Technology patent portfolios: improving the return on new inventions

August 2015  |  SPECIAL REPORT: TECHNOLOGY IN BUSINESS

Financier Worldwide Magazine

August 2015 Issue

August 2015 Issue


Great ideas are the building blocks for successful technology companies. As companies undergo the painstaking process to perfect these ideas into products that users love, businesses often focus on getting into the marketplace quickly. This approach can rapidly generate interest in the product and grow revenue; however, without a long-term plan to protect the idea, it may be detrimental to the growth of the business. Competitors may simply copy or reverse engineer the products, eroding any competitive advantages achieved. An effective way of resolving this problem is by creating a patent portfolio to protect the great ideas and products developed by technology companies.

Successful businesses are difficult to replicate and patents offer a great way of warding off competitors. However, obtaining patents requires long-term planning from the point that ideas are conceived. Planning is essential because patent applications need to be filed before the first sale or disclosure, so despite the inevitable time crunch, mistakes in patent application must be avoided. Small problems in patent applications can be fixed, but the description of the invention in the patent needs to be accurate and sufficiently detailed. An effective way of planning for patent filings is to keep an idea log.

The idea log

From conception, patentable ideas should be tracked in an ‘idea log’ which serves as a repository for information associated with potential inventions. The idea log can be used to describe innovative concepts and track the contributors to help resolve potential disputes regarding ownership. The idea log is also beneficial to strategically pre-screen innovations to identify how a product can be protected.

Pre-screening innovations is important because applying for patents is expensive. The idea log serves to facilitate this step by aiding in determining the business value of the invention.

Prospective patentees should evaluate whether the breadth of invention is broad enough to prevent competitors from copying a product. Patents must be defensible so that they are not easy to design around. If competitors can create simply ways to work around the patent, focus should be turned to prospective patents that will block competitors from getting to market. Prospective patents should also relate to a product or component that is a core part of the business model.

Determining what inventions are core parts of a business depends on commercial applicability. This requires evaluating if an invention can be licensed or sold, and determining the size of the available market. These considerations must then be balanced against the cost of patenting an invention, which can run into the tens of thousands of dollars. Ultimately, the idea log serves as an important tool for each step in evaluating the business value of an invention by providing a central and accessible location for an invention’s related information.

Naturally, prospective patent applications must also meet certain legal requirements. Generally, to be patentable an invention must satisfy the legal requirements that requires the invention to be practically applicable (i.e., you can’t patent an abstract idea), it must involve a new and innovative concept, and be commercially useful. If these requirements are not met, patent protection may not be possible, however it will still be important to maintain these ideas in the idea log in case alternative forms of intellectual property protection are available (e.g., copyright protection, trade secrets, etc.).

Monitoring competitor patent filings

Technology companies that make it difficult for competitors to replicate their technology position themselves better for long-term growth. This not only involves understanding one’s own technology, but also requires monitoring the technological developments of competitors. Monitoring competitor patent filings is important for several reasons.

First, if a business has filed a patent application that precedes a competitor’s patent application, and has overlapping features, the business may amend its own application to specifically claim the overlapping features of the competitor’s design. These specific claims improve the strength of a patent if it is tested in court because narrow and specific claims are more likely to be considered valid than broad and potentially overreaching claims. In other words, patent applications often include broad claims that make it difficult for competitors to use the invention or any similar permutation. However, these broad claims are more easily invalidated than narrow and specific claims. As a result, adding narrow claims that specifically claim overlapping features of a competitor’s design are more likely to survive litigation.

Another reason for monitoring competitors’ patent filings is to determine if the competitor has reached the marketplace first by filing a patent application for a desired invention. Once identified, a competitor’s patent application can be used to adjust the design of products currently under development, such that they do not infringe the competitor’s patent. Pending patent applications may also be adjusted to claim an invention that does not fall within the scope of the competitor’s patents.

Proactive monitoring can save money by avoiding needless litigation and ensuring current patent applications are not later invalidated. From a practical perspective, monitoring competitor patent filings can be laborious and expensive. This is particularly true in industries where there are a large number of competitors. However, in certain cases, such as the pharmaceutical industry, where a relatively small number of competitors exist, monitoring competitor patent filing is both practical and essential. In either case, whether there are many competitors or only a few, it is important to note that patent applications are generally only published 18 months after filing, which creates a blindspot delaying the time to react to a competitor’s new patent filings.

Great ideas are worth protecting. Patents are a useful tool that can maximise the return on investment for new products and technology by preventing competitors from selling a product or accessing a marketplace. However, patents themselves must be created and used strategically to maximise the value that they bring to the businesses that invest in creating them.

 

James Kosa is a partner and Robert Dewald is an associate at Deeth Williams Wall. Mr Kosa can be contacted on +1 (416) 941 9733 or by email: jkosa@dww.com. Mr Dewald can be contacted on +1 (416) 941 8959 or by email: rdewald@dww.com.

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