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Strategies for Developing Patent Portfolios

Friday, May 3, 2013
By Anthony J. Lombardi, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

Patent portfolios provide value to a company in many ways. They can protect products from others who might infringe and help maintain market share. They can serve as defensive tools and provide leverage in negotiations. They can become sources of revenue through license or sale.

To provide these advantages to their full potential, however, it is important to develop patent portfolios strategically. Portfolios developed with some strategic considerations in mind typically provide more value.

Drawbacks of Traditional Approaches

The process used to identify and select inventions to patent can affect the strength of a patent portfolio. Traditional approaches to building patent portfolios often fail to include a strategic component to the decision-making process.

For example, one approach might call for a patent application for each invention disclosure submitted by a company's employees. Each disclosure is typically treated equally, and given the same budget and same level of importance. At the opposite end of the spectrum, the company might take a more selective approach and file applications only for key technologies related to the company's flagship products. Each of these approaches has potential drawbacks.

Patents provide value when they cover technologies important to a company's products and cover them in a comprehensive, cohesive way. Filing applications for all invention disclosures and treating each one equally may result in patents for important technologies. But the applications may miss the mark when it comes to providing coverage for commercially successful embodiments or alternative embodiments implemented by a competitor.

Failing to have a plan for portfolio development can also result in misallocated resources. By filing applications on every possible invention, a company may spend time and money on inventions without a good chance of success at the Patent and Trademark Office and that may not provide strategic or monetization potential. Alternatively, some inventions are not good candidates for enforcement if infringement is difficult to detect and prove.

A limiting filing strategy that focuses only on the most important invention disclosures for patenting is premised on the perceived importance of invention disclosures at the time the decisions to file are made. But market conditions can change—often rapidly in emerging technologies—and product designs may evolve over time.

For example, once a patent application is filed for a product, if the company considers that product patented and does not file any additional applications on later developed improvements of the product, it may lose the opportunity to patent such improvements. These future improvements may ultimately exceed in importance and value the embodiments disclosed in the first patent application.

Patents also provide value when they cover technologies other businesses want to exploit. Although certain inventions may not factor prominently in a company's current product plans, the inventions may hold value as assets suitable for license or sale in the future. By failing to recognize the monetization potential of inventions beyond a company's current business model, the company may miss opportunities to obtain patents on these potentially valuable inventions.

Ask the Right Questions

A strategic approach begins with having the right information to fully evaluate each invention disclosure. By correlating invention disclosures with business objectives and technical objectives, the portfolio is more likely to include strong patents aligned with business goals. Therefore, in addition to describing the invention, invention disclosures should also ask inventors to provide information that can assist in evaluating the invention's relationship to the company's products.

The inventors should identify the product that will embody the invention and determine how the invention relates to the product. The inventors should also indicate which aspects of the invention are likely to have high customer demand. Features sought after by customers are also likely features that competitors will want to include in their products.

The inventors should also detail the status of the product that will embody the invention. This information should include whether the product is under development and, if so, the time line for completion. If the product is not completed, the inventor should identify the embodiments that are the best contenders for commercialization and indicate whether other embodiments might make good candidates for commercialization in the future. In addition, the inventors should fully identify and describe alternative embodiments that competitors might implement to achieve the same goals and results as the invention.

The inventors may not have all the answers. Knowledge and experience from others in the intellectual-property department or other departments of the company may also augment the information collected from the inventors.

Evaluate Disclosures from Different Perspectives

Evaluating invention disclosures from different perspectives can help identify strong disclosures. In addition to evaluating disclosures in light of the company's view of the invention and its business goals, it is also worthwhile to consider invention disclosures from a view independent of the company. Additionally, the potential strength of each disclosure from a patentability and enforceability perspective should also factor into the evaluation process.

The Company's Perspective

Evaluate each invention disclosure from the perspective of the company. This evaluation not only should focus on the current importance of the technology to the company but should also consider whether the technology might become important to the company in the future. Understanding the relationship to the company's business goals is a critical component of this analysis. To gauge the importance of a particular technology to the company, company officials should consider feedback from the inventors and other company personnel who are the most knowledgeable about the products.

For example, some inventions may relate to internal company tools or products that are not the primary focus of the business. Patents for these kinds of inventions might not hold much value if the company does not sell products that include the invention. In a similar vein, if the invention does not have a large number of potential infringers, a patent may not hold as much value as a patent would for a technology with widespread use.

It is also important to consider the current state of development of the product or products that include the invention. For example, if an invention relates to a product that is still being developed, then that invention may require follow-up applications. Important products that might have multiple embodiments under consideration or that might evolve over time are suitable for potential continuation and/or continuation-in-part applications. The strategy for these inventions should include plans for filing additional applications to cover the alternative embodiments and/or new embodiments that are developed as the product evolves and comes to market.

The External Perspective

Evaluate each invention disclosure from a marketplace perspective that is independent of the company. Although some inventions may not relate to a technology that is key to the company, they may still have value outside the company. These inventions may hold potential value for licensing or sale to other companies.

Further, if other companies practicing the technology are in a competition-heavy market, then patents for that technology may hold significant value. Similar to the analysis of the technology within the company, this analysis should also take into account the number of potential infringers for the technology outside the company.

The Strength of the Patent

The strength of the patent—from a patentability and enforceability standpoint—should also factor into the evaluation of each invention disclosure. Any known prior art identified by the inventors and the results of any patentability searches can help inform this evaluation. If a search has not been done, inventor feedback on the general knowledge of the state of the art in the particular field can help provide an understanding of the potential strength of the invention.

Also consider the ease of detecting infringement. If infringement is difficult to detect because the patent covers a behind-the-scenes process, then enforcing the patent becomes all the more difficult. Litigating patents for such technologies may require extensive discovery and expert analysis. Accordingly, such an invention disclosure may not hold as much potential value as one directed to a readily observable feature.

Formulate a Strategy

After the disclosures have been evaluated and the criteria discussed above taken into account, the stronger disclosures—those that are important to the company's current or future business goals, hold potential value outside of the company, or have the most potential for strong and enforceable patents—may warrant higher budgets for preparing and prosecuting patent applications.

For example, those applications deemed the most important may warrant spending more time to develop comprehensive disclosures and claim sets. Additionally, those applications may also warrant a continuing-application strategy to capture different embodiments and future advancements in the underlying technologies.

Finally, the application-drafting process should make use of the information considered and collected in this process to inform the scope of the claims and the overall strategy for developing the applications.

Conclusion

Developing patent portfolios strategically can help a company unlock value from its intellectual property. Taking into account some of these considerations when developing a patenting strategy can help build strong portfolios that provide more value.

Anthony J. Lombardi is an attorney at Finnegan, Henderson, Farabow, Garrett & Dunner, Reston, Va. His patent litigation and patent prosecution practice spans a variety of technology fields, including electronics, computer architecture, software, internet technologies, mobile devices, telecommunications, and business methods.

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