Patents and Trademarks

What are patents and why are they important?

"A patent is the granting of a property right by a sovereign authority to an inventor. This grant provides the inventor exclusive rights to the patented process, design, or invention for a designated period in exchange for a comprehensive disclosure of the invention. They are a form of incorporeal right. Government agencies typically handle and approve applications for patents. " -Investopedia

Patents...

• are independent of company tangibles,
• can be bought, sold, used as collateral,
• can be used as a source of revenue & defense,
• are of real and growing interest to investors.

Why are patents an investment for companies?

• Competitors must buy license(s) to design products based on your patents.
• If not willing to buy, competitors must “design around” patent.
• Other competitors who do not buy licenses or design around may risk an infringement suit, an expensive & lengthy process. 

What is a patent citation?

• Reference to prior technology, upon which current patent is built or uses
• Some added by inventors, others by examiners
• Some added to avoid infringement

Why is it worth doing a patent citation analysis?

• Patents cited by many later patents tend to contain important ideas upon which later inventors are building.
• A company with a large number of cited patents is likely to possess technology that is central to developments in its industry.
• Many studies have revealed a link between citations & technical importance of patents
• Other studies show a connection between patent citations & stock valuations.