Rembrandts in the Attic
The book that turned dormant patent portfolios into a revenue line.
Summary
Kevin Rivette and David Kline argue that most companies treat patents as legal defensive assets managed by their lawyers, when they should be treated as financial and strategic assets managed by their executives. The title refers to the valuable patents companies own without knowing it.
The cases are the argument. IBM restructured its patent licensing in the 1990s and raised annual licensing revenue from roughly thirty million dollars to over a billion. Texas Instruments used its semiconductor patent portfolio to generate licensing income that exceeded its product profits during a difficult period. Dow reorganised its intellectual property management, cut maintenance costs on patents it did not need, and identified assets it could license. The authors also cover defensive uses, including patent fences built around a competitor's core patent to limit its practical value, and the analysis of competitors' portfolios to infer their research direction.
The book appeared at the peak of enthusiasm for intellectual property as a profit centre, and its recommendations have been substantially qualified since. Bessen and Meurer's later empirical work found that outside chemicals and pharmaceuticals, patent litigation costs exceed patent profits for public firms, which undercuts the general case. The aggressive licensing model the authors praise also contributed to the assertion entity industry. The specific techniques for portfolio mapping and for reading competitors' patent filings remain useful.
Key takeaways 7
- Most companies manage patents as legal defences rather than as financial assets with measurable returns.
- IBM raised patent licensing revenue from tens of millions to over a billion dollars annually by managing the portfolio commercially.
- Companies pay maintenance fees on large numbers of patents that serve no defensive or commercial purpose.
- Mapping a competitor's patent filings reveals its research direction and product plans before any announcement.
- Building patent positions around a competitor's core invention limits the practical value of that invention.
- The authors argue that patent strategy belongs with senior management rather than with the legal department.
- Later empirical work found that patent litigation costs exceed patent profits for most public firms outside chemicals and pharmaceuticals, which limits this argument's scope.
Who should read it
Executives with substantial patent portfolios who want techniques for commercial management of them, read against the empirical work questioning the general case.
Where it sits in the reference 2
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