Patent management: Maintaining a healthy portfolio
There is no doubt that it has been a challenging few years for patent portfolio managers. It’s a perfect storm of evolving case law, patent reform uncertainty, and the omnipresent pressure to monetise while reducing costs. The role of the corporate intellectual property team has risen in prominence while its performance is subject to increasing scrutiny from activist investors and board members.
The harsh truth of the current situation for many portfolios is that patents previously believed to be valuable are now low in value or even worse. That’s enough melodrama; the reality is that practices for solidly managing patent portfolios continue to hold true. So what’s a forward-looking portfolio manager to do? Well, one option would be to ‘keep calm and carry on’, assuming, of course, that you were already following best practices. So let’s take a level-headed look at what to do, and to keep doing, to maintain a healthy portfolio for today’s patent marketplace.
Reassess the portfolio
First, take stock of your current position. Perform a frank assessment of your portfolio. This can be challenging to do with the neutrality required—nobody wants to look at an asset they’ve invested in developing and learn that it doesn’t have the value hoped for (just ask any home seller in a buyer’s market). However, don’t wait for a potential purchaser of your patents to tell you that the value is lower than you’d hoped for. Be realistic in your assessment and, if necessary, use a neutral third party.
Considerations for an effective assessment of your portfolio position can be directed towards portfolio level practices and the individual patent level. At the portfolio level:
Develop a robust plan for managing information for your portfolio. Are your patents classified into a useful taxonomy? Do you have product-to-patent maps? Is the information correct, current and accessible? Data formatting impacts ease of use—be sure to standardise on nomenclature, an issue we often see hampering projects. Portfolio housekeeping may not be the most exciting area of IP operations but it is well worth the effort. Accurate classification is extremely important for portfolio readiness. Ask yourself: can you easily identify patents in a particular technology or application and export them in a format readily usable by your team or third parties? Do you have a reliable history of your assessments of your patents vis-à-vis current markets and technologies?
Be sure that your business strategy and patent strategy are aligned. Has your IP team been connected to all of the business stakeholders: innovation/technology, marketing, operations, and so on? Does your portfolio support your business objectives? Are all the separate IP teams within the corporation aligned too?
At the patent level:
Evaluate your patents based on current case law and patent office guidelines. That’s an easy sentence to write but a hard one to execute as the case law and guidance from, for example, the US Patent and Trademark Office is always evolving. There are, however, some very prominent and well-discussed cases to use as a starting point. In particular considerations for patenting abstract ideas (see Alice v CLS Bank), multi-actor method claims post-Limelight v Akamai, and the declining value of standard-essential patents post-Motorola v Microsoft.
Review patent specifications carefully, checking that your patent drafting team have been sufficiently detailed in drafting them. Deficiencies in drafting specifications can affect the likelihood of the patent surviving challenges. While this really should go without saying, in our experience everybody drafting patents knows to do this but it is practised well by few. We also observe that patent owners in some jurisdictions are less good than others in general. This may be due to writing patents initially in the native language of the home jurisdiction and then crafting the US patent without enough consideration to jurisdictional nuances.
Identify your commercially relevant patents—a detectable patent that has not and will not see commercial use is not a valuable patent. Is the claimed invention in commercial use and is the market significant? If in commercial use, do alternative options exist and how much effort would be required to design around the invention?
"Over the course of an initiative to reduce portfolio maintenance fees you can recover costs in a low number of years and realise significant savings."
Establish the detectability of your patents. If the invention outlined in the patents is not reasonably supportable then your ability to use that patent is weak. Detectability is an evolving area—ranging from easily detected with minimal effort using existing reverse-engineering techniques, functional test or literature searching, through to unable to detect, or only with extensive effort, and possibly the development of new analysis techniques.
Assess and reclassify your patents against new use cases and applications that did not apply when the patent was conceived. You may find some hidden gems. This is an area where a third party specialist may offer particular support outside of your team’s core expertise. A topical example is user interface patents: they may be applicable in a wide variety of products from automotive to medical to consumer electronics, as more devices are controlled by touch screens.
With clarity on your current position, you are now able to optimise and rebuild. The sequence you take can vary depending on your objectives and priorities. A typical portfolio management process would be to cull, repurpose, rebuild, and refine.
Cull and repurpose
Identify patents to cull. The savings from a cull plan can be significant, and over the course of an initiative to reduce portfolio maintenance fees you can recover costs in a low number of years and realise significant savings. In our experience a typical portfolio of 6,000 patents and 1,300 patent families can obtain savings of more than $13 million over the life of the portfolio, assuming 15% of patents are culled.
As an alternative to culling patents you may have patents in your portfolio that are likely to sell and that you can safely divest.
Evaluate your newly reclassified patents for licensing potential in new markets and applications. The advantage of this approach is that you can reduce your counter-assertion risk. The challenge may be that some markets are still emerging and the commercial potential may not be realised yet. For example, in ‘connected home’ the market is fairly mature for smart thermostats, but in ‘connected health and wellness’ the market is still highly fragmented.
Analyse the commercial relevance of potential patentable material. Patent filing, prosecution and maintenance is expensive and there are many considerations to make when deciding to file: is there a market for your invention? Is your invention solving a pressing problem? What are competing solutions that may diminish the value of your patent?
File new patent applications bearing in mind evolving case law. Avoid multiple actor method claims to prevent indirect infringement. Take particular care with language: use ‘in response to an action taken by a user or device’ rather than ‘when a user performs’. Draft so that one party implements all the steps. Again, this should be industry standard practice but we still observe new patents that have not been drafted with this in mind.
Always draft with detectability in mind. Understanding what technology is detectable, and at what effort, may require additional expertise. The state of the art in reverse-engineering is constantly evolving and new techniques may uncover opportunities previously unavailable. Invest the time early in the patent creation process to understand this. Most often the focus is on the patentability of the invention (novelty and obviousness), but to create truly high value patents you must also bear in mind detectability and discoverability of infringement. It is not uncommon to see portfolios where 70 to 80% of the patents have claims that are undetectable.
In general, if the invention can be reverse-engineered, patent it. If the patents are undetectable, consider taking the trade secret route instead.
Make sure that your patent drafting team is consistently writing specifications that are broad and highly detailed. If you have sufficiently detailed disclosure in the specifications you can support a vibrant continuation practice. Also, make sure that your drafting team works closely with your licensing team, so that patent applications are in line with licensing plans.
Refine
Review existing pending applications for potential claim improvement opportunities through continuation applications.
Acquire
If you have an urgent need to build your portfolio in a particular technology area then look to acquisition instead. The same considerations apply: seek out patents that are detectable and commercially relevant.
Repeat
Your portfolio and the business environment in which it serves are dynamic. The only constant is change. Make best practices in portfolio management a continuing activity at your organisation.
Good patents continue to hold ground. Spend your time and effort on quality not quantity. Build a commercially relevant, diverse and detectable patent portfolio and you’ll be in good shape for the future.
Treena Grevatt is marketing manager within the IP services division at TechInsights. She supports a team of patent specialists that helps patent owners to protect and grow their businesses, and has worked in technology since obtaining her PhD in experimental quantum physics in 1996. She can be contacted at: tgrevatt@techinsights.com
Anand Rohit is an architect in the IP services engineering solutions team at TechInsights. He is a certified patent valuation analyst specialising in IP-enabled business strategy, technology and patent analytics. He has advised a number of clients looking to achieve their strategic IP goals. He can be contacted at: arohit@techinsights.com
