In this final portion of the series we look at creating value at the micro level by looking at a range of factors including a historical perspective, patent testing, expense reduction, maintenance, as well as missed opportunities.
Value at the micro level
The last key to a valuable portfolio is at the micro level: in the patent itself and in the internal processes that companies use to develop core technologies. A high quality patent is difficult to define, but in general, good counsel that knows a company’s core business is the first step in ensuring quality work. Some companies choose to spend a little extra money up front to develop meaningful and useful claim strategies, as well as to obtain information regarding the most relevant prior art, particularly in foreign jurisdictions. There can also be advantages to developing a process for ensuring relevant prior art from those searches is cited in the appropriate applications in your portfolio.
Still another way to increase the quality of a patent is to keep its prosecution history to a minimum. This can often be achieved by implementing more aggressive prosecution strategies like conducting face-to-face interviews with the patent examiner. It is much more effective to convey information in a 10-minute, face-to-face discussion than through 20 pages of written arguments.
Another way to create high quality patents is to test some patents by licensing them or asserting them. Patents that have endured the rigors of litigation or additional review by a patent office instantly receive an additional badge of honor. While putting patents through such processes does have risk, there is also the potential reward of having the industry recognize that those patents are too strong to fight.
Minimizing Portfolio Costs
In the real world, resources are limited. I have yet to come across an entity that doesn’t utilize some form of budgetary tool or analysis regarding its patent portfolios. In an effort to maximize a portfolio’s value, it is essential to minimize the costs associated with portfolio development and maintenance. A few of the key costs include:
- Harvesting
- Filing/preparation
- Prosecution
- Maintenance
- Opportunity
The cost of harvesting inventions and turning them into patent applications is often overlooked. There is the cost associated with the inventor identifying and writing down details about his invention, thereby taking away from the ability to perform other tasks such as developing products. There is also a cost associated with tracking inventions and deciding whether or not to pursue a patent application for them. Some companies employ a patent committee or a similar collection of individuals that review and consider whether a particular invention should continue down the train. This cost can be reduced by providing an efficient manner to submit disclosures (electronically) and making timely decisions on whether to pursue a patent, and then complete the application in a reasonable time.
Whether the application is prepared in-house or by an attorney/agent outside the company, there is a monetary and time cost associated with the preparation and filing of any application. Additionally, there are governmental or official filing fees associated with filing patents, and these fees can fluctuate in the country or countries where protection is sought. These costs can vary depending upon the complexity of the invention, the type of patent sought, and the relationship between the company and its outside counsel.
Some companies with larger portfolios and more consistent filing practices are able to leverage their buying power to negotiate flat fees or alternative fee structures with their outside counsel. Other companies tend to use particular counsel for certain technologies so that the counsel is already familiar with the basic technology and does not need to get up to speed. Still another way to keep costs relatively predictable is to use attorneys/agents who solely focus their practices on the preparation and prosecution of patent applications, as there can be efficiencies gained in this type of specialization.
Many companies subscribe to the philosophy that they do not want to engage in the patent process. These companies surely avoid the other costs outlined above, but they incur opportunity costs. The cost of not protecting an invention with a patent or some other form of intellectual property leaves that company subject to open competition and potential market devaluation.
Again, the best situation for anyone developing a patent portfolio would be to implement every action listed in this series to help maximize the portfolio’s value. However, a variety of factors must be analyzed including short- and long-term goals, product lines and product development, budgets and more. The attributes of a company that is able to successfully develop valuable patent portfolios and long-term business success include:
- Spend time and energy on the things you can control.
- Think in terms of core technologies and focus your filing efforts on those core technologies.
- Build product and product service roadmaps.
- Focus hiring efforts on complementing core technologies.
- Evaluate revenue stream from all products and ensure funding for core technologies.
- Develop healthy, meaningful relationships with innovators working in your core technologies.
- Involve trusted legal counsel at the ground level and have them work together with innovators.
- Avoid unnecessary and costly filing structures.
- Recognize shifts in technology and emerging markets.
- Continually analyze the size and scope of your portfolio and manage those assets toward your goal.
- Never take your eye off of the competitive landscape.
About the authors:
Sheridan Ross Shareholder Matt Ellsworth handles many complex electrical and software technologies including telephony, RFID, access control, semiconductors, optics, Artificial Intelligence, communication networks, communication protocols, encryption, web-based business, information storage systems, feedback and control systems, power transmission, power machinery, high current electronics, and low current electronics. Mr. Ellsworth also has experience in non-electrical related technologies such as mechanical patents and business method patents. Read more about Matt here.
Floyd Anderson is Vice President and Chief Patent Counsel at Avago Technologies, a leading supplier of analog interface components for communications, industrial and consumer applications. He took his current position as the head of the Intellectual Property Department at Avago after transferring from Agilent Technologies. Anderson set up the IP function at Avago and currently manages an international team responsible for the patent portfolio, for licensing transactions, managing numerous IP litigations, and providing general IP legal support.
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