Some people might say it's time to give Elizabeth Holmes and her "tiny drop of blood" testing company a rest, now that she's seen her imaginary billions disappear and been banned from setting foot in blood-testing labs for at least two years. But stories like hers come along far too rarely. The last great scandal to feature similar amounts of ego and hubris was Bernie Madoff's Ponzi scheme, and so many decent people lost money with him that it was impossible to enjoy his undoing.
The Theranos case is different, and includes the additional "fair game" of a bandwagon full of fawning reporters and VCs. Until Holmes is proven to be certifiably off her rocker, I say Carpe Delictum, and learn from it. This week's lesson: Theranos's patents, and what they reveal about the patenting process.
Anyone who's followed the unraveling of her company, Theranos, could have easily inferred from the references to its patents that there must be some legitimacy to Holmes' work or she wouldn't have received them. But contrary to popular belief, a patent by itself is no indication of a workable concept, much less a disruptive or innovative technology. The fact that Holmes has a long list of patents doesn't automatically elevate her above the likes of legendary snake-oil salesman Clark Stanley, though she might be a little more educated.
Back in the day, the U.S. Patent Office used to ask inventors to provide working models of their "novel" machines as proof that an idea could be put into practice. But sometime after its offices began looking like a hoarder's paradise because of all those models, it stopped requiring them. That means that these days, a patent is essentially an acknowledgement that someone has an idea, along with the cash and determination to try to protect it. Whether it works or not is a different matter.
Furthermore, patent examiners aren't all experts in the field. They rely on online sources to gauge the patentability of an invention, and even if all the relevant information is online, it can be easy for examiners to miss something. How closely one person's idea resembles another's often requires the payment of lawyers' fees to resolve, like too many other things in this life.
Holmes' name was probably on lots of patents because of her very deep pockets, which enabled her to patent blood tests individually, even though the tests used the same (dubious) methodology. After all, it's much more impressive to tote a hefty patent portfolio--almost as impressive as the wheelbarrow of aged diplomats she carted around, calling it an advisory board.
At Big Ass Solutions, we file a lot of patents, both domestic and overseas. It's an expensive process, from first filing to any necessary litigation, but we have to do it. When you spend as much money as we do designing and developing a product, any protection is well worth it. But--and this is the crucial point --any number of patents combined can't compare to the value of the brand. Being honest, building good products and looking out for your customers and employees is infinitely more important. It's what sets this and other successful companies apart.
And hopefully, Elizabeth Holmes has now learned that you can't build a brand based on a collection of patents, an appealing pitch, an evocative wardrobe and big-name connections. Still, she's young enough to have a second act, and if there's anything the public loves more than a scandal, it's a redemption story. Just this week her company announced it had hired new compliance officers "to ensure that it meets the highest standards in its laboratories, medical products and operations." Ha!
Excuse me, that sounds cynical. I meant to say, Hurrah! I can't wait to see what happens next.