Last year, the company Ocean Tomo burst on the scene with a big patent auction that very few buyers showed up for. Since then, however, the company keeps getting its name out there for building a marketplace for patents. Its latest publicity stunt is to try to add up the aggregate value of patents held by companies in the US. As you read the article, though, folks at the company make some bizarre claims -- including the idea that patents and other intellectual property now represent 80% of the value of US companies. The reporter doesn't seem to question the valuation method, even though Ocean Tomo is clearly a biased party who benefits from suggesting (incorrectly) that so much of the nation's economic wealth is locked up in patents. What this analysis misses completely is that it's not the intellectual property alone that creates this value. It's what's done with the knowledge found in that intellectual property. That is, by itself, the "intellectual property" has no value. It's only when it's put to work to actually bring products to market that value is created. This is the key difference between innovation and invention. The folks at companies like Ocean Tomo seem to think that the invention part is where all the value is stored. However, in doing so, they're actually devaluing the intellectual property they think they're promoting. By trying to disconnect it completely from the actual innovation, they're disconnecting the non-scarce resource that makes scarce products more valuable, and actually making the "intellectual property" a lot less valuable.
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