OtherSpeak Softly and Carry a Big Stick in the Economic Garden

Written testimony for Senate Bill 531 contributed by Sam Pardue, Entrepreneur

Sam Pardue, Founder & CEO of Indow Windows, is looking for several other startups whose businesses would benefit from better protection of their IP to testify with him at the State Legislature this Wednesday, March 6 at 3pm.  Entrepreneurs are invited to join Sam in  Salem or have the option to phone in. 

One of the greatest problems facing emerging enterprises is the risk that a larger competitor will infringe on valid intellectual property, knowing that the cost of prosecuting an IP infringement case is beyond the means of most startup companies.   Partly for this reason, most angel and venture investors do not place much value on a startup’s IP portfolio when considering an investment.

As part of its economic gardening strategy, the state of Oregon should consider forming an intellectual property defense fund for phase 1 and phase 2 Oregon-based entrepreneurial ventures.  If a startup company secured protection through the Oregon IP Defense Fund, it would be able to deter potential infringers, giving the startup an essential opportunity to gain scale.  The deterrent power would make the IP portfolios of Oregon startups more attractive to angel and venture investors, leveraging additional capital.
The key math that would allow this mechanism to generate substantial social return is if the State of Oregon could use the fund to deter potential competitors more efficiently than standard devices.  If the defense fund deterred potential competitors efficiently, thus avoiding expensive lawsuits, the insurance fund could make a profit and grow larger.  The fund could also command lower IP insurance rates for a spectrum of Oregon startups by pooling greater purchasing power.

The State of Oregon is in an excellent position to signal, with a very big stick, the intent to defend the IP from a vetted group of startups.  This type of innovative public-private initiative has the PR potential to get national media coverage, and every bit of PR would help signal Oregon’s credible intent to protect our local companies as well as our friendliness to startup companies.  Entrepreneurs would be encouraged to consider Oregon as a location for their startup.

If the state’s annual investment went partly to principal and partly to pay premiums, it could build a larger fund over a period of years.  As the stick got bigger, the deterrent power would grow and the state could extend coverage to more companies.  Eventually the positive dynamic could encourage more innovators to locate their businesses in Oregon to gain shelter under our IP defense umbrella.

This fund represents an opportunity for the State of Oregon to boost its creative class.  You could think of the Oregon IP Defense Fund as a mangrove swamp for the little fish as they get ready to swim with the sharks.  What better way to invest in the creativity that has become a hallmark of our community?

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