A company’s innovations and other intellectual property (IP) assets can be used to attract investors as well as business purchasers. Generally, investors need to identify value before exchanging cash for equity. For example, in 2013 the median investment size during an angel round of funding was $600K, while the median pre-money business valuation was $2.5M. Thus, in 2013, angel investors were willing to invest about $600K in a company valued at approximately $2.5M. One factor that investors examine to place a value on a company is the strength of the company’s IP portfolio, and more specifically, the patent portfolio.
There is value in language
Saying less can be worth more
Before an invention is patented, the patent claims of a patent application covering the concepts of the invention are subject to examination by a patent examiner at, for example, the United States Patent and Trademark Office (USPTO). During examination, (referred to as prosecution), an examiner will cite one or more reference(s) that the examiner believes discloses or renders obvious the concepts of the patent claims. As such, in order for the patent claims to “overcome” the references cited by the examiner, a patent practitioner (such as a patent attorney) can either amend the patent claims further limiting their scope or argue that the cited one or more reference(s) do not disclose what the patent claims recite. Generally, the more language or limitations recited in or added to the patent claims, the narrower the scope of a patent owner’s right to exclude once the patent is granted. As such, a patent practitioner who can skillfully craft succinct patent limitations to obtain a patent does so without over-limiting the scope of the patent claims. Thus, an investor will attribute more strength to a patent portfolio with patents having well-crafted claims, because well-craft claims maximize who a patent owner can assert their right to exclude against.