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Slender payoff from patent activity

A previous post observed the highly uncertain prospects of many patents (See my post of Jan. 3, 2006 that most patents cover only incremental improvements.). An item in the Economist, Vol. 378, March 11, 2006 at 68, reinforces the low odds that any given patent will reward its owner financially.

“Of 1,091 Canadian inventions surveyed in 2003 by Thoas Asebro, of the University of Toronto, only 75 reached the market. Six of these earned returns above 1,400%, but 45 lost money.” For the point of this post, I assume that an “invention” has been protected by a patent. If so, although all of them cost money and time –often by an in-house lawyer – to obtain, only about 3.5 percent made any money.

Economic analyses of the value of patents suggest that all aspects of the patent value chain — invention disclosure forms and committees, outside patent counsel, patterns of international coverage, licensing — ought to be scrutinized for their worth.