Vasin Lee /
6 August 2015EuropeBruno Reynolds

Patent portfolios: maximise the value and minimise the cost

According to patent information company IFI Claims, 66% of what it said were the most prolific patenting companies also feature in the Financial Times’stop 500—compelling evidence that research and development (R&D) today creates tomorrow’s successes.

But which R&D outputs will be valuable? Which patents should companies and universities invest in?

Initial patent filings are cheap, making it easy to justify a cover-all-bases approach of patenting a high proportion of R&D outputs.

However this can quickly create an unmanageable patent portfolio, with coverage in multiple territories and costs escalating over time.

Isis Innovation, the technology transfer company of the University of Oxford, currently manages 1,090 active patents and a further 1,385 applications. The scope of research creates a rich source of early stage technologies that is broadly comparable to large corporates.

We commercialise the university’s IP via licences or spinout companies. Patents managed by Isis have formed the basis for spinout companies including Oxford Immunotec, Oxford Nanopore Technologies, Summit, OrganOx, Oxitec and Oxford Gene Technology.

Isis has also licensed its IP to Sequenom, Lein Diagnostics, Huntleigh Healthcare and many other bioscience and pharma companies.

Isis Enterprise—Isis Innovation’s consultancy arm—has a specialist team which provides patent management advice to university and corporate clients.

Drawing on this experience, we ask: how can patent managers minimise costs but at the same time ensure they do not miss winners?

“One means of defining patent value is by calculating the value that would be lost if you didn’t have those patents.”

We recommend a framework which breaks down the question “which patents are going to make money?” into nine lines of enquiry:

1)      Which patents underpin our core technology? Understand whichpatents protect your products. Frequently companies have a pool of core patents that protect elements of all or many products, and others that are specific to individual products.

2)      How can we maximise the value of our core patents? Additional revenue streams can be created if alternative uses of the patents can be identified. It may also be possible to license the portfolio, for its primary usage, in different territories.

3)      Which patents protect non-core technologies? Patents peripheral to your core offering may create more revenue by being out-licensed to other companies.

4)      How do I value my patents? One means of defining patent value is by calculating the value that would be lost if you didn’t have those patents (ie, the expected loss of revenue due to the erosion of market share).

5)      What value could our patents bring to other companies? Patent valuation depends on context. The value one company can derive from a patent can have little bearing on the value other companies might obtain.

6)      How can I avoid paying fees on technologies that are unlikely to make it to the market? There are many reasons an initially interesting technology will not make it to the market. Identifying prior art or obvious freedom-to-operate issues can save you from wasting money on patent attorneys and time to develop a commercialisation plan.

7)      What are my competitors patenting? Understanding what your competition is patenting can give you a good indication of whether any of your own patents are valuable to other organisations. Analysing the patent portfolios of your nearest competition allows you to identify which of your own patents (or potential patents) have the greatest potential for generating licensing income.

8)      Is anyone infringing my patents? Valuable patents, by definition, protect a lucrative market, and so will attract infringers. Patent owners should be prepared to defend their rights but may find that it is easier and cheaper to turn an infringer into a licensee than pursue litigation.

9)      Are my patents valuable in other ways? Keep in mind that patents can be valuable not only to commercial licensees but in securing funding, as research councils are now asking for market and intellectual property documentation to support translational funding applications—such as the Natural Environment Research Council’s Pathfinder fund applications.

Proactive management of patent portfolios is an investment that pays for itself in reduced patent costs. For many companies, IP portfolio reviews help to realign R&D and patent strategy with the core business focus.

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