oil.I wrote about this I Widely and for others. For many of these companies, data is just the new asset.
If you see unicorns growing, that doesn’t mean they don’t have IP, they just don’t have patents. They have the underlying technology that is part of the IP. They have trade secret protection, but as we know it is not very strong due to people movement, cyber security attacks, etc. No protection, but a lot of value there. ”
Adam, are there patterns between your clients and the people you fund? Do they tend to be a certain nature or type of technology company? What are you seeing?
Adam Gill: “We have received a significant number of requests for software patent litigation. We have not invested in many software patent litigations. The state of the law in what is called eligibility is currently a big gray area. It means that you need to be able to convey what you believe.
And you can’t make that statement when you’re in a gray area like Section 101 where you have a patent. High probabilities cannot be reached without going to one end of the continuum. Sometimes you see — those very technical software patents where the technical part is embedded in the claims. Usually the software patents we see don’t have it, but some do. And we are happy to invest in them. ”
Where are the less gray areas of IP investment today?
Eflat Kaznik: “At the end of the day, patents are kind of signals that investors are looking for. They don’t really understand brand assets like trademarks. That’s something they can look into, but for a patent to be credible, I think Adam was alluding to, there has to be a very close relationship between the product and the patent. .
The software industry has moved away from it. The IP can be held in one place and the invention can be implemented in many other places. That’s not the case with biotech and pharmaceutical companies, where it’s a one-to-one interaction. [relationship]They typically have fewer patents, but the patents are very product focused. ”
Adam Gill: “We’ve done a fair amount of work in the pharmaceutical field, and we agree. [patents] More reliable. I think one of the big reasons for that is that the pharmaceutical field still has the ability to preclude competitors from using their patents, especially with respect to the Hatch-Waxman litigation. that is the default. That’s the remedy, right?
The Hatch-Waxman case is about whether generic drugs can enter. Patents are very powerful in that sense. In law school, we learn that a patent is a right of exclusion. Well, not in the US – they usually have the right to sue for damages. “
Other highlights
Listen to the full episode to learn about intellectual property valuation, patent infringement lawsuit funding, and licensing.
- Why litigation is not an effective business model for startups.
- Views of funders of patent litigation.
- Why R&D intensive industries like semiconductors rely on patents and startups in the software industry don’t.
- Different ways intellectual property fits into the lifecycle of unicorns and start-ups.
