A Comprehensive

Patent Portfolio Development System

This outline presents the elements of a method, called The Comprehensive Patent Portfolio Development System.  The method is a process for establishing a comprehensive intellectual property (IP) position.  The method is based on the principle of obtaining many patents (called a patent portfolio)  to broadly cover a technical area rather than obtaining just one or two isolated patents.   In addition to obtaining patent coverage, the method also has the objective of accomplishing many additional offensive and defensive goals:

• Create a wall of protection for the core technology of the company (defense)
• Create a bank of high value technology trading cards to reduce the effect of legal attacks (defense)
• Create a roadway into the market for the core technology to expand (offense)
• Find and grab weak territory in competitor's market strategies (offense)
• Find and grab opportunities left by other companies that may have failed (offense)
• Find and grab opportunities created by small inventors that have not been exploited (offense)
• Create a bank of high value technology trading cards to attract future investment (offense)
• Provide clear direction for future technology development (offense)
• Provide incentives for internal technology innovation (offense)

Specific Tasks To Be Done

The method includes the following specific tasks:                       

1. Clearly define the current core technology
2. Specify its foundation on prior art
3. Describe the novelty brought in by the company.
4. Search and verify that the foundation for the prior art is clear.
5. Search and verify that the novelty of the new technology is clear.
6. Define the business case for current applications and extrapolate into the near future.
7. Define the competitive commercial environment for the new technology: competing companies, U.S. , International.
8. Define the competitive institutional environment for the new technology: government, university.
9. Determine the current commercial and institutional research base for the new technology.
10. Define a new, virtual technology that addresses all anticipated competitive pressures.
11. Build intellectual property maps to summarize the accessibility of the foundation.
12. Build intellectual property maps to summarize the accessibility of the virtual technology.
13. Quantify the ROI of the potential options.
14. Establish a strategy for the target technology.
15. Build intellectual property maps to summarize the geography of the competition.
16. Build intellectual property maps to summarize the geography of  research efforts.
17. Create a prioritized portfolio list.
18. Explore a number of legal scenarios.
19. Prepare an intellectual property plan and budget to include the legal considerations.
20. Obtain the target patents.

Task Expansion

Clearly define the current core technology.

Prepare a preliminary set of simplified English language claims for the currently envisioned technology.

Specify its foundation on prior art.

Conduct a patent search on key words that represent the claims.  Break out the significant claims for each related patent and describe them in simplified English.

Describe the novelty brought in by the company.

For each related prior art claim, describe how the new technology is novel over the old claim.  Where the novelty is not clear, try to restatement the new claim so it is clear.  Flag any claims that can not be made clear.

Search and verify that the foundation for the prior art is clear.

This step is only needed if conflicts still exist with prior art.  There are a number of ways to deal with conflicts.  One is purchase rights to use the prior art.  A second is to just ignore it and proceed anyway.  If the second is the plan of action, then this step tries to determine if the prior art itself is actually clear.  It may conflict with earlier material for which patents have expired.  It may be too broad or represent obvious material.  The output of this step is a plan to deal with each competing prior art claim.

Search and verify that the novelty of the new technology is clear.

There are bases other than patents that can be considered prior art - university research, general publications etc.  This step runs a search in these other areas.

Define the business case for current applications and extrapolate into the near future.

This step is essentially a summary of how the company is planning to use its technology to make money out into the near future.  A brief analysis would then be done to identify the IP that is needed to protect the future products.

Define the competitive commercial environment for the new technology: competing companies, U.S. , International.

This step is essentially a market study to expand the business case for the competitive response.  What products are other companies likely to develop to compete with you and other players in the market?  What IP will they need to protect those new products?  The result of this step is a list of potential claims that others might make to protect future products.

Define the competitive institutional environment for the new technology: government, university.

This step is essentially a market study to expand the business case for the institutional response.  What products are the government and university people likely to develop to compete with you and other players in the market?  What IP will they need to protect those new products?  The result of this step is a list of potential claims that they might make to protect future products.

Determine the current commercial and institutional research base for the new technology.

This step tries to identify the longer term research response.  What technologies are the labs likely to work on to compete with you and other players in the market?  What IP will they need to protect those new technologies?  The result of this step is a list of potential claims that the labs might make to protect future technologies.

Define a new, virtual technology that addresses all anticipated competitive pressures.

During this step, new technology related to the company product line that can block competitive technology is invented on paper.  This can be a large list of items.

Build intellectual property maps to summarize the accessibility of the foundation.

Patent maps, claim tables and claim maps will be prepared to determine the accessibility of the existing patent structure (foundation).

Build intellectual property maps to summarize the accessibility of the virtual technology.

Patent maps, claim tables and claim maps will be prepared to determine the accessibility of the virtual patent structure.

Quantify the ROI of the potential options.

Costs and benefits should be estimated for each option on the maps.

Establish a strategy for the target technology.

Based on a business approach that looks at growth and resources, a target technology set is established that the company will go after.

Build intellectual property maps to summarize the geography of the competition.

The patent maps are restructured to collect patents by competitor.  This is a document primarily for use by the marketing department to plan sales strategy.

Build intellectual property maps to summarize the geography of  research efforts.

The patent maps are restructured to collect patents by R&D group.  This is a document primarily for use by the engineering department to watch for breakthroughs.

Create a prioritized portfolio list.

List out the patents that will be written to secure the company IP position in order of priority that they will be written in.

Explore a number of legal scenarios.

Prepare a number of contingent legal scenarios to use the IP and interact with outsiders.

Prepare an intellectual property plan and budget to include the legal considerations.

Reduce the contingencies to a single plan and prepare a budget for it.

Obtain the target patents.

Write up the patents.

Cost Justification

The cost of IP protection can vary widely.  There are two elements that should be considered: the cost of preparing the patents and the cost of litigation.  Together, these can be considered an overall IP budget.

A typical way to estimate the overall IP budget is to compare it with the engineering budget since the engineering budget is directly related to engineering effort which is usually the most significant basis for the development of intellectual property.  In practice, the ratio can vary from around 5%, where no intellectual property is protected , to very high values where companies spend more time in court battles ( ie. automobiles, pharmaceuticals, tobacco ).  The budget cannot be reduced to zero because externally initiated actions cannot be avoided.

A typical target budget for a company with an annual engineering cost of $10M might be 5% of cost ( $2M over 4 years ).  Traditionally, this would produce 5 core patents at a cost of $200k and set aside $1.8M as a contingency for legal defense.

The Comprehensive Patent Portfolio method described above would target a reduced cost of $1.5M over 4 years.  $600k would be used to produce 20 core patents plus 20 support patents (40 total).  $900k would be reserved for legal defense contingencies.   The program to achieve this 40 patent position would be completed in 2 years putting 10 core patents in place within 6 months.

While this appears to show only a small overall cost reduction ( 25%), new elements are introduced which entirely change the economics.  A number of patents in the portfolio create new "offensive" and "defensive" postions.  They will actually bring in cash through patent sales or reduce losses through settlement trades.  Therefore, the ROI becomes very high.  In addition, the improved R&D structure will lead to more focused Marketing and Engineering efforts.

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