“My investors say we need a patent strategy – lets’ do it”

Any business that relies on innovation to power it probably has some kind of IP worth protecting and therefore it needs an appropriate and comprehensive IP strategy. So although “needing a patent strategy” might be a sensible strategic goal, you shouldn’t start with that premise but instead incorporate it into an overall IP strategy. The identification of existing IP assets is a good place to start developing such an IP management strategy. IP can take many forms and it is important to identify not just what intangible assets a company holds but also which forms it should take. There are many different types of IP so a company can employ several forms to build out its IP holdings. For example, a tech company might file patents on the more novel aspects of its technology but may opt not to file everything, thus creating trade secrets to complement the patents. In the short term trade secrets are quick and inexpensive to pursue compared to patents, but of course a trade secret is only valuable if it remains a secret. A company that relies on trade secrets needs to develop, implement, and enforce policies that identify and maintain these secrets properly. Often that starts with identifying critical “know-how” (another form of IP asset) in the heads of individuals that needs to be committed to paper and protected as an IP asset of the company which may be deemed so “critical” it needs to be protected as a trade secret to prevent it leaking out of the company into the hands of competitors. This can often be more important for a “service company” who is rolling out a business model into new territories and in which case the value and protection of the “brand” (another form of IP asset) becomes more relevant. As a result the business strategy begins to influence the IP strategy.

One common form of protection for technology is patents, which are basically government-granted monopolies that last for the lifetime of the patent. For the patents a company may choose to file, numerous decisions about the breadth of the filings will need to be made. A thorough understanding of your company’s competitors’ patents and the patent landscape is an essential first step; there is nothing more wasteful than getting your patents denied or invalidated because of prior art you didn’t know about. It is a good idea to determine the claim structure and the focus of the patent, whether broad (as a platform technology), or narrow (linked to a specific application of the technology). It is often desirable that a company’s patents are linked to its products, which makes it possible to assign value directly to the patent. In addition, it may be possible to capture IP that has value in other applications. Training engineers and managers to identify those instances where collateral IP should be created can bring additional value to the portfolio. The intentional creation of collateral IP – as long as it does not detract from the primary mission of building out the core IP – can increase the return on IP investments.

Once a company has identified the forms it will use to protect its IP, it needs to have a suitable business strategy to guide its deployment. This strategy takes into account the resources available to create and deploy its IP, such as the time available from the engineering staff to do invention disclosures, access to the right law firm (namely an attorney who understands your industry as well as your resource limitations) to draft and prosecute the applications, and qualified managers to monitor the portfolio and the external landscapes and take appropriate actions. Examples of possible IP strategies could be: A) aggressive assertion against any company that infringes, with the idea of locking them out of the market altogether; B) aggressive licensing (often preceded by a lawsuit) or joint venturing and OEM relationships to turn a company’s technology into a platform; and C) a passive approach that essentially creates patents and then waits for legal action to come along (whether suing someone or getting sued). In addition, patents can provide negotiating leverage in joint venture discussions, can be sold, and in the event of a company’s failure, may be the last repository of value in a company’s asset base. Properly structured, they have a flexibility that few other assets of any kind have.

It is important to realise that there is no one-size-fits-all IP strategy for a company. Every company’s business strategy is different, every IP asset base is unique, as is the competitor and IP landscape around it and so the amount of resources needed to invest in creating and protecting that IP will differ. The diligent IP manager will understand the specific context in which his own IP fits, the ways in which his industry’s landscape changes (M&A activity, patent issuance and expiration, patent sales), will be alert to opportunities to increase the value of the company’s IP, and will stay focused on investing in creating, protecting and maintaining the various IP assets across the business. The long lifespan of IP rights makes them an asset unlike any other and it’s not just limited to patents. The development and deployment processes around your IP assets deserve rigorous up-front consideration and as the much continuous attention and adjustment as needed to create the competitive barriers to entry needed to support an evolving business strategy.

This isn’t always about spending money – We know one company that spent in excess of $300k on patent prosecution and they ended up with only an “independent claim” after a 12 month investment in a “patent strategy”.

“My investors say I need a patent strategy – let’s do it” is just the start – but its an exciting gambit on which you start to build an effective IP strategy…

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