Summary:

  • Patents and pending patent applications are valuable business assets and can be used as tools to reduce risk exposure and manage risk;
  • In order to develop innovations into a strategically valuable patent portfolio, certain methods are recommended to prepare patent applications, and to identify potential use cases.

Patents and pending patent applications are important business assets that can be used to help a company achieve its business goals, including:

  • Erecting a barrier to entry for a potential competitor,
  • Increasing leverage in a negotiation regarding a joint venture or in the settlement of a dispute,
  • Demonstrating an innovative culture within a company,
  • Assisting in the raising of capital from investors,
  • Reducing the threat of litigation from other parties, and
  • Enabling a more active role in a Standards Setting Organization or other collaborative setting, among others.

In order to utilize a patent or patent application to achieve these types of goals, the patent application must have been prepared and managed through the application examination process with those potential uses in mind. This is a more difficult task than it might seem. Typically, both the details of the examination process (for example, the prior art that may be found by an Examiner and the Examiner’s interpretation of that art) and the potential use cases are not fully known at the time that a patent application is submitted to the U.S. Patent and Trademark Office. Due to those uncertainties, developing a patent portfolio that can be used as a valuable business asset requires a pro-active and iterative process that accommodates the changing business environment of a company. This requires recognizing opportunities in which a patent would have value and at the same time (or in many cases, in advance) building a portfolio that can take advantage of those opportunities. I’ll provide a simplified description of how this goal may be accomplished in situations involving multiple technologies and different business environments.

The overall process may be broken down into three primary sub-processes: (1) application preparation; (2) application examination; and (3) recognition of (and response to) opportunities to strategically use a patent or pending application as a business asset. Note that these three sub-processes are not mutually independent or temporally separated, but instead are inter-related, so that information relevant to one sub-process may need to be considered when making decisions regarding another sub-process.

With regard to application preparation, in addition to the standard concerns about providing a sufficiently detailed and accurate description of how to implement an invention, the application drafter should also consider whether the invention might be applicable to other industries or technological environments. An invention often represents a solution to a technical or business problem, so it is possible that a similar problem arises in other contexts. For example, if an invention is related to handling load balancing of messages or data transfer in one situation, then the same techniques may be applicable to other situations or within other system architectures. In order to explore this possibility, the invention must be considered from a different perspective than just the implementation or use case described by the inventors, and it must be described differently than it might be by many patent practitioners.

To do this effectively, one should consider what the problem being solved is at a higher (and more generalized) level than the actual implementation provided by the inventor(s). Similarly, the invention or solution should be viewed at a functional level that is less specific than the actual implementation. This may require viewing the operations carried out by the invention in generic functional terms rather than as specific operations using the components or elements of the invention. Although somewhat abstract, these considerations may provide suggestions of other ways to describe and utilize the invention, and such information should be presented in the patent application. Some of this information may be available via internal sources such as product development, marketing, sales or the legal department — more on these sources and their value later.

During the application examination process it is important to be aware of potential use cases, or situations in which a particular set of patent claims (which, when interpreted in view of the patent application and examination history, define the property right conferred by the patent) would be a strategically valuable asset for a business. When such a use case is identified, a pending application that provides support for a set of claims that would be of benefit in that use case may be identified and used to produce an asset that would benefit the business. It is also important to avoid introducing any statements into the file history (the record of communications between an applicant and the patent office) that might be interpreted as limiting the coverage of the claims in a way that would be counter-productive to the goal of having a set of claims that cover the desired use case. For example, limitations to: a field of use; a particular configuration of elements; a solution to a problem that arises in, and is limited to, a specific operating environment; etc.

Thus, as part of drafting, participating in the examination of, and utilizing patent applications and issued patents, it is important to identify potential use cases in which it would be valuable to a business to have a properly constructed asset in the form of one or more patents or patent applications. And, in order to identify such potential use cases, it is beneficial to establish internal processes that are capable of capturing and evaluating information that suggests opportunities to use patents and applications in a strategically valuable manner. Below, I’ve outlined an example set of such internal processes and how they may be used to improve the value of patent applications and issued patents produced by a business.

First, the sources of the needed information should be identified and made part of the overall process of obtaining protection for the company’s innovations. These sources will typically include representatives from:

  • Technology,
  • Product development (regarding product features and the longer term product roadmap),
  • Sales,
  • Marketing,
  • The competitive landscape (as this type of information typically keeps track of companies offering competing products or services, and the details of those products or services),
  • Legal (regarding disputes or potential disputes in which having greater leverage would be beneficial), and if applicable,
  • Standards group (or other collaborative venture) participation.

The information is used to assist in identifying potential uses for an intellectual property (IP) asset — this may be done by determining situations in which having such an asset would provide a benefit by increasing a company’s relative position compared to another party. The benefit may be one of those mentioned at the beginning of this article, or another use that becomes evident during the course of the business’s growth and development.

Once a potential use case is identified, the asset or assets that may have current utility (issued patents or allowed applications) may be identified by a careful consideration of the independent claims of each asset relative to the products and services of the party involved in each use case. In addition to assets of current utility, assets of future potential utility (pending patent applications, ideas in the patent program pipeline) should also be identified. The assets of future potential utility are those in which claims may be inserted that would provide a benefit to the business, if such claims were to be allowed after examination. Note that insertion of a new set of claims into a pending application may lead to a relatively fast allowance in certain cases, such as a continuation of an issued case in which the new claim set includes the primary limitation that was responsible for allowance of the issued claims. This enables the pending application to have greater value and present an opportunity for greater leverage than would a typical newly-filed application.

For the assets of current utility, it is important to perform sufficient due diligence to determine the relative leverage or advantage that they may provide. This may include:

  • Consideration of the relative strength of the business’ patent portfolio compared to that of another party (e.g., the type and number of assets that the business may assert against the party as compared to the type and number of assets that the party may assert against the business),
  • The relevance of certain claims to specific products or services (such as to key products or services),
  • Consideration of the relative economic impact of asserting the asset (e.g., the potential impact on the party’s revenue as compared to the impact on the business’s revenue if the party asserted against it, taking into account relevance of the assets, potential licensing revenue), etc.

Once due diligence is underway, a list of properly supported options can be developed. These may include assertion, licensing, proposal of a cooperative venture, a sale of the asset to a target or sale to a competitor of the target, etc. The stakeholders can then make a final decision after consideration of the objectives, risks, costs and benefits of each option.

For the assets of future potential utility, the options available to increase the relative leverage provided by the asset should be identified and considered. Such options may include:

  • A broadening reissue (if available) to broaden the scope of the claims in an issued patent,
  • Re-examination to fix a problem in an issued patent or allow consideration of a specific piece of prior art,
  • Insertion of new claims into a pending application that is expected to issue more quickly than a new application (because the current examination process has already identified possible allowable subject matter),
  • Insertion of new claims in a continuation application, etc.

For each option that is identified, due diligence should be performed to determine the most favorable options based on consideration of budget constraints, timing issues, political issues involving relationships within the eco-system in which the business operates, competitive knowledge regarding competitor and industry directions, etc. As before, the stakeholders can then make a final decision after consideration of the objectives, risks, costs, and benefits of each option.

Although I’ve covered only a high-level introduction to the topic of the importance of developing a strategically valuable patent portfolio and how to go about doing it, here are some key takeaways:

  1. Issued patents and pending applications are a business asset that have multiple uses in ways that can assist a business to achieve its goals;
  2. Successfully using patents and patent applications in such ways requires being pro-active rather than reactive in order to recognize potential uses and be prepared to act on them; and
  3. Successfully using patents and patent applications in such ways requires tight integration between the functions of a patent counsel (whether in-house or outside) and other aspects of a business.