Patents have an asymmetry of reward. BlueIron capitalizes on this in a different way.
Just like the torn up betting tickets at the race track, the patent system is littered with endless stacks of worthless patents. Each patent representing a “good idea” of some inventor who thought it would make some money.
A widely quoted statistic is that 95% of all patents are worthless, but of the 5% that have value, only a quarter of them are strong enough to negotiate significant business deals. In other words, about 1-2% of all patent are the ones that have the enormous value.
Merely having a patent does not even imply that you have something of value. Statistically speaking, you have a 20:1 odds that you are holding a losing ticket.
The “lottery ticket” mentality is addicting.
The lure of a huge payoff with very little investment has two effects.
First effect: not investing enough in their patents to make them valuable.
The first effect is that a lot of people do not put much effort into the investment. They do not put much research into a patent because they know the likelihood of a payoff is very remote, so why invest much?
Many “inventors” churn out lots of provisional patent applications with every new idea they encounter. Sometimes, these are skimpy descriptions of an amorphous idea, but other times they are hundreds of pages long with all sorts of ideas in them.
Often, these “inventions” are prophetic patents that envision a future, but do not have the rigor and experience that comes from grinding through the technical and market issues of bringing the technology to market.
Because these inventors are hoping for some grand payday, they try to do as many of these lottery tickets as they can. They recognize that they have enormous odds, so they play the numbers: put as many patent applications in play as possible, then hope for the best.
Second effect: putting too much value in the result.
The second effect is that a lot of people put too much value in the result. Once they have a patent, there is an emotional need to think the patents are the Winning Lottery Ticket that will solve all their problems.
Very few people can properly understand patent claims. They are the single most difficult legal document to write, as they encompass very detailed technology and very important legal elements. One misplaced word (or even a comma) can kill a patent claim.
It is virtually impossible for a lay person to fully understand the nuance of patent claims, and it helps to have a patent attorney go through them with you.
What is the result of this complexity? A huge over-valuation of a patent by an inventor.
Patent owners like to think that they have some mysterious “monopoly” in the marketplace and they are “protected.” The truth is almost always that they have much less than they think.
I look at the huge asymmetry from the opposite side. I want to avoid bad patents.
The BlueIron business model takes advantage of this asymmetry – but in a different way than most people.
If there is a very good chance that a patent will be worthless, I want to be much more judicious in avoiding bad patents.
It is impossible to pick which patent will be valuable 10 years from now, but it is possible to identify those that will never have value.
If there is a chance that this patent might have real value, it is worth putting in the heaving lifting of research, good drafting, and proper prosecution to make the patent as valuable as possible.
In other words, avoid the patents you know are going to be bad, but do every patent as if it will be litigated for a billion dollars. Carefully pick your bets, and when you make a bet, do the work as if it really matters.