PATENT STRATEGY
Brad Close explains why you shouldn't sit on your patent rights.
Patents are a one-size-fits-all legal right for inventions across every technology field. Te varied fields create different legal necessities, so that diverse industries are oſten at odds over what
they attempt to accomplish with patent
rights. Tis is demonstrated by comparing the industries of bio/pharma with mobile telecoms. With bio/pharma you have the requirement of massive, long-term, front-end investment to develop a few long-lived products that require minimal numbers of patents to protect, whereas mobile telecoms are characterised by an ever- changing environment in which a single product, like a smartphone, can incorporate inventions that are covered by hundreds, if not thousands, of patents.
It is therefore no surprise that strategic licensing plays out differently across different technical fields. With bio/pharma companies, patents tend to be used to exclude all competition on a blockbuster drug. In the mobile telecoms space, however, the “right to exclude” approach is rarely feasible. It is impractical to attempt to map claims of hundreds of patents to particular mobile telecoms products, for example, especially when those products can change faster than the courts can exclude them from the market. In addition, a potential target is likely to have its own set of patents with which it can counter-sue.
In the latter part of the 20th century, a common, big company solution was to broadly cross- license portfolios so that major industry players had substantial freedom to operate without the cost of right-to-use analysis and obtaining individual licences. Tis has been compared to a ‘cold war’ strategy, and in-house counsel were oſten incentivised to obtain patents in bulk, and then cross-license rather than enforce.
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Tis strategy is oſten referred to as building a ‘defensive portfolio’.
At times, cross-licences were so prevalent, and the defensive portfolios were so large, that some corporations did not even keep close track of them. Quality of patents took a back seat
quantity, and the true value of a patent portfolio was superseded by a kind of industry average value. Tat leſt enormous amounts of potential intellectual capital out of play.
A few decades ago the view of the value
of patents, and the monetisation of patent portfolios, slowly started to change. Companies are increasingly focused on obtaining a reasonable return on investment from their patent portfolios. In some cases, such as with Nortel and Motorola Mobility, the IP that the company owns is worth several times the value of the rest of the company. Some pundits attribute this paradigm shiſt to the rise of non-practising entities (NPEs), but that blurs cause and effect, and does not take into account the ever- increasing value of technology in our society.
In the late 1980s to early 1990s we entered the ‘Information Age’. Te assets of this age are intangible, and are protected by IP laws, so as technology continues to evolve, the value of the IP will invariably rise. NPEs might have been early to realise this, but the situation was inevitable.
Gain a competitive advantage
So, how can a company use patent licensing to its competitive advantage? For a bio/pharma company the traditional model of excluding competition is probably its best solution. Let us
World Intellectual Property Review September/October 2013 57
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