Patent Strategies and Patent Portfolio Managementpatenty.bg.agh.edu.pl/prez/portfolio.pdfPatent...

11 October 2006, 1

M Schulze

Dr. Mark Schulze

European Patent AcademySeminar IS02-2006

"Patent-related IP managementfor innovation advisors"

Swider Conference Centre, 11 October 2006

Patent Strategiesand

Patent Portfolio Management

11 October 2006, 2

M Schulze

Patent Strategies - a jungle?Everybody knows so many parameters ......

„Where is the path through the jungle ???“

11 October 2006, 3

M Schulze

PPM - A Process

Controlling

IP Strategy

Strategy Implementation

Superposed Strategies:Business /

R&D

Patent Strategy

Strategic IP Goals

Patent Analysis

3rd PartyIPRs

RiskIdentification

Risk Assessment

RiskReduction

OwnIPRs

ForeignFiling LicencingFirst

FilingPortfolioMngmt

InventionDisclosure

IPO

pera

tions

Upd

ate

11 October 2006, 4

M Schulze

Strategic IP Goals

EXCLUSIVITY

REPUTATION

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM

Options for

Strategic IP Goals

Chosen Strategic IP Goal is

often a mixture

11 October 2006, 5

M Schulze

• Prohibition is the 'natural' purpose of a patent if coming from patent law.

• Use of prohibition includes the readyness to go to court over several instances and invest thus money neccessary.

• Thus, exclusivity is mostly used where the success of a product depends on a certain invention or a group of inventions.

• In practice, exclusivity is a rare option, mostly restricted to the biotech / pharmaceutical field and special, relatively simple solutions in other technical fields. With complex products, this is no option.

EXCLUSIVITY

REPUTATION

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM

Options forStrategic IP Goals

Strategic IP Goals: Exclusivity

11 October 2006, 6

M Schulze

(Counter-)Example: Cellular Phone

Antenna

Microchips

HMI

Applications /Software

Display

Camera

Batteries

Speech / DataTransmission

......0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

1989 1993 1997 2001 2005

First filings - worldwide

„The ’90sBoom“

from 01/02w/o

Infineon

SonyEricssonmobile

Exclusivity is not practical, but a stronger patent position is !

Patent Portfolio Mngmt !

11 October 2006, 7

M Schulze

EXCLUSIVITY

REPUTATION

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM


Strategic IP Goals: Reputation

• Reputation is one of the main reasons to file: to have a patent or being an inventor is a good thing

• Reputation is showing the innovation potential of a company to customers and investors.

• In practice, the use of reputation remains unspecific but the costs add up.

• Another form of reputation is being aggressive in court, e. g., if sued. This will make the company a less easy target for patent litigation

11 October 2006, 8

M Schulze

EXCLUSIVITY

REPUTATION

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM


Strategic IP Goals: Design Access

• Design Access mostly means Deterrence or Cross License Agreements (XLA).

• With Design Access companies share their IP potential: they give acces to their own inventions and use the access to the invention of other companies

• Design Access 'neutralizes' patents and emphazises the selling of product without the danger of patent infringement problems.

• XLAs are based on the equal strengths of patent portfolios; imbalances can be accounted for by payments to the stronger side.

• The larger companies are the more likely they close a XLA.

11 October 2006, 9

M Schulze

EXCLUSIVITY

REPUTATION

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM


Strategic IP Goals: Additional Income

• Additonal Income is not easy to gernerate.

• When Carrot Licensing, one offers his patents to a licensee. This hardly works. To successfully carrot license, one must have a superior patented technology and additionally offer Know-How.

• When Stick Licensing, one threatens to sue a target company because of a concrete patent infringement if no license is taken out. The would-be-licensee is normally not willing to pay and is likely to go to court over serveral instances and tries to counter-strike.

• One must determined to give out one's best technology to the largest companies.

11 October 2006, 10

M Schulze

EXCLUSIVITY

REPUTATION

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM


Strategic IP Goals: Design Freedom

• Design Freedom is the try to design products without violating patents.

• The most prominent realisations are Design Around and Opposition / Invalidation against third party rights, often after a product clearing.

• One does not need own patents to use a Design Freedom strategy.

11 October 2006, 11

M Schulze

Strategic IP Goals (Summary)

Cos

t Le

ader

ship

• Deterrence• Cross License Agreements (XLAs)

• Licensing (Stick / Carrot)• XLAs with Compensation

• Design Around / Invalidation

DESIGN ACCESS

ADDITIONAL INCOME

DESIGN FREEDOM

Mar

ket

Diff

eren

tiatio

n

• Prohibition

• no. 1 patent holder• fighting legal battles to the end

EXCLUSIVITY

REPUTATION

Affected Business Strategy


Exemplary IP Strategies

11 October 2006, 12

M Schulze

PPM - the Look Around

Controlling

IP Strategy



R&D

Patent Strategy

Strategic IP Goals

Patent Analysis

3rd PartyIPRs

RiskIdentification

Risk Assessment

RiskReduction

OwnIPRs



InventionDisclosure

IPO

pera

tions

Upd

ate

11 October 2006, 13

M Schulze

MARKET

TECHNOLOGY

PATENTS

ENVIRONMENT

Options forStrategic IP

Goals

PatentPortfolioManage-

ment:

optimizepatent

activitiesunder cost

aspects

What influences a Strategy ?

11 October 2006, 14

M Schulze

Patent Search: Statistics1998 - 2003

0

50

100

150

200Own Company

CompetitorsFi

rst F

iling

s (a

ccum

ulat

ed)

A

B C D E

U

Ove

rall

0

10

20

30

40

50

1997 1998 1999 2000 2001 2002

Firs

t Fili

ngs A

U

BTren

ds

DE EP US CN

Firs

t Fili

ngs

Reg

ions

2004 2007

Analyse goal-oriented:Return-of-Investment !

• Search Capacity• Search Know-How• Patent Know-How• Market Know-How

0

10

20

30

40

50

60

70

80

F04L G02L G06F G06H H03L H04L H04N M03K M03P

Skyl

inin

g

See Talk of

J. Schaaf

11 October 2006, 15

M Schulze

Aventis owns 29,000+ patents; about 1% show “Aventis” as assignee

Figure modified from Edlyn Simmons Figure:PIUG 2000 Meeting

Richardson Merrell

RichardsonVicks P & G

Rhone Poulenc

Rorer

Rhone Poulenc Rorer

Marion Labs Marion MerrellDow

RousselUCLAF

American Hoechst

Celanese Corp

Rhodia

Celanese AG

Hoechst AG

Hoechst Celanese

Hoechst Marion Roussel

Aventis

Patent Search: The Assignee Problem

From: F. Narin: WIPO Conference on Patents; Genf, 17. September 2003

See Talk of

J. Schaaf

11 October 2006, 16

M Schulze

Market AnalysisMarket Size / Market Share / Turnover / Regions / Trends

US EP

Exclusivity

US EP

Design Access / Income

1. Competitor A2. Own Company3. Competitor B..

18 %16 %12 %..

CompetitorsMarketShare Characterisation

Market: Gas Turbines

financial troublesgood servicesmall R&D..

Market Size:€ 5,7 bn

Market Overview US

Comp A

OwnComp

CompB

Rest

CompA

OwnCompComp

B

Rest

EPin 5 years

Regions

11 October 2006, 17

M Schulze

Technology Analysis

„Which technolgy is important?“ „How good am I at the technology?“

Different Segments(Technologies / Products)

IP Investments

lower higher

following leading Technology Position

Impo

rtan

ceof

the

Tech

nolo

gy

low

er

hi

gher

T2

T3

T1

11 October 2006, 18

M Schulze

... the Technology Position

following leading

Technology Position

Pat

ent P

ositi

on

follo

win

g

l

eadi

ng

Comparison of Patent Position with ...

leading following Market Position

Pate

nt P

ositi

on

fo

llow

ing

le

adin

g

defensive

offensive

The number of IPRs is typically being related with the relevant sales; only

then one can speak of a ‚stronger‘ or ‚weaker‘ position.

... the Market Position

Own Position

The correlation of the patent position with the technological ‚strength‘ gives

a hint for the strategic direction.

offensive

defensive directedinternally

directedexternally

Own Position

11 October 2006, 19

M Schulze

No

of IP

Rig

hts

... a closer look ...

The risks and chances must be usually verified by taking a closer look into the IPRs, incorporating „quality“.

Market Share

0

500

0 5 10 15 20 25

Risks

Chances

... shows the well-known license analogyused in a risk-chance-diagram.

License demand ~

(Sales)Comp * PatentsOwn

* Licence Rate * Hit Rate

License balance ~

Own Demands –Demands from the Comp.

OwnPosition

x

one product market

for large numbers

11 October 2006, 20

M Schulze

Developing a Patent Strategy

Controlling

IP Strategy



R&D

Patent Strategy

Strategic IP Goals

Patent Analysis

3rd PartyIPRs

RiskIdentification

Risk Assessment

RiskReduction

OwnIPRs



InventionDisclosure

IPO

pera

tions

Upd

ate

11 October 2006, 21

M Schulze

Patent Position

stro

ngw

eak

Market Sharesmalllarge

SWOT

Licences SuccessFactors

Definitionof an

IP Strategy

Technology Position

Patent Position

stro

ngw

eak

leadingfollowing

offensive

directed internallydirected externally

Typical IP Behaviour

defensive

Sketch: Strategy Development

+

decisive factors / features

StrategicSignificance

Technology Position

11 October 2006, 22

M Schulze

SWOT

Technology Position

Generic Patent Strategy – an example

+

In case of a (yet) strong Patent Position but weak

Ressources and large exposure, secure Design-

Access via XLAs and licence patents selectively.

StrategicSignificance

Technology Position

offensive

directed internallydirected externally

Typical IP Behaviour

defensive

Licences SuccessFactors

Patent Position

stro

ngw

eak

Market Sharesmalllarge

Patent Position

stro

ngw

eak

leadingfollowing

11 October 2006, 23

M Schulze

A Target Portfolio should be defined

The Target Portfolio should give operative goals regarding the development of the patent portfolio w.r.t quantity and quality.

Patent portfolio management must also incorporate measures and metrices to ensure efficient controlling.

135T3

1513T2

1020T1

in 3 yearsTrendNowTechnology

11 October 2006, 24

M Schulze

Implementation

Controlling

IP Strategy



R&D

Patent Strategy

Strategic IP Goals

Patent Analysis

3rd PartyIPRs

RiskIdentification

Risk Assessment

RiskReduction

OwnIPRs



InventionDisclosure

IPO

pera

tions

Upd

ate

Patent Activity as a ‚Pull‘ !

11 October 2006, 25

M Schulze

Where to file ?

Foreign filing is costly. The selection of countries is thus budget-restrained.

Foreign filing is governed mainly by (a) own turnover and margin, resp. or (b) market size , mostly not the main manufacturer‘s countries.

Patentability, ‚Prosecutability‘ and ‚Culture‘ as further important Factors

In the simplest case, use a country list;better: dependent on the value of the IPR

11 October 2006, 26

M Schulze

‚Application Paths‘

The decision how to file is also dependent on the own pre-application search.

FastImplementation;

Short Cycles;‚sure‘ Patentability

Early development;long cycles;

‚unsure‘ Patentability

Only national: Adv: faster grant, Disadv: high costs immediately

Regional / PCT: Disadv: usually slower grant(PCT up to 30 / 31 Monate);Adv: delayed costs,cheaper for more countries.

In detail, one has to calculate the costs and reason higher spending.

11 October 2006, 27

M Schulze

Distribution of Costs

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21Year

€

Prio DE PCT EP US JP

DE PCT (EP, US, JP) (AT, CH, DE, FR, GB, IT)

Accumulated Costs:EP: € 65.000US: € 19.000JP: € 29.000

Grant:EP: in Year 6US: in Year 5JP: in Year 6

from: Martin Baader ‚Der Leiter Patente 2004‘;Infineon Technologies

11 October 2006, 28

M Schulze

The Value of Patents

Financial value of patents and patent portfolios (in €) using known (?) valuation methods

Application: transaction pricing or licensing fees; financing (e.g. start-ups) etc.

Business Experts: Valuation (quantitative value)

Patent Experts: Evaluation (qualitative value)

Relative value of patents using a value spectrum,e. g. {1 ... 5} or {A ... F}

Application: patent selection; portfolio management; patent comparison

11 October 2006, 29

M Schulze

Scope of InventionBasic

Larger ImprovementDetail

CircumventionNot possible

Possible but costlyAlternatives exist

Proof of Useeasy

costlyNot possible

Some Evaluation Parameters

Value

Not only the average

Customer AttractivityLarge Performance / Cost Advantage

Medium Performance / Cost AdvantageSmall Performance / Cost Advantage

012

012

012 0

12

012

11 October 2006, 30

M Schulze

Generating Inventions

• Overproportionally many inventions should be generated in attractive technologies

• This generation can - at least partly - be controlled, e. g. by- Invention-on-Demand-Workshops- Incentives (Money, Management Appreciation)

• Generally, from a portfolio management point of view it is desirable - but also more costly - to have more inventions than applications can be filed so that one can choose from a pool of inventions and file or discard.

11 October 2006, 31

M Schulze

Prozesses - Get it Going• For the different steps of the operative patent activities

there should be defined processes with (competence orientated) responsibilities and tasks !

• This includes reporting to the business functions ressponsible (e.g. quarterly review), but also to ‚inventor‘s side‘ (inventor, head of R&D)

• Reporting also regarding Costs

Example: of Patent ValueI.D.: Inventorwho: Patent Professional, Head of R&D grouprespons.: Patent Professionalwhen: 1 x month / quarterreport: Patent Professional

11 October 2006, 32

M Schulze

Implementation

Controlling

IP Strategy



R&D

Patent Strategy

Strategic IP Goals

Patent Analysis

3rd PartyIPRs

RiskIdentification

Risk Assessment

RiskReduction

OwnIPRs



InventionDisclosure

IPO

pera

tions

Upd

ate

11 October 2006, 33

M Schulze

Patent work is a speculative business with significant chances and risks. Therefore, much ground would be lost without a strategically oriented approach.

• The strategic orientation of patent work too is subject to the RoI-rule, i.e. to be performed in adequate detail

• Verifiable benefit justifying the additional effort• Clear assignment of roles with defined contributions by the

parties involved in the process• Controlling must lead to consequences• Comfortable IT-support• Strategy process properly timed with processes for setting up

business strategies and budgets• Support by line management

Key Factors for successful PPM

11 October 2006, 34

M Schulze

Thank You !

Dr. Mark Schulze

M SchulzePatentanwaltskanzlei IPR Consulting

Pilotystr. 4D-80538 München

[email protected]

Patent Strategiesand

Patent portfolio management

Patent Strategies and Patent Portfolio Managementpatenty.bg.agh.edu.pl/prez/portfolio.pdfPatent...

Documents

Transcript of Patent Strategies and Patent Portfolio Managementpatenty.bg.agh.edu.pl/prez/portfolio.pdfPatent...