How to Strategically Build Patent Portfolio Based on Priority of Inventions

How to Strategically Build Patent Portfolio Based on Priority of Inventions: The COVID-19 pandemic has debilitated economies across the world, prompting companies to optimize their resources and limit expenditure to stay afloat. The scenario in the intellectual property (IP) sector has not been different. The economic pressure has compelled IP-centric businesses to reduce their patent filing and patent prosecution cost. While it is necessary to do so, the process should be carried out effectively. This article talks about prioritizing inventions as an effective approach to strategically build a patent portfolio.

What is a Patent Portfolio?

A patent portfolio is a collection of patents. It holds value for the company’s present and future business. Therefore, small-scale and large firms invest a significant amount of money to protect the results of their research and development activities in the form of patents.

The Need for Prioritizing Inventions to Build Patent Portfolio Strategically

To reduce patent building and prosecution costs, companies might turn towards reducing patent filings. However, they must realize that such an approach can negatively impact the competitive edge of their products in future. Therefore, there is a need for the companies to identify the priority of each invention or patent and then focus on building a patent portfolio. This will reduce the cost of patent preparation and prosecution, and help businesses make strategic decisions regarding portfolio building.

How to Prioritize Patents – Parameters Defined

All inventions are not created equal – the purpose of the patent associated with each invention is different. Therefore, the approach of prioritizing inventions focuses on building a hierarchy to effectively allocate resources to build a patent portfolio. The inventions are prioritized based on two main factors:

  • Business Impact: The business impact of an invention is assessed on the parameters such as technology, differentiating feature, and consumable/recurring revenue.
  • Degree of Novelty: Being another important parameter to assess the priority of an invention, the degree of novelty is crucial for filing and getting a grant of a patent.

Identifying Priority Level of Inventions

Using the above-mentioned parameters, businesses can segregate and identify the priority level of each invention, which can then be put under four categories:

  • High-Priority Inventions: These inventions are the ones that have a high business impact, as well as broad novelty. It allows the applicant to have a broad claim scope.

  • Mid-High Priority Inventions: The inventions which have a low degree of novelty but a high business impact are categorized into mid-high priority invention.

  • Low-Priority Invention: The inventions that fall under this category are generally low on business impact as well as novelty.

  • Low-Mid Priority Inventions: In this case, the degree of novelty is high but the perceived business impact is not that high.

Portfolio Building Strategies as per Priority of Patents

Once a business identifies the priority of an invention, it can adopt different patent preparation and prosecution strategies for each invention, as listed below.

  • Defensive Filing Strategy: This strategy can be adopted for low-priority patents, wherein businesses have lesser chances of securing a grant. Similarly, since the business impact is low in such inventions, it is not justified to spend a huge sum of money on regular patent filing for such inventions.

    Therefore, businesses can adopt defensive patent filing strategy to file a patent with lesser number of claims to reduce patent preparation cost. In this case, we can utilize the assistance of a strategic partner for writing the low-priority invention application at a lesser cost.

  • Regular Patent Filing Strategy: It can be used for low-mid priority inventions. Here, although the business impact of an invention is low, novelty is high. The scenario justifies filing a regular patent but not with a high cost. Therefore, companies can select a strategic partner to prepare a regular patent application at a fraction of the cost charged by a regular law firm based in the US or Japan. This can reduce overall patent preparation cost.

  • Hybrid Filing Strategy: Adopted for mid-high priority inventions, the hybrid approach entails the involvement of both the strategic partner and patent attorneys/law firms. The former can help in preparing the skeleton of the patent cost-effectively.


For the inventions in which high patent preparation and prosecution cost is not justified, strategic partners can be used to reduce the overall cost and build a high-quality patent portfolio. Whereas, in the opposite case, a regular law firm can be used for the process.

  • Strategy for High Priority Inventions: High preparation and prosecution cost is justified for high priority inventions because they have high novelty and business impact. Companies can choose to work with regular law firms for patent preparation and prosecution. However, even strategic partners can lend support in the process once they gain the trust of the companies by effectively working on low to mid priority inventions.

Cost Advantage: The Benefit of Prioritizing Inventions and Using Hybrid Model

As explained above, strategic partners can be used for low to mid-priority inventions to reduce the overall patent preparation and prosecution process. Based on our experience, in a typical patent portfolio, only 30% of inventions are categorized as high priority, 60% as low to mid priority and mid to high priority, and 10% fall in the low priority section. Therefore, this section intends to explain the cost advantage of using a hybrid model for patent preparation with the help of an example.

Suppose a company needs to prepare 10 patent applications. As per the 60-30-10 rule mentioned above, three inventions can be high to medium priority, six can be medium to low priority, and one invention can be of low priority. Therefore, the total patent preparation cost, involving both the regular US law firm and strategic partner, would cost nearly $40,500.

On the other hand, if a company uses a regular law firm and treats all inventions equally, without prioritizing inventions and adopting the required strategy, patent preparation for 10 applications will be around $80,000.

Similarly, for the patent prosecution process, the cost would amount up to $26,400 while using the hybrid approach, in contrast to $60,000 that would be incurred while using only US-based law firms without prioritizing patents.

How to Select the Right Strategic Partner

While looking for a strategic partner, businesses must make sure that the firm has adequate knowledge of patent practices in multiple jurisdictions. The search partner must inherit a team of qualified patent drafters with strong technical background and knowledge of the US and European Patent Office (EPO) patent drafting. A few other pointers to consider are:

  • Team should have a proper understanding of the technology/products of the company
  • Illustrators must be adept at preparing drawings as per the US, EPO patent laws
  • Firm should ensure consistent work and quality during ramp up and employee change

Similarly, before finalizing a strategic partner, businesses must evaluate their sample patents to gauge drafting experience, conduct technical interviews, ask for references and undertake a pilot project to ensure a high-quality outcome.

Conclusion

In the current pandemic-affected economy, it is not viable to reduce overall patent filing or file patents for every invention. This can negatively impact the future relevance of the company and strain the budget as well, respectively. Hence, prioritizing inventions and applying the above-mentioned strategies is the way forward for businesses to optimize resources and limit expenditure to survive in the highly-competitive IP sector.

Sagacious IP offers businesses cost-effective patent drafting and strategic patent prosecution services to enable clients to identify the priority of each invention/patent during portfolio building. Our unique model helps organizations to make strategic decisions to reduce/manage patent preparation and prosecution cost.

-Pankaj Garg (Engineering Drafting) and the Editorial Team

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