Community Forum – Holding on to Intellectual Property

How do you determine how long to hold on to IP? 

I am interested in learning how organizations determine when to keep intellectual property and when to give it up. What are the filters or questions you ask prior to making a keep / abandon decision on individual countries or on entire patent families? – Dan Hoffman, Air Products and Chemicals

Community Responses

Response 1

Note that the biggest portion of the total lifetime cost of patents is actually in the up-front decisions of where to file as opposed to the maintenance fees. We therefore focus heavily on managing the initial costs. Specifically, we have set up a review board within each BU where we review proposals by inventors for patent filings. Many ideas don’t get filed because the lifetime cost of protection exceeds the likely benefit or because they are unlikely to be detectable, etc. For those that pass the initial hurdle, we generally file the ideas in the country the lead inventor resides in. Ten months later we decide which other countries to file in. When the future value or patentability isn’t clear, we often file PCT applications. This buys us more time to determine which countries to file in, provides more insight in the strength of claims allowed over prior art and ultimately increases the ratio of applications that actually create value. Once issued, we generally review patents every few years and rate their value. In general, we renew all the patents we practice, assuming they have reasonable blocking or licensing potential (i.e. worthwhile claims). For those that we don’t currently practice but we may in the future, we generally keep the US patent and at least one country in Europe and at least one country in Asia (generally China). For those that we don’t practice, are unlikely to practice in the future, and doubt others will practice in the future, we drop all foreign coverage. Since US maintenance fees are due at 3.5, 7.5, and 11.5 years after issuance, we decide whether to also drop the US patent just before the fees are due or not. Note that our bias towards keeping US coverage is based on the great value attained from US patents (i.e. broad market and relatively low maintenance fees) as opposed to being “US centric” in our thinking.

There have been times when we dropped a patent that we wish we would have kept, but the savings in maintenance fees have exceeded the price of the lost coverage. Another point is to ensure that the reviewers involved in the pruning process are thoroughly familiar with the technology, the business value, and review the actual granted claims (vs just the pictures) in assessing the degree of protection provided. That may seem obvious but the individuals with the necessary broad understanding generally have higher demands on their time. Having individuals that have a thorough understanding of your portfolio and ensuring that understanding remains fresh is also very valuable in quickly assessing IP matters when they arise.

– Luc Adriaenssens, SVP of Technology, CommScope (a leading telecom infrastructure provider)

Response 2

At a previous employer we created an Intellectual Property Management Team having cross-functional representation, including representation from all Sales Territories, Technology, Legal and Operations.  The Sales representation also had a marketing and strategic business outlook perspective to it to bring both short and long-term perspectives into the decision-making process.  The Director of Technology was tasked to oversee the patent portfolio and used a combination of reactive and pro-active portfolio management techniques to manage the IP portfolio, relying on input from the various stakeholders already mentioned.

Reactive trigger – the key prompt was when a patent came up for renewal.  The relevant key stakeholders in the IP were then contacted to determine the business relevance and criticality of the IP in question to existing and future business.  Based on the input, decisions were made where to hold and where to fold.

Pro-active trigger – kept tabs on new IP or changes in business activities that obsolesces the technology offering in question.  This could be internal or external derived IP, changes in legislation, regulation or simply consumer behavioral changes that renders the IP in question irrelevant.  Again input to trigger this came from many different sources – some from IP activity tracking, market research, sales and customer feedback etc.  The information was evaluated, consulted with key stakeholders and gate-keepers on business and technology drivers and then formulated a  recommendation and presented it to the IP Management team on which IP may have become obsolete and whether we should consider walking away from it.  The Director of R&D also was tasked to identify business critical technology areas and to devise strategies to develop IP and thus protect the organization’s business interest in these critical areas.

Lastly – during all of these reviews, the critical question to ask is what is the organization’s intent with a particular piece of IP or a family of IP.  Unless you are actively planning to utilize the technology and you want to exclude others from competing with you for the remainder of the patent’s useful life – consider licensing the technology, thus getting value from it and if you believe that there is little chance of extracting value from a use license then you should probably consider just abandoning it.

– Johann Venter, Vice President, Director of Technology, AMVAC

Response 3

The decision to abandon or maintain a patent is seldom easy or without risk.  We usually consider a variety of factors to make the most informed decision and to mitigate the risk.  Some of the questions we ask include:

• Is the technology currently being practiced?   If so, does the value gained by the exclusive practice of the technology exceed the costs associated with maintaining the patent?
• What is the likelihood that a competitor could easily reproduce the technology?  Are we uniquely positioned to practice the technology because of our assets, level of integration, unique expertise, market connect, etc.?
• Is it easy to detect infringement?  If infringement is difficult to detect, the value of the patent may be diminished significantly.
• Would maintaining a patent in just one of the world’s major economies (i.e. the US, EP, or Japan) be sufficient to deter a competitor from practicing the technology elsewhere?   How easily could a competitor restrict the practice of the technology to a particular region or country? 
• How often is the patent cited as prior art?  This may be an indication of the relative importance of the patent to possible competitors. 
• If the patent is not currently being practiced, how important is it to prevent a competitor from practicing?
• How broad are the claims?  How easily can the technology be overcome?
• Does the practice of the technology depend on other enabling or dominating patents?  For example, is an application patent dominated by a composition of matter patent, making the application patent redundant?
• Can the patent be licensed or sold?
• Is the patented technology obsolete?

This list of questions is not meant to be exhaustive.  However, it does illustrate the complexity of the decision-making process.  Finally, the answers to these questions are not always clear cut, and in the end, an element of risk will always be associated with the decision to abandon a patent. 

-Eric J. Moskala, PhD, Technology Manager, Eastman Chemical Company

Response 4

We have IP review teams for each global category. Members represent each of the regions in that category and part of their responsibility is to get together on a regular basis and make filing and maintenance decisions. That way, various interests are represented. The key questions the teams ask themselves are: 1) Is the technology currently being used in a commercial product or will it be used in that country?; 2) Is the technology being used strategically to block others?; 3) Is it aligned with the overall business strategy and where the business is heading?; 4) Is it enforceable?; and 5) Would they accept an option to license to a third party?

– Nanako Mura, Kraft

Response 5

We have a document control system under corporate guidelines.  Generally, I/P documents are retained indefinitely with the exception of selling a product line, in which the I/P associated with it must be transferred.  From a practical perspective, if the product line associated with the I/P is discontinued for business reasons, then we would tend to hold onto it for a specified time, say 35 years, and then discard it.  There are a number of legal intricacies that need to be considered when creating a document control system such that it integrates the needs of technology as well as the commercial needs of the business long term.

– John Rovison, FMC Corp.

Response 6

Recent practices on the business use of IP was summarized in RTM, May-June 2010, Volume 53, Number 3, p. 10, “Integrating IP strategy with Innovation Strategy”, and in a sister article that provided more detail on very specific quantities and timing (e.g. timeframe to hold IP, times available to do follow up patent fencing, and number of patents) published in IAM (Intellectual Asset Magazine, Jan-Feb 2010, Issue 39, p. 63, “All in the Game”). 

– Paul Germeraad, IRI Emeritus

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