To fully exploit and maximize the value of one’s IP portfolio, make sure it is fully aligned with the company’s corporate strategy. That may seem logical but reality often paints a different picture. In a survey by IQPC (International Quality and Productivity Center) 52% of corporate respondents cited failure to align business strategy with IP coverage as one of the key risks to their company’s IP assets. It’s especially shocking when you know that the “top patents,” patents that are valuable because they have a commercial value (or will in the near future) are limited to 15% of a company’s patent portfolio.
Historically lots of companies have invested in a strategy more focused on quantity by filing as often as possible. With 274,000 different patent filings in 2014, the number of patents filed at the European Patent Office reached an all-time high. In just one year, filings grew by 3.1%, whereas the number of granted patents dropped by 3.1% clearly suggesting a decline in patent quality.
Recently the race for patent filings hit the news when a former lawyer at the US office of L’Oréal claims he was fired for “refusing to make filings for dubious inventions” just so the company could fill an annual quota.
The phenomenon of patent trolling only highlighted the problem and perversity of only caring about the numbers and filing patents just to file as many as possible. More and more companies are becoming convinced that focus should be on less but more valuable patents.
Companies such as Lycos have proven that a few highly qualitative patents can be significantly more valuable. Currently, the company is looking to divest some of its 22 US patents. Each of these patents has tens–if not hundreds–of forward citations. Google currently has 124 patents citing the Lycos portfolio. In 2012, Lycos had already sold some of its patents to Vringo who’s still suing Google for infringing some of these patents for a running royalty rate of 3.5%, 47.82 million worth of damages, and prejudgment interest. It’s fair to say that Lycos’ portfolio shows quality over quantity is worth millions if not billions of dollars.
Even in China, the mentality is shifting from purely numbers-driven patenting to a focus on higher quality. At the Intellectual Property Business Congress in China in April of this year, Huawei’s head of IP monetization Haitsing Li referred to 2012 figures showing $500 million licensing revenues for Chinese companies thanks to their patents. By the end of the next year this number had risen to $1.36 billion. He also estimated patent royalties figures for 2014 at a staggering $2 billion.
Basically, a good patent strategy should create value and avoid unnecessary costs; IP should be an asset rather than a liability. The only way to effectively and efficiently ensure this is for your IP strategy to be aligned with your corporate strategy. Here are five ways to do just that:
- IP landscaping: SWOT your own IP and that of competitors
Markets, technology—they both change fast. Mapping potential key patents or future trends is what gives you a competitive edge. Map the opportunities, threats, strengths and weaknesses of all IP that is relevant to your business.
Make sure to think ahead and file “patents for the future,” foreseeing the IP which is going to be critical to you and you competitors in the years to come. For a 360° IP strategy, it’s essential to also map you and your competitors’ “other” IP, such as trademarks, designs, domain names and general info linked to them; also, elements such as the generic top level domain name program (gTLD’s) of ICANN to allow for the expansion of the dotcom suffix at the end of domain name addresses.
- Set up a business-oriented innovation committee
The role of such a committee should be to set innovation objectives in line with the business strategy, then prioritize patent filings and continuously manage the Patent portfolio in line with such objectives. Such a committee ideally includes engineers or technical people, as well as sales, finance and marketing people.
- Foreign filings should correspond with international business ambition
Map substantial markets, manufacturing plants, potential licensees/partners/competitors and where they are applying for patents. Don’t forget to check whether you can enforce your patents in the countries where you would like to file and whether or not your invention is patentable in those countries. The EPO, China, and India, for example, do not grant patents on business methods or software.
There are many cases in which international patent protection may not even be necessary. For example, when there is no international market for your invention or when it is not among the major projects you want to invest in. Carefully assess whether a foreign filing is needed.
- Continuously evaluate your patent portfolio
Business objectives change. Companies should review their patent portfolio on a regular basis. No longer selling certain products or services or considering them as a core business may be ground to abandon or sell part of the patent portfolio helping to reduce cost such as annuities, renewal or watch costs, possible prosecution costs, etc.
If a patent’s current or expected value is less than the remaining maintenance fees, one should definitely consider dropping the patent!
- Monetize your IP
Usually, your business strategy sets out to make money; it’s important to leverage your IP by linking to the company’s commercial goals. This will allow a more robust use of your IP as a marketing tool, making your IP a direct contributor to your success in the market place. Get the help of strategic IP consultants to devise a commercially driven IP Strategy and to maximize return on your IP investment. They can help you identify the financial worth of your IP to ensure funding and tax deductions, or explore licensing revenue opportunities. Benefit from their experience in negotiating and drafting licensing and partnership contracts to make real money from your IP.