The Need for Building a high Quality patent portfolio

Its a beautiful world we live in. Encompassed in a beautiful galaxy, coexisting with multiple solar
systems, getting just the right amount of sunshine, we humans are indeed lucky for getting a chance to
flourish on this beautiful planet abundant with flora and fauna. Mother earth has the best quality-
quantity ratio that makes survival on the planet a breeze. Sans the quality, existence would have been
difficult.

Quality is not a mere adjective; it is a factor that can subjugate quantity, no matter how big the number.
For instance, a single polished diamond is worth more than hundreds of stones from which diamonds
are made. Though Diamonds are the products of those stones, it is the quality that counts, not quantity.
Its a universal law.

The same applies for patents.

Often, a portfolio containing a dozen of high-quality patents is worth more than a portfolio with
hundreds of low-quality patents. For instance, NuCurrent Inc., a Chicago based manufacturing company
of wireless charging equipment, though has mere 15 granted patents (and 33 pending patents in US and
other countries ) in its portfolio, the company earns millions in licensing revenue from corporations with
the likes of Apple and Motorola that uses their patents in their products. Considering the amount spent
in patenting activities and licensing revenue earned, the high-quality portfolio of NuCurrent has a great
ROI.

Additionally, it should also be noted that companies with large good-quality patent portfolios often
emerge as market leaders and have a solid income through mere licensing of patents. IBM is one such
example. According to Source, in year 2007, IBM had a patent portfolio of 26000 patents generating 368
million dollars in licensing revenue which means that the average revenue per patent was $14154.
Thats how the engine gets the fuel!

But the quantity of patents in the portfolio does not affect licensing revenue or litigation; instead it is
the quality of the patents and various other factors that decide whether a deal can be landed or not.
Normally, a patent is considered of high-quality if it adequately covers an invention and its features in
dependent and non-dependent claims. Citations are another major factor that determines the quality of
a patent. More the number of backward citations of a patent, higher is the quality of a patent.

It is imperative to construct a patent portfolio with such high quality patents as a strategic move that
can set one ahead of the race. No matter how big or small the size of the portfolio is, a high-quality
portfolio has its own set of perks.

But if you still did not get a reason to decide the need for building a high-quality portfolio for your
organization, without further ado, let us explore four reasons that would motivate you to go the quality
way.
Quality Coverage: You might be thinking this is an obvious point. Patents are seeked to protect the core
inventions of an organization, what difference would a high-quality patent portfolio make? A high
quality patent portfolio is crafted in a manner that it safeguards the entire product line by patenting all
the features and any improvements made over a product by means of strong claims and divisional
patenting respectively.

Claims of a patent are covered in a manner that it gets difficult for anyone to get around a patent, which
could prevent any entity to develop a substitute product during the lifetime of a patent. For instance,
consider the example of US Patent 7569273B2 titled Thermoplastic powder Material for appearance
models from 3D patent systems, essentially a 3D printing patent. The claims are written in such a
manner that essentially most of the known elements that are commonly used for 3D printing purposes
are claimed under the scope. Such patents can be used to limit anyone from practicing the method till
the end of lifetime of the patent.

Though it is often debated that having such broad patents stifles innovation, if a company chooses to
have such patents for defensive purposes, theres no harm in it for anyone. If used offensively, there is
no difference between the organization and a patent troll.

But if the focus is essentially to protect the core products of an organization, no matter how the patent
is used, the patent holder has a (moral) right given by the government to exclude anyone from making,
copying or selling the patented technology unless a licensing deal is signed between the assignee and
the infringing entity.

Surviving Litigations: Litigation is an important aspect in the lifecycle of a patent where the patent has
to stand the tests of invalidity and novelty for the plaintiff to emerge as a winner. It gets very easy for a
defendant to find some solid prior art after a deep analysis for a low-quality patent.

For instance, in Apple vs. Samsung patent lawsuit, when Samsung appealed to the court to invalidate
the Slide to unlock patent on the basis of obviousness, after examination of the prior art documents, the
court invalidated the Slide to Unlock patent reducing 120 million dollars that Samsung had to pay for
infringing Apples patents.

If the patents are not strong enough, it gets difficult for the plaintiff to continue protecting its
technology despite having a patent over it. Thats a really good reason why you should consider building
a high quality portfolio. Better to be safe than sorry!

Technology Negotiations: Patents come with an expiry date, business dont. But there are unfortunate
times when a particular business isnt profitable anymore and the company has the option either to
cease operations or sell off one of its divisions to continue operations. In such cases, other than the
direct revenues from the product line, value of the intangible assets like patent portfolio is calculated as
well to decide the negotiating amount.

The benefit of having a strong portfolio in such situations is that even if a particular division is shut
down; the intellectual property for the technology could still be used to extract maximum value.
 For instance, when Nortel Networks, a telecommunication and data networking Equipment Company
filed for bankruptcy in 2009, the patent portfolio of the company was auctioned to regain some of the
costs to pay off debts. With a very high quality patent portfolio comprising of 6000+ patents, the
portfolio was bought by the Rockstar consortium for a whopping 4.5 billion dollars.

In order to defend its operating system Android, Google took a drastic strep and acquired Motorola
mobility for an amazing 12.5 billion dollars. With 17000 patents in the portfolio, Google bought a shield
that could protect it during the patent war. On October of 2014, after retaining the patent portfolio of
Motorola mobility, Google sold it to Lenovo for $2.91 billion. It is clear that Google purchased Motorola
to acquire its patent portfolio.

The point is no matter what the circumstances are; a high quality patent portfolio would always be
helpful during negotiations. It does not just protect the products but also increases the overall worth of
the company.

Improved ROI: Being a solid believer in ROI, I often prefer things that have a high return on Investment.
Through the example of NuCurrent and IBM, we have explored two companies whose patents portfolio
yielded them a high return on investment by means of Licensing Opportunities.

A solid portfolio can improve the return on investments on patenting and R&D efforts by improving
licensing opportunities, since everyone wanting to work in a technology has to acquire license over the
major patents in a particular technology. And designing a high quality patent portfolio often comprises
of inculcating such star patents in ones portfolio.

Now that we have given you four awesome reasons to build a high quality patent portfolio, go ahead
and craft the changes accordingly. May you succeed in your endeavors!

Happy patenting!