Value Statements as Key Enablers of Successful Patent Portfolio Management

Intellectual property (IP) valuation, particularly in respect of patents, can appear a daunting undertaking, especially for entities with minimal resources. Many companies have never formally valued their IP and, as a result, have little understanding of the strengths and weaknesses of their patent portfolios.

Whilst sophisticated processes are available to assist in portfolio valuation, many of these may be beyond the limited resources of smaller entities. However, it is possible, with minimal financial outlay, to employ rational methods that can better position a patent portfolio within an overall strategic business plan.

The use of value statements can be a simple yet effective first step in patent portfolio valuation. This approach can create synergies between technical, legal and business functions and underpin a company’s operating goals. The approach is also highly relevant to start up companies embarking on their first venture into the world of patents.

What is a patent value statement?

A patent value statement is a document containing the necessary detail to support business use of the patent and to enable a company to make informed decisions around the fate of the patent. It is not a statement of technical merit, although it may well have a strong technical content. Many technical innovations, whilst perhaps of scientific value in their own right, may have little real commercial value.

The amount of detail required in a value statement should be sufficient to convey the clear reason(s), depending on where the patent is in its lifetime, for pursuing filing, continued prosecution or maintenance. Cornerstone patents that support key technologies may need only a brief synopsis. However, most patents will require significantly more.

A simple first step in assembling a value statement is to document the key areas in which the patent finds or may find business use. Such areas could be for example:

  • protecting margins of products or services
  • blocking competitors from present or future desirable markets
  • bargaining chips in patent assertion events
  • enabling possible licensing agreements
  • enabling joint development and venture agreements
  • enhancing value perception to potential investors.

Value statements are based on the simple premise that it should be possible to clearly articulate the reasons for filing, prosecuting and maintaining a patent; otherwise critical questions should be asked about why a particular innovation is being considered for patent filing or ongoing protection.

Why should you have them?

A patent value statement articulates the reasons that underpin the use of the patent by the business. All parties involved are thereby reminded of why the patent was filed in the first place and why it is being maintained – very useful in business where personnel change jobs frequently. For example, the inventor and/or patent attorney that were involved in filing and prosecuting a patent five years ago may have moved on to new positions; they may even have left the company. Documented value statements can bridge this knowledge gap.

Additionally, business focus and/or technology relevance may shift. What was viewed as groundbreaking technology five years ago may now be superseded, and patents of dubious value may be maintained without critical analysis, thus incurring additional costs to a business. Well developed value statements can assist in strategic pruning of a portfolio and management of costs.

Value statements can also assist start up companies to articulate the worth of their innovations and patents to potential investors, who may not be technically or legally savvy. A well written value statement can inspire confidence in investors that the company understands its IP and can position that IP within an overall business strategy.

When should they be written?

Ideally, a value statement should be written when first contemplating filing. It can greatly assist in defining the business and commercial drivers that ought to underpin any patent filing. Some patents are filed speculatively and it can be reasonably argued that, in the early stages of prosecution, a solid business use may not yet be defined. In these cases, value statements can be delayed until significant financial resources must be committed to the patent.

If patent protection is being sought in different countries, separate value statements that address local issues, perhaps in respect of competitor activity or enforcement, should be developed for each jurisdiction.

When should they be reviewed?

Value statements should be reviewed at every major spend decision during filing and prosecution until the patent is granted. Once a patent is in force, value statements should be reviewed annually to critically assess continued relevance. If key business or commercial events occur or a key competitor event occurs, then the value statement should be reviewed.

A patent value statement is not a static document that is written when the patent is filed and then locked away in a drawer but, instead, it should be viewed as a dynamic document that can and should change with respect to both internal and external pressures.

Who should write them?

Value statements should be written, assessed and approved by a team ideally comprising a technical leader, a business leader and a patent attorney. None of these functions alone has sufficient expertise or the breadth of knowledge to fully assess value. Value statements developed in this way can become co-owned by the team. Such co-ownership can assist in effectively addressing tensions that can arise if questions around the value of a patent, that may have consumed significant resource, are raised.

Patent abandonment decisions are often difficult for individuals to make in isolation, sometimes resulting in overly conservative decisions. An informed team decision can effectively address this issue and result in substantial cost savings in the long term.

Business use

Business use of a patent issued in respect of the technology appears broad and includes the following key areas:

  • competitive advantage in plastic pipe formulations – block competitors from entering market for thinner wall plastic pipes
  • license technology to large plastic manufacturer
  • joint development with large plastic manufacturer
  • enhance investment attractiveness.
  • Depending on resources, enter the national phase widely.
  • Rapidly understand if technology works on scale–up.
Key risks

The following key risks have been identified and will be the subject of ongoing patent value assessment. One or more of these risks may significantly alter future perception of the value of this patent:

  • proof of technology at large scale
  • ability to meet regulatory requirements
  • ongoing competitor activities.