An updated analysis by BlueIron shows that the COVID crisis has dramatically affected business's IP strategy. This lack of confidence in the future has never been seen before and has severe implications.
"Patents represent a company's confidence in the future and their ability to innovate. Companies get patents because they believe in their innovations and that they will be successful in the market," says Russ Krajec, CEO of BlueIron, which finances patent portfolios for innovative companies. "COVID has been shaken this confidence in ways we have never seen before."
The abandonment rate has shot up since COVID started, especially for Small Entities, which are companies of less than 500 people. As reported in March, the abandonment rate nearly doubled, but in July, the trend has continued with abandonments nearly tripling. For Small Entities, the abandonment rate has gone from 11.7% to 31%. For Large Entities, the abandonment rate has doubled from about 6.5% to 13%.
Abandonments are pending patent applications where the applicant has decided to quit prosecution. These data are from when the USPTO examiner has issued a rejection and the applicant has refused to respond, letting the patent go abandoned rather than invest more money in it. The average number of rejections for US patents is about 4.2 per patent.
"Patents are 20 year assets and are typically are not affected by short term market swings. A similar study during the 2008 recession showed patent abandonment rate being very steady," says Krajec. "However, the COVID crisis has changed things in ways we have never seen before."
"Certainly, companies are taking a very hard look at expenses and IP costs are one way to conserve cash during lean times. But cutting off the future value of your company by abandoning patents shows a completely different type of thinking than we have seen before."
About BlueIron: BlueIron provides IP-related financing for companies from startups to publicly traded companies. BlueIron finances the cost of getting a patent and building patent portfolios, provides insurance for enforcement and defense of those patents, and can provide $2-5M loans using patents as collateral. You can read the BlueIron blog here.
About Russ Krajec: Russ Krajec is a registered patent attorney who has been practicing for over 20 years, as well as a podcaster, blogger, and author. His book “Investing In Patents” describes the business criteria used to identify good inventions and good patents. Krajec is the host of the Patent Myths podcast, which looks at IP from a business standpoint.