This article is intended to serve as an introduction to required elements for building a patent portfolio strategy and managing it over time. Topics covered include understanding what is in a portfolio, defining what essential gaps exist, determining how to invest to fill the gaps, and executing continual management of the portfolio (including both pending and issued patents) to ensure the best opportunity for return on investment.
Creating a clear and well understood strategy for building and managing a patent portfolio is an essential part of any business, not only for large corporates that own thousands of patents, but also for small and mid-sized entities. Having a well-conceived patent portfolio strategy and executing on it can be critical to the well-being of a company’s central business. As it happens, the elements that need to be addressed to define a solid patent strategy are essentially the same, no matter the size of the portfolio. Even for entities that consciously decide not to pursue a structured program for a patent portfolio, a thought exercise like the one that follows should be completed to ensure that there is high confidence in that decision.
Why Do I Need a Patent Portfolio?
Building and managing a patent portfolio is an investment of time, resources, and money – and depending upon the size of your company and the size of your portfolio, this investment can be quite large. Like any investment, it is important to understand (and to be able to communicate) what value can be expected to be returned.
Patents, when issued by a country’s government, grant the owner of the patent the right to exclude others from practicing the patent (as you have claimed it) for a period of time. Note that, while winning a patent before your competitor acquires it does give you this right, it does not give you the exclusive right to practice what you have invented.
It is essential to be very clear in answering the “Why Do I Need a Patent Portfolio?” question. Whatever the answer is, it will help provide a confident direction through the rest of the creation of the portfolio strategy. And the answer to the “Why” question can be different for every entity. You may be primarily concerned with being able to fend off specific competitors and their patent portfolios. Or, your program might be tasked with earning monetary value from your patents. It may be some combination of both. Coming back to your answer to this “Why” question, often during the remainder of the strategy creation, will ensure cohesiveness of the program.
Assessing Your Portfolio
Once you have a clear answer to the question of why, the rest of the elements of the patent portfolio strategy can be addressed. The next step is to perform a portfolio assessment to understand your current assets. The result of the portfolio assessment should determine what exists in terms of valuable patents and pending applications, potential surpluses, and portfolio gaps that need to be filled. To be able to understand what exists in each of these three areas, patent claims and pending patent applications should be organized into a landscape. The landscape presents patents and pending applications within a taxonomy that is meaningful to your business. It most often results in patents being classified into technology clusters, but it could take other forms as well, like clusters that relate to specific lines of business or clusters that are relevant to specific competitive threats. Or, by using all three of these examples, different pictures of the portfolio could be presented depending on the audience to whom it is being communicated.
A portfolio assessment can be (and should be) a complex task, but its results should be presented in a simple and clearly understandable format. The potential value of any individual patent depends on several criteria, some of which may be specific to your business. All of these criteria must be considered to produce an accurate assessment of the portfolio. If the portfolio contains many patents within a certain part of the taxonomy, but there are very few that exhibit a high or moderate degree of potential value, this needs to be understood. Data visualization tools are typically a best approach to presenting the results of a portfolio assessment, particularly for larger portfolios.
Defining Portfolio Gaps
How you formulate a strategy to go about filling in portfolio gaps depends on how you answered your “Why?” question. If your patent portfolio is intended primarily to be defensive against competitive threats, another step is required. An understanding of the positions of those who could pose such threats is needed so that a strategy can be defined to build your portfolio accordingly. If your portfolio is intended to serve as a revenue source through the monetization of patents, a market strategy must be developed – just as with any business – to define industry trends, potential customers, and types of monetization paths to pursue (e.g., license or sell).
Based on this analysis, an approach is developed to define which gaps to fill, and in what priority order. This approach is determined by factors such as budget, threat levels, market opportunity, your future business directions, and the degree to which patentable whitespace exists (which is a separate exercise in its own right).
Filling In Portfolio Gaps
With a clear understanding in hand of what your gaps are and which ones to fill, the next step is to ensure that resources are assembled to proceed. This involves ensuring that budget is allocated and that people and mechanisms are in place to identify the most pertinent areas of forward-looking innovation and the best existing and prospective inventors in the company. The best inventors are those who can not only invent within their central area of responsibility, but also can envision future expected trends for other gaps that you have to fill. A number of different approaches can be used to engage inventors, including intensive, structured brainstorming sessions using facilitators to guide the discussions and capture results. The key here is developing an understanding of generally what prior art exists (i.e., where others have already filed patents) and predicting what areas of technology will be valuable in the future.
Managing an Existing Portfolio
Developing a plan for managing an existing portfolio of both issued and pending patents is just as important as defining how to build a new portfolio. Once a patent application is filed, it is an investment with an initial cost. However, over time, significant additional costs in attorney and patent office fees will accrue both while the patent is pending and throughout its lifetime after it issues. Hence, to manage budget effectively, it is imperative that the potential value of both pending and issued patents be continually re-assessed at specific checkpoints to confirm that additional investment in each of them is warranted. Significant budget sums are spent unnecessarily to keep low or zero potential value patents and applications alive. While the initial portfolio assessment will identify the lowest value patents and applications that can be abandoned (to save budget), portfolio assessment is an ongoing process. The larger the portfolio is, the larger potential there will be for budget to be saved through this pruning exercise. The end goal is to maintain a portfolio that is only large enough to achieve your objective (your answer to your “why?” question), while building and maintaining the highest potential value patents in doing so.