Patent licensing: The patent battleplan

Successful, high-return patent licensing programmes require planning. Peter Hanschke of TechInsights offers a guide to getting it right.

In a patent assertion campaign, the onus is on the patent holder to find products that are infringing. A successful licensing programme ultimately hinges on the ability to find litigation-quality evidence of use (EoU) against economically important features of infringing products. Evidence must show a solid, provable chain of custody and be based on a rigorous, systematic approach.

There are finite options available in the public domain for finding reliable technical evidence; in most cases, a successful licensing programme will need to be supported by reverse engineering (RE) to confirm assertions of infringement.

This article focuses on the proactive, pre-emptive steps you can take to significantly improve the probability of a successful outcome in an assertion campaign—either a licensing agreement or compensation settlement that rewards you appropriately for the value and quality of your patents.

Collectively these steps or tactics define key success factors for planning high-return licensing programmes.

Investigate the validity of your patents

A patent being granted means that it has met the quality standards of the examiner, but—especially in the case of technology patents—a more in-depth investigation is required to ensure the patent’s validity. The start point is the claim itself.

To prove a claim is practised or anticipated you must show that all elements are mapped in product evidence or literature.

Most of the elements in a claim chart are usually relatively easy to find in literature that is available in the public domain. This includes data sheets, service manuals, articles, conference proceedings, and marketing presentations. This type of reference material generally reveals indication of use (IoU), which could document everything except the key elements. While the key elements might be inferred, an experienced defence lawyer will use this lack of EoU to weaken your assertion.

"To prove a claim is practised or anticipated you must show that all elements are mapped in product evidence or literature."

To create a stronger claim chart that provides EoU, finding evidence of the key elements is essential—and it is increasingly difficult to find in the public domain. There are occasional exceptions. For example, some companies deliberately disclose technical details as part of their business strategy to promote the adoption of their products. However, patent assertions have motivated most companies to tighten up disclosure and restrict what information is posted to the public domain.

Therefore, in most cases you need to go beyond the literature available in the public domain. Finding evidence for your key elements will usually mean investing in acquiring technical analysis based on reverse engineering.

Ultimately, the key success factor for investigating the validity of your patent hinges on finding evidence that maps to the key elements of the claim. A combination of technical analysis and access to a credible source of older evidence (prior art) may be what is required to confidently validate your own patents.

Invest in litigation-quality evidence

Matching key elements to the evidence is the lynchpin in a successful licensing programme focused on enforcement. This involves investigating the target to whatever depth of technical analysis is required to validate use of the claim.

How this evidence is discovered is also a critical consideration and key success factor for licensing programmes. Evidence—and the process by which it is prepared—must be defendable in court should your claim chart(s) be challenged.

If chain of custody is not thorough, it can result in evidence being inadmissible. The quality of documentation related to a device’s teardown, use of properly licensed tools and equipment to perform analysis, how the product was purchased and from what source—these and many other considerations collectively form a chain of custody that must be carefully maintained.

The value of evidence is improved when these steps and the typical questions associated with case law are anticipated—and the resulting technical analysis is irrefutable.

Ensure a good interpretation of claims

Interpreting a claim is never cut and dried—it is a practised skill and can be highly subjective. During negotiation, the words used can often be interpreted in many ways. The evidence you have gathered might be relevant, but it may not align closely enough with a particular interpretation to prove infringement.

Highly-detailed, very specific claim charts may not always be the best strategy. During the negotiation stage, a company may concede that the claim charts are very specific—and show this is not how their product or innovation works. A presentation that is too specific does not provide any options or manoeuvrability to cover other implementations that are relatively close.

For this reason, some patent experts deliberately write their first claim charts to be somewhat broad. While this strategy risks lengthening the prosecution phase, the resulting patents may be more likely to provide flexibility to adapt during negotiation. Often this leads to a dependent claim to narrow the focus on a specific inventive step or innovation.

Focus on high-volume, high-value features

Proving that a claim is used in the market is an expensive business. A served company that is faced with the prospect of a significant payout will invest considerable resources to challenge an assertion. Usually this involves a tenacious legal team tasked to find prior art to invalidate your claim(s), or to show non-infringement. Those teams may work for weeks with the exclusive focus of weakening and excluding your asserted patents.

In TechInsights’ experience, only 1% to 2% of an asserting company’s patents get through the negotiation process and are actually licensed.

Many are invalidated by the target company through prior art or prior use. That means you will need to create or acquire 50 to 100 patents for every patent that you will be able to use against targets. Add to this the significant cost to prepare a licensing campaign, and the resulting licensing rate leads to the observation that a target product needs to have an economic value of $100 million or more to warrant an assertion.

Related to economic value is the importance of focusing on high-volume, high-value features—and the ability to find EoU on these features. That means ensuring from the outset of your licence planning that the inventive feature for which you are claiming infringement has high value—like a circuit chip which is hard to design around, or one that greatly influences a customer’s buying decision.

Put another way, how much less would a customer pay for a product if the feature enabled by the patent was removed? A court is unlikely to award a large settlement to a patentee because an alleged infringer used an unimportant feature that will have no impact on the market price or usability of the product.

Do an exposure analysis before deciding to attack

A company that is served notice may counter assert. An exposure analysis will help measure that scenario by assessing the relative strength of the target company’s portfolio against your products in the context of the current market.

An exposure analysis assesses the feasibility of a patent assertion against a specific target and anticipates how they will respond. This type of assessment can uncover, for example, the likelihood that the organisation you are trying to assert against will turn around and make a strong case against you with their own claim charts.

An exposure analysis may involve a broad level analysis to:

Determine how much of your target’s portfolio aligns with your products;

Identify the strengths of your portfolio against the target’s products; and

Make solid, evidence-based decisions about the balance of portfolios and whether to proceed with an assertion of infringement with confidence.

An exposure analysis reduces your risks by anticipating how the target company will respond and can use statistical analysis to calculate the magnitude of this response.

Summary

Assertion is the process of enforcing your patent rights to seek compensation for the use of your innovations. Claim charts provide your target or ultimately the court with the hard evidence it requires. Without this, your claim of assertion and ultimately your settlement may be weakened.

Finding accurate litigation-worthy technical data in the public domain to prove infringement is daunting. A web search will often result in thousands of results and take hundreds of hours to sift through. Searches may eventually
yield conventional items such as data sheets, marketing brochures, press releases, technical reports, and conference proceedings. While useful, these types of information may not map the key elements to your claims.

Typically, information required to develop a claim chart and prove infringement is gathered through technical analysis based on reverse engineering and mapped to specific patent claim elements. Together this forms a compelling argument to enforce
patents. This requires finding patents that enable technologies of the most important features of infringing products and using evidence to prove infringement.

Peter Hanschke is director, library products at TechInsights. He ensures that TechInsights’ semiconductor and technology data is easily accessed by customers across the globe in support of their IP campaigns. He can be contacted at: phanschke@techinsights.com