State of Innovation

Patents and Innovation Economics

The Value of Patents: Case Studies

Note that this post is based on free audio CD, titled How to Make Your Patents a WMD- Weapon of Market Domination.  If you want a free copy of the audio CD click here

So how valuable are patents?  The inventor of the air hockey game table, would have answered pretty darn valuable.  He had no competitors during the lifetime of the patent on air hockey.  Would you say that was powerful?  I think you would agree that this patent on air hockey was a Weapon of Market Domination.  Wouldn’t you like to have a patent that completely eliminated all your competition?  What do you think your margin would be in a market you completely own.  I should tell you the day the patent expired, the company that had invented air hockey had a dozen competitors.  Some of you may have guessed that the patent on air hockey was owned by Brunswick.  Xerox patent on the photo copier allowed them to not have any competitors in the photo copier market for the life of the patent.  However, Xerox was not satisfied with just owning the market for photo copiers, Xerox used an aggressive patent strategy to build a fence around their original patent by filing multiple patents upon every improvement they developed on the photo copier.  This allowed Xerox to continue to completely own this market long after the first patent on photo copiers expired. While competitors could produce a photo copier as described in the expired patent or patents, by then customers demanded the functions that Xerox had developed and patented.  Xerox had such a dominate position in the photo copier market for so long that when you wanted a photo copy,  you said, “could you Xerox this for me?”  Clearly Xerox had developed a patent portfolio that was a Weapon of Market Domination.  Wouldn’t you like to develop a patent strategy that allowed you to dominate your market for years?  I hope that was a rhetorical question for most of you.  Polaroid owned the instant photography business for the life of the underlying patent.  Like Xerox they impressively patented every improvement on instant photography.  This allows them to still completely own the instant photography business today.  In the late 1980’s Kodak attempted to penetrate the instant photography business.  Polaroid sued Kodak for patent infringement of several of their patents and won the largest patent damages award in history of 870 million dollars.  Wouldn’t you like to receive 870 million for a competitor daring to enter your market. Clearly, Polaroid’s patents were Weapon of Market Domination.  In just over 10 years, IBM has gone from virtually no royalties from their patent portfolio to having over 3.5 billion a year in royalties.  You heard right.  That was 3.5 billion.  These are just a few examples of how patents have been used in Weapons of Market Domination.  There are plenty more examples.  If you are an individual inventor and want to license your invention to a company, you want to be able to tell the potential licensor that your patent can have this kind of impact for them.

May 27, 2009 - Posted by | -History, -How to, Innovation, Patents


  1. […] order to understand how these companies (see the article The Value of Patents: Case Studies) were able to create patents that were Weapons of Market Domination, you need to understand the […]

    Pingback by Rights Obtained With a Patent « State of Innovation | June 2, 2009 | Reply

  2. […] patent is to generate licensing revenue.  However, you can see from the IMB case (see the article The Value of Patents: Case Studies) that patents can generate significant royalty income.  Wouldn’t you like to have royalty income […]

    Pingback by Reasons for Obtaining a Patent « State of Innovation | June 3, 2009 | Reply

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