On the other hand, a start-up company will likely only have a few patents in their portfolio. Consequently, the patent quality must be paramount – especially if they go up against an industry giant in a licensing or litigation situation. This often means that a small company (who is likely to use its few patents offensively) may pay more per patent (for better quality) than large companies who can also rely only on the quantity of their patents.
Although we have and can provide patents for larger portfolios, we prefer working with clients to develop “portfolio building patent applications” (applications strong enough to be pillars for an entire patent portfolio).
We also take advantage of local laws and protections that are not widely known by many U.S. patent attorneys. For instance, we will often advise clients to seek utility model patents in many countries – especially if costs are a consideration. Utility model patents are local “legacy” patents and are still available in many industrial countries. While requirements vary from country to country, they are usually much easier to acquire that “traditional patents” and hence, often cheaper to acquire. Utility model patents have no equivalent under U.S. law.
Rather than just filing blindly into countries that appear to have market potential, we advise our clients to become extremely selective when developing a foreign filing plan. Our foreign filing plans consider several factors, including political, enforcement, and cost factors in addition to market size when determining where to file. In fact, we often will study where a likely competitor or acquirer are filing patent applications as an additional factor when developing a filing strategy.
Sometimes, inventions such as software may stand a better chance for patent approval in other countries than in the U.S. So, we can tailor a strategic foreign filing plan for your specific technology, based on your budget, your industry, and a wide variety of specific and relevant factors.
However, intellectual property protection and patent portfolio development is expensive. Very few companies can actually afford all the protection they would like to have. So, most companies have to strategically manage their intellectual property assets.
Some intellectual property assets are more valuable than others and, therefore, should be managed appropriately. We advise our clients to treat their patent portfolio as any investment portfolio. Some of the old rules of investing – asset allocation, scale, diversification, buy and hold – can be applied to patent portfolio management. However, for a patent portfolio to be truly successful, a company must also strategically align it with the company’s business plan and then manage it to return profits, direct market trends, and even cover competitor’s products.
Many considerations go into determining the optimal size of a company’s patent portfolio and the optimal patent portfolio size will be different for each company. While a large patent portfolio is always preferred, there is always a monetary limit. We know that a company (especially small companies) should not patent every idea that comes along. We assist our clients in developing an organized strategy that not only considers the basic premise of risk allocation and reduction, but also looks closely at what innovations really deserve patent protection.
We can develop a strategic patent portfolio plan, procedures, and guidelines that are aligned with your business plan, then work with you to ensure that your strategic plan is implemented in an efficient and practical manner.
This is one reason why sophisticated investors only look for companies with protectable intellectual property before investing in the company. If a situation turns south, investors know that their only collateral is often the company’s intellectual property.
Just as a real estate lawyer will conduct a title search for purchase of a home or other real property, a prospective investor or licensee will conduct a search and analysis, known as “due diligence”, to check that there is a proper chain of title from the inventors to the current owners through one or more assignment documents. Additionally, a due diligence may include investigations regarding the validity or patentablity of patents and the strength of patent applications. Often, the due diligence will review your internal contracts and procedures to ensure that a company actually owns everything they say they own.
We have conducted numerous due diligence investigations for investors and have been involved in assisting our clients during a due diligence review when obtaining funds. In fact, we have assisted our clients in obtaining over $95 million in investor funding. If you are thinking about investing in a company’s patent portfolio, we can assist you in this regard. On the other hand, if you are a company who will be facing a due diligence in the future, we can provide assistance to you to make sure that due diligence is successful and as painless as possible.
A relatively simple search may be performed by one of our attorneys or consultants using specialized on-line patent search services. However, we often employ a patent search firm for more elaborate searches. A patent search scope may encompass U.S. patents and published patent applications, foreign patents and published patent applications, technical references and other types of published and on-line materials. Depending on the budget, a number of resources and international databases may be used to conduct the search.
We will then study the search results and identify prior art that are the most relevant to the invention. We then review the selected references with the client so that the client can make an informed decision about whether to proceed with the patent process (and often the development of the invention if we discover patents which may “block” the commercialization of the invention).
In some cases, if the closest references are patents, we will analyze the prosecution history of the selected patents to aid in the interpretation of the patent. The review may involve a discussion of each selected reference and the effect of the references on the available scope of patent protection for the invention.
Most of the time, a formal written patentability opinion is not required. Based on the search and analysis, our clients can then make informed business decisions about how to best protect their inventions or products.
Usually, an infringement analysis centers on an interpretation of patent claims. Unfortunately, patent claims are usually stated in a technical and arcane language. Furthermore, U.S. courts have held that claims do not always mean what they say. In other words, to interpret the scope of the claims, one must often rely on more than just the “plain meaning” of the claim language. To further complicate matters, Federal case law has also established legal doctrines which have both expanded claim breadth and have decreased claim breadth. So, to interpret the proper claim scope for any given claim, several sources are usually analyzed and several legal doctrines are usually applied.
For instance, we often carefully study the patent’s prosecution history to determine the scope of the claims. Once we have determined the proper claim scope, we then determine if there is indeed infringement in light of the proper claim scope and legal precedent. We will then review the patent and the analysis with the client. The review may involve a discussion of the patent specification and the patent claims in view of the company’s product or service.
As courts typically discount the effects of a patent opinion if it is not in writing, memorializing a verbal non-infringement opinion is highly recommended. The opinion may simply be a memo documenting the analysis to a formal legal opinion or conclusion that the patent is not infringed. Based on the infringement analysis, the client can make a business decision about how to respond to any allegation of patent infringement.
Another benefit of obtaining a formal legal non-infringement opinion is the ability to avoid treble damages and attorneys’ fees if a jury were to hold that there is actual infringement. A well-reasoned non-infringement opinion can often be used to show that there was a good faith belief that there was no infringement, hence there is no reason to award punitive damages for intentional infringement.
As a part of the due diligence in responding to either a patent infringement accusation or whether to invest in a company holding a particular patent, the question of whether the patent is valid is often raised.
As an initial matter, the patent term and the payment of maintenance fees are checked to ensure that the patent is unexpired. We obtain and study the patent prosecution history to aid in the interpretation of the patent claims we might conduct or commission a search for prior art that would invalidate the patent. Of course, the search will focus on printed publications that the patent examiner was not aware of when the patent was examined.
We then review our analysis with our clients. The review may involve a discussion of each publication and how they anticipate or render obvious the claims of the patent-in-question.
If an invalidity opinion is desired, we will often memorializing the verbal invalidity opinion in writing because courts often discount verbal opinions or analysis. Typically, a formal opinion provides a legal opinion or conclusion that the patent is invalid and a detailed explanation why the patent is invalid. An invalidity opinion may include an analysis of whether the patent is enforceable in court based on a number of other factors.
A written invalidity opinion may allow the client to avoid significant enhanced damages and attorneys’ fees otherwise awarded to the patent holder, if the patent holder were able to obtain a judicial determination of infringement.
Typically, a clearance search may be conducted to determine if there are any “blocking” patents or patent applications. A clearance search may be similar to a patentability search described above. Often different industries will set different budgets for search – depending on the likelihood of litigation. Some industries experience more patent litigation than other industries. In industries with past patent litigation, it is always a good idea to investigate key players within that industry to determine their likelihood of litigation and the scope of their patents in a particular industrial segment.
0If a potentially blocking patent is located, we can often analyze the blocking patent to determine if the patent is actually valid or if the your product actually infringes. When the “blocking” patent is indeed valid, we often work the clients to determine design around solutions and can assist the client in modifying the design of the product or service to avoid the infringement of the blocking patents.
If the blocking patent is not valid, we highly recommend memorializing the invalidity analysis in a written opinion because courts often will discount the effects of a patent opinion if it is not in writing. The opinion may simply be a memo documenting the analysis or it may be a formal legal opinion or conclusion that the patent is not valid. Based on the invalidity/validity analysis, the client can make a business decision about how to proceed with the development of the product.
As part of our valuation services, we will determine the proper scope of the allowed claims of the patent or patents. In order to determine the scope, we also review the prosecution history of the portfolio to determine if statements were made during to the patent office which limits the scope of the allowed claims. Often we will perform a validity analysis in conjunction with determine the scope of the patent claims. We often will also evaluate the litigation history of the industry to determine the likelihood of litigation and whether the patent will stand up to the rigors of litigation. If necessary, we will also employ technical experts to review the underlying technology for design around solutions.
Thus, our valuation analysis involves a market based approach, but takes into account legal and technical issues to more accurately determine the value of the patents in question.