India: Importance Of Maintaining A Balanced Patent Portfolio

Last Updated: 1 June 2017
Article by Intepat Team

A Patent Portfolio forms a significant part of a corporate's overall value. Building and managing a strong patent portfolio plays a very important role in the success of an IP savvy company. Each and every step in the process of developing and maintaining a patent portfolio is crucial in achieving business goals and attaining patent success.

Effective and efficient patent portfolio is managed by strategic patent filing, managing critical patent timelines, diligently docketing business analysis and auditing. Many business giants like Google, Facebook Inc, Microsoft corp, Ford Motor Co, Honda motor co. Ltd, Sony corp and others are participating in patent buying marketplace known as IP3 (Industry Patent Purchase Program) in an effort to improve their patent portfolios.

These companies pay the same attention to their patent portfolios as investment portfolios. Strategic management of patent portfolio plays a vital role in terms of company's profits and deciding market trends.

A patent portfolio can be said significant if it spreads the risks among many patents and reduces the dependency on individual patents. If a company holds many patents in one technology, it can control and directly influence the markets that rely on that technology. Though it is always preferable to have a large patent portfolio but there are limits. The company needs to closely observe what innovations to file patents on, because once the size of the patent portfolio increases, the individual patenting decisions will bear less importance and will have less impact on the portfolio as a whole.

Therefore there are many factors which regulate the patent portfolio size e.g. R & D expenditure on patent filings. For smaller companies which are spending more on R&D they should also patent more proportionally. Based on the patenting intensity of US resident per R & D expenditure, the advisable patent filing rate for the US companies with less than $100 million revenue is 12 patent applications per year whereas for the US companies with revenue $500million – 1 billion the advised patenting intensity should be 65 patent applications per year.(As per the online data).

The IP risks will be minimized if the patent portfolio grows.

Another important factor that determines quality of patent portfolio is Scale. Having exclusive rights on related patents provides broad protection. An appropriately scaled patent portfolio not only acts as a weapon against litigation , it can also prove to be as offensive weapon which discourages others from entering the field. It acts as a barrier to entry. A perfectly scaled portfolio can shape the industry directions and influence the industry standards. In all a well scaled portfolio of patent renders Category leadership and profitability to the subject company.

Diversity is another important factor for an Efficient Patent portfolio. Diversity trims down the risks. It is actually complementary to Scale. It renders the benefits of risks, asset and business diversification whereas scale creates category leadership. Too much diversity can reduce the profits which scale is providing therefore a balanced approach must be adopted.

The patent portfolio must be Balanced. It should be based on the company's present needs and life span of the given technology or patent. Regular review and modification of the patent portfolio is a must. Regular renewal of the current patents, analysis of the company's current competitive position, areas of strengths and weaknesses, maintaining scale and diversity etc are vital key factors for a balanced Patent portfolio. For re balancing the company may even need to determine which patents to renew/pursue and which patents to discard. Timing is the key to patent portfolio management. Sometimes entering a field late results in a significant devaluation of the patent due to prior art and narrowing of the claims. On the other hand, early entry may prove to be a potential gold mine.

All in all a well-defined Patent Portfolio is indispensable to understand business objectives and proves to be imperative for formulating the core strategies of a company to emerge as market leader.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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