Assignment 12- Part 2

Kasznik’s talk continued

This post continues on the last one by discussing and summarizing the rest of Kasznik’s talk. She specifically talks about companies accumulating patents and what this can show us about the economy.

In a new/smaller market there are a number of players all with a handful of patents. As the industry starts to grow and certain big players are identified, they will generally start accumulating a portfolio of patents. An example of this is Google, which began with very few patents. They then both submitted more patent applications as well as increased their purchases of other companies and patents. At this point Google is buying patents and companies with patents at an incredible rate.

The idea behind this strategy is to accumulate as many patents as possible without putting too much undue stress on the company financially. Obviously companies want to purchase patents that show a positive NPV for the company, but the other concept is strategically getting patents that don’t necessarily have a positive NPV at the time of analysis.

While this concept seems counterintuitive it is gambling that a certain percentage of patents that currently don’t show much financial promise will have large upsides in the future. Similar to how venture capital firms invest, large companies can acquire patents that may potentially apply to future technologies. The example she gave was of Xerox and the Graphical User Interface which could have made them a very large some of money through either licensing or outright selling.

In conclusion it is generally in companies beset interests to build as large of a patent portfolio as they can within reason.