Patent attorney Russ Krajec is the CEO and founder of BlueIron, a patent-financing company. Krajec is an angel investor, a registered patent attorney, a former Chief Operating Officer of a venture-backed startup company, and an inventor on more than 30 US patents and applications. Russ started BlueIron because he was frustrated with what he perceives to be a conflict of interest between clients, particularly startups, and patent attorneys.
Every patent attorney knows the problems. We know what the client really should be doing, but the client either doesn’t want to pay for the proper solutions, or cannot afford the proper representation. Wouldn’t it be nice if you could just do what is in the best interest of building the best, strongest patent portfolio possible without having to justify every dime to the client? Enter BlueIron. If you are a startup company and you have patentable technology, rather than calling an angel, you might want to consider calling Krajec, who offers free legal work in exchange for the rights to the patent which he then licenses back to the inventors. The inventors also retain an option to purchase the patent back at any time. The model is much cheaper than angel or VC financing.
I recently had the opportunity to chat with Krajec on the record. We talked about the BlueIron model, why he founded BlueIron, and more generally about his philosophy for protecting early-stage innovations. What follows are some of the highlights of our conversation, focusing on one of Krajec’s major themes — startups need to get to a patent as fast as possible.
Krajec on using the PCT-PPH to accelerate allowances.
QUINN: So is this how you see yourself working with people to build a portfolio for their innovations?
KRAJEC: Typically, what we recommend to a startup company, is not to do the provisional route, which delays the patent, but actually go the opposite direction and try to do a PCT-PPH or Patent Prosecution Highway. I was a co-founder of a startup out in Seattle and we did about 60 or 70 PCT-PPH cases, so I got pretty adept at this. We can typically get a patent issued in 9 to 12 months using PCT-PPH. This is huge for a startup company because that patent is probably the only asset – the biggest asset they have at the time, and that sets them up for their next round of funding or the ability to do outbound licensing or cross-licensing.
Krajec on why he is not a fan of provisional patent applications.
QUINN: I know you have a dim view of provisional applications. And I understand why, I mean, I have my own view of provisional applications. I think provisional applications are absolutely wonderful if they’re done properly, but probably 98% of them are just simply not done anything near properly, and that comes with real costs. I don’t think people really understand what the costs of a poorly done provisional really is.
KRAJEC: I agree with you. I do agree that provisionals have their place, and I think there are some business cases for them. For a startup company, however, they’re most precious asset is time, and the faster they can get a patent issued, even if it’s not very broad or even if it’s not very good, that patent has a ton of value to that startup. A startup company is not worrying about five or ten years from now. They’re trying to get through this month or this year. And the faster that they can get a patent issued, the more value it’s going to have for them, and I’m not against provisionals per se, I don’t like them for startups mostly because they waste time.
Krajec discussing prosecution strategies other than simply filing another RCE.
QUINN: That’s right. Anymore, the right decision may be to go on appeal. Because I see cases sometimes where literally five, six, seven RCEs have been filed. You know, you’re well past the point where you’re going to convince this examiner to issue a patent that you would be willing to accept. But when you’re getting paid for the service, and you’re saying what we need to do is appeal, I wonder how many times the client is really hearing, “What you need to do is help me pay for my kids to go to college”? And the decision is made – just file another RCE. And I think unfortunately, unless you have people on the inside of the companies that are real good consumers, meaning to some extent they have some familiarity with the laws and the process. It’s like ships passing in the night and you almost cannot be anything more than that.
KRAJEC: Right. You know, my favorite strategy when I was in-house counsel was to use the pre-appeal conference, especially if I was right and I had a legitimate argument. I use the pre-appeal conference as much as possible. I’d even use it in the second office action if I had a second non-final, and, if I was right, I’d use it right away. And I found those kind of strategies as something that would be very difficult to explain to a client and convince them that we’ve got to do it, and then, of course, send them a bill for it, too. Because they don’t like getting the bills.
For the full transcript please see Patent Financing: An alternative path to protection for startups.
Tags: BlueIron, patent, patents, pct-pph, PPH, provisional patent applications, Russ Krajec
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