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Passive vs. Active: What is Really Interesting about Patent Pools

by Tyron Stading on July 14, 2008

Recently we’ve seen a number of Patent Pools emerge (e.g. Alliance Security Trust Patent Pool) as a mechanism to defend against Patent Trolls.  At its core, a Patent Pool is a financial vehicle designed to allow companies to pool their money and resources for either offense or defense.  It won’t help you avoid litigation, make your quarterly numbers, or even release new products, but it does help to take away some of the fuel from patent trolls.  However, I don’t want to talk about Patent Pools in this post, but what I think highlights a much bigger trend.

The interesting point is that Patent Pools highlight a fundamental shift I talked about in an earlier post… a shift from being PASSIVE to ACTIVE.  Just 10 years ago, most patents were filed solely in hopes of one day being used to defend against litigation.  Companies would sit on their patents and use the shear size of their portfolio to win battles.  However, we’ve seen this is a losing strategy (i.e. RIM vs. NTP) given the current landscape.  Instead of managing IP in isolation, there is a wealth of opportunities if you ACTIVELY manage your IP.  With the shift toward these Patent Pools, companies are finally seeing that they need to actively manage IP around them, not just what they own.  I forecast this will only increase as companies learn to take full advantage of their IP, mostly around open innovation, licensing, and partnering opportunities.

Another side effect of this trend is that it really starts to reward the inventors who are the real lifeblood of the IP system.  By starting to really value patents outside the company for their impact and influence, patents are starting to truly become financial assets.  Just like any other asset, they need active valuation, active management, active trading, and active utilization.  Passive assets are not really assets at all and more of an insurance policy.  I believe companies are starting to realize this and the trend toward active management will only increase and in new, creative ways.  While Patent Pools might be a small tactic, it is just the tip of the iceberg as the mentality is shifting toward business implications.