In the TV show “Shark Tank,” a business owner stands before five potential investors (the sharks) and asks them to invest in a business in exchange for a percentage of the equity. Invariably the conversation turns to patents. “Do you have a patent on your idea?” the sharks ask. “Yes,” replies the business owner. With that final nugget of information, the sharks may offer $50,000, $100,000, or even more, in return for partial ownership in the company.

I’m always amazed when people base their investment decisions (at least in part) on whether someone owns a patent. True, patents can be worth substantial amounts of money. In 2013, Kodak sold 1,100 patents for $525 million, and Microsoft purchased 800 AOL patents for more than $1 billion. In 2011, Google purchased Motorola Mobility (with its 17,000 patents) for $12.5 billion, and six companies (including Apple and Microsoft) combined forces to pay $4.5 billion for 6,000 patents from bankrupt telecommunications company Nortel Networks.

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