What’s in a patent?
The Brookings Institution believes patents are a key indicator of a region’s economic potential, and by that measure metro Atlanta isn’t faring so well.
The Washington-based think tank recently released a study showing that the metro area ranked 16th in the number of patents granted, averaging 1,506 per year from 2007 to 2011. That is behind Portland, behind Dallas and Houston, even behind Detroit, although ahead of Raleigh and the Research Triangle. It’s way behind number one, San Jose – the heart of Silicon Valley – which averaged 9,237 per year.
But a true picture may be more nuanced. Some metro Atlanta businesses say they don’t want to waste the time applying for patents — the process can take years — and experts note that many patents are frivolous and even worthless.
“All patents are not created equal,” says long-time patent attorney John Harris of Morris Manning & Martin.
Other experts note that patents are only one of many indicators of economic growth and potential.
“More patents are certainly a healthy sign, but I’m not sure just how much cause and effect there is,” says Stephen Fleming, who heads the Enterprise Innovation Institute at Georgia Tech. He oversees a number of programs, including the high-tech accelerator and the Advanced Technology Development Center, which has nurtured scores of start-ups.
Instead, patents parallel other things that are just as important — research, investment, entrepreneurialism, he says.
“It is a kind of eco-system. All these things are necessary. Patents are one piece of the puzzle, but it’s very easy to mistake one piece of the puzzle for the whole puzzle.”
The number of patents also won’t tell you whether taxes are low or regulations encourage or discourage entrepreneurs.
And it doesn’t tell you whether a new company will find itself among many others in the same sector — start-ups as well as large businesses. Researchers say that clusters of similar companies feed off each other, support each other, shape each other, steal ideas and personnel from each other – and grow faster than any one company on its own.
New patent-centered companies have to find the right cluster or they may leave town.
Atlanta does have enough technology to hold many newcomers, argued Tino Mantella, president of the Technology Association of Georgia: roughly 17 percent of the Georgia GDP is technology-related, accounting for a $113.1 billion impact.
“We are number nine in the country in terms of technology, according to the U.S. Chamber of Commerce. We are a very business-friendly state. I think we are doing a lot right,” Mantella said.
Even so, experts sometimes bemoan the tendency of many smart, young, Atlanta entrepreneurs to leave. Biotech start-ups might look to Philadelphia or Boston. Social media and computing hopefuls might head for Silicon Valley.
The biggest clusters are in communications services and software, especially finance, logistics and healthcare, Mantella said.
That is good, but Atlanta just doesn’t have the breadth and depth the big tech hubs have, argued professor and intellectual property expert Marco Ceccagnoli at Georgia Tech’s Scheller College of Business.
But there are clusters.
For instance, REACH Health Inc. found one in Alpharetta, where it has grown to 52 employees, producing videoconferencing/telemedicine technology that lets experts consult in emergencies. The company was born of technology developed at the Medical College of Georgia, said Richard Otto, CEO.
“Alpharetta is ground zero for healthcare IT,” Otto said.
The company might file for patents, but it hasn’t filed yet. Partly because it has faith in the uniqueness of its software. But also because of what it’s like to file for patents.
“The process takes forever,” Otto said. “We’ll file and it’ll be three years before we know if we’ve got something.”
More important, he argued, is access to venture capital. “If you’ve got the money and you’ve got the people and you’ve got a great idea, you can launch your company here.”
But that is just it: not every innovation finds those items easily.
REACH itself has received funding from TAG, the Georgia Research Alliance, the Medical College and two rounds of equity funding from three different firms – one in Nashville.
So venture funding may be more crucial to a company than having a patent — unless the patent is what convinces the venture fund to invest.
That is one reason to have that patent, acknowledged Otto. “If it’s complicated or if it’s a device, then a patent gives you value.”
While many patents have no business use, having more is better than having fewer, said Todd Scherer, head of technology transfer at Emory University.
“They all represent potential,” he said. “And the more you have — it’s the law of averages — the more likely it is that some will make it to the market.”
Yet even if it is not always living up to potential, Atlanta’s march of start-ups continues, sometimes leaning on patents, sometimes not.
Bill Jones knows both sides of that line.
Jones is CEO of six-employee CollectorDASH, which runs website “communities” for collectors — coins, salt and pepper shakers, action figures, model trains — that kind of thing. Users can also buy, sell and trade their wares.
Named on seven patents involving previous ventures, he shrugs off the idea of filing for another.
“Do I wish I had patent protection? Yes. But do I think it’s necessary? No. There are a lot of things you need to be successful. You need money and time and ideas and you need blood, sweat and tears.”
Over at Atlanta-based Kontrol Freek, which holds patents for video game accessories, CEO Ashish Mistry isn’t hung up on the idea, either. Maybe because Mistry also has an investor’s point of view as partner in BLH Venture Partners, a 4-year-old investment group.
Keep patents in perspective, he said. “Intellectual property is great but it is not the driving factor. It’s about execution. A lot of companies have been bought, sold and gone out of business before their patents were even completed.”
