Aiming for More Patents Can Hurt IP Portfolio Value

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Every year, executives at major companies showcase the number of patents they have filed and/or have been granted. They often use these statistics as a proxy for their level of innovation and to justify their legal spend. The resulting race to get the highest number of patents can result in the unintended consequence of a weak (and expensive) IP portfolio.

If a primary metric for business success is the number of patents, ambitious managers who want to get their year-end bonuses may push to proliferate patent filings for lower value technology. Another way to boost year end numbers is to make multiple filings where a single filing would be more appropriate (and cheaper). Similarly, patent claims may be unduly narrowed, significantly depreciating the value of the issued patent, to get speedy allowances to increase the number of issued patents. This is simply rational behaviour driven by arbitrary metrics.

It is the quality of patents and the value of the underlying technology they protect, not the number of patents, that matters. A company can have a single family of patents worth millions or even billions of dollars if the claims are written strategically and cover the crown jewels. Conversely, a company can have hundreds of patent families that aren’t worth a nickel. Patents may be worthless because they are poorly drafted with overly narrow claims and/or because they cover technology that has no commercial value. Either way, they are a waste of company resources.

Better metrics are needed to incent a strong, high quality portfolio. Metrics that align IP strategy with business strategy are more complex to put into place, but will drive improved results.

Judith McKay is an intellectual property lawyer with McCarthy Tetrault, with a focus on developing intellectual property strategies for clients.

IP strategy patent value



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