FOSTER CITY, Calif. -- A market for buying and selling patents is emerging as companies file more patents and get hit with more infringement suits, said a panel of experts at a lunch event sponsored by the Silicon Valley Chapter of the Licensing Executives Society. But figuring out the value of a patent or the potential cost of litigation is still a black art, they added.
The patent system is still painfully imperfect, said panelists representing large and small product companies and two patent service providers. But a kind of patent marketplace is starting to emerge and companies are getting more savvy about how to use it, they said.
"We can build a full, robust IP strategy on a startup's budget and still have some of the same things we had at Apple," said Richard "Chip" Lutton, general counsel at startup Nest Labs and former chief patent counsel at Apple.
"It's a way different [patent] market than it was five years ago, and I think that's a great opportunity," said Lutton, noting panelists from RPX Corp. and Intellectual Ventures who license patents. "We want to accumulate IP for defense and trading purposes, just like any other company," he said.
Although more people are in the market selling and licensing patents in more ways, panelists said the value of a patent is still very subjective and often inflated. In the wake of sales of large patent portfolios from Nortel and Novell a few years ago "people were advising boards that good patents are worth a million dollars each," said Robert Heath, a senior vice president of corporate development at RPX.
Costs of filing patents are better known. Here startups face a disadvantage given tighter pockets among venture capitalists, noted Cory Van Arsdale, vice president of business development at Intellectual Ventures, which maintains a portfolio of 40,000 patents its licenses and applies for 1,000 more each year.
"We are very choosy on what [patents] we file and very purposeful about what [portfolios] we are developing," focusing on technologies closely tied to the company's brand and products, said Lutton of Nest.
Nevertheless, engineers are filing patents at a record pace, said Walter Hanchuk an IP specialist at the law firm of Cooley LLP. "There's an enormously active marketplace where you can license and buy IP today," he said.
Filings of US utility patents (in red) hit an all-time high in 2012.