US investment company Starboard Value is reportedly urging
Yahoo to create additional value for shareholders through a
licensing programme for its extensive IP portfolio underlines a
more general corporate trend – at Board and
investor level – to focus on the monetisation of
intellectual assets as part of broader business and value
Indeed, for numerous technology companies, licensing is
becoming a major revenue stream – sometimes, even
their entire business model. A more pro-active use of patent
portfolios is an increasingly acceptable and lucrative
alternative to the traditional "secure-maintain-defend"
approach to IP. In addition, details of licensing deals and
associated revenues that may not have been transparent in the
past are frequently appearing in the media, adding to the
general awareness and subsequent pressure for companies to do
more with their IP.
Yet, for many companies seeking to exploit licensing
opportunities, a number of obstacles lie in wait. Chief among
these is insufficient awareness among IP holders of what assets
could be licensed to other parties and who those parties are.
Effective use of analytics and smart day-to-day IP asset
management practices can help.
The foundation of a strong licensing programme is based on
1. Ensure management
2. Know what you have
and organise it
3. Rank your assets
4. Track competitor
5. Revisit and
Ensure management buy-in
Some companies still view patents only as a tool for
defensive purposes. It is imperative, therefore, that you gain
management support before proceeding with licensing
investigations. These can involve a large amount of work and
you do not want to end up unable to reach consensus on what
patents you are actually prepared to license.
Know what you have and organise it
Keep a good inventory of your IP
assets. At a minimum, assets should be tagged in a way that
shows their relationship to the business, thereby enabling the
portfolio to be mined more efficiently. Which products are
covered by which patents? Which business units are benefiting
from which patents? Are there adjacent industries that might
benefit from technologies covered in your patents? The
inventory might also include information on likely potential
infringers; any initially-identified infringing products; the
potential future value of the claimed technology, etc.
Ranking patents can be difficult as there is no magic
formula and every organisation’s structure is
unique. A patents "value" basically comes from two factors:
legal strength and commercial relevance.
Legal strength is often assumed to be high. However, this is
not always the case, and changes in legislation, such as, for
example, the recent Alice v CLS Bank International
case regarding patentable subject matter, can fundamentally
impact the legal strength and enforceability of your patents.
Such legislative changes need to be tracked.
Commercial relevance is somewhat easier to define since
organisations typically have an embedded knowledge of what is
relevant to their business. Does the patent cover an entire
product or just part of it? Is the market for this product
mature or nascent? Is infringement of this technology easy or
hard to detect? Patent landscape studies can be used here to
assess the broader technological field and to identify other
players and potential licensees.
Track competitor activity
As the patent owner, you are
solely responsible for identifying potential patent
infringement. Therefore, it is good practice to reward staff
for locating target products that may infringe your patents.
However, as licensing opportunities generally arise through
awareness of infringement and concerted follow-up, it is also
fruitful to put in place a more thorough monitoring of
competitor product activity.
Revisit and reevaluate
The value and importance of a patent or portfolio changes
over its lifetime as the market shifts, so it is essential to
update rankings regularly. An effective way to do this is to
build an automatic evaluation update into your IP processes;
for example, including a re-evaluation as part of the
keep/abandon decision before paying a patent renewal.
Once you have identified which IP assets are likely to be
most attractive and who the potential licensees are, you need
to demonstrate to those target organisations the requirement
for a licence.
Illustrating there is a real likelihood of infringement will
often be sufficient evidence to convince a target company that
it is in their best interest to take a licence. However, in
order to get to that point, you need to be able to compare the
service or product of the target against your patent claim(s).
This can be as straightforward as making a chart of what the
elements of the patent claim mean; then performing technology
research on what the target’s product/service
specifications are, and comparing the two.
Come up with a good match and it provides a more transparent
and easily demonstrable reason for licensing.
Samuel Davis (pictured, above left) is based in Tokyo
and is director of business development, analytics and
technology consulting services at CPA Global’s
specialist patent research arm, Landon IP.
Haydn Evans (pictured, top right) is vice president, IP
solutions at CPA Global, based in London.