Keyword Analysis on Patent Claims

As an Intellectual Property Professional, it is important that your strategy is clear before the patent drafter begins to write the claims. There are many claims construction approaches to attaining exclusivity for your innovation either by a broad claim, a series of narrow claims or a combination of both. While your exact strategy makes a lot of difference to the way claims are constructed, an important consideration is the choice of words.

The choice of words that you make will aid not only in patentability of the applications but also, at a later stage, in freedom-to-operate and infringement. Experienced drafters know that it is important to avoid commonly used words in the domain of the invention.

One way that you can prepare a claims wording strategy is to create a set of closest prior art and using a text mining software, segment (tokenize) the claims. In case of patent drafting, it is best that you do not apply any taxonomy or thesaurus to fuse generated segments (or keywords) since you would like to see all popular variations.

For organizations, its advantageous to view these statistics in context of other companies in the same domain (using a Assignee-Keyword matrix). Interpretation made from these matrixes can help not only in the choice of words but also in your overall patenting strategy for your product.

For instance I segmented the claims and created a similar matrix in a search set for a drug (citalopram) in Patent iNSIGHT Pro Co-occurance Analyzer and exported that into a Patent Assignee-Keyword Matrix in Excel. While many different interpretations can be made from such a matrix, if your interest is to work around key claims then the spread of assignees around the keywords can greatly help your choice of words for the claims.

The matrix also helps in competitive intelligence. For instance a look at all the claim segments containing the words “disorder”, “phobia” or “syndrome” gives a clear indication of the applications areas that are being targeted by the companies.

So, while technology landscaping requires clustering the keyword segments into topics using various clustering algorithms, claims keyword analysis has many advantages for creating a patenting strategy.

Collating Financial Data for Patent licensing research – Nice to have but not too useful for the most part

Many experienced researchers I have met say that there is no substitute for technical analysis and the insights received from analysis of the patent data itself. Financial information such as profitability, revenues and market cap of assignees may be required for undertaking industry analysis, however do you really need such data for corporate licensing research? Lets understand this further in the context of in-licensing and out-licensing.

For in-licensing, in IP research, one of the biggest “cant help” limitations is that many patents are held by private firms globally and most online services fall short and do not provide accurate financial picture of privately held firms. In an in-licensing context, an “interesting patent” held by a Microsoft, IBM or Exxon may not excite you as much as one held by a startup or a small-to-medium sized private company. Further, as a corporate IP counsel, you are well aware who the big players are in your techno-commercial space and information of their market cap, profitability and annual revenues doesn’t really add any unique insight to patent data. Private companies in US are not required to provide their financial information to anyone other than the IRS, in most cases the data isn’t publicly available or only approximations are available. The same is true for most countries.

Financial parameters can perhaps help get an indication of where to focus your in-licensing efforts on, but caveats exist here too. Say if your patent portfolios extended across three technology segments A, B and C. Now out of the three B has maximum current market potential and licensing revenues are highest in B. However if you analyze the market and see that B belongs to a maturing market and the markets verticals in which C is operating is growing fast and in 5 years may overtake B then you would rather focus on acquiring patent in C instead of building an assertion portfolio for B. But it is to be noted that such decisions require market estimations based on industry growth trends and not on historical patent licensing information. In fact in the current example historical patent licensing information may even misguide you to focus on B. Now re-read this example with A as CD technology, B as DVD and C as Blue-Ray and you will realize why industry trends should dictate the focus and not past licensing revenues or assignee financial information.

For out-licensing, in today’s market, successful corporate out-licensing requires assertion licensing strategies that use technical data to demonstrate infringement and financial power (…. _your_ financial information) to backup your intention to enforce. So the bigger task (and the first step) here is clearly identifying the patents that are building up upon your invention. For this an in-depth technical analysis, especially claims and citation analysis is required. Once you have a strong technical case, then business, financial, legal (litigation) and overall environmental conditions about you and the companies behind those patents are to be considered.

So you need to ask yourself – Does the path to successful licensing research lie in financial data or does it lie in the technical analysis of patents? Our opinion here is that patent research for licensing must start with just patent analysis. How you build your search set makes a huge impact. Analysis of forward and backward citations can help identify related technologies around your inventions. Building the right citation sets and analyzing their claims is necessary. Combining classification codes with contextual clusters gives deep insights on how the sub-technologies are spread. Application filing trends can indicate which technologies are rapidly growing and which are maturing. Undertaking keyword analysis of claims can give many deep insights about companies active in the same research area.

Once you locate the patents, most of the “research” part is done!

Patent in the Gaming Industry

Gaming is perhaps one of the fine examples of how boundaries blur between developing end customer value and protecting IP.

Let’s say your software company developed a radical new rendering engine that can allow pixel perfect resolution and provide a gamer the ability to ‘simulate’ Hi Definition video. However, what you manged to do was that you did this without the need for specialized hardware. So what do you exactly patent and protect. The code, its functionality or its business value?

What you have done would not take any of the software giants much time to achieve. So forget the delicious incentive of your technology buyout. It’s only a matter of time before they hit bullseye. Functionally speaking, your code will do wonders to game buyer. But how do you build a demand for this functionality when you are not interacting with the customer? Finally the business value will be perceived by the customer buying the engine – a gaming company. Will owing copyright to this engine enhance your technology’s value?

What do you protect?

Perhaps you should consider protecting an aspect that you can control and that could fetch you better licensing returns. After all the idea behind patenting my technology is more to do with it’s licensing than the fact that my name gets published somewhere! But how do you know today what you could license tomorrow?

A major challenge for your business is the evaluation of ‘white spaces’ in the patent landscape and ensuring that infringing has already not happened. You don’t want to end up 3 years developing code along an algorithm and realize at the end of it that your patent has not been granted only because someone earlier had thought of something similar. More than that – you would want to make sure your investment remains strong through the gestation of your technology.

One of first steps to solving this is through efficient Patent Searching. By identifying key players and the technology spaces already occupied, you and your investors can get key insight into where exactly your code can make an impact. In fact intelligent analysis of this search can estimate what the Patent Landscape would look like in the future. You could also look at a potential buyout of a semi finished technology that would set the stage for your rendering engine.

Tech companies find a way to fight “Patent Trolls”

Over the past few decades, the patent system has grown progressively. Today almost anything under the Sun that is made by man is considered patentable. Fuelling this is the increasing number of inventions made everyday. Organizations are seeking patents even for the minor modification they make in their original invention. Though this looks like a good trend, but like every coin has two sides, the patent system is also not untouched by the flip side.

It started with patent infringement law suits, wherein the defaulting party has to pay up huge amount of money as compensation. This created an opportunity for some. The opportunity of earning through the patent law suits. They are called the “Patent Trolls” who exist only to extort large payments out of cash rich companies. This trend is seen more in the technology space. The patent trolls seek to buy intellectual property to extract royalties from companies that rely on a particular technology.

Technology companies are known to pay up amounts to the tune of Millions of Dollars to settle the patent infringement law suits. This is becoming quite an annoying trend. Measures have been taken to curb this practice but haven’t seen satisfying results yet.

Technology heavy-weights like Google, Verizon Communications, Cisco Systems, Telefon AB L.M. Ericsson, and Hewlett-Packard among other have formed a group to tackle this. They are called the Allied Security Trust. This group plans to buy up key intellectual property before it is obtained by parties who might use it against them. To join the group, each company will pay about $250,000 and about $5 million into an agreement for future patent purchases. Considering the heavy amounts these companies end up paying in settlements, the amount for joining the group looks very minimal.

The number of patent-related law suits has seen an alarming rise in the recent past – nearly 2500 through October’07 from 921 in 1990. With the Allied Security Trust, the technology companies are hoping to stay clear of such law suits which cost them heavily.

Patent Filing Rises in India

Texas instruments, one of the largest chip makers in the world has seen a dramatic shift in the patent filing from their Indian R&D Offices. Since 1985, the Bangalore office in India, has filed over 500 patents. Another chip maker – NXP Semiconductors, also seems to have a similar story.

Patent Application filed by Indian Firms has grown annually by about 20% to about 35,000 applications in 2007-2008. (Source)

Writing a patent application is not a day’s work. In fact it’s almost as detailed and as complex as a legal contract. While the country is filing patents by the dozen, this could be one of the biggest opportunities for IP and legal processing centers to look inwards and drive revenues from servicing US Based technology giants with Indian offshore R&D Centers like Texas Instruments.

As patent filing continues to soar, so will legal implications and infringements. Courts will begin to get burdened by open cases and hard ruling judgments. The next decade should see exponential growth in business opportunities for services in the legal and IP verticals.

Patent Analysis and VC Funding

Small and medium-sized enterprises (SMEs) represent over 90 % of enterprises in most countries, worldwide. They are the driving force behind a large number of innovations and contribute to the growth of the national economy through employment creation, investments and exports.

Among these SMEs, technology start-ups form a decent sized category. In recent years, success of technology and scientific start-ups has encouraged equity investment from institutional investors. Not only are funds cash rich, but opportunities are abundant. However, this abundance has a flip side – the fact that there are so many startups, some are bound to unwittingly infringe on existing patented technology. After all, a VC investment is always a risk and institutional investors would like to derisk the investment as much as possible.

Due Diligence on the startup’s claims is not just a pre-requisite. It’s in the best interests of the investor to know his investment is not infringing on proprietary patented technology. When a VC is betting on a start-up’s Intellectual Property, the last thing he would like to see is the startup caught in a legal tassel for its intellectual property rights. An expensive lawsuit is a threat big enough for VCs to back out from what seems like a lucrative investment.

Tools like Patent iNSIGHT Pro – a powerful patent mining and analytics engine can give the VC an immediate insight into the ‘patent mesh’. The application can provide an investor insight into the startup’s claim, it’s viability in the present and future markets and most importantly, he can identify the ‘landscape’. This means he can understand how technologies have been raising investment in the past and the trends of how many of these technologies have made it big. He can evaluate the ‘fit’ with reference to the existing and potential competitors as well as customers. The tool will generate detailed information that will form the basis of warranting the success of the business model based around that technology.

Institutional investors are the one of the biggest beneficiaries of such Patent mapping and analysis tools. A powerful Patent analysis tool can help investors identify new opportunities and isolate technology IPs that could make it big tomorrow, based on trends and the patent landscape.

Milking Opportunities

Today’s enterprises continue to scale at a rapid pace and functions like IP and Licensing have started playing a very important role in the business. It’s no longer about getting copyrights and ensuring patent protection and preventing infringement. Today’s IP Research teams are the front runners in identifying trends, practices and technological changes that happen on a daily basis.

Not only that, IPR teams are continuously prowling to explore opportunities like IP acquisitions, mergers, takeovers or even an IP Sale. The last decade has seen a major shift in the abilities of an IPR team within an enterprise.

To understand better of how an IPR team can make an acquisition even more effective, lets say a major chip OEM is looking to acquire the technical IP of developing analog power circuits for a new technology like Wi Max. Now either the OEM invests heavily into R&D and their engineers develop what would be called a ‘competing technology’ or their management decides to acquire someone who ‘already has it’.

The IPR team digs through all patent applications and grants to recover the team that owns the IP to the technology like WiMax. Of course with the advent of media, that’s really not going to be a secret. The WiMax inventors also know there are people who would be pursuing them to buy out their hard work. They have all reasons to price their IP as high as possible. So how exactly does the IPR team add value to the acquisition?

By closely studying the patent landscape, a mesh can be identified that gives the OEM a list of all technologies that are needed for the WiMax technology to work. These could be as specific as an analog power supply design. These ‘neighboring’ technologies don’t all make sense to the WiMAX design, but they are required for a WiMAX based product to work. The IPR team identifies these and present to the OEM’s management. The OEM’s management now isolates these individual technology companies and begins to invest in them. Slowly over a period of a month, the OEM has acquired majority stake in most of these ‘neighboring’ technology companies. Only the WiMax owners remain.

Now since the OEM owns all the relating technologies, owning the WiMAX technology doesn’t seem like such a valuable proposition anymore. The OEM will literally squeeze the WiMAX IP out of the inventors. What once was a lucrative invention becomes a scrap sale.

As you can see, the IPR team not only reduced the cost of acquisition, but identified exact players who would contribute heavily to the growth of the WiMAX industry. The OEM in this case, would slowly gain a monopoly since almost all the technologies in the WiMAX space now belong to the OEM.

Role of Patent Analysis in Business Strategy

A Patent is the right provided to an inventor not for the use or practice of the invention but for preventing others from practicing or using the invention. In the recent years the role of patents has changed dramatically. Patents used to be the concern of only a bunch of legal practitioners or specialists and no one else was really bothered. But with changing times and ever increasing competition in business, patents have become a key factor for any business.

Patent analysis and information benefits many areas of business. It helps in getting the know-how of the relevant technology field in order to forecast market needs. This forms the basis of judging the right time to invest in R&D. Patent Analysis helps in getting an overview of the technologies the competitors’ are working on. This is a medium to assess the competitors’ strengths, weaknesses and most importantly business strategy.

It also plays a major role in licensing technologies/inventions. In mergers and acquisitions, the patent information helps in narrowing down the choices of the companies and technologies to consider. Patent analysis provides a source of technological information that can be used by researches and inventors to find new solutions to technical problems.

For starting a new business or a developing a new product or even buying out some company, it becomes important to go through the patents’ database to make sure you are going in the right direction. Patent searching and analysis was a very tedious and time consuming job a couple of years ago when only patent experts could do this job manually sifting through a huge pile of patent files. But now there are patent analysis softwares available which are designed to make the job of patent searching much easier – and by a big Margin !

Watch this space for more interesting details …