LA Times offers a case study on how IP has little value if you aren't ready to fight for it

Nothing illustrates how the value of IP thrives only when the IP rights owner has the willingness  and wherewithal to protect those rights more than a case study of a small, undercapitalized inventor, as told in the LA Times.

Larry Lockwood received patents in 1994 and 2001 covering e-commerce systems to market merchandise and services. To protect his inventions, Lockwood sued retailers for alleged infringement and developed out-licensing deals with some big companies. Reportedly, his patents had a value of as high as $100M.

In 2003, Century City law firm Sheppard Mullin Richter & Hampton filed a re-examination petition for Lockwood's patents with the U.S. Patent Office. Lockwood's pending infringement lawsuits were put on hold and potential licensees refused to make deals until the re-examinations were completed.

The re-examination process took four years; one fifth of the patent’s life disappeared without any growth in the related benefit stream or effective business development activities, and who knows how much of the patent’s value was chewed up as competitors gained design-around time? Though the patents were upheld, the delay (read opportunity cost, which Lockwood estimated at $32M) and legal expenses were crippling. In any model of IP valuation, significant degradation occurs when four of the most productive years in the IP’s life cycle are removed.

The current system set up to foster innovation may work against individual inventors, which supports Mark Risch’s case for the oft-criticized value preservation and enhancement services provided by so-called “patent trolls” or NPEs (non-practicing entities), companies willing to compensate inventors and take on the risk and expense that comes with IP ownership. In addition, those who say the new patent reform law will not help the small inventor are not taking into account the backlog at USPTO. If the new, albeit convoluted, funding mechanism Congress decides upon eventually allows for reasonable review periods, all benefit.