Many companies pay substantial yearly fees in order to protect their patents. But what business benefit do these patents really generate?

Today, when the financial situation is perhaps more strained than ever, there is every reason to take a close look at which patents that in fact generate any business and which ones do not, ie are actually a cost.

Worst case scenario when you make a run-through of your portfolio is saving money by stop paying, because you are closing patents that do not generate any business. Best case is finding new business opportunities, through for example licensing rights for other parties to use the patent, says Karl Olsson, Senior Attorney at Law at Awapatent.

For almost a year, Awapatent have been working on a new method to be used for evaluation of companies’ existing patent portfolio.

Many companies might, unintentionally, end up in the what we call ”the black-box-dilemma”, and it is often difficult to get out of that situation.

The factors that cause this situation are several:

The patents are driven and managed from an R&D-perspective.

  • You pay for IP-rights, but you don´t really know what you get in return
  • You have applied for patents because you have had the opportunity (to apply)
  • The patents are driven and managed from an R&D-perspective – you tend to forget the customer (value) perspective
  • Lack of cooperation across organisational borders
  • Patents are often considered a scalp under the inventor´s belt – instead of a means to reach the business goal
  • It is difficult to estimate what value a patent generates

Looking for alternative areas of use

When an organisation decides to go through its patent portfolio together with Awapatent, the first step is a workshop with the purpose of finding alternative areas of use for existing patents.

We ask questions based on a pre-defined template which helps when looking at the technology with a new perspective. During this session we go through the technology and its different areas of use. The workshop is about identifying new (product) markets, finding alternative areas of use for the existing technology, and especially looking at the possibilities of licensing the technology to other interested parties. Then it is time for some homework where the relevant issues are verified, and information is being collected for the alternatives identified during the workshop. It means to more thoroughly look into possible markets, applications, or interest in licensing with other parties. Awapatent also take part in this work.

It can be about simple things like taking a closer look at what actors are there on a specific market, or a more complex scenario, where a company considers the cost and the realistic aspects in taking a step further in the development process in order to make the technology apply to a whole new group of customers.

Identifying risks and opportunities

Next step in workshop number two. The purpose of this is to make a risk and opportunity analysis of the different alternatives that came out of workshop number one. Also at this meeting, it is important that all central parts of the organisation are represented.

All in all, there might be up to about 70 questions. The participants are the ones with the answers based on their know-how about the market, the business activities and the technology.  Awapatent’s role is to be the chairman and the facilitator, by asking the right questions, and also to monitor the answers to make sure that they are the relevant answers to the questions. It is much about avoiding mixing things together. Stringency is required when it comes to both questions and answers if the whole group is to reach a general agreement, since a research manager does not always have the same opinion as a market director. The questions are being asked from three different perspectives; from the legal point of view, from the commercial and from a strategic perspective.

Not just IP legal aspects

Legal issues go from legal competition aspects of various ways of acting to comparing the prerequisites of controlling the revenue flows. The likelihood of having a better financial curve, depending on where the technology comes in, in the refinement process, might be a commercial aspect. The probability for higher royalties if you issue a licence to an actor further on in the process must be weighed against a potentially larger volume at licensing earlier in the refinement process.

These questions also touch upon aspects like to what extent the existing IP protection matches the technology to be packaged in a certain licensing program. Other questions that might occur are whether the patent covers the whole technology, or might the alternative mean a greater risk of competitors getting round the patent via a “design around”? Strategic aspects may for example be how well the alternatives fit into the company´s current business.

There is a battery of questions adjusted to the situation, even if certain questions tend to always be there. The aim is to come up with a way of acting which stands out as realistic in practise. Especially for the management, and the fact that the alternative must not interfere with the existing business.All the answers are being translated into a figure, placed in a matrix.

The answers are summed together, and the result is a weighted risk analysis, showing a recommended way of acting, based on the input from the company. The value, as we see it, is mainly to help the companies speeding up their decision process. It provides the customers with a way of acting that they believe in themselves, since they have been involved all the way, and also taken the (final) decision. I think that many people recognizes the long and numerous discussions these questions tend to lead to, without anything concrete coming out of them, Karl Olsson concludes.

By Karin Wall