Portfolio management: building for strength

Optimising a patent portfolio requires understanding what you have and using processes, methods and tools to analyse and organise it effectively, as Mike McLean of TechInsights explains.

Managing patent portfolios requires making decisions about the mix and use of patent assets to improve a business. It requires establishing processes, methods, and tools to analyse and collectively manage sets of patents as well as projects intended to optimise these patent sets within constraints imposed by budget, resource availability, and business strategy.

The primary decisions that require attention are simple to understand but complicated to answer:

• Which patents to file?
• Where to file?
• Do patents need to be purchased? Which patents?
• Which patents to abandon?
• Which patents have value and can be used to protect the business or generate income?

The answers to these questions will be dictated by the nature of the business (technology complexity, technology variation, product variation, product maturity, etc), the patent strategy (freedom to operate, defend market share, provide revenue, enable partnerships, etc), availability of budget and resources, and the current composition of the patent portfolio.

A detailed understanding of a patent portfolio’s composition is missing from many companies. We have a client with a portfolio of 5,000 patents. It readily admits to knowing 200 of those patents in great detail but having limited understanding of the remaining 4,800. This is a common situation due to the scale of many corporate portfolios; the frequency of mergers, acquisitions, divestitures, and new issues; and the lack of proper knowledge-management tools.

Addressing this deficiency requires building a structure to organise the portfolio, assessing the quality and value of the patent assets, and capturing this information in an effective knowledge-management system so it can be used to inform decision-making on a continuing basis.

Structure can be established by creating one or more taxonomies to allow for the patents to be categorised. The most common taxonomy involves technology groupings; product or application area and competitor or business coverage are also used frequently. It is important that the individual taxonomy nodes or categories are thought through in the context of the business’s future. There is a tendency to create categories for what is in the portfolio, not what should be there. Identifying missing pieces can be as important as knowing what is there.

Once the taxonomy is in place, each patent is assigned to any category that is relevant. It is possible that a single patent might end up in multiple categories. The taxonomy should be designed such that no category has more than 200 patents. This will allow for optimal identification of patent sets for further analysis or those that match a given opportunity. The sorted patents will give a good overview of the strength and weaknesses in the portfolio in terms of patent quantity in each taxonomy node.

Evaluating the quality or value of the patents in a given area requires selecting appropriate criteria for the evaluation. Typically two to five criteria are sufficient for this purpose, but we have seen companies use as many as 20. The five criteria used most frequently in our analysis are:

• Industry use—what’s the likelihood that the claimed invention is used in a commercial product or process?
• Ability to detect—can the use of the claimed invention be detected in a commercial product and evidence developed to prove this use?
• Commercial merit—what is the level of current or future sales of the products associated with this patent?
• Validity—are there prior art or other validity concerns with the patent claims (this has become a primary concern after the Alice v CLS Bank decision and the institution of the inter partes review process)? and
• Technical merit—does the claimed invention solve a significant technical problem and are there other solutions that provide acceptable design-around options?

The completion of this analysis provides the data to make informed decisions about the portfolio. Maintaining this data can be challenging but the combination of tools and good processes can make it a differentiator in building a patent portfolio with a positive impact on the business.

Mike McLean is senior vice president of intellectual property services at TechInsights. He leads a team of patent and engineering professionals who help technology organisations protect, manage and use their patent rights. He can be contacted at: mmclean@techinsights.com