Patents are a fundamental tool to generate return on investment for a business. They can be used defensively to prevent others from copying, manufacturing, selling or importing your invention without your permission. Or they can be used strategically in licensing or M&A negotiations as a bargaining tool. But, however they are used, they have no value to a business if they are not valid and in force. Whilst they may still provide useful information for others to build on, patents without enforceable rights are worthless as a business asset. Thus, establishing the legal status of patents is crucial to understanding the value they may possess and the risks they may pose.
For an organization seeking to enter new markets, the development and launch of a new process or product carries with it major risks (especially in technology areas, which are heavily patented). The intended action may be blocked by patents that protect the technology incorporated within that process or product. For this reason, it is vital to establish the “freedom to operate” (FTO) at an early stage to ensure that the commercial production, marketing and use of a new product, process or service does not infringe the patent rights of others.
An FTO analysis comprises searching patent literature for issued or pending patents to identify those that pose a potential risk. And, by analyzing the claimed invention, that search can also determine whether your proposed product, process or service may fall within those claims.
In determining the potential risk, there are several factors to consider:
- Patent rights are limited to specific jurisdictions; therefore, the initial analysis only needs to consider those particular countries or regions where you plan to operate. It may be as well, however, to run a secondary analysis to identify patented technology not yet protected in your intended place of operation in case additional family members are published and subsequently granted there.
- Granted patents have a finite lifespan after which rights of exclusion expire. Therefore, accurately determining the expiry date of a potential problem patent is essential to assessing and quantifying the risk.
- Similarly, granted patents only confer rights while they are valid and maintained during their lifetime. Accurate determination of a granted patent’s legal status (valid and in force, deemed invalid through successful opposition, lapsed due to non-payment of fees, etc.) is also vital to evaluate the risk posed.
Accurately determining the predicted expiry dates and current legal status of relevant patents is therefore central to establishing the level of risk an organization may be exposing itself to.
Traditionally, this has been notoriously difficult and labor-intensive involving a lot of manual effort to load and manipulate patent data in spreadsheets and databases. It also involves a close understanding of relevant rules for calculating the life of a patent. For example, when estimating the remaining term of a patent, simply adding 20 years to the filing date is too simplistic. Looking at just the U.S., 54% of granted patents have term extensions, 34% of grants are impacted by the priority date of a PCT or related application and 10% of granted patents have terminal disclaimers. And that’s before taking account of whether maintenance fees have been paid.
In 2017, we introduced predictive legal status data within Derwent Innovation which uses artificial intelligence and cloud-based computing to perform the necessary calculations against billions of data points to provide accurate and timely predictive data. On completion of a search, relevant data is presented in your search results in the form of family dead, alive or indeterminate status indicators, expiration date analysis, and remaining life calculation.
We continue to improve the accuracy of those calculations and have recently implemented some improvements to our legal status predictions:
- Suspicious expiration date predictions identified on record view
- Improved Dead/Alive calculations for EPO applications
- Refined calculations for specific authorities
Further details of the enhancements are available here.
Predictive legal status information can be invaluable in other strategic business decisions concerning monetization of intellectual assets through licensing or sale and mergers and acquisitions. Predictive data for the remaining life of a patent can be used to quickly determine how much longer a patent will be “alive” to help evaluate licensing or sale opportunities. Similarly, remaining life is key to assessing the viability of patents from a company that may be an M&A target in order to put a price tag on how much that portfolio is worth.
The use of predictive data greatly simplifies and allows faster decisions on relevant questions of ownership and legal status in FTO, licensing and M&A analyses and helps remove the uncertainty and error of traditional methods.
Learn how Derwent Innovation works at https://clarivate.com/products/derwent-innovation/.