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Tynax ~ Patent Library

Strategy Consulting ~ I.P. Strategic Advisory

Tynax offers consulting services to help clients maximize their return on patent investments.

Setting Strategic Objectives

An effective strategy starts with a good understanding of what the organization is hoping to achieve with its patent portfolio. For some the objective is freedom to operate, for others the objective is to generate profitable licensing revenues. An effective strategy starts with clearly formulating the goals. Tynax helps clients to think through the issues and articulate the objectives.

Examples of strategic objectives:

  • Deter infringement suits from competitors—operating companies will be deterred from bringing suit if your portfolio contains a number of patents that could be used in counter-assertion.
  • Minimize royalties to standards bodies—holding a pile of standards-essential patents is arguably the best way of slashing the fees you’re required to pay to standards bodies.
  • Minimize royalties to NPE’s—non-practicing entities don’t care if you have a large portfolio, or no patents at all. However, many NPE’s are open to collaborative partnerships and a strategy of engagement can be an effective method of minimizing NPE royalties.
  • Generate profitable licensing revenues—license revenues can be highly profitable, but generally require substantial investment.
  • Generate profitable patent sale revenues—selling patents with a license back can be a profitable activity for many companies.
  • Build solid defenses for infringement suits—this can involve acquiring patents for counter-assertion, engaging effective defensive litigation attorneys and preventing patent holders being able to gather evidence of use from your product documentation.
  • Deter competition—this can be a realistic objective for companies marketing products comprised of a single patented invention, or a very small number. It’s not very realistic for manufacturers of patent-packed products like automobiles, software, smartphones, PC’s, TV’s or virtually any other form of electronic device.
You may have noticed that “Demonstrate technical prowess through large number of patent grants” is not on this list of potential objectives. The reason is that only the naïve are impressed by large patent portfolios today. Serious players in the I.P. business are fully aware that patents are weapons of litigation, and not trophies for technical achievement. A portfolio containing thousands of patents is worth very little if none of the patents are of litigation quality.

The objectives of every organization are different. When helping you to formulate a patent strategy, Tynax can help you define and articulate your strategic objectives.

Patenting Strategy

Two of the most important decisions an organization has to make when dealing in intellectual property is deciding when to make the move to file patent, and deciding what type of patent to file.

Anyone who's ever played chess knows that one queen is very much more valuable than a number of pawns. When it comes to intellectual property, pawn patents are not much use at all, so spending money creating a set of pawns might not be the best strategy available.

Building Patents for Assertion (or Counter-Assertion)

As the only practical use of a patent (except file a child application) is to sue an infringer in court, it's important to create patents that have a chance of becoming infringed and build them to withstand the rigors of litigation.

Mark Lemley from Stanford and Mark Shapiro at Berkeley report that "Nearly 200,000 patents are issued every year and after a very limited examination process. Most issued patents turn out to have little or no commercial significance, which is one reason that only 1.5 percent of patents are ever litigated and only 0.1 percent of patents are ever litigated to trial" (Lemley, Mark A., and Carl Shapiro. “Probabilistic Patents”. The Journal of Economic Perspectives 19.2 (2005): 75–98.) Acting as a broker, negotiating patent sale transactions, it's our perspective that these numbers truly reflect the reality in the patent industry. 1.5 percent of patents are infringed and asserted and only one in a thousand patents is actually used in a trial. It's our experience that buyers are only really interested in the patents that can be used in trial, and have a chance of winning in trial, and this is a number somewhere between 0.1 percent and 1.5 percent. The other way of looking at this is to estimate that around 99% of patents are not suitable for litigation. This is partly because the patents were never built with litigation in mind, so they were never built to litigation quality.

Building a patent of litigation quality involves:

  • Building patents for a favorable Markman hearing—this can involve filing essentially the same claim many times using different words and forms of language. If the patent is going to be successful in litigation, it has to come through the Markman hearing in good shape, and your chances of this are much enhanced when you take care over phrasing the claims, and filing numerous claims using various choices of words. Patents designed for litigation often have hundreds of claims.
  • Bulding patents to withstand the Inter-Parte Review process—this means taking more time to file patents that are more thoroughly researched and word claims that are more likely to be validated by a panel of experts.
  • Filing applications with infringement in mind—this involves spending time to prepare a detailed specification in the application. Then, over time, as the market develops, continuations can be filed from the original specifications that are aligned with the direction of the market.

Just Because an Invention CAN be Patented Doesn't Mean it SHOULD be Patented

If you reach the conclusion that poor quality patents cannot be used in litigation, they don't impress anyone, and they're practically worthless, it makes sense to focus your patenting efforts on building high-quality patent portfolios. This can mean retaining your prosecution budget for significant inventions that can be built into litigation-quality families.

If you're advised that your invention is sufficiently novel to be granted a patent, you might want to ask what type of patent could be obtainable. Unless the resulting patent has a good chance of being litigation-quality, you might want to save your budget.

Disclose Instead of Patenting?

Patenting an invention means you have a right to sue infringers in court, demanding reasonably royalties from past infringement and possibly demanding an injunction preventing future infringing sales. Clearly, for an important invention, one that's essential for your product, owning the patent gives you a weapon to use against your competitors. If the invention is not so essential to your product, you might want to consider disclosing the invention, through publishing it in a journal, online or in some other public medium. In this way, the invention becomes public domain and cannot be patented by your competitor. You will not incur the patenting costs, and as the invention is public domain, you wil not be restricted from using the invention in your products.

The downside from disclosing instead of patenting is that you cannot sue your competitors from infringing, but if the invention is not essential to the product, you likely won't want to sue your competitors with it anyway.

Cost-Reduction Strategy

In a market where the only practical use of a patent is as a weapon of litigation and 98.5% of patents are never litigated (per Lemley and Shapiro above), there's clearly a huge waste of investment taking place, mostly building and maintaining patents that prove to be practically worthless.

Saving money on prosecution costs, especially per-patent prosecution costs, is not always a smart move—when it results in weaker patents, as it almost always does, squeezing the per-patent prosecution costs results in a portfolio of patents that are unusable and unsellable at any price. A small number of litigation-quality patents is much more useful than large number of patents that were never designed to withstand the rigors of litigation. If your organization has a set budget for patenting, the smart move might be to use the budget to prosecute a small number of extremely well-built patents instead of filing a large number of patents that are not built for litigation and turn out to be worthless.

An effective method of reducing costs might involve asking the following questions:

  • Are we filing patents that could never be used in litigation? Investing in such prosecution could be a huge and unnecessary waste of funds.
  • Are we maintaining patents that could never be used in litigation? Here's another cost that can often be eliminated.

Revenue-Generation Strategy

Patents, Cloaks & Daggers Book Patents are monetized when they're licensed or sold. Patent licensing usually requires litigation, or a credible threat of litigation and buyers are usually only interested in acquiring patents that they can use in licensing programs or in counter-claims or other forms of counter-assertion. The point is that the only patents that can be licensed or sold are the patents that are of litigation quality, ideally with strong evidence of use in the marketplace.

Patent sale transactions are usually relatively risk-free, but more profits can often be made from licensing. The problem is that licensing is not exactly risk-free. Licensees are not always friendly or welcoming to license discussions. Licensing can result in cross litigation, as we have seen in the patent wars. So licensing directly carries risks.

The revenue-generation strategy for an organization involves identifying patents in the portfolio that are litigation-quality, hence candidates for licensing or patent sale. Then deciding on a licensing and/or patent sale strategy.

Selling patents involves researching evidence of use, preparing claims charts and other sales materials, then running a sales process targeted at the best candidate buyers. This is a process Tynax has perfected for more than a decade now.

Tynax has also helped many patent holders to run licensing programs, mostly by teaming them up with licensing specialists.

With extensive experience of patent sale and licensing, Tynax is well placed to help you define your patent revenue-generation strategy.

Partnering Strategy

When it comes to partnerships and alliances, the patent wars are no different from other forms of warfare. Advantage can often be gained through forming partnerships and alliances. As a neutral intermediary, Tynax is able to broker partnerships and strategic alliances with various players in the patent industry.

Partnering with Patent Prosecutors

Patent prosecutors are not all created equal. Some patent attorneys are skilled at creating litigation-quality patents, while others specialize in producing large volumes of weaker patents, at highly competitive costs. Companies usually engage patent prosecution attorneys on an hourly-rate basis, or a fixed price-per-patent. Unfortunately, these arrangements sometimes result in weak patents that prove to be somewhat inadequate for litigation. Tynax brokers creative arrangements designed to deliver high-quality patents. For example, Tynax brokered an alliance between a large operating company and a specialist patent prosecution firm whereby the operating company acquired an option to purchase patents from the prosecutor, at a pre-agreed price, when the patents are developed and shown to meet certain criteria.

If you’re looking for patents that read on your competitors, or patents meeting certain criteria, there’s a good chance that these quality patents could be built by specialist patent-prosecution teams under a creative form of strategic alliance.

Partnering with Patent Litigators

Tynax often connects patent holders with litigators under revenue-sharing arragements that align the interests of all the parties. Asserting patents and extracting royalties usually requires litigation, or a credible threat of litigation and this involves engaging respected patent litigators.

Litigators are specialists, each firm focusing on certain types of cases. Tynax has experience of matching patent holders with litigators and the pairings have resulted in profitable results for several clients.

Partnering with Non-Practicing Entities

Operating companies don't always think of non-practicing entities ("NPE's") as potential partners, but many NPE's are open to collaboration and alliances have proved to be profitable and successful for many operating companies.

For an operating company, partnering with an NPE can strengthen the company's position in the market, deter litigation from competitors, build the expertise of the team and can result in profitable license revenues.

As a neutral party that is well connected with NPE's and other players, Tynax is able to broker win-win partnerships between NPE's, operating companies and various types of patent holders.

Partnering with Competitors

Operating companies that are competing in the marketplace often collaborate when it comes to patents and intellectual property. Cross-licensing arrangements are common and can result in benefits for both parties.

As an independent third party, Tynax is able to broker cross-licenses and other forms of collaboration between companies that might be considered competitors.

Joining Defensive Patent Pools

Defensive patent pools offer benefits for their members, and the arguments in favor of joining such an organization can be compelling. Tynax has relationships with many of the leading patent pooling organizations and is able to help clients negotiate membership arrangements.

Joining Standards Bodies

In business sectors comprising complex, sophisticated technologies, it's practically impossible to sell a product without infringing patents held by someone else. Standards bodies are commonplace in business sectors involving patent-packed products such as telecommunications, electronics, video, audio and software. Tynax is able to open discussions with standards bodies and orchestrate membership for clients.