The Economist discovers patents as financial assets

Last week's Economist ran an interesting story on Patents as financial assets. However, there is a tone to the article (aided and abetted by a misleading title "Trolls demanding tolls") that is unfortunate. While the article discusses a number of activities on patents, it leaves the impression that the main reason for investing in patents (and other intellectual property) is to become a troll. Yes, there be trolls here. But the vast majority of intangible asset investments is done for other reasons. Operating companies have long bought and sold patents for both operational and strategic reasons. As the article points out, companies can gain extra revenue by selling or licensing out unused technology. Patent brokers also play an important role in helping the small inventor, who may not have the resources or capability, to commercialize their idea.

Nor are pure investments in IP necessarily an infringement play (aka trolls). Investments in revenue-generating IP can be a bonus for the careful investor. For example, both Sir Paul McCartney and Michael Jackson invested heavily in the copyrights of other peoples' songs. Patent investment companies, such as Royalty Pharma, have provided investors with an investment mechanism as well as providing financing to companies for future R&D.

(Side note: Athena is working on a report on case studies of investing in intangibles - look for this to be published in a month or so.)

Having said that, the fact that the Economist is even paying attention is a good sign. The article ends by saying "IP is moving out of the lab and into the financial mainstream." I hope that is true.