By: Mandi Matz, Senior Consultant

The year 2026 marks my 20^th anniversary working in development and prospect research. Remembering the first year of my career, I laugh at myself because I realize how much I didn’t know. I was so overeager not to miss anything in my research that my first profiles were as long as term papers, a bad habit of which my then-boss soon cured me.

I also remember that the first prospect I was assigned to research was a real stumper. He owned complicated real estate, a lot of stock and several patents. Being completely green, I spent too much time trying to figure everything out, including how much he may be earning from those patents.

All these years later, I’m still a bit baffled by patents, so I asked an expert: My brother Aaron Matz, who’s a patent litigator. It led to an interesting conversation between adult siblings who started our respective careers at about the same time.

So, here’s a patent primer. If you encounter prospects with patents, I hope it will be helpful. It certainly has some information I wish I knew way back when.

What is your background? How did you become a patent attorney?

I have a degree in electrical engineering from Caltech and went on to a Ph.D. program at MIT. When I started working, I was as an engineer for Motorola and later General Dynamics, which bought my division of Motorola. After a few years, I decided to apply to law school on a lark. I kept working while I was in school, and I earned my J.D. from Arizona State. That was 20 years ago. I’m a senior attorney in the Phoenix office of Perkins Coie.

Is it common for engineers to become patent attorneys?

It’s not necessary for patent attorneys to have an engineering background, but for engineers who do become lawyers, it is fairly common.

What do you find most interesting about your work?

Getting to work with inventors and people who are experts in technology. I’ve met people who have invented fundamental things that are now in absolutely everything. For example, for one case, I met some of the people who invented a very early version of Wi-Fi. For another case, I met with the inventors of what’s basically the little computer that’s in every cellphone.

Let’s go through some patent basics. If a prospect researcher comes across a patent, what are the first few things they should look at to understand its significance?

The very first thing to look for is the assignment of the patent. The assignee is the owner.

Are there reliable public databases or tools you recommend for researching patents, and how should a beginner approach them?

You can always start at the U.S. Patent and Trademark Office (https://www.uspto.gov/). It’s searchable and has good resources for those that are new to intellectual property. There’s also a section specifically for researchers and librarians (under the Learning and Resources tab) that might be helpful.

I like Google Patents (https://patents.google.com/). It’s free and more user friendly than the USPTO site. It’s also good for searching for international patents. I find the best way to search is by a person’s name and the patent number, if you have both of those pieces of information.

Who can apply for a patent and how long does it take before it’s issued?

Anyone can apply for a patent. You don’t need a lawyer to apply, but it can be helpful to have one. The typical time until the patent is issued is two or three years.

Are there different types of patents?

The two most common types – the types that you as researchers are most likely to encounter – are utility patents and design patents. Utility patents cover something that you make or how you use it. Unexpired utility patents will have a seven-or-eight-digit number. Design patents cover the aesthetic design aspects of an object. These patents are designated by “D” followed by a number.

How much does it cost to apply? Is the fact that a prospect applies for a patent a wealth indicator?

Could be. The fees for a patent are usually a few thousand dollars over the life of the patent, including the application fees, the issue fees and the maintenance fees. Of course, if someone uses a lawyer to apply for a patent, the cost is substantially more. One thing you can find out from the face of the patent is if the person used an attorney or agent. So, if you have a prospect who has numerous patents and you see that they used an attorney each time they applied for one, you can assume that they have some wealth.

Interestingly, the U.S. Patent Office is one of the few government agencies that is self-funded. All of its funding comes from the various fees.

Who typically owns a patent – the individual inventor, their employer or another entity?

In the vast majority of cases, the assignee is the employer of the inventor(s).

So, what does it actually mean when someone is listed as an inventor on a patent? As researchers, does that tell us anything meaningful about their financial situation?

In and of itself, no. When someone applies for a patent, they are required to list all of the inventors. In the most common scenario, the inventors work for a company or in academia. In that case, the institution almost always owns the patent. The inventors may get a bonus of some kind from their employer, but they aren’t otherwise making any money from the patent. Their employer most likely isn’t making any money from the patent either.

As researchers, we are always trying to figure out how much a prospect is potentially worth. So, what are the ways patents actually generate money?

There are three ways a patent can generate money: licensing, litigation and sale. Licensing is probably the most common of the three.

In cases where litigation is involved, the patent owner can sue for damages, but that’s limited to a six-year window. At least 95% of cases settle before trial, typically because of the cost and level of risk involved in a trial. Most settlements are confidential so while you can find out that a settlement occurred, it is unlikely that you will be able to find out any financial terms or details.

Think of litigation like a funnel. A very small number of patents have gone to litigation. Of those, a very small number have gone to trial. Of the ones that have actually gone to trial, only a fraction have resulted in damages being awarded to the patent owner. If damages have been awarded, that is a matter of the public record. But even then, it is almost impossible to determine how much an individual inventor or owner may have received.

Sales of patents are relatively uncommon. They most often occur when a company goes bankrupt and the patents are sold out of the bankruptcy or when a company is getting out of a certain line of business, so they sell their patents to another company. Sometimes the company selling the patents will retain a back-end interest, or it may be an outright sale. But again, it’s very difficult to find financial information in this case.

Do most patents ever generate meaningful income, or is that rare?

Patents come from the Constitution. The original patent law was written in 1790. Since then, more than 12 million utility patents and more than one million design patents have been issued in the U.S., the vast majority of which have never been licensed or subject to litigation, meaning they’re pieces of paper that have never generated any money.

I had no idea patent law is that old.

Here’s another fun fact. Abraham Lincoln held a patent. It was issued in 1849 for an invention that lifts boats over obstructions in a river (https://www.uspto.gov/learning-and-resources/journeys-innovation/abraham-lincoln).

Back to the basics. We’ve talked about patents and inventors who work for large institutions. Are things different for someone who works for a startup or who is an independent or garage inventor?

If the person works for a startup, the same rules apply. The assignee of the patent will usually be the employer, and the inventor will not be earning anything from the patent, but they may get some kind of bonus.

The one thing that may be different is if the inventor is a founder of the company. A founder is more likely to have an ownership stake in the company that owns the patent, particularly if it’s their own company. So, if they are able to license or sell the patent, that will affect their bottom line more than if they are just an inventor who works for a big company in which they don’t have a significant stake. But still, even with a company founder, it’s very unlikely that you’ll be able to find specific information about how much they may be earning from that patent.

Sales of patents by garage inventors are extremely rare.

Are there certain industries that are more likely to produce financial returns?

This is where the garage inventor may have a chance. Smaller, simpler inventions that don’t require a lot of capital or the infrastructure of a large company or academic institution behind them can be profitable. The type of thing you see on Shark Tank: Something some friends made in their spare time. If the inventors hit it “big,” meaning they licensed or sold their invention and made some money from it, you may find some information about that in a news story online.

That scenario is really one-in-a-million, but it can happen. One example of this is the Super Soaker, that toy water gun. (The Super Soaker was invented by Lonnie Johnson, who was trained as a nuclear engineer. In 1989, he licensed his famous invention to Larami Corp. Two years later, the Super Soaker generated more than $200 million in sales and became the #1 selling toy in America. The Super Soaker has generated more than $1 billion in sales over its lifetime: https://www.invent.org/inductees/lonnie-johnson).

There’s also an interesting movie (Flash of Genius from 2008) with Greg Kinnear, where his character (Robert Kearns) develops an intermittent windshield wiper. That’s another case of a garage inventor who made some money. The movie, which is based on a true story, does a pretty accurate job of showing the patent process to the layperson.

(After we talked, Aaron sent me this article about inventors who became rich from their patents. Included in the list? Lonnie Johnson and Robert Kearns: https://www.slashgear.com/1636698/patents-that-made-founders-rich/).

It seems like it’s virtually impossible to tell whether a patent is being monetized.

That’s true. It is very rare that you can find monetary information in the public domain. You can do a news search and see if the patent has been subject to litigation, but the financial terms are rarely disclosed. If a public company is involved, there may be something in the SEC filings. But even in those filings, while there may be information about litigation, the amount of money involved is rarely detailed.

The inventor Jerome Lemelson is a rare example where you can find some information. He owned hundreds of patents, on his own and through a foundation controlled by him (the Lemelson Foundation). You can certainly find estimates of his wealth, but there are also controversies surrounding the validity of his patents and the tactics he used to extend them, to the point where patent law was changed because of him.

Do expired patents have any relevance when evaluating a prospect’s past or present wealth?

Most patents don’t expire for 20 years from the filing date. If the patent was licensed, once it expires, the assignee is no longer earning any licensing revenue from it.

AI is on everyone’s mind. How may it affect patents?

It’s hard to say. It’s likely that more and more patents will be written by AI, and AI will be used in the examination process. The use of AI likely will mean that the quantity of patents being issued will go way up and the quality will go way down. In that case, patents will be worth less, at least in the short term, until the patent office catches up in terms of using AI technology. But that’s just a guess. As with everything AI, there’s a lot of speculation about how it will affect all kinds of things.

If you had to give prospect researchers one piece of advice about how to interpret patent information, what would it be?

Temper your expectations for finding financial information. It’s ironic. The purpose of a patent is to make the details of the invention public, yet it’s very difficult to find information in publicly available sources about how much it’s worth. Don’t spend too much time trying.

But that doesn’t mean you should ignore a patent if you are researching someone. Remember that it costs thousands of dollars to apply for a patent, especially if you use a lawyer. Wealth indicators that you can find in public sources – like real estate, clues that suggest a lavish lifestyle, things like that – may mean that someone has made some money from a patent, although you likely won’t find out or be able to figure out exactly how much.

Anything else we should know?

Although its imperfect, the U.S. probably has the best patent system in the world, bar none.