Patents, innovation, asset class, and weapon

While the issues involved are complex and also involve the use of government force to make it stick, and drug patents have a long and debated history, New asset class and much more at Dealbook points to a growing phenomenon for the global economy as well. Patents and innovation deserve a separate post, but the weapons of choice is heating up and involves much more than ‘competition’:

“Patents are a volatile, spot market,” he said. “This is a market, but a market that is more like art than stocks or oil.”

Ron Epstein, chief executive of Epicenter IP Group, agreed that pricing patents, especially large portfolios, was difficult. But he said he thought corporate trading in patents would become more commonplace, and pricing more routine. Someday, he predicted, patent acquisition costs may be a standard line item in corporate earnings statements.

“By fits and starts, we are moving to a more efficient marketplace for innovation,” Mr. Epstein said.

Calling patents an asset class is shortsighted, said Kevin Rivette, a founder of 3LP Advisors. The larger value of a portfolio, he said, can be as a strategic tool to negotiate lower costs from a supplier or to alter a rival’s product plans.

“You can use patents to change the competitive landscape,” he said.