Optimizing the Patent Portfolio
An exclusive right to manufacture or use, sell a product for a company seems to be exciting, but maintaining a patent portfolio adds an economic burden to the company. Especially when a set of patents or their families are not used, not in demand, not fetching any commercial benefit is a liability to the company. These patents will add additional load on the company’s spending, which eventually leaks the profit.
In view of the above context, it is mandatory to optimize the patent portfolio. For a smaller company that owns fewer patents on its name, this is not required. However, the concern is for large companies that own a vast number of patents in its portfolio. Therefore, the patents that add a little to no value to the company have to optimize the patent portfolio to save the cost of spending for maintenance of the portfolio. There is a methodology which deals with the above-stated problem is known as patent pruning.
It is a process that filters out unnecessary or burdensome patents from a portfolio of patents of a company. It includes various factors that assess the patent and handpick them according to the set criteria. A few well-known criteria for filtering the patent portfolio are listed below:
- Life of a patent
- Patents having no licensing scope
- Patents with high invalidation risk
- Unused patent
- Strength and future potential value of the patent
For instance, Cisco holds a patent portfolio of approximately 59000 patents worldwide. We all are aware that Cisco’s product line focuses on networking hardware, software, and telecommunications equipment. However, if Cisco’s portfolio comprises any other patents which are not in line with the offered products by Cisco, then those patents stand liability to Cisco, and this hinders the profit. The probable solution to this problem is to either give the unused patent to license for the needy companies or stop paying maintenance to such patents. It is further understandable from the below graphs.
Distribution of patents around the world:
From the above graph, it is clear that the US is dominating in terms of filing, innovating, and maintaining the portfolio by Cisco.
Last twenty years patent per year of the portfolio:
The above graph describes the downward trend of filing by Cisco in the last couple of years. However, the company’s active patents by 2020 still record at 14000 approximately. It means cumulatively they are going to consume much budget to maintain them. Therefore, there is enough scope in the 14000 patents to filter out based on the criteria mentioned above.
Few top concepts of the portfolio
The above graph shows different categories where the entire portfolio patents are divided into multiple domains, and these divided patents need to be analyzed by their respective professionals to prune out unwanted patents from them to reduce expenditure load on the entire portfolio.
Simply shunning the patents from the portfolio is not the solution to the problem. Though patent pruning seems to be uncomplicated, at the same time, you have to have multi-domain professionals who analyze the patents at multiple verticals to give a value that helps the companies to make a decision.
Keywords: Portfolio optimization, patent pruning, patent maintenance, patent value, portfolio assessment, patent burden, profit management.