Shifting Strategies: Building a Strong Patent Portfolio in an Erratic U.S. Patent System

“You just can’t thoughtlessly throw away money creating a patent portfolio in 2024—that is a recipe for having a patent portfolio full of weak patents in countries where you would never enforce or license anyway.”

Patent Portfolio Finding an appropriate patent strategy is simple. Start with a well-funded and dedicated research and development team who sees their job as not only inventing but also working side-by-side with patent attorneys to protect the intangible assets they create for the betterment and advancement of the company. Instruct the patent attorneys representing the company to spend the time necessary to describe and claim the invention to meet the standards of today and the moving target that is the unknowable standards of tomorrow. Pay millions and millions of dollars in patent office fees in the United States and around the world. Then, sit back and watch success roll in like waves washing over the sand at high tide.

If only it were that easy!

Innovating was always the easiest part of the equation because it is the only part of the process that can truly be controlled. Once a patent application is filed, patent examiners, judges, bureaucrats, and politicians start to matter and influence not only the rights obtained but whether rights are even obtainable, or able to be kept once obtained. Over most of the last generation, these human actors have taken the U.S. patent system, once the gold standard in the world, and have turned it into a pale, ghostly image of what it once was. There is no doubt that the U.S. patent system itself is the biggest wildcard in the equation, which is why innovators are increasingly looking outside the United States to countries where patents are obtainable, keepable, and enforceable.

Place Your Bets

U.S. law is affirmatively working against innovators by interjecting uncertainty, for which there has yet to be a solution. This is in large part because patents are not really property. Yes, the statute says that a patent is equivalent to personal property, and there are old Supreme Court cases that liken patents to real estate, but modern Supreme Court precedent correctly identifies a patent as nothing more than a government franchise, which never enjoys quiet title because it can be challenged everyday throughout the life of the patent. If a patent were truly a property right, the law in place when it was obtained would be the law applied throughout the life of the patent, but that is simply not the case with patents. In true Roulette style, the law that will apply to determine whether the patent you own should have been granted in the first place will be the law of the moment. Place your bets! Wherever the ball (or the law) lands determines the outcome, making the entire process seem like nothing more than an elaborate and expensive game of musical chairs.

Give the courts and bureaucrats what they say is necessary today and tomorrow they will still conclude you haven’t described enough, you haven’t claimed things properly, or in retrospect that just isn’t the type of thing we want to allow patents on. It is remarkable that given the arbitrary and capricious nature of the U.S. patent system innovators still want U.S. patents, but times are changing.

Simply stated, old business and R&D models that relied upon fair rights for a faithful description of an innovation have become outdated and entirely unreliable. How do you build a patent portfolio against this backdrop? Is it even possible to satisfy the target of the moment and the undoubtedly shifted target that will be in place in several years? Obtaining a U.S. patent portfolio with assertable assets is not for the faint of heart, which is why so much emphasis is being placed on trade secret protection.

Changing Priorities

Against this sea of instability and uncertainty, enterprises both large and small are taking a long, hard look at their patent filing strategy, and whether a patent makes sense in the first place. Even IBM, a patent juggernaut for more than a generation, decided over the last several years that being the top patenting company in the works was no longer a priority, choosing instead to take a more selective approach to patenting. If that isn’t a canary in the coal mine, I don’t know what a sufficient wake-up call could ever be that would get innovative companies to realize there is a new game in town and that game requires purposeful triage. You just can’t thoughtlessly throw away money creating a patent portfolio in 2024—that is a recipe for having a patent portfolio full of weak patents in countries where you would never enforce or license anyway.

A rational patent strategy today must start with determining what the company is trying to accomplish, and whether patents—or at least what kind of patents—are the right form of intellectual property to pursue and ultimately maintain. In a world where company budgets are decreasing, inflation has been rampant for several years, margins are thin and getting thinner, and competition is increasing, a holistic view of all forms of IP and the protection they can provide is essential. You simply cannot just thoughtlessly elect to pursue an innovation patent because that has been the preferred long-term strategy to protect innovation. Design patents, utility models, trademarks, and trade secrets are far more affordable to obtain and maintain than is an innovation patent.

To succeed in developing an optimal patent strategy, innovators and corporate leaders must first be cognizant of the business reality that a patent is not the only tool in the toolbox. A patent might not be the most effective tool in the toolbox given the shifting sands of patent law, and by purposefully triaging the company innovation portfolio, cheaper alternatives will often exist, which means greater resources for those innovations that absolutely require perfected patent protection that has a realistic opportunity to stand the test—and challenges—of time.

Portfolio success requires a comprehensive understanding of ongoing research and development within the company, ongoing research and development by competitors, technical realities and deployment timelines, the wants and needs of customers, and an understanding about what will be achieved by seeking patent protection. Indeed, the very nature of preparing a winning patent strategy requires understanding of not only the patent laws and the business realities of evolving technologies, but also where both the law and industry is heading, and what the company plans to do with the rights obtained.

Look Within

A comprehensive patent strategy requires a company to first take an introspective look at its own business, including goals for the future, client needs, core competence and existing research and development. Once this internal review is completed it becomes necessary to engage in an industry and marketplace analysis that focuses on competitors, business opportunities, alliances, industry realities, and technical limitations. Only after a thorough internal and external review can a winning patent strategy be developed. After all, a patent is a business asset that can be used to facilitate success, but how will YOU use your patents, if at all? The use case should dramatically affect decision-making, budget, and overall strategy because getting a patent in and of itself is not the goal.

Getting a commercially useful patent that can meaningfully be leveraged given your overall business plan is the goal, and far more complicated. With a holistic view of what can be accomplished in terms of markets, competitors, and importation, freeing up financial resources not needed to pursue innovation patents and pay annuities can lead to more innovation being protected, and with better, more streamlined, and thoughtfully designed protection.

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2 comments so far. Add my comment.

  • [Avatar for Lab Jedor]
    Lab Jedor
    May 14, 2024 11:55 am

    It is more difficult to maintain a valid patent on a novel invention than doing the invention in the USA. Many (if not most) issued patents on valuable inventions are invalidated on obviousness. In fact, the more valuable your invention, the more likely its patent will be invalidated.

    This is an immense (unwilling) turnover of intellectual property of inventors to the public domain. In a bizarre way it fulfills the desire of the Framers to promote innovation. Billions of dollars are spent (and this is apart from doing the invention) on obtaining and defending patents. It describes inventions in eye-watering detail, enabling any PHOSITA to readily apply it. All courtesy the patent system.

    And when the value of the invention and thus of the patent has become apparent, the patent owner has a greater than 80% chance to have the patent invalidated in our current system.

    Like I said elsewhere, our patent system has turned into an involuntary Open Source system. With much higher cost, byzantine rules and heartbreak. And in the actual Open Source community you get at least the credit for your contribution.

    Rationally, one should carefully assess if a strong patent portfolio for most inventions, which are either incremental or apply existing knowledge and/or technology, is still possible in the USA. The USPTO is further tightening the noose on this with new rule making proposals on continuing applications and Terminal Disclaimers.

    A more rational decision may be to go for trade secrets and shoot for a 5-7 year advantage over competition, rather than taking a chance of giving it all (unwillingly) away.

  • [Avatar for Anon]
    Anon
    May 13, 2024 11:41 am

    “Rational” invites the aspects of Efficient Breach to Efficient Infringement — much to the detriment of all innovation.

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