Imagine That IP Law Blog

A company may spend millions of dollars prosecuting and maintaining a patent portfolio designed around products, markets, and competitive threats identified five or ten years ago. The portfolio may contain excellent patents. The harder question is whether they are the patents the company would choose to own today.

Businesses change faster than patent portfolios. Products evolve, R&D priorities shift, companies enter new markets and make acquisitions, and new competitors emerge. Patents, by contrast, can remain in force for decades. Even a well-managed portfolio can therefore become disconnected from the business it was intended to protect.

For in-house counsel, that makes one question worth asking periodically: Do the patents we have protect the business we are building today?

Answering that question is not simply an exercise in pruning old patents or identifying places to file more applications. It is an exercise in capital allocation: deciding where patent investment can create competitive leverage, where existing assets continue to serve a strategic purpose, and where the company may be spending money based primarily on decisions made years ago. A useful portfolio review starts with the business, not the patent docket.

Start With Business Strategy, Not the Patent List
Patent portfolio reviews can easily become administrative exercises focused on patent counts, maintenance fees, pending foreign applications, and continuation decisions. Those questions matter, but they should come later. The starting point should be the company’s business strategy:

• What products and services generate the most value today?
• Which technologies differentiate those products from competing offerings?
• Where does management expect growth over the next three to five years?
• Which technical capabilities would be most damaging if competitors replicated them?
• Which competitors present the most significant threats?
• Where is the company investing its R&D budget?

These questions create the framework to evaluate the portfolio. A portfolio can be technically strong without being strategically well aligned. A company may own hundreds of patents directed to technologies that were once central to the business while having comparatively little protection around the platforms now driving growth. That does not mean the earlier patent decisions were wrong, the business may simply have changed. The review should determine whether the portfolio changed with it.

Test Whether the Portfolio Creates Competitive Leverage
One of the most useful questions in a portfolio review is also one of the simplest: If a competitor copied the features that make our product successful, which patents would we rely on?

Consider a medical device company whose historical portfolio is concentrated on sensors, mechanical components, and internal device architecture. Suppose its newer products increasingly differentiate themselves through wireless connectivity, remote monitoring, data analysis, and automated clinical alerts. If those capabilities are driving customer adoption while the portfolio remains concentrated on the physical device, the company may have a protection gap even though it owns a substantial number of patents.

The issue is not necessarily that the company needs more patents. It may need patents in different places. That can mean improving invention capture, engaging more closely with teams working on strategically important platforms, pursuing applications around newly important technologies, or reassessing claim strategy in pending families.

There is also a difference between product coverage and competitive coverage. A portfolio can map neatly onto the company's own products and still provide limited leverage if competitors solve the same commercial problem differently. The review should therefore ask not only which patents cover the company's product, but which claims could matter if competitors pursue alternative implementations of the capabilities that create the product's competitive advantage.

Use the Pending Portfolio to Protect the Roadmap
Issued patents largely reflect decisions made in the past. Pending applications provide something different: optionality. They deserve particular attention in a strategic portfolio review.

A prosecution docket can be treated as a collection of deadlines, but pending applications also provide an opportunity to reassess claim strategy as the business and competitive landscape evolve. A technology that appeared peripheral when an application was prepared may become commercially significant. A competitor may adopt an implementation that was not viewed as important when the application was filed. A new product may combine existing technologies in ways that make different claim scope strategically useful. Where the disclosure and applicable law permit, pending applications and continuation practice may provide a way to respond.

The same principle applies after acquisitions. Acquired patents were developed under another company's strategy, roadmap, and competitive environment. Once the business has been integrated, the combined portfolio should be reviewed again. Important integration points may need protection, overlapping families may create unnecessary expense, and acquired applications may need to be prosecuted differently to reflect the buyer's strategy.

Revisit Geographic Strategy
Foreign filing strategies can also become outdated. A company may have established its international filing practices when its revenue, manufacturing footprint, and principal competitors were concentrated in a different set of jurisdictions. New customer markets emerge, manufacturing moves, supply chains change, and distributed technologies can place relevant activity in several countries.

A geographic review should go beyond asking where the company sells products. Relevant considerations include where important competitors operate or manufacture, where potentially infringing activity is likely to occur, where meaningful remedies are available, where manufacturing or supply-chain leverage exists, and whether the commercial importance of a jurisdiction justifies the cost of obtaining and maintaining rights there.

The result may be additional investment in some countries and less in others. The right geographic portfolio today may be materially different from the right portfolio five or ten years ago.

Treat Patent Spend as Capital Allocation
A strategic portfolio review should not automatically produce more filing. One of its most valuable outcomes may be identifying where the company can stop spending money.

Patent portfolios consume capital continuously through prosecution expenses, foreign associate fees, annuities, maintenance fees, inventor and engineering time, and internal administrative resources. The relevant question is not whether an individual patent has some conceivable value. It is whether continuing to invest in that asset is the best use of the company's next patent dollar.

For a given technology, in-house counsel may choose to continue prosecuting an existing family, file a continuation, expand foreign coverage, maintain an issued patent, protect a new generation of technology, investigate competitor activity, acquire third-party rights, or make no additional patent investment at all.

Some families may justify additional investment because they protect important products, anticipated growth areas, or meaningful competitive positions. Others may warrant ordinary maintenance but little additional prosecution. Some may have become sufficiently disconnected from the business that future fees are difficult to justify. A smaller portfolio concentrated around strategically important technologies can be more valuable than a larger portfolio accumulated without a clear connection to current objectives.

Do Not Confuse “Non-Core" With "Worthless”
Reducing investment in an asset does not mean the asset lacks value. A patent can stop being central to the operating business while remaining strategically important. Older claims may read on newer competitive products, patents acquired for defensive purposes may retain cross-licensing value, and other assets may have potential through licensing, sale, partnerships, or transactions.

A portfolio review should therefore distinguish among assets that protect current products, support anticipated growth, create competitive or defensive leverage, provide strategic optionality, may have licensing or transaction value, and no longer justify continued investment. Before assets are abandoned or monetized, counsel should also consider existing licenses, cross-license relationships, defensive positioning, transaction strategy, and who might acquire sold patents.

“Non-core” is a business classification, not a valuation conclusion.

The Portfolio You Would Choose Today
A useful way to test portfolio alignment is to imagine the company did not already own its existing patents. Knowing what you know today about the company's products, technology roadmap, competitors, markets, and budget, where would you invest? Which technologies and countries would receive the greatest attention? Which pending applications would you preserve for strategic flexibility? Which older assets would still be worth maintaining? Where would you spend less?

The existing portfolio will never perfectly match those answers, nor should it. Patents are long-lived assets, and business strategy will continue to change. But a significant gap between the portfolio the company owns and the portfolio it would choose today is worth understanding.

The question for in-house counsel is not whether every patent can be tied to a current product. It is whether the portfolio as a whole reflects deliberate decisions about where the company needs exclusivity, competitive leverage, strategic optionality, and continued investment. If those decisions have not been revisited as the business has changed, the company may be managing yesterday's risks with today's patent budget.

Patent portfolio management is therefore more than the administration of intellectual property assets. It is an exercise in capital allocation. The objective is not to own more patents. It is to make sure the patents the company owns, and continues to invest in, are the ones the business actually needs.