Andrew Eisenberg is a partner and intellectual property attorney at the Austin office of Michael Best & Friedrich LLP. I have enjoyed getting to know Andrew and learning about his company as we both mentor small business owners. Andrew’s legal knowledge is very impressive and his experience is broad. He holds three patents himself and has also worked at a startup. I’m proud to list him as one of my Trusted Suppliers.
Andrew is a blogger and this post on cultivating patent value really struck a nerve with me as 87 percent of company valuation can be in the form of Intellectual Property (1). I hope anyone contemplating a patent reads this first.
I hope you enjoy Andrew’s post as much as I do.
(1) “Annual Study of Intangible Asset Market Value” Ocean Tomo, LLC (3/5/15)
How to Cultivate Amazing Patent Value
With this being the case, one can never underestimate the importance of patents. When companies head down the path of protecting intellectual property, they tend to focus on the idea itself – rather than the possibilities the idea presents. It is important to remember that the true value of a patent only starts with the actual idea; over time this value can evolve and grow as it extends to protect your company’s market well into the future.
As a company, it is important to gain a sound understanding of the patent landscape. By gaining an in-depth understanding and focusing on quality, it becomes possible to achieve a far more comprehensive intellectual property protection strategy.
It’s important to plan ahead
A patent can last for 20 years; that’s a long time, especially for newly established startups!
Therefore, it is a waste of time drafting a patent that is shortsighted and only sees a few years ahead; over time, its value will decrease if it becomes outdated. So why do companies create patents that fail to take into account the future? Simply put, it is far easier to think two years in advance as opposed to 20.
An experienced patent attorney won’t merely look a year or two down the road; they’ll attempt to determine alternatives and workarounds in order to draft a more reliable, higher quality, and often infringed asset.
A patent is far more relevant if it includes next-generation features and ideas. By preparing for the future, it is possible to increase both the short and long-term value of the asset in question. Remember, just because you have included next-generation features as part of the patent, doesn’t mean your immediate project needs to include those features – simply conceiving a way to achieve certain goals further down the track can often mean they are patentable.
How do you predict the future?
While it is impossible to see into the future, it is possible to make a fairly accurate prediction by fleshing out the possibilities.
The best way to do this is by drawing on the brains of the company.
Patent mining – or information disclosure – sessions are an effective way to compile information from those who are well-informed on the topic. I find that by leading a brainstorming session with a team of topic matter experts, it becomes possible to flesh out new ideas related to the particular field in question.
While I often lead sessions, in some scenarios I have found that someone from within the team is best placed to head the conversation.
For example, one of my clients’ CTOs often insists on leading their sessions. I am more than happy for him to take the lead because I’ve found that he is able to draw more information from his team; he understands the product, the technology, and most importantly the team itself. He has a firm grasp of their strengths and weaknesses and opts to call on particular team members in relation to a certain question – rather than simply throwing the question out there for everyone to field. By directing the initial question to the team member best suited, he is often provided with a better start to the discussion. From here, other team members can build upon the initial answer.
Understand the patent landscape
Predicting the future of your product is just one way to maximize the value of your patent – it is also very important to understand the patent landscape. Simply put, this means you need to be able to identify patents, patent applications and similar products that exist within the same technical field or product space. This involves more than merely carrying out an “art search”; it involves considering actual products that are out there already.
I have a number of larger clients who come to me for assistance. When they submit a new idea, I’m not the only one who casts an eye over it. I involve a team that includes MBAs and other analysts – as well as myself. Nonlegal experts research the product landscape, including competitors’ products that fall within the same technical space as the company’s current idea.
This process achieves two things:
- If the idea is already patented, then money is wasted by going ahead – we redirect it elsewhere, towards a new idea.
- If the idea is untouched, our industry research gives us a clearer picture in terms of where the industry is heading – this feeds back into creating a patent with a future vision.
Identifying other assets within the technical field has a number of benefits. It can make it possible to not only determine the direction of the industry, but can also point out concepts overlooked by competitors, pinpoint future products/product features, unearth additional advantages, and identify potential gaps in the idea itself.
But gaining a sound overview of the patent landscape, it becomes possible to craft a far more in-depth, forward-thinking patent that delivers greater value to your company.
A portfolio can serve to further increase value
Today, there is a growing stigma against patent piling or collecting a large pool of assets. While it is an acceptable practice for large companies that naturally own hundreds of patents, each new asset only provides a marginal return on investment.
In the case of SMEs that may only have a few patents to their name, creating a portfolio can often prove to be very beneficial. A portfolio that includes two or more patents around a particular product/product line can often result in a multiplier effect in terms of patent value – whilst also providing better product protection.
The goal should be to build a portfolio of patents over three to five years.
I find that the best way to explain this concept is via a case study.
For some time I worked at Audiotoniq as their General Counsel; during that time I was approached a number of times regarding the creation of patents that covered technology semi-related to the company’s product.
In one case, I was approached by a party that wished to license a single asset; they claimed that this asset would give them ownership of all digital hearing aids. As you are probably aware, all hearing aids in this day and age are digital.
I looked into the matter and found that this party had already approached six major industry players, all of which had refused – for this reason, they were calling on a startup for licenses. At the time of contacting me, this particular party was in active litigation with all six major companies. In essence, the party had approached us – the remaining hearing aid manufacturers – with offers to license in the hope of funding their litigation.
This party did two things wrong:
- They were asking for too much money in the first place.
- They had a single patent asset.
This meant that the six major companies were relying on the chance that they would be able to invalidate the single asset during litigation for less money than the party was asking for in exchange for the license. It was a pretty safe bet.
In other words, if the party had asked for less, then the major companies may have decided that it was cheaper to pay for the license rather than litigation costs. Similarly, if the party had multiple assets – rather than just the one – the major companies may not have been so confident in terms of invalidating all of them.
Essentially, it would have put pressure on these companies to take licenses rather than roll the dice and attempt to invalidate.
This case study highlights the importance of building a portfolio of patents.
It’s not just about the idea…
Remember, patents may begin with an idea – but ultimately they become far more.
In order to obtain the best value from your patent, it is important to ensure it encapsulates a broader understanding of the idea and takes into account future industry predictions. Similarly, gaining an in-depth understanding of the surrounding landscape and the creation of an asset portfolio can aid in boosting the value of an individual patent.
Ultimately, a carefully drafted patent can deliver better protection for your product and the future of your company. A higher value patent equates to more dependable assets – delivering greater value for potential investors, partners – and of course purchasers.
As an experienced patent attorney, I can help you create an intellectual property portfolio. Specializing in startups, I can assist your company in developing intellectual assets that are not only valuable – but also aid growth. From small businesses and budding entrepreneurs with big ideas, through to large corporations that need to protect their intellectual property now and into the future, it is important to ensure you partner with a patent attorney that understands your industry, your business, and your goals.
To contact Andrew to discuss this article or for a consultation, go here.