“During my 30 years at IBM, and now working as an Patent Broker, it has been my observation that Less than 1% of patents in a typical portfolio represent seminal patents. The next cluster at the top of the list are “core” patents (20%) that are central to the company’s business.
In the middle of the list, (45%) are patents that could possibly be better monetized. Some of them may be infringed and should be enforced. Others may be useful in a non-competing industry through a licensing program or patent sale, where a grant back license (is a license under which a party grants another the right to use a patent under the condition that the licensee agrees to grant the licensor a license with respect to any improvements to that patent made by the licensee.) ensures the licensee can continue to practice the patent if required.
At the bottom of the patent portfolio list (the non-core, minor improvements on existing patents, and unutilized group) are patents that the company will probably drop when the maintenance fees are due. (If patents are not worth monetizing through licensing or selling, then monetizing them through saving money on their maintenance fee is about as good as it gets.)
Do’s and don’ts of patent monetization
If you are contemplating a monetization strategy, you might need to bring in a patent broker to help value and market some of your patents. Here are some do’s and don’ts that are helpful to remember:
- Don’t automatically drop seemingly worthless patents at annual maintenance fee time. It costs nothing to have a patent broker take a look at them.
- Put a process in place to evaluate your patents, if you do not have such a process already. For those patents that are next on the drop list, perform that evaluation a year before their maintenance fee is due. If a patent looks likely to be dropped, give it to a broker while there is still a full year left to explore means of monetization.
- Bring in a patent broker to help with the evaluation process, as well as the selling or buying patents. A broker can give an unbiased, first-pass valuation and report of market potential. Once you have identified which patents are to be sold, the patent broker will provide an active campaign utilizing their connections throughout industry and the IP community, as well as other entities that frequently buy patents such as patent aggregators, to make the right match between seller and buyer.
- Be open to changing your initial plans. For example, perhaps you only meant to sell one patent, but the broker finds that more than one patent should be sold — or that more than one weak (for your purposes, anyway) patent should be offered together to make a stronger offering. A patent broker’s evaluation can actually help you in terms of your overall strategy for your patent portfolio — whether that strategy is protective, defensive or offensive — and can also implement a licensing program or provide support for an existing one.