How much is a patent worth?True Patent Value: Defining Quality in Patents and Patent Portfolios Larry M. Goldstein

How much is a patent worth?

True Patent Value: Defining Quality in Patents and
Patent Portfolios
Larry M. Goldstein
True Value Press (self published), 2013
ISBN: 978-0989554107, Soft cover, 500 pp (þ 68 pp)
Price: $104.50

The book fills a gap between the ‘how to’ guides, aimed
towards patent attorneys, and the guides to complex valuation
and economics of intellectual property. Goldstein’s
book is thus of interest to the directors of companies, to
investors and non-practising entities. It can also help the
heads of research and development (R&D) by showing how
a patent application fits into a bigger picture.

The book is of interest to patent attorneys as well. In fact,
there are several audiences that the author envisages, and
he spends a couple of chapters giving an overview of the
fundamentals of patent law in terms of each audience’s
requirements.

Goldstein acknowledges that patents may relate to more
or less any field, but goes on to divide the patent world
between biotechnology, chemical and pharmaceutical
(BCP) and information and communication technologies
(ICT). Goldstein’s considerable experience is in telecommunications,
including code division multiple access and
the like. Not surprisingly, his background and personal
history have coloured his perspective. Telecommunications
is a very fast moving area where devices frequently infringe
a large number of patents, and patent pools have developed
to simplify licensing. Non-practising entities (trolls) are
generally active in the computing field. The book focuses
on patents in the ICT field.
* Patent Attorney, IP Factor, Israel’s International Patent and Trademark
Attorney. Email: mfactor@ipfactor.co.il.
168 IP IN REVIEW Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 2
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After acknowledgments that include a quote by Hillel,
the Pharisee Jewish leader in the Second Temple period,
Goldstein provides a preface in which he raises four basic
questions: (i) Why another book about patents?; (ii) Who
will find this book useful?; (iii) What does the book cover?;
and (iv) What bits should each audience read? He provides
a generally useful table showing each segment of his target
audience the sections they should read, and the order in
which they should do so.1
Goldstein associates the value of a patent with being
able to sell it or prevent competitors from practising it.
This has validity in fast-moving fields like telecommunications,
where a product invariably infringes many patents.
The value of a pharmaceutical formulation is very different,
since the value of licensing or sale is almost never considered
and almost all value is in the promise of limited
monopolistic sales conditions that justify the costs of
development.

Goldstein differentiates between the type of automated
evaluation that can be carried out by a non-patent expert
who can count the claims and see whether they are for
methods, devices or systems. He candidly suggests that, in
the very big patent sales, most patents are considered
superficially in such a manner. The more valuable patents
are subjected to a more expert analysis, in which claims are
reviewed in terms of the specification and the file wrapper
is examined. He notes that value may be affected by external
events such as discovery of an earlier citation, or
perhaps a patent-killing disclosure by the inventor.
Nevertheless, Goldstein finds value only in issued
patents, and particularly in issued patents that are infringed
now or will be infringed in the very near future. He does
not consider as value the potential value inherent in
pending applications, or in patents that are not now
infringed. I think this is a little like ignoring potential
energy of a wound spring or of a rock pushed up a hill. I
note that in the Boston Consulting Book on valuing
patents by Mark Blaxill and Ralph Eckardt,2 the analogy of
digital value fluctuations is used, in that worth can fluctuate
widely dependent on external circumstances.
There are some fairly serious analyses of famous
patents that were sold or litigated, and these provide
insight into a patent’s worth. Goldstein’s analysis examines
claims for ambiguities such as non-defined terms, inconsistent
terminology and non-standard phrasing. He is
a believer in claim differentiation and in creating patent
thickets as a strategy to ensure that at least something
survives claim reconstruction, and considers that multiple
claims for the same or closely linked inventions
provide much additional protection, hence value, as compared
to single patents.

Goldstein is correct that many of the litigated patents
and the most valuable patents are in either the pharma or
telecommunications sectors, but there are also mechanical
inventions of value, including some remarkably simple
ideas like the patented concepts behind Tetrapak, Velcro or
the zip fastener whose patents prevented competition and
enabled manufacturing without competition, and thus generated
great wealth.

I suspect that Goldstein’s insights will be helpful in
understanding the huge sums paid out in infringement
cases and the large sums spent in purchasing patents for
telecommunications. I do not think that other sectors of
the patent industry follow similar dynamics. Consequently,
pharmaceutical developers, and developers of methods in
chemistry or biology, may find the book less useful.
Nevertheless, for telecommunications and similar industries,
his insights are highly relevant, and I think this book
is a worthwhile read for anyone in the field, including both
practitioners and their clients. Goldstein has published this
book himself, so the cost is much less than that of similarly
sized volumes from legal publishers. The quality is by no
means inferior, however; so I consider this good value for
money. Sample pages may be reviewed at Goldstein’s
website, www.truepatentvalue.com.