Tuesday, May 21, 2013

Maintaining a global patent portfolio

GlobeBuilding a strategic patent portfolio requires tough decisions to be made all the time. In which countries do I file patent applications? Which patent applications should I abandon? Which issued patents should I maintain?

In a previous post I outlined one corporate strategy. You view country selections as a set of buckets that are grouped to define the different business approaches to the countries in each bucket.

Another corporate approach is to apply tools from optimisation theory to patent lifecycle decisions. There are four specific factors that must be considered in order to optimise a patent portfolio across various countries. These are:
  • geographic importance
  • strength of the existing portfolio
  • diversity across technology areas
  • filing/management costs.

Each of these factors are assigned specific parameters or weights that are then used as inputs to an optimisation model.

Importance of geographic region

Factors to consider within a geographic region are the proliferation of relevant products, strength of the IP regime, and regional holes.

A patent applicant should seek protection in countries most relevant to its products and technologies. It is therefore important to file patent applications in all geographic regions where infringing products are made, used or sold.

In order to prioritise individual countries it is important to consider:
  • expected revenue in a country for the relevant products;
  • whether a country is a major manufacturing centre for relevant products;
  • whether a country is an import/export centre for relevant products.

The strength of the IP regime within each country is important. There is more value in securing patent protection in a country with a strong IP regime than securing patent protection in a country with a weaker regime.

There are a few ranking engines around that rank IP regimes of various countries based on factors such as legal enforcement, judiciary independence, average length of litigation, and so on. Examples include the Global Intellectual Property Index (GIPI) and the Intellectual Property Rights Index (IPRI).

Another factor in country selection is whether a country is helping a company fill a gap in a particular region where it has no protection otherwise. These gaps are known as regional holes.

Countries are assigned relative weights to reflect relative importance in the above areas.

Strength of the existing portfolio

It's important to consider the strength, in the sense of size and value, of the portfolio that already exists in a jurisdiction. Consider a case where a company has many patents in Country A but only a few in Country B. The marginal value of an additional patent filed in Country B is potentially higher than in Country A.

Diversity across technology areas

The most fundamental and valuable inventions in any given technology area are typically protected early on. Different elements of the technology are invented as the technology evolves. Companies need to recognise such trends and ensure there are no time gaps in their portfolio holdings for any technology area.

Cost of obtaining patents

The cost of obtaining patents varies across countries, although the cost does tend to follow the same general pattern. There is the initial cost of preparing the patent specification. Following initial drafting, there are the following cost steps in each country:
  • Filing - cost of filing the application including professional fees, Patent Office fees and translation costs
  • Prosecution - cost associated with examination reports that must be dealt with to secure grant.
  • Granting - cost payable to Patent Office for granting a patent
  • Annuities - fees paid to Patent Offices periodically to keep a patent or patent application alive

In most countries the cost of prosecution is much higher than during any other phase in the patent's lifetime. This is also the time when the uncertainty associated with a patent's value is also the highest. The prosecution stage is a good time to assess whether continuing with a patent application in a given country is worthwhile.

The optimisation model

Having considered and assigned weights to geographic importance, strength of the existing portfolio, diversity across technology areas and filing/management costs, a company is then in a position to formulate and solve an optimisation problem.

Each company will have its own optimisation model. However this is defined, the process provides a company with a rational and objective approach to the strategic management of patent portfolios.

Photo courtesy of author Benjamin Bunch under Creative Commons licence.

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