Clause 8 Podcast: Louis Carbonneau on Brokering Patents After the Patent Gold Rush

The golden age for patent brokers has come and gone, but that doesn’t stop Louis Carbonneau.

“There are very, very few patent brokers nowadays,” Carbonneau says. “We’re just one of a handful left. And frankly, we get about four or five portfolios every single day that people want us to broker. We only say yes 1% or 2% of the time.”

As one of the world’s leading patent brokers, the CEO and Founder of Tangible IP has brokered over 4,500 patents and boasts close to 30 years in the intellectual property industry.

With experience as Microsoft’s former General Manager of International IP & Licensing, Carbonneau has sat on many sides of the intellectual property table. He shares his adventures in the industry and lessons learned with Eli Mazour, host of the Clause 8 podcast, including behind-the-scenes stories from his time at Microsoft, the common pitfalls of patent licensing, and why price isn’t always an essential part of the conversation when buying and selling intellectual property.

“Some people will not even want to acquire patents for free if they don’t like the patents because then they have to start paying for maintenance fees and prosecution fees. It’s like a free puppy. It’s only free for a few hours, and after that, you start paying,” Carbonneau explains.

Those that are interested in selling their patents need to understand what brokers — and buyers — are looking for in a deal.

Highlights

[05:18] How a patent deal saved Apple: the creative deal that Microsoft offered Apple in the late 90s.

[17:38] The Intellectual Ventures pipe dream: why experienced patent experts at Microsoft were skeptical of Nathan Myhrvold’s idea.

[24:49] What makes a good deal?: secrets to successful patent transactions

[39:35] Seller pitfalls: Carbonneau talks about the different types of people looking to sell their patents and cautions against making common patent license mistakes.

[44:47] Patent prosecution is ‘part art, part science’

[49:37] The perfect patent: It’s hard to find the patent that everybody likes and it’s not always about price, either.  Buyers often face challenges finding patents worth acquiring.

Carbonneau on why business units refuse to sell patents:

“Everyone I’ve ever talked to that does the job I used to have knows that the hardest thing in life is to pry patents out of the business unit when you want to sell them and monetize them. These business units couldn’t care less about patents until you tell them you’d like to sell them. And then they become extremely territorial because it’s human nature. They say, Wait a minute. If we sell or license these patents to a third party and these guys end up building a killer app, that makes us look bad. We don’t want to be those guys. They will fight tooth and nail for no other reason than to avoid embarrassment.”

Carbonneau on surviving as a patent broker over the last decade:

“My thought was always that any market is cyclical by nature. We’re just going to hunker down and survive through this cycle. And then when things get better we’ll be in a really great position with a better market share. All this turned out to be true. There are very, very few patent brokers nowadays. We’re just one of a handful left. And frankly, we get about four or five portfolios every single day that people want us to broker. We only say yes 1% or 2% of the time, so we have no problems finding patents to sell. But we have problems finding buyers to buy. So the prediction about market share turned out to be true. The prediction about the market getting better is still unfolding.”

Carbonneau on dealing with mistakes made during patent prosecution:

“There are still a lot of mistakes made by people who draft patents. I just wish there were better tools to catch those [mistakes] and fix them because when we look at these patents all we can do is bang our head on the walls.”

Carbonneau on why prices is far from the most important factor when selling patents: 

“The problem is, it’s unlike real estate where you always end up finding the right house because if it’s not perfect, you just lower the price. With patents, it’s not really price related. Obviously, there is a price component, but regardless of the price, some people will not even want to acquire patents for free if they don’t like the patents because then they have to start paying for maintenance fees and prosecution fees. It’s like a free puppy. It’s only free for a few hours, and after that, you start paying.”