How to Build a Smart Patent Portfolio

Large companies spend millions to protect the outcome of the R&D activities in the form of patents. However, simply owning a large patent portfolio does not hold any value, unless it is backed by the strategies of a Smart Patent Portfolio. In this blog post, Ajay Yadav describes how a patent portfolio comes with a financial commitment and how companies should focus their strategies on assessing and minimizing the gap between the cost and ROI. When companies minimize this gap, they can achieve a Smart Patent Portfolio. 

The stock market is a fascination for many people- me included.  A year ago, I began investing with some basic understanding, hoping to earn returns from some of my savings. However, it was no surprise that I failed. Why? I never had a strategy!

To make informed decisions about what stocks to keep, where to invest further, and what to drop from a portfolio, investors must have a good stock strategy backed by logic and powered by research, analysis, and market trend information. In simple words, a wise investor assesses something called Intrinsic value before investing and regularly tunes the relevancy of stocks in his portfolio by assessing its expected return in the future. This strategy was what I was missing in my attempt to build a smart stock portfolio that minimizes risks and maximizes profit opportunities.

Following this analogy, companies must understand the basic facts and strategies of a Smart Patent Portfolio to save costs and maximize the value of their innovations. Large companies invest millions to protect the outcome of the R&D activities in the form of patents and build a patent portfolio that holds value for the company’s present and future business. Considering the high investment and ROI expectations, it becomes imperative for IP and patent managers to make strategic decisions when building patent portfolios.

This is especially important in the high-tech industry, where there are frequent technology changes and particularly high numbers of patent filings. With approximately 70% of the top 100 patent owners in the world operating in the high-tech industry, these companies are in a fierce race to file patent applications and protect their innovations. However, the quality and relevancy of the patent portfolio risk being compromised when companies indiscriminately protect every intellectual property asset. This is an expensive and ineffective approach and a key challenge for patent and IP managers. 

Is it wrong to build a large patent portfolio? 

As famous American investor Peter Lynch said, “Know what you own, and know why you own it.” This precisely defines the philosophy and strategy for building what I call a Smart Patent Portfolio. It is great to own a large patent portfolio, as long as you make sure the patents maintain their relevancy and are not transforming into a liability. If you do not know why you own a set of patents, it will hurt you later when you are required to pay the annuity fee. Therefore, it is important for patent managers to diligently review IP assets at different stages of the patent life cycle to make informed decisions.

So how should you make decisions about your IP investments? As mentioned above, Investors calculate the intrinsic value of the stock before investing. Similarly, IP managers can use patent usability value to assess the relevancy, quality of the patent/portfolio, and make informed decisions before investing. The patent usability value may be determined by multiple factors. Begin by asking the following questions:

  1. Is the patent in line with your current and future business needs? 
  2. Are you using the patented technology in your commercial products? 
  3. Is there a potential (present/future) market for the patented technology for out-licensing? 
  4. Do the patent cover the right geography? 
  5. Are the patents relevant and usable? 

By using one or more of these factors to make an informed decision throughout the patent lifecycle, patent managers can build and maintain a Smart Patent Portfolio.

You might be wondering why it is important to assess the patent usability value at different stages of the patent lifecycle, when this already was assessed before filing a patent application. Building a Smart Patent Portfolio is a continuous process, and it is critical to be proactive in assessing the patent usability value of your patents/portfolio and keep tuning the quality and relevancy for better returns. This is especially important in the high-tech industry where technologies frequently change and improve. An invention from a company seven years ago may not hold the same value today for several reasons such as:

  • The patented technology was the focus of their business back then, but not now
  • The market started moving away from that technology
  • Competitors have a leap development in technology etc. 

Give your patent portfolio a tune-up

As mentioned above, patent managers have several opportunities during the patent lifecycle to assess the usability value of the patents in their portfolio and induce a smartness quotient that can provide a multi-dimensional benefit in the future. Benefits could include cost-savings, knowing licensing opportunities, improving the future commercial value of patents, adding a competitive edge to the portfolio, and understanding the utility of patents in a foreign geography and relevancy for others. Let’s explore these opportunities through the stages of the patent lifecycle!

Opportunity 1: During Prosecution: Receiving an office action on your patent application is a normal event during prosecution. Patent managers should see this as an opportunity to amend the claims not only to incorporate the examiner’s rejection but also to take competitor’s available and future technology into account to reinforce the claims to make the patent more relevant for the future. Making such informed decisions at the prosecution stage is a strong foundation for a Smart Patent Portfolio and shapes the overall portfolio to be more usable in the future.

Opportunity 2: At Notice of Allowance: This is a key stage when patent managers should assess their patent portfolio to realize the potential of their existing inventions and decide on patent continuation filing. An effective practice to expand the portfolio is to file patent families with claims tailored according to competitors’ commercial products and possible future technology. This strategy organically expands the existing portfolio in the direction where technology or competitors are moving, assuring future relevance for the patent portfolio.

Opportunity 3: Patent Annuity Payments: Revisiting the stock market example above, would you be willing to hold stock in a company that loses value over many years? The answer is No unless you anticipate a radical injection into the company, causing it to emerge in the market. The same analogy applies when patent annuity fees are due. This is the time when patent managers should assess the usability value of the patents for the company’s product roadmap, ongoing product development, and their potential for future out-licensing. Unless you see usability, it is worth allowing the patent to lapse. Another important aspect to assess at this stage is usability for others. Some patents may not hold value for your company but can be valuable for others. This is an opportunity to identify players who need your invention more than you do and monetize it for a decent sum.

Smart Patent Portfolios: not a short-term exercise

Similar to a smart stock portfolio strategy, building a Smart Patent Portfolio is not a short-term exercise, irrespective of a company’s scale. A company keeps evolving and innovating with the changing market to build a patent portfolio to match the business need. What matters in the end is the company should be able to utilize the patent portfolio for competing, defending, and earning from the investment it has made. The focus should always be on innovating technologies that can change the user experience and regularly assess the usability or relevance of the patents and the portfolio to minimize costs and maximize gains.

Stock and patent portfolios typically achieve their best results with strategic professional management. Evalueserve supports global customers at every stage of the patent lifecycle to help assess the patent portfolio’s usability value. By tuning the quality of the portfolio, we can minimize costs and maximize future gains.

You can read more about one of the effective strategies to build a Smart Patent Portfolio in our case study on Directed Prosecution or contact us for more information about how Evalueserve can help your company build a Smart Patent Portfolio.

Additional Insights: 

Ajay Yadav
Solutions Architect, IP and R&D Solutions Posts

Ajay Yadav is a Solution Architect in the hi-tech division of IP and R&D. He has more than 12 years of experience working with clients in a varied technology domain including Semiconductor, Computer Science, Telecom, Electronics, Autonomous Vehicles, Internet of Things etc. Ajay has expertise in designing custom licensing processes/solution for clients and suggesting commercialization and management for patent portfolios. In his spare time, he follows his passion for photography. Ajay expects readers of this blog to share their ideas, experiences and learnings on this topic.

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