Patent mining is one of the buzz words of intellectual property management and for many seems to promise untold riches generated from rights portfolios that would otherwise lie dormant. In reality, however, this is very rarely the case. Patent mining is no quick fix, neither is it a solution that will work in all organizations. But for those that are willing to take risks and invest time and money in the process, the benefits could be considerable.
The very concept of proactively studying one’s own patent portfolio and conveying those patent rights to anyone else (much less a competitor!), would have been alien to companies holding patents. Today, high-tech companies, like Procter & Gamble, proudly teach that they will license competitors, sometimes before the technology is even used in their own products.
In this atmosphere, patent mining should be defined in the broadest context of a technology company’s strategic view. No one has yet said it better than Dr. Joe Daniele, former Director of Licensing at Xerox, when he stated in a 1993 speech (given with the author) before the Licensing Executives Society (LES): “IP management is the direct connection of R&D to the marketplace”.
Those companies that were only willing to tentatively dip their toes into the water of change began to limit patent mining’s reach to the study of underutilized patents in their portfolio. While the pruning of the underbrush that such embryonic efforts provided occasionally led to more strategic programs, like at Dow or Proctor & Gamble, more often, the limited financial return of such efforts discouraged those companies from moving forward to discover the more significant meaning of patent mining.
That is not to say that on the tactical level, patent mining can’t offer useful information for distinguishing patents that could be licensed in non-competing fields of use, abandoned or donated – saving money and providing valuable tax donations. But it is not what should or will motivate a company, competing for internal financial resources, to devote the serious commitment the practice deserves.
Today, patent mining can no longer be limited to a self-reflective study of your own patents. It must mean the active scanning and analysis of ALL patents that can directly affect your business and technology development practice. Patent mining is a strategic and core function for any IP-centric corporation seeking to tie technology development to business strategy and provides a foundation to help managers make strategic decisions regarding IP acquisition and technology development.
Mismanagement of IP can be as lethal to competitive positioning and new product development as poorly drafted patent filings, or worse, picking the wrong technology platform. But if patent mining is more than an operational task for the IP law department, who “owns” it in a typical corporation: legal, the CTO or the CEO? Harry Gwinnell, Chief IP Counsel at Cargill Inc., says: “The greatest likelihood of success lies in establishing a business group, visible throughout the company, to identify and execute hidden opportunities”.
MINE YOUR OWN BUSINESS
Companies once sent researchers to review the patents within a small section or subsection of a portfolio, with an eye on narrow freedom of action. Today, patent management application and robust search engines allow internal IP managers to quickly pull together organized sets of patents from within their own portfolios, those of specific competitors, and those patents citing relevant technical or industry terms.
With the advent of such patent analysis software, IP managers have pushed the patent mining process toward studying larger and larger patent sets. Companies, once only interested in understanding the patents within their own portfolio, are now interested in knowing about the patents held by competitors. Where patent searches were once aimed at determining prior art during prosecution, they are now aimed at winnowing out patentable new technologies before the research and development teams spring into action.
When mining a large portfolio, software provides the essential first step in organizing and triangling. However, human analysis should be added to it, experts with technical and business aptitude and the ability to understand a patent claim. These experts are needed to review the output, confirm which patents are important and why. Experts can also refine the initial search to confirm that it captures relevant information and to tweak the categories to ensure accuracy and alignment with business objectives.
Clustering or categorizing the information is important. Ideally, you should maintain two parallel organization structures – one that is generic and categorized by technology and one that is specific to your company’s products – thus tracking both what you need and how it fits into the big picture. By capturing both perspectives, managers are better equipped to make decisions about moving IP inbound and outbound.
With this information in hand, it is necessary to ensure that the right people have access to the mining data and know how to use it to make sound business decisions. Having the information visible to the entire company, from R&D, to product marketing, to the highest levels of management, will raise IP-consciousness within the organization.
With this new-found consciousness, more people could be engaged in everything form spotting infringers at a trade show to recognizing a complementary technology that could enhance an internal effort. The more you know about your IP, the better able you are to recognize intersections with the outside world. An IP portfolio that is organized by technology area and mapped to the company’s products is highly useful in providing the right information.
EXPLOITING THE GOLD MINE
Success in refining the ore of promising opportunities that are identified by patent mining can be constrained by limiting executives to a narrow menu of plain vanilla licensing deals. IP transfers can provide the basis for donations to not-for-profits to licensing alternate fields of use, all the way to spin-offs – the list is only limited by imagination.
Companies may naively suffer from IBM envy – striving to achieve the multi-billion dollar licensing success of Big Blue. Yet, when you consider that only five of every 100 patents is licensed and one of every 100 patents actually generates revenue, it is apparent that IP mania has skewed the facts and produced a surreal belief that every company with patents can enjoy the success of IBM. It is often difficult for a company to embrace the reality that a patent or technology is not so priceless. Many who suffer from IBM envy would not be willing to confront an infringing player in court under ant circumstances.
Limiting commercialization activity to licensing leftovers, or non-core patents and technologies is another means to usher in failure. Often, success in licensing and commercialization activity lies much closer to core. According to Gwinnell: “Most of the major value (in a portfolio) lies in your core technology and it takes hard work and creative thinking to extract that value”. IP professionals are obligated to seek new channels of exploitation, welcome risk and bring their creative deal-making skills to life.
PANNING FOR GOLD OUTSIDE YOUR PORTFOLIO
Your own patent mine contains only a small bit of the gold that stands to create strategic advantage for your company. The technology landscape is spotted with patents and technologies that can hold danger and opportunity.
Examining the IP landscape will reveal that the aftermath of the technology bubble collapse has left the technology landscape strewn with patents available for licensing or sale from distressed and bankrupt companies looking for quick cash and willing to sell their IP assets for pennies on the dollar. Licensing or purchasing the rights to these patents and technologies can be valuable in several ways. First, it can help companies bolster IP position and avoid the risk of defending their product position against infringement claims (particularly to be guarded against is allowing key IP to fail into the hands of so-called trolls. With no products of their own, these patent-holding companies troll for patents in the IP marketplace with the goal of enforcing the patents against product-holding companies – often at outrageous prices). Second, it can help contribute progress to the development of and reduce the time to market for new products. Finally, it can help maintain competitive advantage as companies develop new product features and improvements in the face of alternative products being brought to market.
Mining your patent portfolio and conducting a technology landscape analysis is the key to knowing exactly what patents you’ve got, what patents you need, and how much they are worth.
BUY-IN FROM ON HIGH
The new era of patent mining involves creativity, assumes a higher degree of risk, and most importantly, requires engagement from upper management. However, the rewards stand to be much higher, beyond licensing fees or royalties.
In order to be successful at extracting value in unconventional ways, and especially if such transactions involve strategic IP platforms, companies will ultimately need executive level support.
(Original version of this article is available in IAM journal # 02)