In October 2013, Elwha LLC — an Intellectual Ventures entity — filed U.S. Patent 9,261,236.[2] The inventors include Bill Gates, co-founder and executive chairman of Microsoft, and Nathan Myhrvold, former Chief Technology Officer (“CTO”) of Microsoft and founder of Intellectual Ventures. Myhrvold holds over 600 granted U.S. patents. These are not people with a shallow grasp of technology or business.
The patent covers a specific logistics solution for the railroad industry: a first train, which has access to a Liquefied Natural Gas (“LNG”) fuel source on its route, picks up more LNG than it needs for itself — sized precisely to the fuel requirements of a second train — and carries the surplus to a storage site at the junction of two routes, where the second train then fuels. The idea addresses a real problem: how do you distribute LNG to remote rail junctions where pipelines don’t reach?
The patent will expire in 2033 having never generated a dollar of enforcement value.
Not because the invention is wrong. Because nobody ever built the business.
A Patent Is a Bet — Examine It
When a patent issues, the company announces it. A press release. A LinkedIn post. Sometimes a framed copy on the wall. What the press release does not say is what was actually bought.
A patent, by itself, is a bet. The bet is this: that a competitor will independently discover your invention, find it commercially compelling, adopt it at scale, and generate enough infringing revenue to make enforcement worthwhile. Without all of that happening, the patent expires having cost years of maintenance fees without producing a dollar of enforcement value.[1]
For the passive patent strategy to pay off, competitors need to be almost as smart as you. If they are significantly ahead, they invented the same thing before you filed — prior art that can invalidate your patent. If they are nowhere near, they will never arrive at your approach within the twenty-year patent term. The passive model only works when competitors are close enough to eventually converge on your solution, but not close enough to have beaten you there.
That is a fragile condition. And the Elwha patent shows exactly how it fails.
What Went Wrong With the Gates Patent
Liquefied Natural Gas locomotive technology is not science fiction. Burlington Northern operated LNG-powered locomotives in commercial coal service in the Pacific Northwest in 1992 — twenty-one years before this patent was filed.[3] Union Pacific ran a $15 million LNG research program in the 1990s. Canadian National operated a year-long LNG mainline test from September 2012 to September 2013.
Elwha filed its first related applications on September 24, 2012 — the same month CN’s test began. The patent itself was filed October 31, 2013 — the same month CN’s test concluded. The background section of the patent acknowledges that natural gas “is sometimes used as a fuel source for trains.” This is not an invention that arrived before the market. It arrived as the market was actively running.
But the specification contains not a single reference to safety, hazardous materials, regulation, permit, DOT, PHMSA, or FRA.[^2a] LNG is a flammable cryogenic liquid; transporting it by rail in bulk required a special FRA permit at the time of filing and was effectively prohibited without one. Any railroad engineer would know this immediately. The inventors treated the distribution problem as a pure logistics optimization question — the kind that surfaces when brilliant people who are not railroad operators work through a problem on a whiteboard.
This is the waiting room inventor: someone who observes an industry solving a problem from the outside, identifies the obvious next-step engineering challenge, and proposes a solution without the market knowledge that would reveal why the industry isn’t already doing it that way.[^2b]
Elwha filed a blocking patent on an obvious logistics extension of an already-active technology, precisely as that technology was under active development. They set the trap and waited.
The industry found a different path. Federal hazardous materials regulations prohibited bulk LNG transport by rail without special permits when the patent was filed. A 2020 PHMSA rule briefly authorized it; that rule was suspended in September 2023; commercial rail transport of bulk LNG has never occurred.[^3a] Where LNG locomotive technology has been deployed at commercial scale, the infrastructure model has used fixed liquefaction plants and truck tanker delivery to trackside terminals — not the train-as-distributor architecture the patent covers.[^3b] The patent will expire in 2033 unused, its specific architecture never implemented, its regulatory foundation eroded before the ink was dry.
Why Building the Business Changes Everything
The stronger model doesn’t wait for competitors to independently discover your invention. It forces the market to adopt it.
If your company is actively selling the patented product — with real marketing, real sales, real distribution — competitors who want the same customers face a direct choice: practice your claims and become an infringer, or design around them and accept a commercial disadvantage. You are not betting on independent convergence. You are creating the conditions under which infringement becomes the only commercially rational path.
Elwha’s mistake was not the patent. It was the missing business. If a railroad had deployed this specific distribution architecture at scale — marketing it as a cost-reduction system for remote fueling, driving customer adoption, competing for fuel efficiency contracts — every other railroad that wanted the same operational economics would have faced a choice. The patent would have had teeth because the business forced the issue.
This is why Intellectual Property (“IP”)-backed lenders require revenue before they will underwrite against a patent portfolio. As BlueIron’s underwriting criteria state directly: “pre-market patents have zero collateral value — realizable value is zero.”[4] Revenue is not just evidence the business works. It is evidence that you are driving market adoption — that your commercial activity is creating the conditions under which competitors must either practice your claims or be left behind.
A patent without a business behind it is a passive bet. A patent backed by an operating company selling the product is an active engine.
Why Enforcement Value Still Takes Years to Peak
Even with a business behind it, patent enforcement value takes time to develop — and a few legal mechanics explain why.[5]
Infringement begins at issuance, not before.[6] Competitors who were commercially practicing your invention at least one year before your filing date have a statutory prior-use defense and fall outside your reach.[7] Everyone who started after filing can generate up to six years of recoverable damages looking back from any lawsuit.[8] Based on BlueIron’s experience underwriting IP-backed loans, “patents do not reach their peak value until year 12” of their life.[9] By then — with a business actively forcing adoption — competitors have been generating infringing revenue for years, and meaningful remaining term still supports a credible forward-looking license. After year fifteen, remaining term contracts and well-resourced infringers start calculating whether waiting out expiration is cheaper than settling.
A patent’s twenty-year term runs from the earliest effective U.S. filing date — not issuance.[10] Continuation practice can extend the prosecution window to write claims against products that didn’t exist at original filing, but the strategy only works when the specification supports it, the remaining term permits it, and the application published on the standard 18-month schedule.[11]
What the Portfolio Looks Like From This Angle
When an IP-backed lender evaluates a portfolio, what they underwrite against is the overlap between established patent claims and revenue that identified competitors are generating right now.[4] A portfolio dominated by recently filed patents is, from a collateral standpoint, a portfolio of seeds — some of which will never grow if there is no business forcing them.
When an acquirer’s IP counsel runs due diligence, the patents marked highest-value are those reading on what competitors are actually doing in the market today, backed by the company’s own commercial track record demonstrating the approach works.
A company that filed in 2016 on an approach that has since become the standard way competitors solve the same problem — because that company built the market and proved the approach — may have something far more valuable than it realizes. Those patents may now read on competitor products in ways nobody anticipated at filing.
The oldest patents, backed by the most years of market development, are often the most powerful assets in the portfolio.
What You Are Building When You File
A patent on technology not yet widely adopted is an investment with a ten-to-fifteen year horizon — but only if a business is actively building the market it covers.[9]
The specification written today needs to support claims against products that do not yet exist. The most important question at a filing decision is not “does this protect our current product?”[12] It is: does this cover the approach any competitor building in this space will eventually be forced to use — because our customers are already buying it?[13]
Not a workaround around your own legacy constraint. The commercially unavoidable solution for any competitor who wants what your customers are already paying for.
The Question Worth Asking
When someone asks which patents in your portfolio are your strongest assets, the honest answer is rarely “the ones we filed this year.”
The strongest assets are those that have matured against the market — filed when the technology was new, backed by years of commercial activity that forced the market to adopt the approach, now approaching peak leverage as the competitive landscape has converged around what your customers already buy.
The question worth asking: which patents, measured against what competitors are building and selling today to compete for your customers, are closest to that peak? Which ones would command the highest price on the secondary market right now?
That review produces a rank-ordering that looks nothing like the list sorted by issuance date.
The newest patents are next decade’s harvest — if you build the market.
The oldest ones, backed by years of commercial activity, may be ready to pick right now.
Related: [What an IP-Backed Lender Sees That You Missed · How Do I Know If My Patent Is Worthless? · How to Find a Realistic Patent Value]
Sources
1 Russ Krajec, “How to Find a Realistic Patent Value,” BlueIron IP. https://blueironip.com/how-to-find-a-realistic-patent-value/ (“Patents only have value when they are infringed. An uninfringed patent is typically valued at its cost.”) See also Investing in Patents, §2-3-3. https://blueironip.com/investing-in-patents/ ↩
2 U.S. Patent No. 9,261,236, “Train Propellant Management Systems and Methods,” filed October 31, 2013, issued February 16, 2016, assigned to Elwha LLC. Inventors include Bill Gates, Nathan P. Myhrvold, Roderick A. Hyde, Jordin T. Kare, Tony S. Pan, Nels R. Peterson, Clarence T. Tegreene, and Lowell L. Wood, Jr. Retrieved from USPTO patent database. The specification’s Background section acknowledges that natural gas “is sometimes used as a fuel source for trains” and identifies the specific problem addressed: inadequate LNG distribution infrastructure in remote areas where “the natural gas infrastructure (e.g. natural gas facilities, storage sites, pipelines, etc.) is not as developed as the infrastructure for diesel fuel.” The independent claim (Claim 1) covers a train that carries surplus LNG — sized to the fuel requirements of a second train — to a storage site at the junction of two routes, where the second train then fuels. It does not cover LNG locomotives generally; it covers the specific train-as-distributor architecture for remote locations. ↩
3 LNG locomotive history: Burlington Northern began natural gas locomotive development in 1987 and operated LNG locomotives in commercial coal service in the Pacific Northwest by 1992. Union Pacific ran a $15 million dual-fuel LNG research program in the 1990s. Canadian National operated a 300-mile LNG mainline test between Edmonton and Fort McMurray, September 2012–September 2013. Progressive Railroading, https://www.progressiverailroading.com/mechanical/article/Liquefied-natural-gas-could-help-railroads-reap-locomotive-benefits-if-regulatory-technical-issues-are-resolved–39693. Elwha’s related applications were filed September 24, 2012 (U.S. Ser. Nos. 13/625,607 and 13/625,715) and August 1, 2013 (Ser. Nos. 13/957,077 and 13/957,083), per the patent’s cross-reference section. The cluster of filings precisely brackets CN’s test program. Industry adoption path: BNSF tested three converted LNG locomotives; Union Pacific evaluated dual-fuel and concluded it was “not yet viable for usage across the network,” https://www.up.com/cs/groups/public/@uprr/documents/up_pdf_nativedocs/pdf_up_emg_lng_facts.pdf. Where LNG fueling infrastructure has been deployed, railroads have used fixed terminals supplied by truck — not the train-based distribution architecture this patent covers. ↩
4 Russ Krajec, “Loans Using Patents as Collateral,” BlueIron IP. https://blueironip.com/loans-using-patents-as-collateral/ (“The realizable value is zero for a pre-revenue company.” IP-backed lending requires demonstrable overlap between patents and revenue that identified competitors are generating right now.) ↩
5 The legal framework governing when infringement begins and what damages are recoverable is established by 35 U.S.C. §§ 271(a), 154(d), 273, 286, and 154(a)(2), summarized in footnotes [6]–[11]. ↩
6 35 U.S.C. § 271(a): infringing acts occur “during the term of the patent therefor,” meaning the term that begins at issuance. https://blueironip.com/mpep/mpep-9015-appx-l-271/ ↩
7 35 U.S.C. § 273(a). The prior commercial use defense requires use at least one year before the effective filing date. Personal and nontransferable under § 273(e)(1). https://blueironip.com/mpep/mpep-9015-appx-l-273/ ↩
8 35 U.S.C. § 286: no recovery for infringement more than six years before the complaint. https://blueironip.com/mpep/mpep-9015-appx-l-286/ For pre-issuance reasonable royalties, 35 U.S.C. § 154(d) requires actual notice of the published application and substantially identical issued claims. Rosebud LMS Inc. v. Adobe Systems Inc., 831 F.3d 1366 (Fed. Cir. 2016). https://blueironip.com/mpep/mpep-9015-appx-l-154/ ↩
9 Russ Krajec, “How to Find a Realistic Patent Value,” BlueIron IP. https://blueironip.com/how-to-find-a-realistic-patent-value/ (“patents do not reach their peak value until year 12.”) See also Investing in Patents, §2-3-3: “the sweet spot between 5 and 15 years away, when patents typically sell for the highest amount.” https://blueironip.com/investing-in-patents/ ↩
10 35 U.S.C. § 154(a)(2): 20 years from the earliest effective U.S. filing date. For a continuation, the clock runs from the parent’s filing date. Patent Term Adjustment under § 154(b) can extend the term for USPTO delays. https://blueironip.com/mpep/mpep-9015-appx-l-154/ ; https://blueironip.com/mpep/mpep-9015-appx-l-120/ ↩
11 A continuation’s claims cannot be infringed before the continuation issues — 35 U.S.C. § 271(a) requires acts “during the term of the patent therefor.” https://blueironip.com/mpep/mpep-9015-appx-l-271/ Prosecution laches can render continuation claims unenforceable for unreasonable delay. Symbol Technologies, Inc. v. Lemelson Medical Education & Research Foundation, 422 F.3d 1378 (Fed. Cir. 2005). Doctrine significantly narrowed by Google LLC v. Sonos, Inc. (Fed. Cir. 2025): standard 18-month publication largely defeats a prejudice claim if the competitor began investing after the application published. https://www.mofo.com/resources/insights/250904-federal-circuit-pushes-back-on-prosecution-laches ↩
12 Russ Krajec, “Your Attorney Drafted Claims on Your Product — Not Your Competitor’s,” BlueIron IP. https://blueironip.com/claims-on-your-product-not-competitors/ (“A patent does not exist to document what you built. It exists to constrain what your competitor can build.”) ↩
13 Russ Krajec, “Stop Patenting Your Invention. Patent Your Competitor’s Product,” BlueIron IP. https://blueironip.com/stop-patenting-your-invention/ (“What remains — the common thread across all implementations, yours and every competitor’s — becomes your independent claim. That common thread is the constraint.”) ↩
