Patent Pruning

by | Feb 13, 2019 | Insights | 0 comments

Identify the Patents not worth maintaining

Consider the following instance — your company has accumulated a large portfolio containing hundreds of patents covering multiple technologies. Now, you might have multiple patents which are of no use to your organization anymore and trying to make the most out of the situation, you decide to monetize your patents. Though there are multiple ways to monetize a patent, you decide the best course of action would be to sell them given the situation and find a prospective buyer. The deal amount has already been negotiated and the potential buyer gets a due diligence performed on this portfolio.

Now in case if your portfolio is robust and of high quality, there is nothing to worry about. But if there are any defects on this portfolio be it related to confusion among the ownership of the patents, or terms of existing licensing deal or low-quality patents which have nothing great to offer, chaos will ensue creating delays in the transaction and renegotiation of the deal value.

In those cases, it is a possibility that you might get lesser than what your portfolio is worth. Low-quality patents will, in fact, cost you a lot more than what they are worth. Hence, it becomes necessary to eliminate such patents from your portfolio so that even if a due diligence or any kind of portfolio analysis is performed, you would emerge as the winner. Patent pruning basically is portfolio analysis to figure out the low-quality patents, which upon being discarded can increase the overall value of the patent portfolio. Patent Pruning is a strategic step to align the company’s patent portfolio with business objectives.

Why Pruning your Portfolio is Prudent?
For companies with large portfolios, millions of dollars are spent per year just on maintenance fees. Approximately 10% of any given patent portfolio is non-core technology, obsolete technology, and/or has little strategic value to the patent owner. In some cases, it may be sage to abandon, sell, or donate these assets. The money that can be saved on renewal fees can be significant. In addition, selling off assets can bring another flux of cash into your organization.

Steps involved in the Pruning Process
Sagacious through its Ingenious Patent Ranking Tool identifies the patents least likely to be useful. This is a quantitative analysis just to obtain an order to start any further patent portfolio management/optimization process like, patent tagging, infringement analysis etc. The strength of a patent is calculated by an algorithm based on several factors including, but not limited to: The Rate of Forward Citations, Variation of Forward Assignees, When was the patent filed in the evolution of the technology, The diversity of patent family, Remaining lifetime of the patent, Type of claims and much more.

  • Identify patents in the patent portfolio which belong to core and non-core technology.
  • Mark important key variables such as family size, forward citation, self-citation, patent age, originality etc. against all non-core technology patents.
  • Provide a score based on key variables.
  • Identify low scoring patents.
  • Each low scoring patent needs to be assessed on criteria set as per company policy.

Once we identify unused (low scoring) patents, focus is on determining any alternate use of these patents like licensing, patent sale etc. before abandonment. IP Attorney, Technical experts and business team then sit together and analyse other possibilities to finally decide whether to abandon, sale, license out or reassign.

Pitfalls to Avoid in this Process
Never Assume Your Patent Portfolio Is Full Of Gems
Simply put: In a portfolio of 100 patents, a low percentage of those patents are often true gems. Knowing when to stop investing time and resources into forcing value out of bad assets is important to successful patent pruning.

Inadequate Knowledge Of Patent Mining Process
Without the right strategy and background experience in patent mining, you could end up wasting hours upon hours of company resources sifting through patents, trying to find value. To avoid falling down to any loss, you need to know exactly where technology is headed across a wide range of industries, and how any given patent in your portfolio applies to technology 10 years into the future.

Don’t Let Your Patent Portfolio Grow Out Of Control
Sagacious evaluates assets not in practice, outdated technologies or any assets with existing litigation are all ready to be evaluated for possible pruning from your patent portfolio.

Over the past years the pace with which technology has evolved pretty much explains such large number of patents being filed. Sagacious has helped many fortunes 500 companies to provide a systematic, judicious and business objective driven approach to distinguish profit-generating IP assets from unused, non-profitable and cost driven assets. Otherwise, abandonment of a useful patent may cause a substantial loss in future.


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