One of the questions I regularly get asked when I’m out trying to raise money from VCs for my latest brainstorm is whether I have a patent behind the idea. I’ve never bothered as I don’t really think that the majority of the businesses out there are successful because they’ve protected their intellectual property with a patent, but rather because they just out-compete their competitors. Plus new businesses have a habit of radically changing as you put them together which can easily invalidate the defense a patent provides. Plus I’m a fan of open source…and so on.

What I didn’t realize until I read a post in the Patent Law Blog on the cost of maintaining a patent (after shelling out all the cash to get it in the first place) is that maintenance feeds are rather pricey - especially if you aren’t making money from the patent and have to write a check from your personal checking account.

For most categories of patent owners, the maintenance fees after issuance are $980, $2,480 and $4,110 at 3.5 years, 7.5 and 11.5 years, respectively (I did wonder about the reason for the 0.5…). If the fee is not paid, the patent is forfeited and this cost results in a of patents expiring before their time.

Something to think about before you take that napkin into your lawyer for a quote. I wonder if this is why Lego lost its patent years ago? Perhaps they forgot to pay the bill.

Mercury News is reporting that Silicon Valley produced a single, solitary IPO in 2008. Since taking companies public is primarily what the valley is set up to do (OK, they sell them too but they all want an IPO and selling is the consolation prize), this is a pretty scary statistic and does not bode well for the health of the various venture funds operating on Sand Hill Road.

“IPOs are a closely watched barometer of the valley’s unique economy. The current paralysis is in stark contrast to the IPO frenzy during the so-called “irrational exuberance” of the late 1990s, when several e-commerce startups raised millions of dollars without turning a profit. The bursting of the dot-com bubble vaporized investments and caused about 200,000 jobs to disappear”

The company, ArcSight (NASDAQ: ARST) has actually done pretty well in this era of 40% declines in the index as they are almost trading at their IPO price. We all should be so lucky.