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$750,000 per patent--$4.5B divided by 6000 patents--is clearly absurd.

Or is it? I'm thinking that it does make economic sense, but only if you buy in bulk.

The vast majority of patents (not even limited to software patents) make no money, are never enforced, and are completely unused in every sense of the word. Even a patent lawyer has admitted this to me.

But in very rare, unpredictable, and seemingly capricious cases, it's worth a fortune. The best example is the patent purportedly for inventing wireless email that allowed NTP to extort $600 million from Research In Motion a couple years ago.

If you buy patents in bulk, you might even be able to achieve a return despite the randomness in value.

I'm going to make the analogy to owning a gun and deciding how many bullets (patents) to buy:

- A dozen bullets and you can (maybe) protect yourself. This is your defensive patent portfolio; if sued, you can maybe find some way to countersue.

- Thousands of bullets and you can wage war. This is your attack patent portfolio.

- But a single bullet is good only for suicide. Start-ups that spend their time and energy filing one patent application probably kill themselves. I saw one case where it happened.

I think I'm going to call this principle the Patent Portfolio Price Power Law. In a ruthless business sense, a LOT of software patents makes sense.




Tech companies like Google have nearly unlimited pools of money, so they can spend ridiculously large amounts of money for things that make sense to them.

People do the same thing. How many rich guys buy a $500k Ferrari that is never driven?


>How many rich guys buy a $500k Ferrari that is never driven?

None. No Ferrari costs $500k outside of an auction house, and even then that's a very rare price. The classic collectable ferraris go for far more, and the "average" ferraris go for far less.


Also, patents can function at the very least as patent lawsuit deterrents.




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