Most intellectual property (IP) departments understand the need to continuously review and cleanse corporate patent portfolios, but maintaining a portfolio is only one half of the story. After all, a patent portfolio is of use to a company only if it mirrors the organisation’s products and services – and its corporate goals. And yet, few IP professionals believe that they have the insight or knowledge that they need to tailor their patent portfolios in this way. How can this be overcome?

In constant motion

As companies grow, so do their patent portfolios. The patent (and IP) registration process is in constant transition as IP departments seek coverage for new developments and products, enhanced protection for secondary and tertiary products, and additional design and trademark protection for process packaging and branding. This process expands even further during the lifecycle of successful products, where improvements and modifications become the focus of protection efforts.

It is common for companies, particularly in hi-tech sectors, to keep a number of alternate technologies behind for subsequent consideration and review, filing patents to protect them should they be required later. It is also necessary to have fallback positions if the lead candidate for exploitation is not truly effective. This results naturally in the creation and maintenance of large patent portfolios: some covering further product improvements; some aiming to prevent competitive penetration into the marketplace; and many guarding technologies that are interesting, but that may not fit with existing corporate goals.

Traditionally, IP professionals have demonstrated a strong reluctance to eliminate patent protection for these types of technologies, even though they may never be put into production. This is for many reasons. On a positive note, such patents can provide a company with the ability to bring replacement products quickly to market should company goals change. But, on the negative side, filing and maintaining such patents will prove to be an unnecessary expense if they are never used.

Selling or licensing is a much-vaunted alternative to letting these patents lapse, as it provides companies with the means to reduce their expenditure on unexploited patents or even, if the market is right, derive additional revenue from them. However, if the technology is sold or licensed to third parties and then becomes highly successful in the marketplace, the question for the corporate boardroom has to be: Why did another company succeed with that innovation when we couldn’t?

Who should decide what to keep?

Another common issue to arise is the question as to who holds responsibility for making decisions to drop technology and relating patent protection. Does it rest with legal counsel, marketing or sales departments, research and development (R&D) heads, technology transfer groups, the CEO, company president, or even combinations of one or more of them?

Establishing who holds responsibility for this decision-making has been a key stumbling block for many companies, particularly when it comes to efforts to align a company’s IP portfolio with its overall business goals. It is easy to see why. This role requires not only strong leadership, but also the ability by the responsible individuals to interface at all levels of a company’s structure. They need to be able to understand the role of IP if they are to make effective recommendations that are in the best interests of the company and shareholders.

Reaping the rewards

It is important to overcome this stumbling block as the benefits of aligning a patent portfolio to a company’s goals can be enormous. Not only will the focus of any future patenting activity be on new and improved products, but also the company will be able to significantly reduce the cost of its ongoing patent prosecution and maintenance.

The average cost for preparing, prosecuting and obtaining a utility patent in the US can range from $25,000 to $100,000 depending on the technology and complexity. Processes and mechanical inventions are generally less expensive than hi-tech and biotech inventions; similarly, hi-tech and software patents commonly take longer to be examined than the market life of the product they are designed to cover. Meanwhile, biotech and pharmaceutical patents are often granted long before the Food and Drug Administration (FDA) approval process is over and may require the use of patent term extension procedures to be of value.

A balancing act must be orchestrated, therefore, between the usefulness of a technology, its offensive and defensive value, and the potential to commercialise it on one hand, and the expenditure and resources required to monitor its activity, and to keep and maintain the right on the other. For this to work effectively, it is incumbent to measure corporate competencies and resources against the technology and products that exist already in the marketplace, and the value of any new technology to the company.

A roadmap to change

The next obvious question then is: Where do you start? The answer sounds simple, but can be difficult in practice. First, you have to make sure that your IP strategy is clearly defined. Then you need to ensure that it is realistic, measurable and achievable. Finally, you have to make sure that it is clearly understood by everyone in the business. This last element can be easily achieved by making leaders from all key business groups responsible for transferring IP knowledge. They should form part of an ‘oversight’ team that measures the company’s IP strategy against the technology that it is developing. This team will be responsible also for making decisions relating to technology protection and so must meet frequently to map out those technology areas that are key to the business.

In order to maximise the effectiveness of the team, a single member should be asked to lead the discussions around patent filing and to establish the technology items up for discussion. Each participant should be assigned specific designated tasks and responsibilities to ensure each department’s input into the process. Furthermore, the team needs to establish its own objectives, such as enhancing patent coverage of new and improved products, as well as identifying unneeded technology that should be dropped, licensed or sold.

The results that this team achieves should then be measured against the objectives identified by the team. Measurable items could include:

• Creating and monitoring an Invention Disclosure System which requires inventors to present concepts and developments for consideration by the oversight team;
• Developing strategies for enhancing technology coverage for new products;
• Accelerated patent filings and prosecution;
• Ensuring that key technologies are covered by foreign rights;
• Identifying unused technology and pooling the same for holding or divesting where appropriate;
• Making cost savings by abandoning technology or tracking revenue derived from licensing or selling the same;
• Negotiating the scope of equity interest created in subsidiary companies;
• Establishing a grading system to identify each item’s relevance based on type of coverage and claim scope;
• Monitoring competitor activities and patent filings; and
• Making recommendations for enhancing, modifying or eliminating portions or all of the prior strategy.

Quarterly or yearly sessions should be scheduled to review overall process and, where necessary, all patent applications in the portfolio, assessing their status and relevance in light of current corporate goals. This should result in a patent portfolio that consistently mirrors an organisation’s products, services and its future business plans.


Gary Nath is managing partner and founder of The Nath Law Group. He is based in Alexandria, US