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  • last updated : 02 November, 2022

What is a Patent Portfolio and Why Do You Need One?

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patent portfolio

Patent Portfolio Analysis 

Prosecuting, sustaining, and litigating a single patent as a separate entity will not provide a company or individual with a greater revenue or competitive advantage than maintaining a collection of patents and deciding on different research and marketing strategies based on this collection. As a result, a patent portfolio enters the picture, which is a collection of all the patents owned by a company or an individual. These possessed patents may include both applications and granted patents. 

How to build a Patent Portfolio? 

The portfolio can be built around a specific product that a company manufactures or a technology area that is applied to a variety of products or solutions that the company offers, as well as the company’s market strategy. 

Large-scale companies will have different patent portfolio development strategies than small-scale/startup companies with limited revenue. Large-scale companies can hire patent attorneys to develop these strategies. The strategies generally focus on achieving a strong dominant position in a specific technology area. Whereas small-scale companies will require well-organized and cost-effective strategies that focus on obtaining quality patents and creating a valuable patent portfolio for acquisition or investment.

Patent Portfolio Management 

A company’s patent portfolio management is a process that it uses to stay ahead of the competition. It can keep track of the patents it owns and maintain coordination between their business and patenting strategies. This process includes a variety of strategies for generating an effective and targeted portfolio, such as identifying patents that are less valuable and making decisions to prune or abandon those patents, making decisions on offensive or defensive strategies, licensing, mergers, and a variety of other patent portfolio transactions. 

What is Patent Portfolio Analytics and how does it help with various patent portfolio strategies? 

Patent portfolio analysis is the qualitative study and review of the patents a company owns with regard to the legal status of the patent applications, competitor advancement, technology relevance, and so on to understand the relevant strengths and weaknesses of each patent in the portfolio. In addition to examining a single patent, the analysis would consider how one patent in the portfolio interacts with the other patents in the portfolio. Companies could use this analysis to apply multiple strategies, such as keeping effective patents and pruning weaker patents. It can assist to generate a targeted portfolio.

What constitutes a strong patent portfolio? 

A strong patent portfolio is related to the quality of patents that safeguard the complete product line by including all new elements and advancements in the form of firmer claim scope and concentrating on divisional or continuation filing activities while keeping future scope in mind. It is built by constantly monitoring your competitors’ expansion activities in similar domains to yours and acting offensively or defensively as a result. It aids in obtaining: 

  • Increased competitive revenue and value
  • Prevent similar product-line competitors from entering the market
  • It has the potential to be used as a weapon against infringers
  • The value of a company rises among shareholders/investors, and 
  • Create a cross-licensing opportunity 

What are the principles of a good Patent Portfolio? 

Following are the ten key principles of a great patent portfolio: 

Principle 1: A company should ascertain its strategy for patents 

The company must decide what strategy to implement for its patents, that should include at least target requirements and available investment, as well as licensing income and specific financial returns on R&D, as well as creating barriers for competitors by not allowing them to file patent lawsuits or stop them from undertaking R&D initiatives.  

Principle 2: A good patent portfolio reflects the owner’s strategic focus

The strategy for a good patent portfolio should be determined by the company’s corporate strategy/business objective. 

Principle 3: Invest in the right number of patents 

The average investment in patents should be about 1% of the amount invested in R&D, but this will vary depending on the company’s specific needs, rapid technological change, innovative discoveries, new companies and new industries, competitor patent litigation, consumer sales, and an enterprising patent strategy implemented by the organization. 

Principle 4: Balance of quantity and quality 

Companies should maintain a stable relationship between the quantity and quality of patents in their portfolio, where the good quality of patents can be assessed in one scenario based on claims that are clearly supported in the written explanation or in another scenario based on patent ranking, and companies should understand the relative quality of their portfolio. However, the quality approach will necessitate a significant investment, and some patents will contribute to quantity in order to support a good set of patents. 

Principle 5: Geographic Balance 

The patent portfolio should be geographically balanced, such that patent protection should also apply in the main market of a certain technology or in the location from which the company received the majority of reviews, which would also benefit the company’s distributors. The decision should be based on the cost of obtaining a patent in a different geography as well as the enforceability of patents in countries that do not enforce certain types of patents, such as software patents in Asian countries. 

Principle 6: Time Balance 

To be competitively ahead of other competitors, the company should balance the time between R&D activities and patenting activities in the early stages of its life. However, if capital is scarce in the early stages of a company, a strategy based on significant technical contributions can be devised. To postpone national filing investments, use continuation of applications and apply for a PCT or European patent.

Principle 7: Identification and filling of gaps  

Portfolio management should be an ongoing process in which gaps in the portfolio are identified and strategic actions are taken. Preparing and presenting your own patent applications, as well as searching for and purchasing a good set of patents granted to competitors, are examples of strategic actions.

Principle 8: Time management, including divestment 

Some patents in the portfolio will have high value, while others will have low value. Therefore, this should be determined on a priority and repeated basis. Because it will reduce the cost and time investment in high-value patents while allowing low-value patents to be sold/abandoned.

Principle 9: Establish measurement criteria 

A patent strategy must align with the corporate strategy, and it can be measured using a variety of criteria: 

  • Revenue generation versus total cost is used to measure the company’s objectives, such as revenue generation through lawsuit activities
  • How R&D adds value, that can be measured by innovative products built over time, patent portfolio expansion over time, or licensing revenue in the form of R&D percentage over time 
  • Determining the effectiveness of a company’s patent portfolio in putting it ahead of competitors in a particular technology domain 

Principle 10: Sharing accountability for patent and patenting activity management within the organization 

  • The legal department, which would be able to offer patent legal advice 
  • The chief technology officer is familiar with the technical elements of each invention
  • VP of business development in charge of licensing patent portfolios and monetization 
  • The Strategic Business Unit is responsible for recognizing the company’s financial goals and developing new technology. It is also responsible for enhancing products, and generating revenue from the products

Value of The Patent Portfolio 

A patent portfolio’s value is important because it allows the industry to increase its financial growth. As the company can know the financial value of each patent that it owns. The value of the patent portfolio is determined by the following factors: 

  • The scope of the patent claim is determined by its breadth and detectability in order to prove infringement
  • Divisional applications, scope of filing of continuation, and continuation in parts to broaden the scope of the claim in infringement
  • Available for investment 
  • Competitors’ patent-related activities 
  • Filing in a number of other jurisdictions 
  • Aids in strategic decisions involving licensing, partnerships, mergers, acquisitions, or other transactions aimed at expanding a patent portfolio 
  • Patents that are not valuable can be identified, and weak patents with low market value can be abandoned or sold
  • Identifying both offensive and defensive strategies 
  • Identify patents that correspond to various standards such as IEEE, 3GPP, ETSI, and so on 
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