How strong are your IP assets? -

How strong are your IP assets?


There is no question that a portfolio of patents can provide tremendous value to a company.  In fact, many will agree that trying to compete in a high technology industry without adequate patent protection is insane if not merely futile. 

Whether you have a patent portfolio of 200 or 20,000, identifying which are providing the value can be a daunting task.  The comparative value from one patent to the next is not always readily apparent.  Certainly all patents are not created equally.  There are a number of factors that can influence value, from licensing (think IBM) to litigation (multi-million dollar verdicts are commonplace in the news).  These highly publicized benefits are unfortunately not very applicable to most patents in most portfolios.

From the perspective of many companies that design and make products, the salient value factors in a patent or portfolio of patents lie in the ability to protect products and technology, avoid litigation, and leverage cross-licensing opportunities.  These factors are not as sexy as giant licensing revenues and damage awards because they are largely unseen.  A company, maintaining high margins on a new (patent protected) product, will seldom directly credit the patent protection for keeping competitors at bay or forcing R&D dollars to be spent  to design around.

Additionally, a portfolio of key patents may keep a competitor from asserting their own against you – a sort of patent based cold war phenomena.  It is impossible to know when a competitor has decided not to assert a patent against you.  These immeasurable factors are nonetheless important because they speak directly to value – costs saved, margins and revenue dollars protected. 

Since these value factors are so hard to identify, one must change their analysis to distinguish key patents from the rest.  
Start by reviewing the portfolio from a high level and pare down using a tiered approach.  The fundamental idea is to associate patents with revenue streams to assign a value.  Products can be easily organized into high level technology segments.  Turn to the patent portfolio and assign each patent to one or more of these technology segments.  You will likely find patents that fall outside of core technology – it is useful to identify that these patents are not protecting any current products.   Once the patents are correlated with products by way of the technology segments, a high level value determination may be made based on the revenue streams associated with your products. 

At this point is important to bear in mind the geographic nature of patents.  Since a patent only protects an invention in a specific geographic region, a correlation between revenue by region and the jurisdiction of the patent is critical.  If key sales for a particular technology occur in Japan, and your patents are only US, you are not protecting your technology, and the US patents are of far less value than a Japanese patent would have been.

The next step to this analysis is to consider competitor activity.  Competitor sales by technology segment may be mapped out by region and correlated to patents as described above.    The same should be done for competitor manufacturing sites.  The ability to stop a competitor from making an infringing product can be of great value even in a region where there are no sales.  

This analysis provides a direct business-aligned value perspective of a patent portfolio.  Important groups of patents applicable to strategic regions of the world rise to the top while those of trivial relevance fall to the bottom, creating a value spectrum.  The approach is somewhat simplistic, but the results will enable more informed decisions from a business or legal perspective.

About the author:

Thomas Marlow is Intellectual Property Counsel for Fairchild Semiconductor.  In his current role, he and his team are responsible for managing worldwide IP strategy, enforcement, and procurement. A primary focus includes promoting and capitalizing on innovation within the company to generate a strong intellectual property portfolio around Fairchild’s technology focus areas.  Marlow’s work also includes patent portfolio management, strategic and competitive landscape analysis, as well as patent and IP portfolio evaluation to assist prosecution and business development decisions.
Previously,  Marlow was a private practice Patent Attorney in Minneapolis practicing in the electronic arts including semiconductors, integrated circuit design and fabrication, wireless communications, and computer networks. While there he worked with companies and inventors to write and prosecute patent applications, and develop patent and portfolio analysis programs.
He attended the University Of Notre Dame where he earned his Bachelor’s Degree in Electrical Engineering.  He later received his Juris Doctor degree with a concentration in Intellectual Property from Franklin Pierce.

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