INSIGHT: Patent Portfolio Management in Uncertain Economic Times

June 29, 2020, 8:01 AM

With the global disruption the Covid-19 pandemic has caused to the markets and supply chains, your company may be addressing the economic uncertainty by either freezing or cutting budgets—including its patent spend.

However, a patent portfolio is a long-term investment, and any cost-cutting measures should be viewed with that in mind.

Here are a few things you may want to consider to keep your patent-related expenses down.

Refocus Your Filing Strategy

Even though the natural response may be to reduce all new activity, be wary of putting a pause on filing new patent applications.

Cutting patent filings may seem like an easy way to save money, but remember:

  1. patent rights are granted on a first to file system—the first person to file a patent application on an invention has priority, regardless of who invented first; and
  2. patents provide future value, since they carve out exclusive rights to technical spaces for years at a time.

Resist the urge to let the short-term savings prevent you from creating long-term value. Additionally, once you put a pause on the patenting process, you risk losing the culture of recognizing and protecting innovation. If inventors stop engaging, you might lose future inventions.

Instead, refocus your filing strategy. Closely evaluate the particular inventions you are looking to patent and realign your “risk” profile. Where you might typically file strategic patent applications on “blue sky” projects, consider limiting the number of patent applications covering more speculative technologies and focus more on your immediate product road map.

Four years from now, you may find yourself in a stronger patent position than your competitors who decided not to file new applications.

Consider Filing Provisional Patent Applications

Consider filing more inventions as provisional applications. A provisional application is an application filed in the U.S. Patent and Trademark Office (USPTO) that establishes an early filing date, but will not be examined by the USPTO unless you file a regular non-provisional patent application within one year.

This provides you with some time to evaluate the quality and value of the invention before you invest in a full non-provisional application, and can protect you against lost patent rights through public disclosure of the invention prior to filing.

There are some risks associated with filing a provisional application, such as the risk that the provisional application fails to capture essential elements of the invention. However, a good internal process and continued communication with your patent counsel can help minimize those risks and lead to comprehensive provisional applications that will preserve your patent rights, while reducing your upfront investment.

By properly using provisional application filings, you may not have to sacrifice protecting your innovation pipeline to cost cutting measures.

Prune Your Existing Portfolio

Look at your product and technology portfolio and realign your existing patent portfolio. Examine your issued patents to see if you can stop paying maintenance fees (which can be expensive, particularly in Europe) on patents covering obsolete product lines or old technology.

Review your key markets and consider abandoning foreign cases that have become less important. For example, in some countries where you’ve already established strong brand leadership, consider whether that reputation creates a significant enough barrier to entry. The brand alone may inhibit competitors from entering the market should you sacrifice continued patent protection for minor functional features.

Similarly, look at pending applications and drop applications on technology that you now know is less likely to yield strong patents (whether due to patent prosecution or changes in the business). Patents and applications which may have seemed strategic before may no longer fit on your business or technology road map.

Consolidate Your Portfolio

If you have several law firms working on your cases, now may be an excellent time to consider consolidating that work to one or two law firms. While it may be nice to have several firms to choose from, managing multiple firms can increase internal administrative costs and external counsel costs.

When a firm has the opportunity to handle a larger number of applications for you, they become more familiar with your technology and patent portfolio as a whole. The result is more efficient patent application drafting and prosecution, as well as more cohesiveness in the scope of your patent portfolio.

In addition, by consolidating more work with a particular firm, you may be in a better position to renegotiate some fees. If consolidating, consider whether it is more effective to divide your portfolio by technology, by major product lines, or some other organizational grouping, and then consider which firms may be best suited for each grouping.

Simply consolidating to fewer firms without any organization of the portfolio makes the consolidation less effective.

Consider Monetizing Your Portfolio

While the above suggestions address saving money and spending wisely, you should also consider the possibility of generating capital with your patent portfolio.

Take a look at your existing IP assets and evaluate the possibility of:

  • licensing out any patents to companies outside of your industry or core markets;
  • licensing to competitors; or
  • using patents as collateral to secure a loan.

Each option involves different considerations and requires separate analysis, but could bring capital into your company if needed. Make sure you understand what you have in your portfolio, and discuss these options with your patent attorneys.

Keeping patent costs down is particularly important in an uncertain economy. But continually revisiting your patent strategy and realigning it with your business strategy helps ensure that you are spending your money effectively and managing your patent portfolio wisely.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

F. James Coe is counsel at Hamilton, Brook, Smith & Reynolds P.C. For more than 20 years he has provided clients with strategic IP counseling, including patent portfolio development and intellectual property litigation. Having spent much of that time in-house, Coe gained invaluable insight into how companies develop their products and business strategies and how the protection of intellectual property can fit within that framework.

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