Innovation Asset Blog

Patent scarcity could hinder Twitter's IPO hopes

As Twitter prepares to open itself to public investors, there are several factors giving financial analysts pause. One of these is Twitter's approach to intellectual property - the company owns a total of just nine patents. In contrast to Twitter, Facebook had 774 patents prior to its own IPO. Twitter's corporate philosophy is to allow developers and designers to retain more comprehensive control of their creations. 

Twitter claims its policy is a good defense against patent assertion agencies, though it leaves the company open to many other issues. For example, intellectual assets like patents guard against infringement from possible competitors. Foregoing this protection may make it difficult for Twitter to attract investments, as there is no guarantee its microblogging service will not be infringed upon. In the event of litigation, Twitter would have very little to stand on but its nine patents. Furthermore, the company's decision to leave intellectual property rights with its employees means competitors could gain access to many key innovations should workers depart in search of separate opportunities. 

Those who defend Twitter's practices around intellectual property say it is disrupting a broken system by choosing not to file patents. However, investors are concerned because the system Twitter is flouting is the same one it exists within, and no amount of disruption removes the dangers of poor intellectual property management.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.