In today’s fast-paced, technology-driven world, maximizing return on R&D investment and ensuring the competitive strength and market relevance of IP portfolios are key business considerations. Faced with such complex issues, in-house IP professionals are increasingly using patent research to help them make more informed decisions.

The growing focus on intellectual property (IP) assets as a value creator has placed increased pressure on companies to align their IP strategies more closely with their broader business strategy. Across the world, companies have realized that, whether home-grown or acquired, a strong patent portfolio is not only necessary for protection, but can also be a vital component in creating a true competitive edge.

The key to developing a robust IP portfolio and being able to properly manage the assets in that portfolio is knowledge and understanding of the technology landscape in which an organization operates — and much of that can be delivered through an effective patent research strategy.

In a highly competitive and litigious market, undertaking detailed patent research and analysis is of paramount importance. It provides organizations with a clearer picture of the IP universe relating to specific technologies, thereby helping them to identify the strengths, weaknesses and potential gaps in their portfolios; opportunities to develop new innovations, either on their own or in partnership with other IP Rights holders; as well as potential infringement risks. In this way, patent research provides critical information to support key corporate decision-making on such matters as the amount and focus of R&D investment, possible collaboration with other industry players, as well as M&A activity.

Patent research covers a number of different activities, from patent searching — including Freedom to Operate (FTO) searching, and invalidity and infringement analysis — to patent portfolio audits, competitive landscape studies, and patent analytics.

FTO or “clearance” searches are used to identify whether a proposed activity infringes upon any existing, unexpired patents. They detail the major competitors and IP assets within a technology market in a given region. This type of analysis drives marketability, manufacturing and investment decisions.

Invalidity and infringement searches are used to gauge the legal strength of patents. Through a comprehensive analysis of prior art, they measure how well a patent stands up to legal challenges from other patents, as well as their assertion potential against possible infringers.

In combination, these searches can help define a patent’s value and market potential. Patents that can stand up to litigation, or operate freely in a particular market, are valued higher — so such analysis can be used to build business cases that prove patent viability.

Quality patent research also benefits companies by:

  • Highlighting their best inventions for patent filing
  • Facilitating the drafting of strong patent claims, taking into account relevant patents that have already being published
  • Identifying third-party inventions that could be purchased or licensed to complement existing patent portfolios
  • Understanding and monitoring the patent and R&D activity of competitors
  • Demonstrating to shareholders and potential investors the value of the company’s intellectual assets, the strength of differentiation, and the defensibility of the related technology

Discovering hidden value

Many organizations appreciate that there are significant opportunities to generate improved returns on investment by incorporating a consistent approach to patent research into the management and optimization of their patent portfolios. For instance, a technology company that regularly conducts patent searches prior to filing patent applications may identify opportunities to exclude a significant percentage of its planned patent filings on the basis that the applications in question are not “novel”.

This, in turn, results in savings in patent drafting, filing and prosecution costs. Typically, for a large organization with 1000+ filings, such savings can run into millions of dollars in a very short period. For example, utilizing patent research services, one U.S.-based multinational hi-tech corporation was able to eliminate over 10 percent of its patent cases before proceeding to prosecution, resulting in annual savings of around $3 million.

The average cost of prosecuting a patent is around $20,000, so investing a few hundred dollars on a patent search to assess whether this will be money well spent makes a lot of sense.

Performing FTO searches on key product areas on a regular basis can also be a very cost-effective way to keep up to speed on competitors — both in terms of their latest technologies as well as their product marketing positioning — without having to run a full-scale patent portfolio analysis each time in order to understand the competitive strength of your patent portfolio. Not only does this save cost and time, it also enables companies to be more nimble and responsive, adjusting their patent strategy quickly to meet competitive threats.

Infringement searches should be used regularly to assess litigation threats, both offensive and defensive. These searches help organizations identify potential infringers to their own portfolio, while, at the same time, assessing how well their portfolio would withstand an assertion of infringement against it.

In the innovation industry, any metric is rarely static. As competitors evolve and release new technologies into a market, companies must make every effort to stay abreast of new developments. Ultimately, patent protection is given not just to the most novel companies, but increasingly the best-prepared ones.

Today, the decisions that companies make on their IP are more important and influence their wider business more than ever before. It stands to reason that, the better informed the decision-makers, the better the decision. And that’s where patent research can make the difference between a good and bad decision.