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Five Trillion (And Two) Reasons Patents Matter
By: Lou Basenese   Thursday, May 3, 2012 9:39 AM
Symbols: AWRE, INTC, MSFT
economic growth and national competitiveness."

I'd say so. Especially since the study's authors also confess that the figures "tend to under-represent the broad impact of IP in the American economy." So the total impact of IP on U.S. economic growth is even greater than that $5 trillion figure.

What's the bottom line? Joff Wild of Intellectual Asset Management, sums it up perfectly, saying, "IP is of fundamental importance to American prosperity and economic growth." Indeed.

The problem is that so few people understand this reality.

For instance, the Financial Times downplays patents as merely "ammunition in the (tech) industry's increasingly heated round of legal battles."

And Ron Laurie, a patents expert in Silicon Valley, also draws battle analogies, saying, "It sounds like the cold war arms race."

But both are missing the mark.

Sure, patents help defend against legal actions. But the real value of patents isn't insurance. It's the economic value they create. Year-in and year-out.

As the USTPO study concluded, "Innovation has a positive pervasive effect on the entire economy, and its benefits flow both upstream and downstream to every sector of the U.S. economy."

In other words, IP is a key driver of economic growth.

Companies get that IP matters. That's why they continue to innovate and patent technologies.

It's also why they continue to hunt and compete for valuable patents capable of generating additional economic benefits. As AOL's Chief Executive, Tim Armstrong, said, "The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio." In other words, multiple companies were interested in the potential to monetize AOL's patents.

A few Wall Street firms get it, particularly MDB Capital. But most investors still don't have a clue.

Bottom line: Don't be blind to the investment opportunity IP represents. As I told you before, close to 50% of the approximately 3,900 public companies that have patents are small and/or micro caps. And since analysts pay less attention to these stocks, we can exploit information inefficiencies for outsized profits.

Like subscribers to my VIP advisory, MicroCap Tech Trader, just did. On February 24, I recommended they buy Aware based on the merit and value of the company's patents. Now they're sitting on a profit of 56%.

I assure you, the market's ripe with many more opportunities to profit from IP. That is, as long as we're willing to take the time to do some good old-fashioned due diligence to find them.

Ahead of the tape,

Louis Basenese

P.S. Each week, I alert a select group of readers to the very best opportunities to profit from patents. I'm convinced this trend represents "one of the biggest opportunities of the next decade." If you want to be included on my exclusive list, sign up here.


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