Building a Quality Patent Portfolio

Michelle Lee, current Director of the United States Patent and Trademark Office, has made it a point to increase the quality of patents that it issues. As part of the “Enhanced Patent Quality Initiative,” the USPTO will strive to issue patents that are both “correct and clear.” System-wide, issuing correct and clear patents will help to reduce inefficiencies created when patents are invalid, overly vague or include some combination of issues, and then asserted as infringed by a specific device sold by a competitor.

Given the USPTO’s commitment to quality, patent owners would be wise to commit to quality among their own portfolios. Building a quality portfolio is no easy task, but certain strategies can be put in place to create a portfolio that is valuable and provides a competitive advantage. Here are some tips to help build a quality portfolio:

Be Selective
Innovative companies continuously develop new inventions to help their business grow. Procedures should be put in place to evaluate those ideas prior to preparing a patent application out of hand. Moreover, in many situations inventions may best be protected using trade secret law (i.e. keeping confidential) versus disclosing the invention to the public via a published patent application.

Perform Diligence
A patent search can provide valuable knowledge which will help to enhance the quality of your portfolio. The search may help to identify technology already owned or developed by others, and thus save the expense related to the filing of an inappropriate or doomed application. If the technology still warrants filing a patent application, the search will provide valuable information suggesting how the description and claims can be tailored to clearly define features of the technology that are distinguished from the identified prior art.

Identify Key Areas
In aggregate, your portfolio can be analyzed to determine areas of strength and potential areas for growth. Paramount in this exercise is the ability to create value across the portfolio by diversifying assets and minimizing reliance on one particular portion.

Continuously Review
In order to maintain a quality portfolio, patent owners need to continuously monitor their assets and assess its value. If an asset has lost some or all of its value, it may be best to divest or otherwise abandon it. Additionally, if otherwise valuable assets do not contribute a competitive advantage, sale or transfer can free up capital.

Monitor Competitor’s Portfolios
Understanding a competitor’s patents can be very useful in cross-licensing and assessing acquisition opportunities. Furthermore, knowing what competitors are doing provides valuable insights into where white space may exist in a particular technology area. This white space can suggest new key areas of development for a company.

Strategically Leverage Assets
There are several options to consider when leveraging a patent portfolio and deriving a competitive advantage. Some of these options include publicity, several forms of licensing and litigation. Often companies are effective in using marketing activities to deter competitors from treading too closely into a particular area – for example by indicating market leadership and marking products with patent numbers. Licensing, is a valuable tool to generate revenue or present cross-licensing opportunities, and to avoid costly litigation. In other circumstances, exclusion via litigation is the clear path for a company to exert market power. While litigation can be time consuming and expensive, patents that are successfully enforced through litigation are clearly valuable, and dramatically increase the quality of a patent portfolio.

Using the tips above as a guide, patent owners can build a quality patent portfolio that will not only consist of valid patents, but also provide clear boundaries as to rights in their respective inventions. Ultimately, the quality patent portfolio provides innovative companies with a valuable tool in furthering their business success.