Episode 28: "Patents Won't Save a Bad Business" | Patent Expert Russ Krajec on IP-Backed Lending, Why Patents Create the Most Value at Year 15, and Common Angel Due Diligence Mistakes

The Diligent Observer Podcast

Insights from a patent strategist who's authored 1,000+ patents and is revolutionizing IP finance through patent insurance and IP-backed lending at BlueIron

Today's episode explores three ideas that caught my attention:

1. Provisionals are never a good idea - Founders who file provisional patents are explicitly saying they don't value their IP enough to spend an extra $600.
2. Insurance vs litigation reality - Patent lawsuits are 10x more common than D&O claims, yet investors often push for D&O coverage while ignoring patent insurance.
3. Trade secrets are sometimes better kept a secret - Sometimes patents hurt by forcing public disclosure of processes better kept as trade secrets. Key example of why "more IP" isn't always better.

I explore these ideas and more with Russ Krajec, Founder of BlueIron.

Russ Krajec brings a refreshingly pragmatic view to intellectual property strategy, shaped by writing over 1,000 patents and pioneering IP-backed lending at BlueIron. As a "recovering patent attorney" and author of "Investing in Patents," he challenges conventional wisdom about startup IP strategy while providing practical frameworks for both founders and investors to evaluate patent decisions.

During our conversation, Russ shares:

• The dangerous economics of contingency litigation - breaking down why cases need $50M+ potential returns.
• Sector-specific IP strategies - contrasting approaches for medical devices vs software products.
• A practical perspective on patent value focused on realized versus potential revenue protection.

Connect with Russ

LinkedIn | Website

Stuff We Reference

• Charlie Munger
• Jerome Lemelson
• Patenting the filament for the lightbulb by Thomas Edison
• Apple’s slide-to-unlock vs. Samsung
• U.S. Patent and Trademark Office (USPTO)
• Patent Cooperation Treaty (PCT)

Know someone who would enjoy this episode? Share it with them!

P.S. Your feedback is important to me. Also, it tells the algorithms to pay more attention, which helps me out a lot. If you enjoyed this episode, hit the "like" button or leave a comment with your thoughts.

Want more?

• Get essential angel intel straight to your inbox every week with The Diligent Observer Newsletter.
• Check out the entire show library and follow via Apple Podcasts, Spotify, and YouTube.

Connect with Andrew

LinkedIn | X | Angel Ops E-Book

All opinions are personal and may not reflect the views of The Diligent Observer. Not investment advice.

Chapters

1. Introduction (00:00:00)

2. Understanding Patents: Basics and Misconceptions (00:01:56)

3. The Value of Patents in Business (00:03:10)

4. Challenges and Pitfalls of Patents (00:05:24)

5. Provisional vs. Non-Provisional Patents (00:08:14)

6. IP Strategy for Startups (00:11:07)

7. Evaluating Patent Strategies (00:13:58)

8. Provisional Patent Applications: A Deep Dive (00:17:22)

9. The Importance of Patent Insurance (00:29:07)