Patent Strategies SMEs Can Learn From Large Companies

Patent Stratgies SMEs can learn from Large Companies

Patent strategies could be defined as establishing a plan of action to maximise the returns on IP investments. Let’s explore how SMEs can implement patent strategies used by large companies to make the most of their IP budgets!

Large companies and small and medium-sized enterprises (SMEs) undeniably operate with different available resources and business goals. Aside from basic differences in numbers of employees, SMEs typically focus on niche markets while large companies tend to offer a wider variety of products and services. Large companies can raise money by selling shares of stock while SMEs often seek financing from outside investors such as venture capital firms or pursue opportunities to be acquired by larger entities. 

One area where differences between SMEs and large companies is particularly salient is how these entities approach their patent portfolios. Some of those differences are driven by budgetary constraints, some are driven by availability of manpower, and some are driven by business goals. In some cases, however, SMEs simply have not had as much experience with patents as larger entities. SMEs are unaware of how to change their approach to patenting in ways that provide strategic business advantages.

What are some patent strategies that large companies employ that SMEs do not, and how can those strategies be adopted or adapted by SMEs?  

Patent Strategy #1 – Large Companies Employ Best Possible Legal Expertise

Not all patents are the same. In fact, many are not worth the paper they are printed on. That is because patents often issue with claims that are too narrow or with terms that are interpreted to mean something different than what was intended. 

The more elements that are included in a claim, the easier it is to distinguish the claim from what has come before and therefore establish patentability. That is why it is often relatively easy to obtain an issued patent with very narrow claims. The problem with such claims is that they are easy for competitors to get around. For example, a claim to an incandescent lightbulb with a carbon filament would not cover a competitor’s incandescent lightbulb with a tungsten filament. If the claim had been drafted instead to recite an incandescent lightbulb with a filament, this broader claim would better protect against commercially viable variations of the patented product. 

Sometimes a seemingly simple word choice is enough to render a patent completely worthless. In an infamous patent case involving baking dough, a patent was rendered useless because of the phrase “heat the dough to 450 degrees.” The phrase was literally interpreted to mean that the internal temperature of the dough had to reach 450 degrees, when what was intended was “heat the oven to 450 degrees.”    

In addition to general issues of claim interpretation, particular technology areas require specialized claim language and structure, and there are also many legal requirements that must be met for a patent to hold up in court. All of this adds up to the fact that patent law is a highly specialized area of law that requires a lot of training and skill. Large companies understand this and typically use established expert patent law firms or build their own in-house patent departments and budget for that expertise. In contrast, SMEs, due to their limited budgets, often try to cut corners by drafting patent applications themselves or seeking affordable (not necessarily expert) service provider, only to discover years down the road that a core part of their business is not adequately protected.

Patent Strategy #2 – Large Companies Look for Broader IP Protection for Key Products

Large companies with significant financial resources often pursue a strategy of procuring and maintaining a large quantity of patents. As an example, Samsung Electronics had 76,638 active US patent application families across all its subsidiaries in 2019

Large patent portfolios allow more varied levels of coverage for key products while also allowing large companies to pursue protection for products or aspects of their business of lesser importance but that still have value. Large companies use multiple patents to protect a broad class of products and services around an invention, with follow-on filings used to cover new developments as they arise. For instance, different patents may have broad vs. narrow claims, or claims directed to different aspects of a product or service such as component parts, software elements, electrical systems, methods of use, and manufacturing aspects. The cumulative effect of such an approach is to minimize the importance of any one patent to a company’s business goals.    

Another aspect of large patent portfolios that large companies leverage to their advantage is their ability to deter potential infringers and competitors from trying to compete in the marketplace. It is time intensive and expensive to analyze a patent and determine whether it is invalid or whether a proposed competing product would infringe. The more patents a company holds in a given area, the more resources others need to spend to determine if they have freedom to operate in that area. 

In contrast, SMEs have budget constraints that typically drive them to focus on a small number of core patents. For many SMEs, every patent matters, and a single patent can make or break the company. SMEs are often under a threat to be gobbled up by large companies in the absence of a strong defensive patent portfolio.

Patent Strategy #3 – Large Companies Do More Strategic Patent Planning Than SMEs

Decision makers at large companies know that not every product needs to be protected in every potential market. For example, if the market for a product is only in the US and Europe, it doesn’t make sense to apply a one-size-fits-all patent strategy that includes patent filings in Canada, Japan, and Australia. However, if it is anticipated that a market for the product will emerge down the road in one of those countries, then a patent filing is justified.  

Large companies tend to employ more strategic planning when it comes to mapping their patent strategies onto what is known or anticipated about markets for a product, where manufacturing plants are planned, and the location of potential partners/licensees or competitors. They typically develop a clear plan early on for which countries are most important for patent coverage for a given product, and also reassess those decisions over time. If market forces change over time, large companies identify these trends and adjust their patent strategy accordingly by abandoning applications or deciding not to pay patent maintenance fees in different countries.

SMEs may either seek too few countries for protection in an effort to save costs, or pursue applications in as many countries as possible in an effort to make their portfolio more attractive to potential investors or acquirers – neither of which aligns their patent approach with the true market for their product.   

Patent Strategy #4 – Large Companies Seek to Invalidate Competitors’ Patents More Than SMEs

Just because a patent is issued does not mean that it is valid and enforceable. Invalidity actions can be pursued either through litigation in court or via pre- or post-grant proceedings before the issuing patent office. For example, the US provides several avenues to challenge the validity of a patent after it has been granted, and almost 11,000 petitions to initiate such proceedings were filed in the USPTO between 2012 and 2019. Whether invalidity actions are decided by a US district court or in a proceeding before the USPTO, around 40-45% of all challenged US patents are determined to be invalid in whole or in part.

Large companies typically monitor and analyze their competitors’ patent portfolios on an ongoing basis. Such monitoring allows the opportunity to initiate offensive actions to invalidate patents of strategic business interest, but also provides additional benefits. Competitive patent monitoring can provide insight into competitors’ future product offerings and marketing strategies, allowing companies to modify their own market or product strategies in response. Tracking patent filings can also highlight untapped markets where a low number of patent applications have been filed and where a company can potentially gain a patent foothold or technological advantage.

SMEs often lack the resources or the sophistication to monitor and analyze their competitors’ patent portfolios on an ongoing basis. And hence it not in their capacity to initiate offensive actions to invalidate patents.

What Can SMEs Do Differently?

You Get what you Pay for

The US Supreme Court has long recognized that a patent application constitutes one of the most difficult legal instruments to draw with accuracy. SMEs can take big leaps based on the strength of its core patents, they should consider not to cut costs especially from the drafting budgets.  

SMEs should avoid basing their hiring of a patent attorney or agent solely on who provides the cheapest services. Of course, budget is a factor. But sacrificing top notch skill and experience for the lowest bidder may not be a great move.

Drafting Patent Applications

SMEs should also avoid trying to have the application written in whole or in part by a non-patent professional. SMEs often think that they can cut costs by having one of their scientists or engineers prepare the application, and that a patent attorney or agent can just edit it or add claims to it. This is dangerous – a patent application is not an academic manuscript or a summary of technical specifications. While a write-up from the inventors is very useful to a patent attorney or agent, as described above there are ways of drafting patent claims that can either provide broad scope or severely limit protection. In addition, there are legal requirements that must be met for the application as a whole – for example, claims are routinely invalidated on the basis that a particular element was not described adequately or at all in the supporting text (specification) of the patent.   

Provisional Patent Applications

Another danger area is improper use of provisional patent applications. Provisional patent applications have relaxed requirements regarding formatting, supporting documents, and claims compared to full patent applications, but allow applicants to establish a filing date so long as the full application is filed no more than a year later. Because they can be produced faster and cheaper than full applications, SMEs often file bare-bones provisional patent applications with the intention of fleshing out their description of the invention in the full application. This is dangerous because provisional patent applications are still held to the same standard as full patent applications when it comes to legal requirements for describing the invention completely and in a way that explains how to make and use the invention. Patent cases abound where claims are held to be not entitled to the filing date of their provisional patent applications because of inadequate disclosure, with consequences that often result in findings of invalidity.  

A Hybrid Approach for Quantity with Quality

SMEs obviously have budgetary constraints on the number of patent applications they can file and maintain. There are, however, some cost-conscious approaches they can pursue to expand their patent portfolios without sacrificing quality. 

Even with large companies, not every patent application is treated the same. Some are extremely high value and receive extra time and attention, while others are of lesser value and receive merely the resources needed to competently provide reasonable coverage. SMEs can follow suit on their own scales by prioritizing patent applications into first and second tier filings based on their strategic value. A second tier of applications can be pursued while controlling costs by narrowing the scope of the drafting (and limiting the number of countries in which applications are filed – more on that below.) 

Where available, SMEs should also explore their options when it comes to continuation applications. A continuation application enables an applicant to pursue additional claims based on an earlier-filed patent application, so long as that earlier application has not been issued or abandoned yet. The continuation application is afforded the same priority date as the earlier application. Because it is often easier to get narrow claims allowed compared to broader claims, SMEs should consider narrowing claims initially or in response to an examiner’s rejection. This will allow them to quickly obtain a first patent with narrow claims (e.g., a specific version of a product) while filing one or more continuation applications to obtain additional related patents with claims of varying scope (e.g., to a range of different versions of the product). 

Work Smarter, not Harder

In order to avoid pursuing patent applications in either too few or too many countries, SMEs should, ideally, clearly identify their markets when the patent application is initially being drafted and develop a country-by-country filing strategy accordingly. Of course, that is not always possible. When decisions on where to file need to be delayed, SMEs should take full advantage of the time allowed to them when filing an international patent application under the Patent Cooperation Treaty (PCT). SMEs can file a provisional patent application followed a year later by a PCT application, and then they do not have to decide upon (or pay for) related patent filings in individual countries until 30 months from the filing date of the provisional application. 

The provisional to PCT strategy described above assumes that SMEs only want to file in one of the 153 countries covered by the PCT. If a market falls outside of those countries, then related patent applications need to be filed directly in those non-PCT countries within a year of the provisional application filing date. This also highlights the importance of making these decisions as early as possible.  

Global Patent Portfolio Strategy

When determining what countries to file in, SMEs should consider the following questions with respect to current markets and anticipated markets in the future:

  • Where do I expect to sell/manufacture/distribute the product?
  • Where is patent protection available (e.g. software is not patentable in Europe, Russia, Argentina, or Brazil)? 
  • Which countries are competitors filing patent applications in?
  • Where do competitors want to sell/manufacture/distribute their product?
  • Where are your potential investors or acquirers doing business?

In addition, SMEs should review their patent portfolios every one to two years and/or any time there is a substantial change in business focus to make sure that patent filings still align with business goals. This review should focus not only on the relevance of geographic locations, but also to make sure that applications and claims are still relevant to the business. If either a location or the scope of an application or patent are no longer relevant, sell/license it or abandon it.  

Targeted Monitoring

Even if SMEs don’t have the resources to initiate invalidation actions against competitors, there is value in knowing what patents are issuing around your core product or technology. Many companies offer patent monitoring services through which an SME can be alerted whenever a new patent issues or patent application publishes meeting search criteria of interest. 

Some of the key benefits of patent monitoring searches include:

  • Gaining insight into competitors’ product market strategies and the technology areas they are investing in.
  • Identify new market opportunities where patent applications directed to certain inventions have not been filed.
  • Reassess business goals if a market is “too crowded” (i.e., too many patent applications filed on similar inventions.) 
  • Where a competitor’s patent or patent application has claims that cover an SMEs product, the SME can develop a strategy to either defend against a patent infringement action or proactively initiate an invalidity challenge. 
  • Identify potential infringers of the SME’s patents, allowing for attempts to either pursue a license or initiate a patent infringement action. 

Conclusion

Let’s summarize how SMEs can implement the patent strategies outlined above. Large companies have in-house patent counsel responsible for the company’s patent portfolio, either performing the patent preparation and prosecution themselves or directing every move made by outside counsel. Such in-house counsel can oversee and carry out the types of strategic approaches described above. SMEs typically solely rely on their outside patent counsel to alert them regarding such issues.  Alternatively, SMEs should consider assigning someone in-house as a point person for patent management who is responsible for working with management and outside counsel to coordinate and implement various patent strategies. 

TIP Tool is free for your whole team

No credit card required. No setup fees. No need to download.

6 Ways to Strengthen Your Patent Portfolio

6 Ways to Strengthen Your Patent Portfolio

The other day I was speaking to a portfolio manager at a large enterprise.  He was given a task to enhance the patent portfolio for the company. My first question to him was about the process of capturing ideas from inventors.

Me: “How do you capture the ideas and collaborate over the ideas to transform them into valuable IP?”

He: “We conduct certain brainstorming sessions, capture ideas in excel sheets and pursue as and when we feel a need for the same.”

In my experience of working for over 20 years with so many enterprises, the scenario is pretty much the same. Most enterprises use excel sheets, emails, docketing softwares (that’s like giving a factory when all that’s needed is a simple machine), or some other make-do softwares to capture ideas.

You Might Wonder What’s Wrong With Using Such Tools?

Well, in the absence of easy capturing and thorough vetting, a lot of things may happen which hurt the value of a patent portfolio.

  • Great ideas get lost while traveling amongst various stakeholders.
  • Weak ideas get pursued for filing a patent resulting in either a rejected patent or a low-value patent.
  • Filed/Granted patents are sometimes great in terms of innovation but do not have a market demand as the business team did not collaborate while persuasion.
  • Effort gets wasted on an idea which the company has already filed a patent on in the past by some other inventor.
  • Sometimes inventors get so busy with the progress of the invention that the idea gets completely missed out of the patenting process. Even worse, the product reaches the market without IP protection. And, competitors take full advantage of it.

Hence what’s needed is a defined process to capture ideas. A way to collaborate over ideas to conduct thorough internal vetting. A place where all the stakeholders from different arenas of a business and research can contribute. Thus making sure that only the finest ideas are pursued for filing patents. 

Strengthen Your Patent Portfolio Proactively

Strengthen Your Patent Portfolio Proactively

Besides this, a strong culture of innovation at the workplace and a time-to-time audit of the portfolio shall also be beneficial towards a valuable patent portfolio.

Here are 6 quick pointers that can help you strengthen your patent portfolio:

1./Effective Innovation Capturing

2. Thorough Vetting

3. Curating An Innovation Driven Culture

4. Getting Patent Experts Onboard

5. Pruning To Strengthen Your Patent Portfolio

6. Expediting Patenting Process

#1 Effective Innovation Capturing

It all starts with an idea. So, the inventor comes up with an idea. Maybe he shares the idea with you, maybe he does not. Maybe you review or maybe it gets slipped as you were too busy. And the inventor gets busy working on that idea totally forgetting about the protection it might need. Whether patent or trade secret or defensive publication. 

Now the product that gets created based on the inventor’s idea is revolutionary. And it reaches the public domain without any IP protection. It’s under the threat of fast followers. Companies out there who have resources and capital are always on a look for products which they can easily copy and sell for a lower cost. These guys also save on money that you spend on R&D and engineering of the product. Thus, grabbing the market share that your company deserved actually.

And the worst part is you cannot do anything about it. 

This necessitates to have a defined place to capture innovations and track their progress throughout the lifecycle.

Another thing that acts as a friction for inventors to disclose inventions and add them in the patent pipeline is: “long, non-intuitive invention disclosure forms with jargons that only attorneys understand”. At TriangleIP, we understand this friction and thus we have kept the idea capture form very simple in the TIP tool.  

An Easy Idea Form For Inventors | Strengthen Your Patent Portfolio

#2 Thorough Vetting

If you have a bunch of ideas coming in from different inventors; it’s very much possible that you might not have a budget to pursue them all for IP protection. So in order to choose which ideas to pursue, the ideas need to get evaluated from different aspects. You might wish to keep some ideas as trade secrets or give some to public domain with patent protection. Hence what’s needed here is a thorough vetting of ideas.

Thorough Internal vetting of Ideas | Strengthen Your Patent Portfolio

Innovation happens quite early in a process. Typically before you have any customer or market validation. Hence all that can be done is speculation on which ideas will generate revenue a few years down the line. It takes around 3-5 years to get patent protection for an invention.

However, one thing that helps you mitigate the risk and choose the best of ideas is to have it vetted by people from different streams; business, legal, engineering, strategy, etc.

Listed below are some important factors to consider to zero down on the ideas for patenting:

  • Strategic vision of the enterprise.
    • Alignment with a product line to have market dominance. 
      • Say there is a company that deals in smart refrigerators. It would want to have patents around advanced functions of refrigerator like: Ordering groceries based on the supplements about to finish in the refrigerator.
    • Market expansion across geographies.
    • Just for defensive purposes against probable lawsuits.
  • Relevance of technology to be patented in long term. Technologies go out of date as industries evolve. 
    • Example: Mobile phones have almost out-dated the landline phones in the last few years.  
  • Budget allocated towards IP.

#3 Curating An Innovation-Driven Work Culture.

“When failure is not an option, we can forget about creativity, learning and innovation. – Brene Brown”

Embracing failure is the key to have an innovation driven culture. Because the studies suggest that a significant percentage of innovations fail. The companies must have enough risk appetite (financially) to handle the failures. (Because somewhere there are chances of blockbuster success too).

And that’s not all, there are many other factors that can encourage or kill innovation culture at an enterprise.

The other day I was reading a book called “The Invincible Company” and in that, I came across a beautiful concept called “The Culture Map”. The culture map talked about the Enablers and Blockers of innovation at a company. It resonated really well with me. 

Innovation Culture Blockers:

  1. Lack of Innovation Strategy.
  2. General Fear of Failure.
  3. Bureaucracy slowing down innovation.
  4. Locked into Current Business Model.
  5. Lack of skills, knowledge and experience.

Innovation Culture Blockers | Strengthen Your Patent Portfolio

Innovation Culture Enablers

  1. Strategic guidance.
  2. Resource allocation.
  3. Innovation Tools.
  4. Legitimacy and Power.
  5. Skills development.

Innovation Culture Enablers | Strengthen Your Patent Portfolio

It would be beneficial to take a quick look inside your organization for these enablers and blockers. This shall further be helpful in creating an environment where innovation shall flourish for the organizational good.

#4 Getting Patent Experts Onboard:

Lack of expertise in drafting patents may result in rejection. Mentioned below are some of the top reasons for rejection of patent applications:

  • Improper and Insufficient description of the invention and how it works.
  • Lack of novelty.
  • Non-patentable subject matter; e.g. new use of a known substance.
  • Erroneous Writing: Issues with line numbers, reference numbers on drawings, or paragraph numbers.

If you don’t have in-house experts to write the patent, we suggest that you choose an IP firm that has the reputation and the experience to handle the end-to-end process. You need to have the right people on the job to draft the patent. Ensure that the one who is writing the patent has deep knowledge of the technology, has the right background, understands the fundamentals of a patent, and so on. 

#5 Pruning Patent Portfolio | Abandoning ‘Out-of-Date’ Patents

Let’s say you have a portfolio of many patents (50 or more), only a few of them would be worth a lot. The rest will guzzle your time, effort and money.

Maintenance fee alone can become a significant expense if there are many patents in a portfolio and for quite a long time. The snapshot below  shows the maintenance fee to be paid for patents at different time intervals.

Maintenance Fee USPTO| Patent Pruning | Strengthen Your Patent Portfolio | Abandoning Out-of-date Patents

The ability to know when to stop investing in bad IP assets is important to have a strong patent portfolio.

If you look carefully in your portfolio, you will find that there are patents that are areas in orphaned technology or where there is no commercial interest. Free up the budget allocated for it to work on an innovation that is more promising. A technology that was once highly used does not mean it is going to be relevant forever. Some of the patents might have run their utility. 

Let’s take a look at how IBM has pruned it’s patent portfolio over the last 2 decades. IBM has abandoned thousands of patents across T0, T1 and T2. This probably saved them millions of dollars and strengthened the patent portfolio.

IBM US Abandoned Patents by Pruning 1999-2020 | Strengthen Your Patent Portfolio

There can be many reasons for abandoning the patents:

We, at Triangle IP, are on the way to bring analytics to the TIP tool  that shall help the users identify hopelessly expensive cases.

  • Out-of-date technology as the industry evolved over the years.
  • Change in patent laws in different geographies.
  • No market presence, say you got patents in the UK but the business related to those patents never really took off in the UK. So, maintaining those patents does not make sense.

#6 Expediting the patenting process to be at the right time in the market.

There was a time when it took more than three to five years to get your patent up and running. Thankfully, that’s not the case anymore as you can easily get an expedited patent for a few thousand dollars in the US. While it might sound like a big number for a new startup, if it means that you can build your portfolio quicker, then it is wise to get that leverage for yourself. 

You can also watch this video by our co-founder where he explain portfolio management in a greater detail:

To Sum It Up:

Here is a quick recap of the pointers that shall help you progress towards a strong patent portfolio.

1..A well-defined business process to capture ideas and progress them to valuable IP (Intellectual Property). 

2. The process must provide for thorough vetting from strategy, market, legal, feasibility, financial aspects.

3. Curating an innovation culture by removing the blockers and supporting the enablers shall help your people to come up with more valuable inventions.

4. Ensure that your patent applications do not fall in the rejection bucket by hiring experts to write your patent applications.

5. Time-to-time pruning of the patent portfolio i.e. abandoning the patents (due for renewal) can help you strengthen the patent portfolio.

6. Expediting the patenting process for a few thousand dollars shall be a good tradeoff to be at the right place at the right time.

Note: The preceding is general business advice and not to be construed as legal advice. IP laws vary by country and retaining licensed legal counsel is advised to confirm this information. Any expressed or implied opinions are of the author and do not necessarily reflect the views of Triangle IP or any other entity who might be associated with the presenter. We hope this content is helpful to you, but should not be relied upon without confirming the advice and accuracy with local legal counsel. Any comments or inquiries are not confidential so please discuss your issues directly with counsel.

TIP Tool is free for your whole team

No credit card required. No setup fees. No need to download.