Most companies hold on to their patents as a defensive means to protect themselves from competition gaining an upper hand from their innovations and development efforts. Their ability to drive maximum revenues for the business comes from their ability to have exclusive access to their innovation and fend off the competition for a stipulated time giving them a clear head start. Then, we have the Patent Licensing & Enforcement Companies (PLECs) who either acquire patent portfolio or partner with the patents holders and then look to license their technology with a completely offensive strategy. They drive revenues from assertive licensing via legal notices or even going to the extents of filing law suits against those who infringe on the patents. Due to the nature and amount of damages being awarded by the courts it may appear that Patent infringement cases can be even more profitable and less cumbersome than manufacturing products and getting them out to market. So it’s little surprise that this is a growing business model. Intellectual Asset Management Magazine online stated in a 2008 article that the IP awards and settlements market in the US is $3.4 billion annually.
Small innovators can see PLECs as a necessity to help them license their patents and take on a large companies who may be potential infringers while traditional R&D houses see these as Non-practicing Entities (NPEs) or in some cases as Patent Trolls i.e., those that buy up patents only to benefit from suing companies having established products in the market. While there are both arguments for and against these intermediaries, they are very much a part of the innovation industry as licensing as well as return on patent investments become a concern for many. As long as businesses and inventors will need help in these two areas, there will be a market for those who can help provide this support.
Whether you are on the side that is looking to license and protect your patents or the side that needs to steer clear of PLECs, patent trolls and other businesses who may have patent portfolios that overlap yours, your intelligence will primarily come from patent databases in addition to secondary online information such as company and products literature.
In a previous post titled Unlocking value from your IP using Patent Citation Intelligence we discussed at length ways to discovering licensing options to maximize revenue. Searching for infringing companies is not too different from searching for potential licensees. The process of assertive licensing usually involves demonstration of infringement and so technologies present in your patent sets need to be matched with either the claims of the other party or the infringement must be evident from the products functioning or product literature. Tools to fast search, lookup, rank claims help save a lot of time as part of this process.
Analyzing patents for infringement and being able to navigate around potential infringement suits are two sides of the same coin where information in patent data can come to the rescue. For both parties who need to enforce patents and those that need to safeguard their development activities against potential law suits, you should create a list of those working in the same domain who may have a need for the technology in question or those who may benefit from using the technology. The same set of companies form a watch list which PLECs analyze closely to look out for a infringement.
A 2006 EETimes article speaks about how a small company avoided going bust from patent enforcement:
Patriot Scientific Corp. had spent nearly a decade trying unsuccessfully to establish a new microprocessor architecture when it decided it needed to do some soul-searching. It hit paydirt when that process revealed its real products: patents.
The six-person company netted more than $24 million in 2005 from Advanced Micro Devices, Casio, Fujitsu, Intel and Hewlett-Packard by licensing seven U.S. patents it considers fundamental to CPUs. And it’s just getting started.
“Hundreds of companies have been put on notice as potential infringers,” said David Pohl, CEO of the Carlsbad, Calif., company, which hopes to collect royalties on sales of all microprocessor-based systems–sales that are estimated at $200 billion a year. “Virtually every electronic product that a consumer or business comes into contact with is touched by this portfolio.”
The extract above demonstrates how important it is to be able to identify potential licensors for a patent as well as knowing who potential infringers are- an activity that has been mastered by PLECs. While identifying companies such as AMD, Casio, Fujitsu, Intel and HP may be more obvious, being able to identify and list the hundreds of smaller companies which in this case could benefit directly from the microprocessor architecture requires an even more efficient process. Whether relying on a third party company to which the task of enforcement is delegated or done in-house, the ability to create a solid watch list and keep a close eye on infringement activity relies heavily on having good intelligence at the push of a button. Being able to view graphical representations of relationships by citation data, being able to track the use of a certain technology within various industries and also to compare phrases within the patent text of a group of similar patents to detect similarities help facilitate the process.
As the ecosystem of patents filed grows and the list of competitors or possible infingement liabilities is on the rise , it can become increasing difficult to track all the developments and cover all bases without the support of good analysis tools. Luckily patent data analysis tools have advanced in leaps and bounds giving businesses the tools needed to protect their business interests through protecting their most valuable assets – their IP. Licensing and enforcement activity is todays vanguard for a IP portfolios held by businesses and we can expect to continue seeing developments in this space.