Leaving Portfolio Profitability on the Kitchen Table
Semiconductor companies often hold untapped profitability in their intellectual property (IP) portfolio. But until they focus on it, the unrealized value remains…untapped. By examining patents through proven methodologies, leaders have an opportunity to create entirely new revenue streams by enforcing an asset’s fair value.
Patent holders often question the merits of pursuing asset rights. Their common perception is that the pursuit will not produce a significant return. “It’s so expensive, and besides, what are we talking about?” But advancements in reverse engineering (RE) have made it possible to scale patent enforcement, enabling companies to create significant new revenue opportunities, effectively monetizing patented holdings.
Finding the Value
The foundation of almost every technological device is hidden in a maze of microprocessors, built on an array of semiconductors, not that unlike the various utensils in your common kitchen drawer. Many of these components are patented, but the holders of the intellectual property rights may be unaware of the product’s use or the extent to which a manufacturer has leveraged a license.
In today’s competitive market, the owner of a semiconductor system, hardware, or circuit patent must find ways of delivering the highest value from owned assets. While accepting existing earnings from IP saves on costs in the short-term, there is a significant opportunity cost of failing to evaluate patent portfolios. Companies not only face the certainty of diminishing returns in perpetuity, but the enforcement of patent’s current value goes beyond monetary implications through to brand reputation.
A patent’s value is directly related to whether the invention is being used and by whom, how widely it is being used, if it is reasonably detectable, and the cost of proving that usage. Making these determinations is a particularly unique challenge for semiconductor companies, which typically cannot track these patent assets or use, resulting in undervalued IP.
A Case in Point
To maximize opportunities, companies should periodically evaluate a patent’s worth and potential to the business as it changes over time. Consider Philips, a company renowned for its extensive patent portfolio, covering a range of items from medical equipment to streaming media. The company has an entire division—Philips Intellectual Property and Standards—focused on protecting and licensing its growing list of 64,500 patents (which increased by over 1,000 in 2019). It generates significant value from this portfolio by closely monitoring its assets.
The true opportunity in determining the value of IP is in the ability to enforce its value. Without evidentiary proof of a patent holder’s claim, companies will not be able to collect revenue owed nor demand fair value for future use. Most companies do not have Philip’s model of dedicated resources to keep track of intellectual property, nor is this necessary to fully monetize patent portfolios. Advancements in technology enable today’s companies to reap the benefits of having a division without committing to such a material investment.
Semiconductor leaders need to approach this process holistically by partnering with experts who understand both the technical and legal nature of semiconductor inventions, are adept at leveraging digital tools to comprehensively track them, and can cost-effectively value patents based on verifiable proof.
The IC chipset is so uniquely intricate, complex, and miniaturized that obtaining evidence of use is difficult without proper recordkeeping and tracking. Outside IP providers with industry expertise in semiconductor patent monetization utilize proven processes that reduce expenditure and allow semiconductor companies to discover revenue opportunities for existing patents. These vendors can design tests, experiments, lab procedures, teardowns, high-level printed circuit board extractions and RE methodologies, material characterization, construction analysis, and circuit extraction, among other procedures, to substantiate a patent’s elements. This collaboration can also help semiconductor companies identify other users of owned inventions and, most importantly, provide patent-focused evidence.
Building the Smarter IP Portfolio
In a fast-changing, hyper-competitive world, advancements in technology challenge the thinking of what is possible more frequently than realized. This evolving landscape requires organizations to build smart IP portfolios that enable them to both defend their current portfolios and capitalize on proactive licensing revenue strategies.
UnitedLex helps technology companies and leading law firms unlock and protect their IP assets’ value. We have supported the world’s leading companies in more than 250 patent litigation matters and achieved over $3B in favorable client settlements and jury verdicts in the past 10 years. Discover more about measuring and optimizing the value of your patents in our white paper, Semiconductor Patent Portfolio Profitability through Reverse Engineering.