Edison in the Boardroom Revisited: How Leading Companies Realize Value from Their Intellectual Property, Second Edition

The Rise of the IP Investor

Before 2001, the only investors interested in IP, and specifically patents, were those individuals about to lay out money for a large capital investment project such as a pharmaceutical drug development or the construction of a billion-dollar semiconductor lab. Other than that, investors thought IP was something to ask for, but not pay attention to. (Do you have any IP protection? If yes, check the box. If no, why not?) However, after the dot-com bust, many of the VCs found that IP was the only remaining asset left in the company—and the only way to get any return on their investment, which the VCs found was not always possible. Just because something is an asset does not mean that it will generate funds. IP, even if granted by the United States Patent and Trademark Office (USPTO) and carried on a company’s books, is not always valid or valuable. Since recovering from the dot-com lessons, venture capitalists have paid more attention to IP. Mark Radcliffe, Senior Partner at DLA Piper in Palo Alto, explains:

Venture capitalists have always fallen into two camps: (1) investors in life science companies and, (2) investors in IT companies. For the life sciences investor, intellectual property has always been a fundamental determinant for whether or not to make the investment. If you don’t have a strong patent portfolio in the life science area, you don’t have a company and no venture capitalist will invest. Patents for life science investors are so important ...