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December, 1st, 2021

By Stephen Ball

Are your patents paying for themselves? If you are asking “how do I save on my patent budget?” then you are asking the wrong question. Instead, you should be asking “why am I not getting enough value out of my current budget?” If there is a drive to cut costs, then your IP is not working. The strategy needs to change and focus on quality IP in strategic areas in order to maximize value. If 80% of a company’s value in its IP, the conversation should shift from cutting it to protecting it efficiently.

There are a number of different ways IP brings value. For example, it protects investments made in design and engineering that would otherwise be coopted by competitors copying your products and services. Without IP safeguards, you simply pave the way for competitors to drive over your business. IP also adds value as a defensive measure, which is more difficult to quantify because it is measured by hypothetical damages and attorneys’ fees. However, it can be used to resolve conflicts without litigation and may present cross-licensing opportunities. Moreover, IP also supports marketing since obtaining exclusive rights shows that a company is a trusted and established innovator in a space.

IP is first and foremost a business weapon. When used to exclude competitors and increase market share it makes sense to prioritize where it has the greatest impact. This is done by identifying the most profitable lines of products/services and focusing IP protection there. IP is not a numbers game, and one good property is worth a thousand bad ones. The Pareto principle (aka the 80/20 rule) not only suggests that 80% of a company’s revenue is generated by 20% of its products/services, but also that 80% of IP value is found in 20% of its properties. So stop trying to cover everything and instead focus on the most profitable areas. The “leakage” in IP budgets is typically found in the pursuit or maintenance of useless IP.

To this end, a “patent committee” should be used to regularly evaluate and reevaluate IP decisions. It reviews new invention disclosures for protection and decides whether to maintain properties, all while considering competitors’ marketing and filing activities. The patent committee can be a single person or can be a group coming from different areas of the company such as sales, marketing, technology, legal, or operations–IP affects every group. The key point is that the committee reviews the business strategy apart from the technology strategy.

Once the most valuable areas are identified, the goal should be to obtain the broadest protection in those areas. It pays to be aggressive in patent prosecution. This includes use of the ex parte appeals process instead of Requests for Continued Examination (RCEs). The search fee has already been paid, so do not pay another unless there is something new to search (like adding subject matter from the specification). If you believe claims are novel it is time to take the case out of the examiner’s hands through an appeal. Appeals are effective (WHIPgroup has over 80% success rate), and they reduce the number of office actions as well as the number of limiting claim amendments.

In addition, strategize on building a web of protection around those valuable areas. There should be broad claims, narrow claims, and continuation applications to vary the scope of protection and create insurmountable obstacles for potential infringers. Broad claims help with infringement, narrow claims with validity, and claim layering (dependent claims depend on dependent claims) can weave them together. Continuation applications present a risk to competitors that they will infringe future claims, and so deter them from investing in the space.

It is not the IP budget, it is the strategy. Innovative companies do not cut IP budgets but seek to get more value out of them so the IP can pay for itself. So stop wasting resources on bad IP and instead focus on high quality IP in strategic areas, creating a web a protection in those areas while abandoning others.

At WHIPgroup, we have a track record of successfully applying our prosecution know-how and can develop a comprehensive strategy for making your IP work for you. From multinational corporations to startups, we offer clients fixed fee, not to exceed, and subscription options for prosecution services. We also offer courtesy consultations on how to build an effective and efficient IP strategy.

 

WHIPgroup is leading counsel for U.S. and international technology companies. We specialize in patent and trademark law.

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