Unused and Unsuitable Portfolios

Pruning is important because over time technology that was originally patented as novel and unique slowly matures. As newer features are introduced by R&D or in-licensed by business development, the older patents hold less and less commercial value. A product feature or manufacturing process that the patent protects slowly moves from unique to a commodity. When this happens the need to retain patent protection diminishes. There is no need to pay fees to maintain such dead-weight art.  For an older portfolio in a non-court technology/market area the “Unused and Unsuitable Portfolios” figure shows a typical distribution of patents that could be available for pruning.

Assuming that sustaining an advantaged competitive position is the key value patents are bringing to a company, an effective and efficient way to quickly determine which patents in a portfolio that are likely dead-weight and not contributing to a corporation’s profits is the following: take the small portfolios derived from the first segmentation described above and calculate for each patent or application in this portfolio the following measures. These are shown in the “Candidates to Prune” figure and include: (1) the priority date of the patent, its family size, and percent of the patent family that is alive, (2) the number of forward citations and the average number of citations per year, (3) the presence or not of a predator or shark, (4) the generality and originality scores of the patent, (5) whether or not the patent is been validated by litigation, opposition, re-examination, (6) the number of company’s own patents that have cited the patent and or have been referenced by it, and (7) the total number of claims, and number of independent claims.

Candidates to Prune

Although there are many more measures that can be used to assess value, these measures have been found from working with practitioners worldwide to be among the measures that most quickly determine which patents should likely be abandoned. By rank ordering patents (smallest scores on each measure to largest scores), the art which should be pruned is efficiently identified. The lists are fine-tuned for specific industry segments where it is known from subject matter experts that one measure is more or less relevant than the others.

Patents appearing at the top of the list, those with small families and not cited by other entities, are prime candidates to be pruned or abandoned. The logic is when a company obtains or has a patent that is a valuable asset protecting commercial products or services, the company typically files a patent portfolio in many countries and continues incremental R&D to further build out the technology. This results in many family members and many self-citations and references to other company patents.

When a company chooses not to file patents in other geographies, the family size stays small and there is no follow-on work. These are sometimes called “inventor recognition” patents, where the idea might be good technically but the commercial value of the invention is low. In such a case, the feature that a patent is protecting is not important to consumer purchasing behavior. It can also be that the relative cost of producing such a feature has been improved upon by others and the patent over time no longer protects an advantaged cost position. In either or both of these cases, the patent is not protecting the advantaged product position the company desires. Since no advantaged position is being protected, the commercial value of the asset is nil and to maintain such an asset is not a good business practice. Thus, the patents at the top of this list are the ones to stop payment of maintenance fees.

How far down the list a company should go in considering patents for abandonment often depends upon how diligent a company has been in keeping its patent portfolio current. For portfolios that have never been put through the scrutiny of a patent management process or where the process is not been rigorous for five or more years, companies have traditionally found that up to 20% of their total portfolio can be abandoned. This is hopefully the exception. Most companies are diligent in their patent management and in these cases experience has found that on the order of 5% to 10% of the patents found at the top of the listing are the only ones suitable for pruning.