How to create valuable IP assets

25-09-2018

Abdullah Rahal

How to create valuable IP assets

erhui1979 / iStockphoto.com

There are several ways to boost the strength of a patent portfolio in order to assist with monetisation, says Abdullah Rahal of TechInsights.

Companies worldwide consider IP among their most valuable assets because of the substantial gains that can be generated from its monetisation. Determining the value of a patent portfolio is a constant challenge for patent owners due to the increasing complexities in the IP environment.

Amid considerable opportunity and uncertainty, businesses need robust patent portfolio management strategies designed to maximise profits, mitigate future risks and losses, and continually increase the overall value of the portfolio over time.

Patent monetisation

At first, most companies work closely with their R&D teams and/or their internal inventors to build their portfolios by filing applications on new concepts. In some instances, even while the applications are going through prosecution, companies may acquire supporting assets from the marketplace. This includes patents and applications which complement their own innovations and align with the overall corporate strategy.

Maintaining and building a portfolio is essential, as is eventually leveraging the assets for a successful monetisation programme. When establishing a monetisation strategy, it is important to understand that the strategy must constantly evolve. As such, processes need to be put in place to consistently monitor changes in the corporate strategy, market conditions, IP law, and other factors, and adjust the strategy as needed.

As much as building a portfolio and maintaining a sound monetisation strategy are essential to improving chances of success, the key is to ensure the portfolio contains valuable assets. A core opportunity to maximise the value of assets is to strengthen applications in progress, but this opportunity is often overlooked.

Maximising value through strengthening

At TechInsights, having assessed hundreds of portfolios and thousands of patents, we have observed that less than 5% of a portfolio contains valuable patents. This is no secret in the IP world, and it has sparked debate among industry experts on the best approach to building a patent portfolio: quality versus quantity.

The resolution to that debate depends on the current state of the company and its patent portfolio in comparison to the markets in which it participates. Regardless, the underlying and primary objective of both sides is building a portfolio of valuable assets. So, what makes an asset valuable?

Value is determined by the willingness of another party to enter into a deal, and is driven by having valid assets that protect technology with a current or future market application of economic significance. The ability to clearly prove these assets to the other party is key to maximising the value in the deal. 

How does an organisation increase the value within its portfolio? There are several different approaches, but the most straightforward is through what we refer to as patent strengthening. 

Prior to filing applications, most companies invest some effort in screening for innovations that might not be worth keeping. This includes considerations such as ease of detection and economic importance.

Strengthening during prosecution helps organisations fine-tune claims to read on products and companies of interest. At the same time, there is an opportunity to potentially abandon claims or applications that were not previously filtered out, but which have since been shown to be of little or no value. This enables companies to focus their resources on more fruitful innovations and claims.

Strengthening during the prosecution of an application can enable a company to use a patent as soon as it is granted. Evidence of use (EoU) gathered during the prosecution can position a patent to be used immediately, whether for licensing, litigation, or divestiture.

Prioritising assets for strengthening

There are two primary methods used to identify applications with strengthening opportunities.

The first method relies on analytical patent and data-mining tools to identify, filter, and prioritise patents. Data reviewed may include so-called patent tombstones (the information about a patent usually found on the first page of the patent), litigation, history, family size, foreign counterparts, citations, and more for a given technology or multiple technologies. This approach can help identify potential white space within the portfolio, or even within a competitor’s portfolio, and it provides an opportunity to compare applications and portfolios to those of others in the market.

"Strengthening during the prosecution of an application can enable a company to use a patent as soon as it is granted."

Tools are very useful for working with a large number or patents: they provide a quick and relatively accurate picture of the overall patent landscape and highlight technology areas—and the patents within those areas—for consideration (Figure 1).

The second method, which offers a more comprehensive way to identify valuable assets in a portfolio, mixes analytical tools with eyes-on assessment. This means subject matter experts review the portfolio using tools to quickly narrow down areas of interest, and they also leverage their own knowledge of the technology, IP, and players in the marketplace while assessing assets and applications.

Figure 2 presents a patent ratings chart, showing ratings of A through D for patents that meet certain defined criteria. A-rated patents can be easily detected and are known to be of use in the industry; D-rated patents are difficult to detect with standard testing methods, and industry use is unlikely or impossible to detect.

figure-2a_techinsights.jpg

As applications are evaluated, some may be identified as A-rated patents, and are probable candidates for strengthening; some will be identified as D-rated patents, and are probable candidates for sale or abandonment. 

There are, however, patents that fall into the less obvious B and C ratings categories. For example, these could be good patents that have not yet been adopted by the industry, but that may become fundamental as the market evolves. Some of these applications would be good candidates for strengthening; these applications require a higher degree of skill and experience to evaluate.

Technical strengthening of claims

Ultimately, the value of a patent lies in its enforceability; a strong patent has associated EoU or Indication of Use (IoU). For example, in electronics, technical analysis can support strengthening efforts:

Systems analysis can provide evidence related to software, hardware, and networks;

Circuit analysis can provide evidence related to semiconductor designs; and

Process analysis can provide evidence related to structures and materials.

In some cases, discovering applicable technical analysis can increase the rating of a B or C-rated patent to an A, even in difficult-to-detect areas.

Figure 3 shows the process of “patent strengthening” and claim enhancement:

Assess applications that have been filed to identify those with strengthening opportunities;

Subject matter expert helps select target device or product for analysis;

Leverage existing technical analysis or conduct analysis as needed;

Create a strengthening discussion document showing how claims map to existing devices; and

Discussion documents serve as a guide on how you should enhance or modify your claims.

The data acquired through assessments, ratings, and analyses enables the IP team to:

Summarise and document the target technology area, the market, and all of its players; and

Pursue enhancements to claims during prosecution through office actions and filing continuations.

Conclusion

In essence, there are four ways to focus strengthening efforts:

Preparing for negotiations regarding a specific company of interest;

Identifying market adoption of a specific innovation coverage by one or multiple companies of interest;

Pinpointing applications, claims, or patents with little or no value for abandonment to streamline a portfolio and lower maintenance fees; and

Filing new continuations and tuning claims to a company of interest.

How an organisation chooses to prioritise which one to focus on should align with its business goals.

Patent strengthening improves and adds value to a company’s portfolio. And, while all applications can be pursued, it is important to understand which patents are worth special attention and investment. Trying to strengthen too many patents can be expensive and unproductive. Strengthening works best when companies focus on optimising the value of their key innovations. Reducing and focusing the effort on specific assets is the best approach.

Finally, patent strengthening is something that must take place throughout the life of a portfolio. It is part of successfully building, maintaining, and increasing a portfolio that can be leveraged for monetisation.

 

Abdullah Rahal is a strategic account manager at TechInsights. He works with IP groups in Fortune 500 clients to ensure they achieve their IP objectives. Rahal has more than 23 years of experience in IP portfolio management, IP monetisation and patent transactions, and has extensive knowledge of the microelectronics industry. He can be contacted at: arahal@techinsights.com

IP assets, Abdullah Rahal, TechInsight, patent, patent portfolio, R&D, evidence of use, licensing, litigation, technology

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