How to Manage an IP Portfolio

Take Inventory

Goal: Make IP work for your business

Creating an IP portfolio takes time and involves moving through
a number of defined stages, says Ron Epstein, CEO of IP consultancy and
brokerage iPotential. Most companies have barely even started to organize their
intellectual capital. To move beyond that passive stage, you need to get a
better sense of what IP you already hold and how to make it serve your business
objectives.

Think as broadly as possible. Should you treat a unique
manufacturing process as a trade secret or a patentable process that could
present an obstacle to competitors or earn you licensing revenue? Can you
assess the value of your brand identity? Have your geniuses in inventory
management figured out a way to shorten delivery times that needs protection? Every
company is different, so make sure you’re not overlooking something
important as you gather your brain trust to take a crack at the following
questions:

• What IP do we already hold?
• How much of it is already protected?
• Which specific pieces of IP offer strategic value to the
  company?
• What additional IP would be necessary to carry out our strategy?

Make sure every piece of IP you inventory provides clear value
to the company’s strategic goals, as otherwise it isn’t worth
protecting. That said, value can mean a variety of things. Does a piece of IP — typically
a patent, trade secret, or trademark — prevent a competitor from copying
your products or from taking on your identity? Can you tie up a rival by
patenting IP you currently don’t need but that is critical to the
competitor, and so block its efforts to get into your markets? Do you have so
much IP socked away that you could use it as a bargaining chip if you’re
sued for infringement? (You’d be surprised at how many IP lawsuits
get settled this way.) Could you license or donate unused IP to see some sort
of return? Take time to consider all the possibilities.

Create Your Process

Goal: Catch IP as you create it

Once you’ve got your inventory, you need figure out
how to manage all that existing IP, plus all the innovations your employees are
continually coming up with. Stephen Fox of Foley & Lardner, who used to
head up the legal IP operation at Hewlett-Packard, advises companies not to
spend “endless hours” trying to develop a perfect scheme
right out of the box. Instead, he suggests starting with a relatively simple
system that you can tinker with over time.

Here are the three basic activities your setup needs to cover:

1. Get innovations from the innovators.
2. Protect the valuable stuff to build your arsenal.
3. Make it work for you in any number of ways — perhaps by
   inconveniencing your foes or using IP to expand into new markets, much the way
   Harley Davidson licensed its logo for use on shirts and jackets.

The first part involves capturing ongoing innovation and figuring
out whether it has any strategic value. To do so, you’ll need to work
both from the bottom up, with your innovators, and top down from an
administrative level to focus efforts on areas strategic to the company. All
this should happen as early as possible as new gadgets and practices are
developing.

Someone also has to mind the store, because it’s a
major mistake to leave IP decisions in the hands of engineers and patent
attorneys. Such folks “tend to be very technology focused, sometimes
to the exclusion of the commercial benefit of the technology to the company,”
says Morrison & Foerster partner Alex Chartove. The result, often as
not, is an IP portfolio too heavily focused on nifty technology ideas that may
be of little use to the company.

The other mistake executives make is to put too little emphasis
on IP early in its lifecycle and before infringement happens, says Carlo Van
den Bosch, an IP attorney at Sheppard Mullin. Once someone has stepped on your
IP rights, “it’s very difficult for attorneys to scramble
and get protection into place.” And of course, when lawyers start
scrambling, the bills start mounting.

One important point: You’ll also have to consider strict
legal deadlines in some cases. For example, publicly disclosing an invention
starts a one-year clock on filing a U.S. patent application, after which the
window slams shut. Americans must also register copyright within 90 days of
first publication to ensure that their legal options aren’t
circumscribed in case of infringement.

Consider the Bigger Picture

Goal: Plan strategically by looking at your IP in
context

To make IP really effective, you eventually have to look well beyond
your own office park. Experts recommend studying the IP map of an industry,
which illustrates how different markets and products intersect with the IP
holdings of major competitors in those areas. Protected IP acts like a fence
that blocks off one or more avenues. By looking at the lay of the land, you’ll
more easily see which market or product segments are free and clear in an IP
sense, and where you might find strategic paths through other
intellectual-property thickets in order to reach your goals.

By doing so, companies can get a sense of where they can deploy
IP to push rivals out of a market and when they’ll have to settle for
a narrower but still important advantage, says Susan Pan, a partner with IP law
firm Sughrue Mion.

Depending on your industry, finding an absolutely clear path may
be impossible. Various aspects of a cell phone, for instance, may be covered by
literally thousands of patents. In that case, it’s time to cut deals
with the companies holding IP that stands in your way — another good
reason to have a formidable IP portfolio you can deploy in negotiations.
Competitors will be more open to licensing or cross-licensing discussions when
they know they’re vulnerable on other fronts, and that your portfolio
could help shore up their defenses.

The immediate impulse of most companies is to directly protect
their intellectual property. But sometimes the indirect approach can strengthen
an IP portfolio. Here are some areas that can provide additional protection:

• Associated Processes: If you have a patent on a given
  invention, you might be able to protect a process that’s key to
  manufacturing a gadget or that could enable an important supply chain. Boston
  chef Jasper White couldn’t keep other restaurants from offering
  lobster, but at his Summer Shack he patented a method of cooking them for New
  England clambakes of up to a hundred people.
• Enhancements: Nothing stands still for long. As
  companies further develop IP, they can protect intermediary versions or
  enhancements, much as Apple refines devices such as the iPhone and gets
  additional patent protection.
• Extensions: Similar to enhancements, extensions move
  intellectual property into new areas. A new use might provide a new area of
  protection. For example, you might add a new product line to a trademark
  registration, or modify the story line and dialogue of a movie and turn it into
  a script for a Broadway play.
• Strategy Blockade: As you watch competitors and their
  activities, you can often get a sense of where they are going. Calculate the
  path they need to take and tie up some of their steps so that they can’t
  move freely.