An important function of a business is to create value. This can take the form of value for customers, value for clients or value for investors. One form of value that is often overlooked, or delayed in terms of when it is developed into an asset, is the value obtainable from innovations created by employees and consultants. This value can be captured by a properly constructed patent portfolio and used to create new value and to prevent the loss of previously created value.

Because patents are generally associated with innovation, an increase in a company’s patent portfolio is typically interpreted as evidence of innovation by the company. For investors (including employees who have equity), patents provide an assurance that a company’s innovations are being protected. This enables the value associated with those innovations to be realized in ways that are not limited to the sale of a product. This can provide an “exit strategy” in the event that the business is not successful, in which case some of the capital invested may be recouped via sale or licensing of the patents. Capturing the value of innovations in this way can also assist in raising capital during operation of the business because it suggests that new products and services are being developed, and with that the possibility of increased market share and new sources of revenue.

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