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Patent Portfolio Evaluation

Patent Portfolio Evaluation

Patent Portfolio Analysis often occurs during due diligence.  For example, an analysis may occur when an investor is determining whether to purchase or invest in a company. Many times the investor obtains what they believe to be a thorough understanding of the portfolio, when in reality they only have a superficial understanding.  Below are several common errors that occur when analysing a patent portfolio: 

  1. Don’t Just Rely on the Number of Patents and Patent Applications

The most common deficiency is relying on the total number of patents and patent applications in the portfolio as an indicator of value.  The size of the portfolio may indeed be a good barometer of the overall value.  However, there are more accurate indicators.  I have evaluated relatively large patent portfolios that on initial review appear to completely cover a particular subject matter.  However, upon closer review, the portfolio does not fully cover the intended subject matter and/or there are holes in the patent coverage that would allow for a competitor to effectively practice in the area. 

  1. Understand the Scope of the Patent Claims 

The claims define the scope of protection for an issued patent.  Therefore, it is imperative that one understand the scope of the claims for each patent within a portfolio.  Each word within a claim must be analyzed to understand the scope to determine what is and is not covered by a patent.  It is surprising how often what a patent actually covers is misunderstood.  Just because a patent discloses a particular aspect within the specification does not mean that the patent covers the subject matter.  Rather, it is necessary to analyze the claims to determine how the particular subject matter is (or isn’t) claimed.  

Further, the portfolio as a whole should be analyzed to determine the extent of protection within a particular technical area.  Often times, patents include claims that complement other patents within a portfolio to obtain an overall patent protection scheme.  This is particularly true of patent families that include multiple continuation, continuation-in-part, and divisional applications that are each directed to a slightly different aspect of an inventive concept.  

Another important aspect is to determine whether any of the patents are still active (i.e., still pending).  This provides the opportunity to file additional applications on the subject matter included within the application.  This may be an extremely valuable aspect in the event a competitor is trying to design around an existing portfolio.

  1. Prosecution History

A concept closely related to item #2 above is to analyze the prosecution history of the patents.  The prosecution history is the correspondence between the applicant and the Patent Office during the pendency of the application.  This includes the originally-filed application and associated paperwork, any rejections from the Patent Office, and any corresponding responses.  This information often provides a more thorough understanding of how the claims should be interpreted.  Further, any prior art cited in the rejections can be analyzed to determine the differences with the claimed invention. 

  1.  Procedural Issues

A final aspect for investigation is to ensure that the procedural aspects of each patent in the portfolio are correct.  This may include analyzing the declarations, assignments, priority claims, and other requirements of each patent to ensure it is correct and properly submitted to the Patent Office. 

 These concepts are a few of the major aspects to remember when analyzing a patent portfolio.  Often these four aspects will provide a good overview of the portfolio and its possible value.  

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