Our Experience: Common Problems for Patent Review Boards and Our Processes for Solving Them
Especially at young, fast-growing companies, there are few employees under more pressure than members of the Patent Review Board, or PRB—also known as a Patent Review Committee. Generally composed of scientists and engineers who’ve done time in the trenches of R&D, the PRB acts as a vital go-between higher-ups and engineers and scientists, translating executive direction into IP strategy. Among other things, PRBs encourage productivity in R&D labs, make decisions about what patents to pursue, interface with IP counsel to see those patents to fruition, and handle various aspects of patent monetization. Perhaps most importantly, PRBs are responsible for making sure that a company’s investment in R&D results not only in dynamic new technology, but in patents to protect that technology, which can be used as a valuable source of revenue.
Put another way, PRBs are expected to ensure that their companies’ R&D budgets, often many millions of dollars’ worth, don’t go to waste—understandably a top priority for upper management. The trouble is that most companies don’t have institutional processes for developing and filing patents—the mechanisms that allow R&D departments to be most fruitful and profitable. As a result, PRBs often find themselves ill-equipped to deliver the kinds of results (high volumes of valuable patents) that are demanded of them. To make matters worse, they frequently have no good resources within their companies to draw on for help.
PRBs often come to us for assistance, especially with getting their R&D departments to produce more patents. And by the time they get to that stage, they’ve generally tried a couple of strategies on their own, including awareness campaigns and cash incentives. But approaches like these virtually never work. We’ll explain why in detail below, but the basic problem is that such tactics are ineffective at creating and reinforcing an R&D culture of viable patent development.
The good news is that there’s another way. And in this article, we’ll describe the process we’ve used to help many PRBs kickstart the patent filings coming out of their R&D departments—and keep them coming thereafter. Specifically, we’ll explain:
- How a patent landscape analysis—a detailed overview of all current and pending patents in a given sector or geographical region—can help PRBs identify the areas of innovation that their R&D departments should focus on to maximize productivity and profitability.
- How subsequent landscape analyses can foster a self-sustaining culture of patent development and filing.
- How and why PRBs should think about complementing IP developed in house with patents purchased in the marketplace.
- How to determine the right number of annual patent filings for an R&D department.
The strategies we’ll go over can be put to work by most any patent review board.
Note: If you want to learn more about how GreyB can assist you and your PRB with IP strategy, you can contact us here.
Why PRBs Struggle to Create a Culture of Patent Filing in R&D Departments
Especially when a company is relatively new but has quickly become very large (think Uber), or when a company has been around for longer but suddenly finds the need to quickly ramp up the strength of their IP holdings (Walmart comes to mind), the resident PRB often finds itself under extreme pressure to vastly increase the company’s patents. As we noted above, sometimes this is simply a matter of increasing ROI for R&D. Other times—as in the case of Uber—it’s more a function of preparing for potential patent infringement lawsuits and/or demands for IP licensing fees that executives see in the offing, and which can easily cost millions and millions of dollars. Still others, companies want to enter one or more new areas of business that require a more robust portfolio of intellectual property.
Whatever the reason, the mandate from corporate leadership is to increase the number of patents being filed as a result of the R&D department’s labors. While this sounds straightforward enough, if the PRB is part of a company without a well-honed system for developing and filing patents, chances are that patents and patenting are largely foreign from the culture of the R&D department.
The engineers and scientists that work there tend to be concerned with ideas and inventions as such, not with patenting them. This despite the fact that, as we’ve already mentioned, when PRBs approach us, they’ve generally already tried a number of tactics to get their R&D managers to send them ideas for patents without success.
It frequently proceeds as follows.
PRBs Try Awareness
First, the PRB tries to build awareness, holding a workshop or a seminar—or even a series of them—to encourage the R&D department to keep patents top-of-mind. Now that they’re aware, the theory goes, as they perform their work, they’ll naturally shepherd suitable ideas to the PRB for consideration. Invariably, this fails; awareness campaigns aren’t enough to imbue the life-of-mind culture that dominates research facilities with a more fiscally-focused sensibility. And this remains the case even after PRB members have sat in with R&D teams during working hours, attempting to coach them in real time—which they often try.
PRBs Try Rewards
The next step is often to offer a reward for every idea submitted for which the company ultimately obtains a patent—$5,000 a pop, say, or even $10,000. This fails, too, frequently resulting in the submission of some zany ideas—a car periscope, stadium seats that eject their occupants in the event of a terrorist attack—but nothing viably patentable.
But the silly notions that often arise during this last stage of the PRB’s journey do sometimes yield a useful lesson: No matter how intelligent, well-educated, and experienced the members of an R&D department, the process of generating ideas that are likely to be commercially viable once patented is not intuitive. Conjuring great inventions from thin air is very difficult, even for extremely talented scientists.
What we tell PRBs at this stage is that until they implement a strategic process for generating IP—some context for their R&D teams to work within and expand upon—they will continue to struggle. And we believe that the best place to start is with a patent landscape analysis.
How Patent Landscape Analysis Can Provide the Engine PRBs Need to Kickstart Patent Filings—and Keep Them Coming
We have written previously about our process for conducting a patent landscape analysis, and if you’re interested, you can read about the subject in great detail here. But for the purposes of this article, what’s important to understand is that a well-done patent landscape analysis is based on a powerful digital search. Our analysts comb myriad, hard-to-navigate databases to come up with results that are broad in scope, fine-grained in detail, and devoid of noise—the red herrings and irrelevancies that can make meaningful data hard to interpret. From these results they create a landscape of the status of IP in a given sector or area at the time of the analysis—allowing executives, PRBs, or whoever happens to be looking at it to see innovative trends, competitors’ latest moves, where they stand in comparison, and (often with our guidance) what their next steps might be.
For PRBs struggling to get their R&D departments into a productive rhythm, a patent landscape analysis can be invaluable, too. By looking at an industry-wide landscape analysis, for example, a young rising company in the ride-hailing space might see what areas of innovation Uber and Lyft are focusing on, learning both where the trends seem to be going and where the gaps are that might present fresh opportunities. In effect, for a stumped R&D department, a good patent landscape analysis acts as a source of inspiration, complete with definite, actionable data; it’s a skeleton on which to improvise and expand, and a means of highlighting possible paths forward.
Once this culture of patent-focused innovation has gained some traction, we recommend that companies institutionalize it by making it a focus of training for new hires and preserving the knowledge through internal portals and videos. In our experience, this approach is vastly more effective than the seminar-and-reward combination we described above, which tends to be haphazard and which has the effect of making patenting seem exterior to a company’s processes, rather than core to their success.
At least to start, we generally recommend that PRBs run a quarterly patent landscape analysis, reevaluating and strategizing with their R&D departments after each to create both short and long-term strategies for in-house IP development. Once a rhythm has been established, it tends to feed on itself, with one new patentable idea leading to whole families of others. The nature of these strategies, of course, depends on the company’s preference. Some prefer to build portfolios that have good potential for commercialization—that is, to be useful in collecting licensing fees and/or lawsuit settlements from other companies on the basis of infringement. Others opt for purely defensive tactics, building a portfolio that will come in handy if they get sued.
Developing IP in-house, however, is not the most practical way of approaching either of these strategies—more on this later—and many companies that would like to have more generative R&D departments mostly just want to create great new technologies. As we mentioned above, patent landscape analysis is a great tool for that, too. And this remains true even after an R&D department is up and running productively.
In one recent—and especially creative example—a large steel manufacturer asked us to run a patent landscape analysis on the plastic industry. As a result, they were able to see myriad innovations in that space having to do with the materiality of the product—plastics with textured surfaces, plastics that were very soft and malleable, plastics that resembled wood grain. Our patent landscape analysis provided their R&D department with years’ worth of inspiration, if not more, as they set to work trying to replicate some of the innovations in the world of plastics in the context of steel production.
We should note that PRBs sometimes balk at the idea of handing their R&D department a snapshot of what competitors in their industry are working on. They worry that, consciously or not, their researchers will simply begin copying what they see in our landscape analysis. We do not consider this very likely, but to wary PRBs, we suggest summarizing our landscape analysis for their R&D department, rather than handing over the full, detailed report. That way, their scientists and engineers can get a sense of things without the risk of their inadvertently copying specific technologies.
Why Companies Are Often Wary of Buying Patents—and Why They Should Reconsider
Up until now, we’ve been discussing how PRBs can kick-start patent generation at their R&D departments and keep them humming steadily along. It’s an essential part of most companies’ IP strategy, and we would never advise against devoting generous resources to R&D. But when PRBs approach us, they are often so focused on developing IP in-house that they neglect to consider other means of building a strong patent portfolio: purchasing patents from other companies, or buying other companies whole—and their IP holdings along with them. When properly deployed, buying patents makes a powerful complement to strong in-house R&D.
Again, it’s not surprising that PRBs, despite their collective experience, are unversed in the patent marketplace. It’s an area with few veterans and an even smaller number of experts. Buying patents effectively requires:
- A patent landscape analysis of the kind described above, to identify holders of patents in the buyer’s area of interest and
- An in-depth evaluation of the available patents’ likely value. (Some companies find themselves fielding lots of overtures from brokers with patent portfolios for sale, which might reduce the need for a landscape analysis, but an in-depth evaluation is always essential before buying patents.)
Determining a patent’s value is itself a complex task, which we’ve described in detail here. But if a PRB can accurately identify and purchase valuable sets of patents, the practice can often offer huge strategic advantages.
For one, buying patents is much faster than developing them via R&D, which can take many years. If a company needs to bolster their patent holdings quickly—if they’re preparing for an IPO, for example, and they need patents for the purpose of defending against potential infringement lawsuits—patent acquisition becomes an essential complement to IP developed in-house.
Buying patents, as opposed to filing new ones, also has the advantage of greater certainty. While filing patents for new technology can doubtlessly pay enormous dividends, there’s no guarantee that it will. It’s hard to say exactly what ideas will be valuable in the future, and companies with large R&D departments often end up with hundreds of unused patents in their portfolios, with no way of monetizing many of them. Indeed, a big firm can easily spend hundreds of thousands of dollars filing and maintaining patents that never become useful to them. Savvy patent acquisition avoids this problem. With the right expert guidance, companies can quickly target and purchase exactly the patents that fit their needs, preferences, and strategies—ensuring that the resources that they devote to buying patents are not wasted.
If a company is afraid of getting sued, for example, we will calibrate our analysis to identify patents to patch weak spots in their portfolio—patents covering technology that they use or are likely to use, and which could make them vulnerable to attack in the hands of another owner. Alternatively, if a company wants to pursue a patent strategy that will position them to monetize patents—through licensing fees and lawsuits of their own—we will find patents that overlap with tech that one or more large company is already using.
Particularly at relatively young companies, PRBs are often skittish about the latter approach, telling us that they’re interested in a “purely defensive” patent strategy: one designed to protect them from legal action. But in the world of IP, the best defense is frequently a good offense. By acquiring patents that other companies are already infringing upon—or which they are likely to infringe upon—a firm collects valuable ammunition. In the not unlikely event that one of those companies sues them on the basis of some other patent infringement instance in the future, the firm can countersue, or threaten to, often nullifying the action altogether. The prospect of an expensive, messy, protracted court battle, after all, is often enough to inspire a claimant to drop their suit.
When it comes to buying patents, PRBs often encounter strong resistance from upper level executives, who tend to be unenthusiastic about the associated costs. But in fact, purchasing patents is often cheaper than developing them in-house, and PRB members would do well to illustrate as much to higher-ups.
A portfolio containing 40 patents or so, for example, might come with a price tag of $5 million or more. Understandably, that figure can scare off executives unversed in the IP marketplace. But in addition to cutting associated R&D costs to zero, buying extant patents eliminates the legal expenses associated with the process of applying for and getting patents granted, which can run to $30,000 a piece. For 40 new patents, that’s $1.2 million in legal fees up front. And as we explained above, that investment comes with no guarantee of the patents’ ultimate value. Meanwhile, one patent, well-chosen for acquisition, can easily be licensed for $5 or $10 million a year.
For executives interested in quickly expanding their firm’s patent portfolio—and in using that portfolio to generate revenue—it’s difficult to argue with the math. And by helping PRBs identify patents that are both well priced and ripe for monetization, we are often able to assist them in convincing their skeptical bosses to fund patent acquisition.
How Many Patents Should PRBs Try to File Every Year?
We began this article with PRBs under pressure from top executives to generate more patents. And unsurprisingly, those same executives often want some way of knowing, once their R&D departments begin to succeed at generating more patents, just how many of them they should be expected to produce. PRBs are often at a loss about how to answer this question. But it’s the simplest of all of the ones we’ve addressed here.
To figure out how many patents a company should aim to file every year, we recommend that they look at publicly traded competitors, which are required to disclose their budgets for research and development. All patent filings are public, so from there, determining their per-patent R&D budget becomes a matter of simple arithmetic. By doing this calculation for public competitors in a range of sizes, a company can come up with a reasonable goal for their own annual patent filings as a function of their R&D spending.
If you want to learn more about how GreyB can assist you and your PRB with IP strategy, you can contact us here.