portfolio mining and analysis
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Portfolio Mining and Analysis. Frank S. Farrell F.S. Farrell, LLC 7101 York Avenue South Suite 305 Edina, MN 55435 Phone: 952-921-3260 Fax: 952-216-0106 Email: [email protected]. Portfolio Mining. - PowerPoint PPT PresentationTRANSCRIPT
Portfolio Mining and Analysis
Frank S. FarrellF.S. Farrell, LLC7101 York Avenue SouthSuite 305Edina, MN 55435 Phone: 952-921-3260Fax: 952-216-0106Email: [email protected]
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 2
Portfolio Mining
• A systematic process of organizing and classifying an intellectual property portfolio with an eye to extracting value
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 3
Today’s Situation
• Disconnect between technology roadmap and patenting– Patents become way to document
product development, not innovation
• Disconnect between IP development and revenue generation– Patents obtained but sit unused
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 4
• Patents are a defensive tool• Licensing your patents to others is
expensive• Licensing will make your competitors mad• The returns aren’t worth the risk• We’ll look greedy or opportunistic
Original Assumptions - No Longer Valid
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 5
How Did We Get Here?
• U.S. R&D spending continues to rise (R&D spending in 1999 was $244B, 44% of total worldwide R&D)
• Non-governmental (NG) R&D is 75% of total R&D• License fee revenue is 10-15% of NG R&D dollars
(Arora et al., Markets for Technology (2002))• R&D expenditures have fueled explosive IP growth
– 103,703 patents were applied for in 1983, with 59,400 filed by U.S. Applicants – 57,000 were granted
– 326,000 patents were applied for in 2001, with 173,000 filed by U.S. Applicants – 166,039 were granted
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 6
U.S. Patent Applications
0
50000
100000
150000
200000
250000
300000
350000
400000
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
No.
of A
pps U.S. Filings
Foreign Filings
Total Filings
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 7
U.S. Patent Grants
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Year
No.
of P
aten
ts U.S. Patents
Foreign Patents
All Patents
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 8
Extracting Value From Existing IP Portfolios
• How to recognize value in your Portfolio
• How to capitalize on that value
• How to use that knowledge to craft your IP strategy
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 9
How to Recognize Value in Your IP Portfolio
• Organizing your Portfolio
• Classifying the IP
• Identifying revenue producing opportunities
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 10
Organizing Your Portfolio
• Organize by Technology Area– Easy, often can do automatically based on
patent class
• Map Patents on Products– More difficult, requiring participation by
product designers, but also more revealing
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 11
Classifying Your IP –Core or Non-Core?
Non-Core Core
US 4444444
EP xx/xxxxx
TM xyz
US 5555555
WO xx/xxxxx
US 4444455
JP xx/xxxxx
US 6666666
DE xxxxxxxx
FR yyyyyyyy
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 12
Classifying Your IP -Product or Potential Product?
Never Product Possible Product
Product
US 4444444
EP xx/xxxxx
TM xyz
US 4444455
JP xx/xxxxx
US 5555555
WO xx/xxxxx
US 6666666
DE xxxxxxxx
FR yyyyyyyy
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 13
Identifying Revenue Producing Opportunities
• Are there infringers?
• Are there any new business opportunities?
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 14
Identifying Revenue Producing Opportunities
• How:– Competitive Technology Intelligence– Patent Mining of Competitors– Technology Forecasting– Engineers and Marketing
• Assessment of Competitors
• Brainstorming on alternative uses of patented technology
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 15
Capitalizing on the Value In Your IP Portfolio
• Transfer the IP by Sale or Donation– Low risk, guaranteed reward
• Borrow against your IP Portfolio– Pro: Make use of an otherwise
nonperforming asset (esp. M&A)– Con: Maintenance fees/annuities, interest
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 16
Capitalizing on the Value In Your IP Portfolio
• License your IP– Pro: Potential for greater returns– Con: Maintenance fees/annuities, retain
risks of invalidity and unenforceability
• Transfer IP to a Joint Venture– Pro: Potential for greater returns than above– Con: Risks of failure of any new business
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 17
Capitalizing on the Value In Your IP Portfolio
• Enforce your IP– Pro: Potential for greatest returns– Con: Maintenance fees/annuities, retain
risks of invalidity and unenforceability, high costs of litigation (if necessary)
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 18
Adopt a Portfolio Management Strategy
• Decide whether you will license core technologies to competitors
• Decide whether you are going to pursue infringers to generate revenue or to keep them out of particular product areas
• Develop strategy for aligning patent acquisition with existing and planned products and services
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 19
IP Revenue Methodologies –Core or Non-Core?
Non-Core Core
License or sell License Non-Competitor
License or sell Enforce or Do Nothing
Competitor
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 20
IP Revenue Methodologies –Product or Potential Product?
Never Product
Possible Product
Product
License or Sell
License, Sell or Joint
Venture
License Non-Competitor
License, Sell or Joint
Venture
Joint Venture or Do Nothing
Enforce or Do
Nothing
Competitor
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 21
IP Revenue Methodologies –Comp. vs. Noncomp. Value?
Low Competitive
Value
High Competitive
Value
Sell or Donate Enforce or License(?)
Low Non-Competitive
Value
License, Sell or Joint Venture
Enforce, License for
noncompetitive uses
High Non-Competitive
Value
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 22
Crafting Your IP Strategy to Enhance Value
• Patenting to enhance revenue producing opportunities
• Pruning your portfolio
• Charting future development and patent strategies
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 23
Patenting to Enhance Revenue-Producing Opportunities
• Patent to instantiate R&D dollars – Track patents to research and development
goals
• Identify areas of patent weakness– Spend R&D $$ in core areas of technology
where patent protection weak
• Identify areas where technology is moving
• Catch ideas outside of product lines
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 24
Pruning Your Portfolio
• The cost of maintaining a patent increases nonlinearly as the patent ages– Review patent portfolio annually to
determine if patents should be allowed to lapse, or should be sold or donated
– Decision based on licensing potential/ revenue vs cost of maintaining
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 25
Charting Future Development and Patent Strategies
• Patent to complement your biz strategy– Track patents to research and development goals
– Patent in areas where competitors have to move
• Emphasize and invest in core areas of technology where patent protection weak
• Identify and exploit patent weakness on the part of competitors
• License or purchase patents that do above
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 26
Conclusion
• Recognizing Value in Your IP
• Capitalizing on that value
• Using that knowledge to craft your IP strategy both in reducing expense and increasing value
MIPLA Corporate Practice CLEMarch 26, 2004 – Minneapolis, MN
Presented by Frank S. Farrell Page 27
Recommendations
• Organize your IP portfolio to identify revenue opportunities
• Pursue the revenue opportunities• Prune your portfolio• Patent to complement your biz strategy
– Track patents to research and development goals
– Patent in areas where competitors have to move
• Emphasize and invest in core areas of technology where patent protection weak