With companies around the world increasingly recognising the value of intellectual property (IP) and with major new IP markets emerging on the global stage, the need for businesses to know what intellectual assets they own and the competitive strength of those assets is all the more critical.

In the past year, a number of mega-deals – including Google’s acquisition of Motorola Mobility and the purchase of Nortel Networks’ patent portfolio by a consortium of blue-chip technology companies – has highlighted the commercial importance of patents. This was reinforced by the recent State of the IP Industry Survey, in which 77% of in-house IP professionals reported an improved understanding of IP strength and quality in 2011.

But with many IP professionals saying they are still under budgetary pressure, there is an increased need for IP departments to demonstrate value in their holdings and be more accountable, communicative and forensic in their patent analysis. By doing so, they will be in a better position to help ensure that their IP strategy is aligned with the broader business strategy.

According to Donal O’Connell, managing director of Chawton Innovation Services and former manager of the Patent Creation team at Nokia, this is continuing a trend that has been building over the past decade. ‘In 2001 to 2002,’ he said, ‘it was no longer good enough to talk about the growth of your portfolio alone as a sign of positive progress. Chief financial officers (CFOs) started going to IP departments to ask them about how much of their portfolios were truly valuable, saying: “You need to tell us more about the portfolio than size – you need to be able to slice and dice it.”’

In situations where IP departments have inherited patent assets through acquisitions, O’Connell said, the portfolios can be so large that the IP managers can’t get their heads around them – particularly if they are inherently diverse. ‘Systems and tools to evaluate the patents may be there,’ he added, ‘but the question is, how do you go about it? Do you group them by geography, citations, or alignment with the company’s core technology? Lack of resources is no longer a valid excuse – you need to be able to explain to your company which assets you have.’

Portfolio evaluation should ideally help IP managers answer two crucial questions: i) how valuable their company’s intangible assets are; and ii) how competitors are positioning their IP holdings in efforts to gain commercial advantage. But the actual process of answering these questions hinges on a series of complex analyses and subtle relationships between several factors. IP managers may have developed their own methods for conducting the necessary research, but their coverage on both internal and external portfolio queries may not always be wide or deep enough to provide full and meaningful results.

Strong bargaining position

It is a point that’s reinforced by CPA Global’s vice-president of IP Outsourcing, Haydn Evans, who says that honing in on valuable assets can mean the difference between success and failure. ‘In industries such as pharma, which is all about exclusivity,’ he explained, ‘one patent can be all important, and can cover a blockbuster product in its entirety. For other industries, combinations of patents are most useful, because a particular product or technology may be protected by tens or hundreds of patents. Having a good combination of patents often puts you in a strong bargaining position for licensing negotiations.’

Keeping track of competitors, says O’Connell, is a responsibility that is every bit as important as complying with regulated areas such as interoperability standards. He considers that there are five key questions that must be addressed in relation to competitors’ IP holdings:

• Which competitors are citing your patents, and therefore building on your technologies?

• Which jurisdictions are your competitors filing in?

• How are your competitors’ portfolios changing over time in comparison with yours?

• What are your competitors’ licensing habits or patterns?

• Are competitors’ patents likely to fall into the hands of non-practising entities (NPEs) and what defensive legislation measures may be required as a result?

Other, more detailed, competitive data that may be desirable for IP managers to have would include: i) a breakdown of a competitor’s portfolio relative to the number of patents in any technology space; ii) the relative strength of those patents; iii) the number of patents that a competitor has in its portfolio as a result of acquisitions; and iv) the length of time it takes for a competitor to obtain a granted patent in different jurisdictions (also known as the pendency period).

Building a firewall

At CPA Global, Evans has been closely involved in the development of Insight – a bespoke analysis tool backed up by a team of patent-quality experts, designed to help IP managers address the twin questions of portfolio strength and competitors’ manoeuvres. With the aid of Patent Quality Index (PQI) segmentation, Insight sorts portfolios into five segments – based on their statistical strength – and quickly identifies high-potential and low-potential assets. Evans said that the citation and scoring analysis that the tool provides enables IP managers ‘to start identifying important patents in their portfolios that have attracted external attention’.

Armed with this knowledge, IP managers can approach their organisation’s intellectual assets more strategically to help ensure they are aligned with the broader business needs and that critically important assets are properly protected. ‘If you are aware of the patents in your portfolio that are important,’ Evans added, ‘you can potentially ensure that you file related patents that cover the same technology in a different industry or that cover improvements or modifications of the technology. These related patents help to act as a “patent firewall” around your key technologies.’

In the area of competition, Evans said, ‘Insight can assist with all of the relevant comparative analyses. It can also help to identify new or emerging competitors in a technology space, so that you are not surprised by new competition – even if it emerges from non-traditional competitors or markets.’

From O’Connell’s perspective, tools like Insight present IP managers with a range of promising applications. ‘It will be of benefit to companies with medium-to-large portfolios that have never developed systems to slice and dice them,’ he said, ‘and could also be useful in a mergers-and-acquisitions situation. If a portfolio is acquired that has not actually been subjected to evaluation itself, the company acquiring it would be able to say: “Now we can find out what we have. Beforehand, we didn’t know where to start.”’


To find out more about CPA Global’s Insight, please email Haydn Evans (for European-based queries) or Rich Kolar (for American or Asia Pacific-based queries) here