The Patent Business

Patents are more than just boring legal documents. “A patent is the link between R&D and the legal processes,” notes Pierre Buffet, executive vice president of intellectual property information firm Questel. “Patents can be used for various interesting business purposes outside of simply protecting a new invention,” adds Director Ronald Kaminecki with Dialog LLC.

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More than Just Boring Legal Documents

Patents are more than just boring legal documents. “A patent is the link between R&D and the legal processes,” notes Pierre Buffet, executive vice president of intellectual property information firm Questel. “Patents can be used for various interesting business purposes outside of simply protecting a new invention,” says Director Ronald Kaminecki with Dialog LLC, an information services firm. In each of the past three years alone, about 1.8 million new patent applications were filed worldwide, adding to the more than 60 million patent records existing online. So, the amount of information available in patents is enormous.

Soonwoo Hong, counselor of the World Intellectual Property Organization, credits the development of customized, computerized databases of patent information with today’s strategic use of patent information. WIPO is the organization through which applications may be filed for patents in more than one foreign country under the Patent Cooperation Treaty (PCT).

Most countries, including the U.S., require that patent applications disclose the invention sufficiently, clearly and completely for it to be carried out by a person skilled in the relevant technology field (the “art”). Therefore, patent applications and issued patents present much more detailed information about an invention than other types of scientific or technical publications. In addition, about 70 percent of the information disclosed in patents is never published anywhere else, according to Hong.

Patent applications and issued patents can also provide clues to your competitors’ business strategies. These strategies can include mergers and acquisitions. Because they indicate which companies are working in a particular technology field, patents and patent applications can indicate which companies are most likely to license one of your firm’s patents or are most likely to initiate legal action against your employer over an invention, says Kaminecki. Issued patents and patent applications also may be useful in locating experts who may be free to serve as consultants for your firm or expert witnesses knowledgeable in a given technology field who can appear in patent litigation, working either for your employer or for the opposing party in the litigation.

Patent attorney Michael Brodowski, a partner in K&L Gates LLP, notes that firms can conduct patent clearance (freedom-to-operate) studies to determine whether others’ patent rights may impact their own business plans. A patent landscape is a survey of patent and non-patent literature that seeks to answer one or more business objectives, according to Matthew Luby, director of patent analysis at intellectual property firm Landon IP. The parameters of the patent landscape are really defined by the individual objectives of the project. A patent landscape study can identify any potentially problematic patent(s). It can also be used to identify areas of opportunity in support of R&D planning, said Robert Stembridge of Thomson Reuters IP Solutions. Citation mapping can be used to identify potential partners and licensees in support of technology licensing and commercialization of an invention. Citation mapping links patents and patent applications to the previously issued patents that they cite.

Citation mapping can enable one to understand what, where, when, and why research was patented and identify the key competitors who are driving research trends. It can also indicate which inventions are the key ones in developing and commercializing a new technology.

Who conducts patent landscape surveys? Typically, they are done by patent attorneys or patent agents, often in consultation with information scientists, staff researchers working in the technology field in question, and their research managers. Business managers supervising businesses using the technology in question may also be involved. At larger companies, the patent attorneys work in the corporate legal department. Smaller and midsized firms typically hire patent law firms to conduct these surveys. However, even large companies may contract work out to external law firms if the workload of company attorneys is too heavy to conduct the surveys in-house.

Guiding future research

To obtain a patent, the invention must be described fully in the patent application. This full disclosure means that patents and patent applications contain a wealth of valuable technical information, observes Robert Stembridge of Thomson Reuters IP Solutions.

Wise lab managers encourage staff members to begin their research projects with a prior art search of the patent literature. Reading patents can help researchers understand the state of the art in their field and aid in designing their own experiments and projects. This can help companies file their own patents in the area of an already patented invention. Doing so can give rise to cross-licensing opportunities (see below).

However, most patents, about 85 percent, have expired. Thus, a huge number of inventions are available to be used for free without having to license the patents or pay royalty fees.

Many companies disclose technical details for their inventions only in their patent applications and issued patents, nowhere else. Conducting patent searches is an efficient way to avoid duplicating the research of others. It has been estimated that up to 30 percent of research funds are inadvertently spent redeveloping existing inventions. Imagine how much more productive your lab would be if these funds were spent on new inventions rather than on “reinventing the wheel.” Searching the patent literature, lab managers and bench researchers can learn what technology already exists and build on it rather than wasting time and money simply repeating someone else’s work.

Patent information can also help your employer avoid infringing on other organizations’ patent rights.

Competitive Intelligence

Thus, lab managers and researchers can use patent information to find out what technology already exists and build on it. Kaminecki notes, “Patents are a not only a great source of information about technology trends, including up-and-coming areas of research, but also competitive information, including which companies are working in an area and also which companies are most likely to license a patent, which ones are most likely to sue about an invention, and which ones are most likely to scoop you with an improvement to your invention.” This information is available because patents must include a technical description of the invention and claims that define exactly what the invention is. Patents also provide the name of the inventor(s) and the owner of the patent (usually the employer of the inventor).

In particular, periodic current awareness patent searches can enable patent attorneys and researchers to monitor the patent activity of competitor firms and others working in given technology fields such as universities and national laboratories, observes Brodowski. This monitoring can include both issued U.S. patents and patent (PCT) applications. This permits early notice of competitive activity. Patent attorneys, researchers, and lab managers can react knowledgeably when applying for their own patents and in modifying product development plans. In addition, if appropriate, they can challenge the validity of patents (or parts of them) that may be problematic in view of previously issued patents, published papers, or papers presented at conferences.

Patents also can provide clues about the long-term strategies of competitors and potential targets of mergers and acquisition. They can also be used to help identify experts and expert witnesses who could become involved in patent litigation.

Patent citation analysis enables one to identify which patents are strong ones. If a patent is widely cited in other patents, it is likely to be a strong patent playing a key role in developing a new technology. This can help in choosing which patents to license. The ability to make wise choices in this regard can enhance R&D output and accelerate the commercialization of profitable new products and processes.

Citations can also indicate the speed at which a company is innovating. Companies whose patents cite recent patents are likely to be innovating faster than companies whose patents cite older patents.

Patent information also can be used to track globalization of a particular technology, reports Yali Friedman of thinkBiotech LLC. Knowing where innovations are developed can help influence plant site selection decisions. It can also help predict global future developments in an industry.

To add complexity to the globalization concept, a single invention may result from the work of more than one inventor working at more than one R&D lab located in more than one country.

Cross-licensing patents

A cross-licensing agreement is a contract in which two or more organizations grant a license to each other for the exploitation of the subject matter claimed in one or more of the patents each owns. Frequently, each organization owns patents covering different essential aspects of a given commercial product. Thus, by cross-licensing, each party maintains their freedom to manufacture and market the commercial product. The term “cross-licensing” implies that neither organization makes royalty payments to the other.

Some companies file patent applications primarily to cross-license the resulting patents, as opposed to trying to stop a competitor from bringing a product to market. For example, Company B may patent an improvement to an existing patent held by another firm, Company A, in the hope that the two firms will cross-license their patents. Crosslicensing enables Company B to market a product without having Company A sue them for patent infringement.

This research and the resulting patent activity can result in a “patent thicket,” an overlapping network of several or more patents covering a basic technology and improvements to it. In this case, often it is not one patent that a firm must license to obtain freedom to commercialize an invention but multiple patents often owned by multiple companies. The cost and time required to negotiate with these various intellectual property owners can impede innovation and obstruct, or at least delay, a firm commercializing new technology.

Some experts have strongly criticized patent thickets as inhibiting innovation and economic growth. However, intellectual property expert Sir Robin Jacob has pointed out that “every patentee of a major invention is likely to come up with improvements and alleged improvements to his invention” and that “it is in the nature of the patent system itself that patent thickets should happen and it has always happened.” (As Lord Justice Jacob, Sir Robin served as a judge in the Court of Appeal of England and Wales.)

Other documents

Edlyn Simmons of Simmons Patent Information Service LLC notes that documents that are not actual patents can also provide useful information. He notes, “Patent databases contain millions of records for patent documents that are not legally enforceable patents. These include pending patent applications, lapsed or abandoned applications, and patents that have expired.”

Press releases can indicate where technology described in one or more patents is being commercialized. This information is usually of most use to business managers. Ideally, press releases list the country where the patent was issued and the patent number.

Wrap-up

Chemical and pharmaceutical companies, biotechnology companies, analytical instrument companies, and many other types of firms are knowledge driven. In today’s knowledge-driven economy, effective use of patent information contributes to the success of many companies.

Categories: Business Management

Published In

Changing Spaces Magazine Issue Cover
Changing Spaces

Published: December 1, 2011

Cover Story

Changing Spaces

Over the last decade, traditional office and R&D designs have failed to serve new business models and employment arrangements; the results have been visible at the bottom line of balance sheets. The real bottom line is this: Better workplaces make for better business.