Should Patents Be Treated as Just Another Investment Vehicle?

MARK TERRY, ESQ.

Large corporations have invested in patent funds, and patent-focused investment entities have raised billions of dollars to acquire and monetize patent portfolios.

That activity raises a difficult question: should patents be treated like other investment assets, or should ownership be tied more closely to producing and commercializing inventions?

Critics argue that non-practicing entities can use patent ownership aggressively, particularly when enforcement is directed at companies that actually manufacture products or provide services.

At the same time, ownership of intangible rights without direct production is not unusual. Financial institutions hold mortgage-backed securities, publishers hold music rights, and investors own interests in trademarks, copyrights, bonds, stocks, and commodities.

A patent owner has the legal right to enforce a valid patent, even when the owner does not manufacture the patented product. The more difficult policy question is how to discourage abusive litigation without weakening legitimate patent rights.

Patent reform, litigation rules, and more careful portfolio management can help address frivolous claims. But as long as patents remain transferable property, individuals and companies must treat them as assets that can be bought, sold, licensed, and enforced.

Businesses should therefore evaluate patent risk proactively and build strategies for clearance, licensing, enforcement, and defense before a dispute occurs.