Shaping a strong and useful patent portfolio comes down to asking hard questions about what the business wants to achieve with its patents, according to senior patent counsel at Google and Avon.
Laura Sheridan, senior patent counsel at Google in New York, says businesses need to look at their patents on a macro level – particularly when they have tens of thousands – and should constantly be asking why they actually have a patent portfolio.
“Patent attorneys have been brought up to prosecute registrations to cover a client's product – but that approach alone may not get you where you need to be,” Sheridan says. “It is important that you know why you have this portfolio.”
She adds that a business’s portfolio management tactics should obviously be shaped by whether it has patents for defensive purposes or whether it might be looking to license or sell rights.
Businesses may be surprised, she says, that the answer to that question is not always something that patent departments have a clear grasp on until they have gone through the exercise of looking at what the business needs.
“Once you have clarity on this question, you can be much more cut-throat about which patents you should and should not keep.”
Brian McCloskey, chief patent counsel at makeup brand Avon in New York, says that his business went through this process of asking what it wants. He says that the patent department now has a much clearer focus on the idea that a patent should help it achieve meaningful market exclusion to help it drive up margins.
“We used to have very R&D-executive-driven culture, where the higher ups would say: ‘Here is our product launch, get us our patent’,” he says.
“I found that approach really backwards and it resulted in a lot of disclosure.” He adds that the business has now taken a different approach so that even if an idea is novel and inventive, the company will consider whether a patent is really needed and look at other ways to protect it. These points and more were shared by Sheridan and McCloskey at Managing IP’s US Patent Forum in April.
Money makers
The Google and Avon counsel say that budget plays an enormous role in how they develop their portfolio strategies – although they add that it should not necessarily be the defining factor.
McCloskey at Avon says that budget is a huge factor in his strategy development because of the firm’s broad international portfolio.
“Avon operates in 53 countries and we file in all of them. We have a small portfolio in terms of patent families and operate with a small budget,” he says.
He adds that having such a broad and international portfolio means that renewal fees increase exponentially every time the business patents something new, which limits how many inventions the company can protect.
“It would be nice to file everything, but we have had to make hard choices,” he says.
Sheridan at Google says working to a budget is a matter of backing up and asking why the business is filing for an invention in the first place.
Answering that question then answers more questions over what jurisdictions the invention needs to be registered in, “which is often a short list,” she says.
“It may be longer list for different companies and for different reasons, depending on the invention. But if you look at it from the view of how you value your assets and what you use them for, the list will usually be short.”
She adds that from Google’s perspective, renewal fees balloon as it has 20,000 assets across the globe.
But she adds that patent departments should try to not put themselves in a position where the budget dictates the chain of the portfolio.
“If your budget is $10 million, you don’t want to try and fit into that. It should be a case of you come up with the strategy first, layering in the $10 million and moving things around after that point. “Perhaps that approach is not realistic, however.”
Shedding patents
Sources say that an obvious way to find cost-saving wins in a patent portfolio to give attorneys more wiggle room in developing their strategies is to cull unneeded registrations.
“There are a few different reasons why you will have a portfolio, and if anyone has figured all of them out, I would like to talk to them,” says McCloskey at Avon.
One reason, he says, is to protect products and another could be to build up assets that might be interesting to another company. He points out that it is important to know what patents the business has and, more importantly, which it wants to sell and which are making money.
“If you can say, ‘here are my patents that cost X amount and here are products lines they support’, you can look at the numbers and answer questions on whether they are truly needed.”
Sheridan at Google says her team constantly considers whether a particular patent meets the business’s strategic objectives, and if it does not then the team gets rid of it.
“Abandoning a patent after time and money has been spent on it is an uncomfortable task for attorneys but something they get used to,” she says, adding that patent departments can get employee buy-in for this task by showing that it frees up budget for other endeavours.
“If we save $5,000, we tell attorneys they can go to something else with it, such as do a continuation. It is how we get people to feel more at ease with it.”
Two huge companies have managed to do more with their patent portfolios by asking hard questions about whether a patent is truly needed. As IP departments become more integrated into businesses’ overall strategy, these cost-saving measures will help patent departments to stand out as true commercial assets.
