Out on the West Coast—and especially here in Northern California—there is no shortage of technology start-ups and other venture-backed companies. At RPX, we spend a fair amount of time talking to executives and board members at these companies, and I’ve noticed two things: 1) It is rare to find an early-stage growth company with a full-time general counsel or an in-house intellectual property attorney, and 2) even the most seasoned entrepreneurs often have a limited view of how patents and patent risk fit into their operating strategy.
The two phenomena may very well be related. Many of these small companies are led by technologists that are told by their investors that they need to file for patents, but are given very little guidance as to why. As a result, they often see patents primarily as an outgrowth of internal product development, something that prevents others from using their technology. In reality, of course, patents are rarely used in this way, and as in-house counsel well understand, it is external patents and the non-practicing entities (NPE asserting them that deserve the most attention from the C-suite. Large, established companies have learned the hard lesson that patents can be a source of significant costs (in the form of both legal fees and settlements). Leaders of emerging growth companies are just beginning to learn this.