To thrive in today’s rapidly evolving landscape of technology and innovation, companies must not only innovate but also adopt a strategic IP approach for maintaining a competitive edge. However, new competitors, emerging technologies, including AI, resource and budget constraints, and the changing legal and regulatory landscape can all affect a business’s intellectual property (IP) portfolio.
IP portfolio optimization involves the systemic evaluation and balancing of a company’s IP assets, including patents, trademarks, and copyrights, to enhance their value and effectiveness to the company.
This article delves into the importance of IP portfolio optimization and sheds light on how businesses can best optimize their IP assets to drive sustained growth and strengthen their market positioning.
Importance of IP portfolio optimization
Portfolio optimization is essential for several reasons:
- Risk mitigation: Portfolio optimization can help identify and minimize risks, such as technologies that no longer align with the company’s strategic goals or potential IP infringements.
- Resource and budget allocation: Through regular evaluation of IP assets, companies can make informed decisions on where to invest in new filings, continuations, or abandonments, maximizing use of budget and resources.
- M&A: IP portfolios can significantly affect the outcome of M&A by increasing value to potential buyers, showing a company’s market position, revenue, and competitive edge, while reducing risk of infringement claims and valuation challenges.
Five IP portfolio optimization strategies
Many companies hold onto their assets for too long without exploring how their IP could better be utilized. If there is not a strong business case—strong monetization opportunities, contribution to brand reputation, or market positioning–those low-performing IP assets should be dropped, divested, or licensed.
Below are strategies for optimizing IP portfolios.
- Conduct a portfolio audit.
A critical first step, auditing the portfolio serves as the foundation for all actions, ensuring decisions are data- and analytics-driven and sound. In this process, each asset is systematically reviewed to determine its value and alignment with business objectives–including its strengths and weaknesses within the portfolio, competitive and monetization opportunities, and potential risks. This assessment allows companies to prioritize high-value patents and which ones be pruned.
With hundreds or thousands of assets, portfolio evaluation becomes a complex challenge. Leveraging technology and AI, coupled with experienced team guidance, can simplify this process.
- Prioritize your IP assets.
Portfolio mining is an essential process that uses data mining, analytics, AI, and visualization tools to reveal what patents to prune, sell, or keep driving revenue, defending IP, and reducing costs.
Portfolio mining analysis is also valuable in evaluating standard essential patents (SEPs), which are patents on inventions that must be used to comply with a technical standard for a particular industry. For example, telecom is of the most prominent industries where SEPs are vital, with technologies like 5G, LTE, and cellular network standards relying heavily on patented components.
- Generate additional revenue streams.
One way to leverage IP is through licensing agreements that grant other entities the rights to use patented technology in exchange for royalties. Licensing is particularly effective for high-value patents covering core technological advancements, such as Qualcomm’s 5G IP licensing, or significant innovations found in the biopharmaceutical industry.
Non-core IP assets can be licensed out to generate additional income. By identifying industries or sectors where these patents can be applied, companies can secure consistent revenue while allowing others to benefit from the technology.
Technology transfers, a broad term that can also involve licensing, funded research, start-up ventures, and funded research, are another monetization strategy. This is the process of moving scientific discoveries from research institutions to industry for commercialization. Space technologies are a good example of technology transfer; its present in a myriad of industries such as health and medicine (e.g., CAT scans), transportation, navigation, consumer goods (e.g., computer mouse, cell phone cameras, and dust busters), and communication.
- Keep the bloat down through asset pruning.
In the portfolio optimization process, recognizing when to abandon low-value, low performing IP assets is a critical yet often underappreciated task. Cost savings can be achieved by culling IP that are no longer relevant or valuable, eliminating regular maintenance fees which can add up for companies with substantial IP portfolios; the process of pruning also helps IP teams focus resources and budget on core technologies.
Patent lapse analysis is the process of identifying trivial or underperforming patents that are ideal to prune—that is, be discontinued and allowed to expire for a variety of reasons, including failure pay maintenance fees.
- Divest low-performing or non-core IP assets.
Selling, or divesting, patents is another viable monetization strategy, particularly for patents that may not align with the company’s current business objectives but hold significant value for other entities. Monetizing these non-core patents can create valuable revenue streams without affecting the company’s primary business operations. One effective strategy is to package and sell these patents to entities that can better utilize them, such as smaller companies looking to enhance their technological capabilities or enter new markets.
Maximizing value extraction from IP portfolios
Portfolio optimization is essential for maximizing value to the business. Rather than being viewed as a “one and done” process, however, effective portfolio optimization involves strategic planning, regular assessments, and proactive management to ensure IP assets align with business goals, generate revenue, and support innovation.
Through continuous assessment of their IP portfolio, companies can ensure that their IP remains robust, strategically aligned, and relevant to the business.
From portfolio evaluation to patent lapse review, UnitedLex helps companies unlock their IP portfolio’s full potential. Learn more.
