In the early stages of development, inventors and their
employers are often confused about what to patent. When faced with
a dizzying array of new products and feature enhancements, it may
be tempting to select the flashiest one, or fall back on a patent
strategy from a prior product, a different company, or an earlier
time. Be wary: These are poor proxies for determining what is
valuable. In fact, what is valuable may be easily overlooked and
may morph over time as the competitive environment and customer
needs change. What is valuable to you depends on your goals for
your patent strategy.
Companies typically have several patent strategy goals that drive
decisions related to implementation of their strategy. The
selection of one or more of these as primary goals may influence
how to weigh the indicators of patent value discussed below.
Goal 1: Achieve marketplace prestige. Patent
applications can signal to market stakeholders that a company has
developed proprietary technology. Those who focus on Goal 1 use
patents primarily to showcase a company's contributions to the
state of the art and reassure investors that the company is taking
appropriate steps to protect their investments in research and
development.
Goal 2: Stop imitators/copycats. Imitators
are those who seek to swoop in and steal your customers by copying
your technology rather than developing their own. This shortcut
saves the imitator development time and effort, increasing their
profitability at your expense. Imitators may particularly prey on
industries where products can be easily reverse-engineered and/or
have low barriers to entry. Contrary to conventional wisdom, those
who focus on Goal 2 find imitators a source of annoyance rather
than a source of flattery.
Goal 3: Build an arsenal for use against business
competitors. A stockpile of patents can have a
significant deterrent effect on a competitor looking to pick a
fight. Even if a patent war breaks out among competitors, those who
focus on Goal 3 can use a common fear of mutually assured
destruction to broker a cease-fire in the form of a patent
cross-license. Those who focus on Goal 3 will patent features that
are not even in their own products if it is likely that a
competitor will want to add those features in the competitor's
products.
Goal 4: Monetize for revenue. The rights
granted by a patent to exclude others from making, using, selling
and importing an invention does not necessarily mean that the
patentee wants to be the only party engaging in these activities.
Those who focus on Goal 4 look forward to sharing their patented
technology with others, for the right price. Although monetization
is an often discussed goal, few operating companies make this goal
a high enough priority to be meaningful.
After selecting one or more goals from the list above, companies
should then turn to indicators used to value inventions and their
corresponding patents. The following criteria can be used to assess
the value of the likely outcome of the patenting process at the
outset. Thus, these indicators of patent value can be used to
select which inventions to pursue in patent applications.
Detectability. This indicator is critical for
offensive use of patents to enforce your rights (e.g., Goals 2, 3
and 4), but much less important for achieving prestige (Goal 1).
Would you be able to tell if a competitor was practicing the
patented invention? What would be observable? Typically,
detectability of external-facing features (those shown to
customers/users) is higher than the detectability of internal
mechanisms or algorithms. A higher level of detectability leads to
a higher value of the patent. Note that if the invention is hard to
detect, it may be better protected as a trade secret, and exposing
the invention in a published patent application may well ruin trade
secrecy protection.
Availability of suitable alternatives. This
indicator is crucial for arsenal building (Goal 3) and monetization
(Goal 4), but relatively less important in achieving prestige (Goal
1) or stopping strict imitators (Goal 2). If you lock up one way
(or one category of ways) to solve a problem by patenting it, how
good is the next best alternative that remains available to
competitors? This concept is also referred to as the availability
of "design-around options." The absence of reasonable
alternatives strongly increases the value of the patent.
Likelihood of use by others. This indicator
is important for stopping imitators (Goal 2), building an arsenal
(Goal 3), and monetizing for revenue (Goal 4), but may not be
important for achieving prestige (Goal 1). Is the invention
something that others would reasonably like to do? If the invention
solves a business problem that others are likely to face, the
answer is probably yes. If the invention is narrowly applicable to
a specific set of circumstances that is likely to arise only in
your product, the answer is probably no. A higher likelihood of use
by others leads to a higher value of the patent. This indicator can
be used to weed out inventions that are too narrow in scope to be
worth pursuing in patent applications.
Scope of claims likely to be allowable. This
indicator is more important to building an arsenal (Goal 3) and
monetizing (Goal 4) as compared to achieving prestige (Goal 1) or
stopping imitators (Goal 2). Assessment of this indicator requires
background knowledge of how crowded the field of technology is and
how actively others are pursuing related technology. In relatively
new technology areas, broader claims are more likely to be
allowable than in well-developed technology areas where only
narrowly tailored claims are likely to be allowable. Sometimes,
companies rely on their chief technology officer and other
technical specialists to outline the contours of the intellectual
property landscape as they have observed it. Other times, companies
request IP landscape studies in order to learn where the white
space is between the IP holdings of competitors. A greater scope of
claims likely to be allowable leads to a higher value of the
patent.
Longevity. Patent applications are typically
published 18 months after filing, and typically take between two
and four years to issue as patents. Under any patent strategy
(Goals 1-4), the value of the patent is greater if the useful life
of the invention exceeds the time consumed before the patent
issues. The most valuable patents according to this indicator are
those that are still relevant until the end of the patent's
20-year term.
Equipped with an understanding of your patent goals, you can use
an appropriately-weighted combination of these five indicators of
patent value to score your inventions that are patent
possibilities. Then, based on the scores, you can rank the patent
possibilities. The final decision is how many of the top-ranked
patent possibilities you can fit into your IP budget. Whatever the
number may be, you will be prepared to implement your strategy with
confidence in the true value of what you are pursuing.
Originally published in the Daily Journal 8/27/14.
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.