How to create valuable IP assets

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.