Everything You Need to Know About Patent Pruning

Making a patent application was a major thing a few decades ago. At that time, applying for patents was more than just a math exercise; quality was valued more highly. Casual filings were few, and granted patents were usually highly appreciated for both their quality and their face worth. But as times evolved, so did the procedures for applying for patents. To gain a monopoly on technology, businesses started submitting hundreds of patent applications year, which resulted in enormous patent portfolios that started to strain businesses' financial resources. This made patent pruning necessary. Today, one of the best methods for improving a patent portfolio is thought to be patent pruning.

Maintenance costs and patent pruning techniques

The main goal of patent pruning is to lower overall expenses for the patent owner. Research and development (R&D) costs, patent application and prosecution fees, and maintenance fees are frequently large financial outlays related to acquiring and upkeep a patent portfolio. Furthermore, the pressure on the IP owner's finances grows as a result of these fees rising year after year.

This cost increases dramatically for patents held for more than ten years because it is assumed that they have a substantially larger market worth. To minimise irrational maintenance costs, businesses must evaluate their patent portfolios, identify unneeded patents, and retire them. To ascertain whether eliminating patents that do not pertain to the core company and score lower on the quality measures is a wise move, one can conduct more research on those patents. The idea of patent trimming is applicable in this situation.

Patent portfolio optimization, also known as patent pruning, is the process of identifying, classifying, and optimising patents by examining patent portfolios. It is a process for deciding which patents should be kept and given priority, and which ones should be sold or otherwise disposed of. Companies can improve their patent portfolios with the help of patent pruning, saving money that would otherwise be regularly spent on maintaining inferior or extrinsic patents.

The potential value of a company can be increased and resources that would otherwise be spent on maintaining pointless patents can be freed up by researching an IP portfolio to define key value drivers and identify items that may fall outside the business' objectives.

To help you better understand the concept, the next part talks about how important patent pruning is.

Why Is Pruning the Patent Portfolio Important?

This article examines patent portfolio pruning, including its importance, method, consideration of both objective and subjective factors, and more. Let's first examine the costs associated with maintaining patent portfolios and how patent pruning can contribute to their reduction.

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The significance of patent prudence for large businesses

Companies with patent portfolios of all sizes frequently employ pruning to maximise their holdings. One may argue that the necessity or significance of patent trimming is inversely correlated with the size of the patent portfolio. This occurs because the expense of maintaining a larger patent portfolio keeps pace with its size. As an illustration, a company maintaining a portfolio of, let's say, 100 patents would spend significantly more on renewal and prosecution than a company managing a portfolio of just 10 patents. As a result, a number of the most influential companies in the world are optimising their patent portfolios through patent pruning to reduce maintenance expenses.

Patent portfolio pruning risks and strategies for avoiding them

Pruning a patent portfolio might be dangerous. One runs the danger of losing an asset that may have had the ability to bring in money if not done with the utmost care and accuracy. To understand a patent's full potential worth in a market that is completely unrelated to the corporation that presently possesses it, multi-industry expertise are frequently needed. Consider the possibility that a patent you have in your industry could be licenced or sold in another area of the economy.

Therefore, it is strongly advised to use an expert's services before deciding to sell or give up any patent in the portfolio. Furthermore, a beginner and inexperienced patent analyst's trimming of patents may result in the abandonment of a piece of intellectual property that is essential to the operation of the company or that has potential for licencing or sale.

The dangers of patent portfolio reduction can be avoided in a variety of ways. One of the most popular strategies is to conduct IP valuation through qualified specialists in order to help find and eliminate inefficiency and produce assured significant new business growth. Before giving up on patents or letting any intellectual property lapse, one should consult an expert. Experts can accurately assess the potential worth of the intellectual property, identify options for licencing and selling, and assist patent owners in deciding whether to maintain or give up the IP.

Identifying and eliminating inactive and underused patents from an IP portfolio is just a small part of the larger picture of effective IP management. To develop and maintain a great plan for your IP, it is highly advantageous to work with industry specialists who are also quite knowledgeable technically. Determining which components of the whole should be maintained and which can be thrown away can be made easier by understanding the value of each component.

A significant component of the patent portfolio trimming process is realising how important a patent's value is. No expert can properly prune a portfolio without knowing the IP's current and future value. Therefore, we will highlight several key elements that affect a patent's potential in the following section.

How to Assess a Patent's Potential

A thorough investigation or analysis is necessary before deciding to drop even one patent that is not essential to the operation and is of lower quality. Choosing a patent's likelihood of infringement and licencing is the goal of this research.

When estimating the prospective value of a patent, the following important aspects must be taken into account:

the range of the claims and their specific or general nature. The likelihood that you will be able to licence the intellectual property in areas where you are not directly competing can be increased by making broader claims.

Size of the current and future markets for the patented technology.

whether or not contemporary third-party products use the exclusive technology.

whether there is active research being done in the technology industry and whether it is in demand.

A patent specialist can determine the possibility of a patent as accurately as possible with the aid of thorough research on these aspects. The potential for monetizing the patents that show promise can be further evaluated through licencing, enforcement, or sale. Additionally, there are particular standards that must be met when trimming a patent portfolio. The measures that one should consider when undertaking patent trimming are discussed in the section below.

Pruning a Patent Portfolio: Criteria

It is important to emphasise that corporations may even sell or relinquish patents that their owners actively utilise, making it clear that only unused patents can be entirely trimmed. There are, however, a number of crucial factors to think about in this situation. The following standards will be used to eliminate patent portfolios from products:

if there is a clear workaround for the invention or process that a patent protects.

In case previously unknown prior art surfaces that could quickly render the patent invalid.

Any potential revenue lost if a country stops selling your technology or product (one can evaluate country-specific pruning).

As you must already be aware, the examination and classification of patents into core, non-core, high, and low quality categories is one of the most important steps in the patent pruning process. This is when a patent portfolio's objective and subjective assessments enter the picture. Let's use examples to better comprehend the two.

Analyzing a Patent Portfolio with Objectivity

Identification of core patents—patents that are directly connected to a company's mission—is the main goal of objective analysis. By analysing the patent tags, it is simple to accomplish. Either internal patent tagging or IPC/CPC classification codes are used. One of the most important tagging characteristics is "core and supplementary," which is used to determine whether or not a patent is relevant to the company's products. If so, it is regarded as a core patent; otherwise, it is classified as supplementary. All of the patents classified as core can be kept at the end of this exercise, while those classified as supplementary can potentially be pruned. Furthermore, thorough investigation at a later time can assist in making choices regarding the licencing, sale, or abandonment of supplemental patents.

Other tagging characteristics, in addition to the core and supplemental tags, can aid in narrowing down the list of patents for pruning. For instance, we can determine whether the patents are related to other goods or categorise them using many levels of technology and applicability tags. The rate of forwarding citations, variety of forwarding assignees, diversity of patent families, diversity of IPC/CPC of forwarding citations, etc. are quality indicators for objective examination. An algorithm is typically used to decide a patent's strength based on a number of factors, and the procedure is typically automatic. The rank or strength of a patent can be ascertained by the analysis of these characteristics.

An illustration of objective analysis

To distinguish between supplementary and core patents, a cloud service provider's patents may be labelled in accordance with the tagging parameters. In this case, technological tags can assist in achieving the required effects. As a result, after the patent pruning process is complete, networking and content delivery patents (i.e., those connected to the cloud network or cloud category) will be kept because they are crucial to the operation of the company.

Though it might produce accurate answers, objective analysis isn't always the best choice. For licencing, investment, merger & acquisition (M&A), and other purposes, for instance, one can try to evaluate the calibre of a company's patent portfolio. In certain situations, a subjective analysis might be used to produce more useful conclusions than an objective one. Continue reading to learn more about this type.

Personal Evaluation of a Patent Portfolio

Subjective analysis is frequently performed by an experienced searcher because it is fully manual and goal-oriented. It is mostly used to determine which non-core patents can be renewed for licence or sale and which ones can be deleted. Subject matter experts carry out the search in accordance with the objectives of the customer and assess the patents according to the following criteria:

Relevance of the portfolio to the product line: It is critical to evaluate how pertinent the IP portfolio is to one's line of business when the goal of the analysis is to ascertain the profitability of purchasing the portfolio. This may be used to determine whether the transaction should proceed. The patents in the portfolio may have a large market and a good chance of infringement, but if they don't help the potential buyer with a technical issue, they may not be worth much.

Technology Stage Currently Covered by a Patent: One important factor that could impact the invention's value is the lifecycle of the technology covered by the relevant patent. Due to the limited number of participants experimenting in the market, patents filed during the development stage of a technology sometimes have a high value. Furthermore, patents granted in this stage typically act as the technological pillars.

Patent portfolio's litigation risk Prosecution and maintenance are the two phases that make up a patent's lifespan. Only a small number of patents are known to solicit litigation during the maintenance phase. However, due to their potential to bring in money for the owner, patents that could result in litigation are highly sought for.

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