Every economy depends on an asset that behaves unlike any other kind of property: an idea. A house can be locked. An idea, once discovered, can be copied at zero cost by anyone who hears about it; it is a “public good,” non-excludable, and for that reason chronically underproduced by any market left to itself. If everyone benefits from finding a new piece of information, but one person alone bears the cost of discovering it, the rational move is to wait for someone else to make the investment. No one makes it, and we are all the poorer for it.
Solving that problem has occupied Jon Putnam‘s entire career, from agricultural economics to some of the highest-stakes intellectual property disputes in the country. Jon Putnam is an intellectual property economist and testifying expert. His firm, Competition Dynamics, was built around one question: what an idea is worth, who paid to discover it, and how markets, and occasionally the courts, should reward the discoverer.
Public Goods and Private Incentives
Jon Putnam traces his interest to an undergraduate fascination with productivity: how economies produce more output from the same quantity of inputs. The most reliable way to do that, economists have shown, is discovery: new products, or new ways of doing old things, which requires investment in research. That research produces information, the public good that nobody can be excluded from using once it exists and that, as a result, is underproduced.
The non-excludability of discovery, and the social problem of underinvestment in it, are characteristic of his larger intellectual interest: an attraction to markets where the ordinary rules break down. “I’ve always liked the pathologies, the exceptions where the usual economic rules don’t apply,” he says. “If the earth were flat, I would want to be near the edge, to see what happens.”
His Yale senior thesis examined one solution: government research investment in improving agricultural yields. That project was an early indicator of his later work on the patent system, the government’s creation of a private-sector solution: the patent system. The patent system requires an inventor to publish the new information she has discovered, so others can learn from a discovery, while granting a temporary right to exclude others from using it in particular ways. “It’s a fascinating solution to a fascinating problem,” he says.
That fascination pulled him further in. His first job involved counting patents to measure research outputs at U.S. state agricultural experiment stations. After enrolling in Yale’s graduate school, he won a fellowship to study intellectual property at the law school, then another to collect data on the same invention patented in multiple European countries. His Ph.D. dissertation attempted something larger still: measuring the value of every patent in the world. To help pay for his dissertation, he became an intellectual property testifying expert, “which is also kind of an exotic animal,” he notes. He had no idea at the time that this would become his life’s work.
Why Value Is So Hard to Pin Down?
A simpler problem is how firms value their own patent portfolios. Ask him why executives struggle to put a value for their intellectual property on their own balance sheets, and Putnam offers a list, not a single answer.
Intellectual property is usually unique by definition, not a differentiated product like a pickup truck. It’s rarely traded on an open market, and when it moves, it moves in bundles, transacted as a portfolio rather than priced piece by piece. And even then, those prices are usually confidential. Further, even without observing individual prices, economists know that the distribution of patent values is highly skewed compared to physical assets: pickup truck prices don’t differ by more than a factor of two or three, but the top five percent of patent rights are worth four to five times the average, Putnam says, the top one percent more than 25 times and the most valuable patent in a portfolio of 10,000 more than 150 times.
Layered on that skew is the invention’s “option value”: an early-stage patent may look worthless because it’s unproven, but then its value increases enormously as further development, such as clinical trials, identifies its true worth. Even more often, however, promising innovations fail to realize their potential.
There’s a structural wrinkle, too: because patents require public disclosure, a patent “carries the seeds of its own destruction,” Putnam says. Some inventions are easy to invent around; others aren’t, and which category a given patent falls into is often uncertain at the outset.
Finally, inventions never operate alone. They depend on complementary assets, like product development, sales, marketing, distribution. Untangling how much profit is attributable to the invention itself, versus all the infrastructure built around it, is a dispute that arises even inside organizations. Putnam compares it to a team sport: which player caused the team to win, and what should be that player’s share of the winnings.
For all these economic reasons, and many other legal ones, disputes between companies often produce vastly different estimates of the value of a single invention. When a firm must reliably value thousands of such inventions reliably, for the benefit of its investors, it is easy to see why the answer to the question is almost always, “Not Available.”
Qualcomm and the Price of Ideology
Few disputes illustrate the stakes of that valuation problem more clearly than Qualcomm’s, one of the largest patent licensing fights of the last decade. Putnam served as Qualcomm’s expert when the Federal Trade Commission and Apple, Qualcomm’s own biggest customer, sued the company over its “no license, no chips” policy. Qualcomm, he notes, is one of the most innovative companies on the planet, yet it was being attacked simultaneously by its regulator and by the customer whose products depended on its technology. The trial judge granted summary judgment to the plaintiffs before trial began, leaving only the size of the damages to be decided.
While the government took the position that Qualcomm had market power – that is, its prices were “too high” – the government’s economists could not answer a basic question: too high, in relation to what? Putnam and his colleagues built an innovative econometric model, drawing on every industry license, to test whether Qualcomm’s royalty rates were excessive compared to other “fair” agreements. Given the scale and quality of its patent portfolio, Qualcomm’s terms were found to conform to industry norms. Eventually, the Ninth Circuit reversed the lower court and granted summary judgment to Qualcomm.
The lesson Jon Putnam draws is blunt. “When economists don’t do their job, ideology takes over, and that almost always comes at the expense of justice,” he says. No company, however innovative, is immune. He traces the deeper problem to regulators who, in his view, don’t know how to analyze market prices under dynamic competition. It’s a problem pervasive enough that he named his own firm after it: Competition Dynamics exists, he says, “to pose and solve these next-generation questions.”
The Quality-Adjusted Price of Progress
Ask Jon Putnam about the tension between intellectual property law and competition law, and he rejects as “naïve” the framing that IP law drives prices up while competition law drives them down. He’s equally critical of the fashionable answer from antitrust agencies over the last two decades, that the two bodies of law are simply “complementary.” That framing, he argues, asserts harmony, and sounds appealing, but does not engage the real economic relationships among exclusivity, competition, and price.
Jon Putnam argues that the question of how competition and IP law impact prices prompts another question in return: “What do you mean by ‘price’?” Putnam’s answer turns on a distinction economists draw and lawyers often miss: between the nominal and quality-adjusted prices of a good. An orange that costs $1.39 today and $1.49 tomorrow has gone up in nominal price. But if the higher-priced orange comes with higher quality, and consumers prefer it anyway, the quality-adjusted price of the orange has actually fallen. That, Jon Putnam says, is the entire logic of the patent system: to induce investments in improved quality with the promise of higher nominal prices, so the resulting quality-adjusted price falls and consumers end up better off. That is, says Putnam, what the Constitution calls “promoting progress.” Antitrust agencies, which are built to regulate static competition using tools that mostly measure nominal prices, are poorly equipped to capture or evaluate the dynamic effects of technological change on quality-adjusted prices.
Jon Putnam says that there’s a second wrinkle to the tension between antitrust and IP law, particularly in an era of dominant technology companies: a firm’s incentive to invest in research generally rises as its market share increases, since a larger firm can spread its research costs over more sales. A firm’s “research intensity”, the share of sales it devotes to R&D, peaks when an industry has only two or three large firms fighting to steal each other’s customers. But once a firm closes in on becoming a monopolist, it often grows complacent, even if it is historically successful and innovative. Putnam points to Apple, whose research and patent output in recent years has lagged its peers as it has leaned into a “walled garden” strategy in which Apple has a monopoly on iOS-based products. “I’m old enough to remember when Apple was the quirky upstart punching above its weight in its competition with Microsoft,” he says. “It’s sad, but predictable, that the repeated consequence of great market success is lethargy and the defense of incumbency against potential entrants and outsiders.”
Executive Blind Spots
Over decades of advising companies across sectors, Jon Putnam has developed a running list of misconceptions leaders, lawyers, judges and/or policymakers carry about intellectual property.
The first myth is that innovative companies always favor strong patents. Particularly when a company’s monopoly power is due to other factors, like network effects, incumbent monopolists like Apple or Google often favor weak patent rights. The policy goal, he concludes, should be for patents to convey strong, exclusive rights, which allow new entrants to gain a foothold in the market and challenge incumbents’ complacency. Paradoxically, most of the time patents limit monopoly instead of advancing it.
A second myth: that a technology not invented in-house carries little value. Jon Putnam points to Apple’s position on patents essential to telecommunications standards like 5G, the idea being that since every competitor practices the same standard, and only facilitates interoperability between competing products, the standard itself can’t differentiate products in the marketplace. He calls this a category error: each succeeding standardized generation adds enormous value, even without “additional interoperability.” In simulations his firm ran, for example, Apple’s losing access to 5G, and having to fall back on 4G, would have cost tens of billions of dollars in profit.
The third: treating intangible property rights the same as tangible ones. In practice, competitors, courts, and patent owners themselves quietly assign IP a kind of second-class status, especially internationally, where enforcing rights in countries whose advantage lies in manufacturing is difficult. “Possession is nine-tenths of the law,” Putnam notes. Because intangible property is harder to possess than the tangible product that embodies it, it is more easily misappropriated, and countries whose comparative advantage lies in manufacturing rather than innovation have little incentive to compensate for that misappropriation, easily or at all.
The fourth: that building a better mousetrap is enough. Technological improvement alone rarely wins a market; companies still need sales, marketing, distribution, and reputation. Markets are littered with the carcasses of failed innovative companies that were beaten by less innovative companies who knew the basic blocking and tackling of business.
Finally: that a failed company means failed technology. Even when a company fails, its technology often hasn’t. Often, its “exit strategy” is to sell off its IP in a secondary market so investors recover some capital. That market has given rise to so-called patent trolls, a label Putnam treats with nuance: while some buyers acquire patents purely to extract nuisance payments from large targets, the broader market functions efficiently to reward the original research investment behind the technology, even if indirectly, and even if the patent plaintiff doesn’t “make anything,” which is, in Putnam’s view, an “economically meaningless” distinction.
Truth, Trust, and the Machine
Asked what technologies excite him most right now, Jon Putnam points first to medicine: personalized therapeutic treatment. He survived Stage 4 cancer through a clinical trial that used targeted immunotherapy. “Needless to say, I’m a big fan,” he says.
Artificial intelligence draws a more guarded response. For Putnam, AI implicates a society’s relationship with truth, which he insists is not simply “what most people think is most likely to be true most of the time.” He once asked a generative AI system to describe his own professional record; it returned a cheerful, confident account, until he asked about a specific case, where it mixed up the plaintiff and the defendant, who his client was, and the verdict itself. He doesn’t see a reliable way to force a generative system to tell the truth, partly because people themselves often don’t tell it. AI is useful for gathering information, but it requires constant vigilance, an exhausting, and sometimes dangerous, demand.
That same preoccupation with truth shapes how Putnam approaches the courtroom. A witness promises to tell the truth, the whole truth, and nothing but the truth, and though the phrase “so help you God” has gone out of fashion, he still adds it silently in his own mind, because he expects to stand before God one day and give an account of what he told his fellow humans. That, more than the “penalties and pains of perjury,” shapes his preparation for testimony.
Still, he’s quick to admit he isn’t God and doesn’t know the whole truth himself. He’s given certain facts, asked to make certain assumptions, then reasons from them to a legally supportable conclusion. He finds real value in the jury system: jurors who may lack formal training in economics or law but have been trained by life to separate truth from falsehood, sometimes fare better than more credentialed observers at the essential act of fact-finding.
From the Sidelines to the Courtroom
The test of whether a person or a system actually delivers the goods under pressure shows up in many places, including an unlikely source of inspiration: professional football. Putnam was never an athlete, but as he took on responsibility for managing people, he started listening to what coaches and athletes said, particularly, as a Patriots fan, Tom Brady and Bill Belichick. Brady’s approach sounded a lot like patient R&D: to get slightly better every week;. Asked once what his favorite Super Bowl victory was, he answered, “The next one.” Belichick’s ethos was narrower: indifferent to pedigree, salary, or talk, and reducible to two words: “Do your job.” Both men, in Putnam’s reading, carried a basic humility toward the task in front of them: there is always room to improve, and the only test that matters is whether you actually delivered.
Jon Putnam sets that discipline against the steady, and in some cases tectonic, change he’s watched reshape entire industries. For example, computers did more than speed up calculation; they changed how people think, a shift the patent system has struggled to accommodate, as it depends on the embodiment of intangible ideas in tangible devices. The Bayh-Dole Act, which gave universities title to inventions even when the research was government-funded, let them specialize in researching ideas while contracting out the embodiment to others, increasing the system’s efficiency but sharpening the distinction between “those who discover” and “those who make.” He traces a similar specialization in cellular telecommunications, where early innovators such as Motorola, Ericsson, Nokia, and Siemens, once known as the “MENS club,” were also the manufacturers. By the fourth generation of the technology, that club had dissolved: Western firms specialized in innovation, Chinese manufacturers in production: efficient, but a source of new friction over who should get paid, and how much.
The Bridge Between Worlds
As the firm’s founder and CEO, Jon Putnam has little use for the phrase “diversity is our strength,” at least not in its narrow, familiar sense. But something adjacent to it, he believes, is simply true: it takes all kinds of people to build something that lasts. Asked what he’s learned about the people who bring new ideas into the world, Putnam describes a wide, sometimes contradictory range of skills, often housed uneasily inside the same person. The technically gifted are often socially awkward, and the reverse holds too. Decisive people may lack nuance; thinkers equivocate; salespeople may talk big, but they also remember birthdays and they close deals.
Jon Putnam speaks from experience. An advisor, asked once whether Putnam would become an economist or a lawyer, said, “Neither.” Putnam’s global-patent dissertation, while notable, had taken thirteen years, much too slow a pace for academia. Neither a star economist nor leading lawyer, he serves as an effective bridge between the two worlds.
That bridging instinct runs through his own path between academia, consulting, entrepreneurship, and expert testimony. Both of his parents were teachers, and he wanted to follow them into it, until he realized he disliked grading people. On the other hand, he was drawn to the “combat” of the courtroom, contending (as he says) “for the truth.” Consulting taught him the discipline of delivering work on time, under pressure, without error, and eventually of building a firm and teaching those lessons to others, profitably.
Yet Jon Putnam is candid that he doesn’t credit his success to his own skill alone. “The only reason I was a ‘successful entrepreneur’ was that God had mercy on my wife and small children,” he says. “He feeds the sparrows, and he fed us.”
That same bridging instinct now shapes how Putnam is building Competition Dynamics itself. The firm has assembled five PhD economists, trained in industrial organization, econometrics, transfer pricing, and antitrust, whom Putnam teaches, and who teach each other, in an internal research culture he considers as important as any single case. “Our highest internal value is to discover new information about the world, and to teach it to everyone in the firm,” he says. Ngoc Ngo, CD’s second testifying expert, has already put that culture to the test on her own cases. The rest, Putnam believes, are close behind.
Building Without an End Point
Jon Putnam is currently developing a product of his own, which puts the question of what advice he’d give a founder squarely in his own path, not just a client’s.
His advice: there’s no finish line, so don’t stop innovating. The best strategy for beating competitors isn’t excluding them; it’s staying ahead of them. “Make your customers choose you because you’re the best, not because you’re the only,” Jon Putnam says. Execution matters as much as invention: surround yourself with people who know when a good product can still be improved. Listen to what customers actually want, even when it differs from what you assume they should have. “Amazon was a bookstore,” he notes.
On trust, his advice runs in two directions: earn it before sharing everything with every employee, and once earned, make staying worthwhile, since disgruntled former employees who leave with their ideas are themselves a form of competition. A smaller share of a larger pie, he says, is almost always worth more than a larger share of a smaller one.
What continues to surprise him most is how rarely people recognize genuine innovation the moment it appears. Rogaine began as a failed treatment for high blood pressure whose side effect happened to grow hair. The laser used in laser eye surgery was developed at IBM for cutting silicon, not corneas. A great many people in the industry were convinced the iPhone would fail. The lesson Putnam draws from a career spent pricing ideas is less about certainty than about humility toward one’s own blind spots. Failures may yet prove to be successes. Successes may yet prove otherwise. The only reliable response is to keep paying attention, and to keep delivering a better, “truer,” quality-adjusted price, every day.
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