Patent Portfolio Pruning – An Effective Method for Immediate Cost Savings
Over the last decade, companies globally have been rethinking their strategies and looking for opportunities to leverage their profit-driving assets. It’s well worth noting that patents are one of the most valuable parts of these assets. Since patent filing and maintenance incurs higher costs, companies frequently evaluate and prune their patents to ensure their continued relevance to the core business. This article aims to describe the process of patent portfolio pruning and how it minimizes expenses to facilitate better allocation of resources.
Why is Patent Pruning Important?
Patent pruning involves analysis of a company’s patent portfolio to identify and categorize patents into core, non-core, high and low-quality categories. Such segmentation helps in abandoning low-quality patents to increase the total value of the patent portfolio. Almost every top patent filer has a robust patent pruning process in place. One of the primary reasons for performing pruning is the fact that patents usually become invaluable to business over time. Therefore, including them in the pruning process saves money, which can be reinvested in R&D activities, new IP filings, patent maintenance and more.
To summarize, patent pruning helps in identifying the following:
- High-quality patents that can be retained/renewed
- Low-quality patents that can be potentially abandoned
Let us now understand the pruning process involved here.
Pruning Process – Objective and Subjective Analysis
Objective Analysis – The Process
The main motive of objective analysis is the identification of fundamental patents (patents that are directly aligned to a company’s objective). But how do we identify which patents are fundamental and which ones are not?
This can be easily done by reviewing the patent tags. Patent tagging is either done in-house or by using IPC/CPC classification codes. The major tagging parameter is ‘core and supplementary’, which is used to check whether a patent corresponds to the company’s own products. If yes, it is considered a core patent, otherwise, it is tagged as supplementary. At the end of this exercise, the patents categorized as core can be retained whereas the ones categorized as supplementary can be pruned. Thereafter, a detailed analysis can be performed to make decisions to license or abandon them.
Besides the core and supplementary tags, there can be other tagging parameters that can further help in shortlisting patents for pruning. For instance, we can either check if the patents relate to other products, or we can organize the patents as per multi-tier technology and applicability tags.
For objective analysis, the quality indicators are – rate of forward citations, variation of forward assignees, diversity of IPC/CPC of forward citations, diversity of patent families, etc.
Objective Analysis – An Example
Let’s consider this example for objective analysis. The patents of a cloud service provider can be tagged according to the tagging parameters to identify core and supplementary patents. Specifically, they can be tagged based on technology tags. Therefore, patents related to networking and content delivery (i.e., related to the cloud network or cloud category) would be core to the company and will be retained.
How to Shortlist Patents for Subjective Analysis
After identification of core patents, the remaining ones which are non-core should be studied in detail before being discarded. Instead of studying all non-core patents at once, we can prioritize them based on various quality indicators.
The main quality indicators for subjective analysis are – claim scope and the ease of evidence identification. We can also check the current market applicability of a patent or its future value in the subjective analysis.
Finally, based on this analysis and these parameters, we can decide the set of patents that should be considered for pruning and can be taken forward for subjective analysis thereafter.
Subjective Analysis – The Process
Subjective analysis is basically done for non-core patents, during which we follow the below steps:
- First, we check whether the patented technology is being implemented in any of the third-party product offerings.
- If yes, then the patent can be recommended for renewal or for exploring licensing/sales. If no, we need to further check if research is ongoing in the field of invention of the said patent.
- In case the research is ongoing, it can be recommended for renewal or for exploring licensing/sales.
- If yes, we can discard the patent. If not, then we can check whether the technology has become obsolete.
Subjective Analysis – An Example
In the case of a large network device manufacturer, objective analysis is performed to categorize patents as core and non-core patents. Then, the non-core patents are evaluated based on certain other parameters. Resultantly, some patents will have medium claim scope and low ease of identification while others will have high claim scope and high ease of identification.
Therefore, by combining both objective and subjective analysis, we can identify the patents which should be renewed to generate money and the ones which can be discarded. Furthermore, according to the F3 analysis model, fringe patents have the least potential for value generation and include monetizable, lean and obsolete patents. Monetizable patents are crucial for start-ups or companies in a different domain, lean patents have no family member under prosecution and obsolete patents are not used in any of the current products/services. To generate money from these fringe patents, we can do the following:
Sagacious IP undertook a project to help a Fortune 25 Cloud company with over 10,000 patents. The objective of the project was to either save money or generate revenue for the company. After pruning over 100 patents, we generated revenue and reduced expenses by:
- Increasing patent sales.
- Pruning over 40 patents that were 7-year-old and more than 60 patents that were 11-year-old to save costs.
Patent pruning allows businesses to categorize patents and ultimately discard low-quality ones to increase the overall value of the portfolio. Sagacious IP, an award-winning IP research solutions provider, has been offering various IP services and solutions to its clients across the world. Be it ranking a patent portfolio or assessing possible licensees, our patent licensing and monetization services enable you to generate money from your IP. Click here to know more about this service and click here for our webinar on this subject.
– Amit Kumar (ICT Licensing) and the Editorial Team