Preserving patent value
Which patent attributes have an impact on patent value and could render those patents valueless, even if they are infringed? Here are the important ones:
• Industry use: Are manufacturers shipping products that practise what the patents teach?
• Ability to detect industry use: If the invention is being practised, can one detect the use of what the claims cover? If not, patent value is compromised.
• Prior art: If someone else has filed a patent or disclosed the same invention before the filing of your patent then there is a high probability your patent is invalid and has no value. If a person of ordinary skill at the time of the invention could have seen that the invention was obvious then the patent may also be valueless.
• Complexity of claims: If a member of a jury is likely to have difficulty understanding the claims then a defence counsel will have an easier time presenting a non-infringement case for his/her client and the patents will suffer in value.
• Patents reading on standards: Judge James Robart’s decision in Microsoft v Motorola in 2013 has reduced the value of standards essential patents (SEPs). Furthermore, the Obama administration has disallowed the granting of exclusion orders at the International Trade Commission for SEPs, which too has had an impact on their value.
• Industry use period: If known infringement was all in the past with no products shipping at present, licensing value hinges on access to past damages. If infringing products are being shipped today and will ship in the future then licensing value improves greatly.
If infringement is only expected to happen in the future then the value of the patent declines because much can change before that future arrives, including the expiration of the patents.
• Work-around potential: If the patented invention is only one way of many possible ways to achieve the result delivered when the invention is practised then it may be very easy for an infringer to stop using the invention by choosing an alternative design or method that produces the same result which has a major impact on patent value.
• Presence of method claims: A patent that has only method claims has immediate access to six years of past damages. If there are apparatus claims, systems claims, or means-plus-function claims in the patent along with the method claims then the ability to access past damages is compromised, reducing value.
• Actors in method claims: Once there is more than one actor responsible for performing the elements of a method claim, then indirect infringement, induced infringement, and contributory infringement come into play, and to the extent that it is difficult to pinpoint who the infringer is, the value of a patent is affected.
• Claim quality: The quality of patent claims has an impact on value if defendants can use sections of a claim to prove they are not infringing. There is a large body of claim construction rules and case law and if patent claims deviate from them, their value will be diminished.
• Family attributes: A patent family includes child patents stemming from a parent and the counterparts of those patents filed in other countries. If the patentee does not own the complete family then the value of the patent for licensing purposes is compromised and may be zero. If a terminal disclaimer exists between family members that are owned by different parties, neither party can enforce the patent. Value further depends on having family counterparts in jurisdictions where discovery is available, such as the US.
• Market structure: If the infringed market involves millions of low-value users it will be difficult to recover damages from them all. However, if the same infringement value arises from a few dozen manufacturers one can mount a focused licensing campaign. Concepts of patent exhaustion and implied licence further impinge on patent value within multi-tier markets.
• Infringed market value: If the infringed market is less than $1 billion it becomes difficult to see a return on investment from a licensing campaign that justifies the acquisition of the patents. This has an impact on patent value.
• Encumbrances: If licences have been granted covering a major portion of the infringed market then only the unlicensed infringement that remains is available for any licensing. This reduces patent values accordingly.
• Remaining life: If fewer than four years remain in the patent term there may be insufficient time to license them and values will decline as time passes.
Some of these attributes are binary: if they are present, patent value is not just degraded, it’s zero. Careful review of the claims with respect to the attributes above is well worth doing.
Art Monk is vice president of patent brokerage at TechInsights. He can be contacted at: amonk@techinsights.com
