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Patent Value

What drives the value of patents from a startup perspective?

What drives the value of patents from a startup perspective?

January  2018

Copyright © 2018 Partnering 4 Biotech. All Rights Reserved.

 

If patents can facilitate partnering and venture capital investment at an early stage, they become priceless when a startup matures and becomes an acquisition target or when it goes public. Startups typically have limited time and resources to protect and prosecute their IP. However, if they fail to file for and optimize their patent protection, they run the risk of not finding VC for the next investment round but also not being a good enough acquisition target. Securing good patents generally doesn’t cost more than securing bad ones...   

 

One of the main reasons bigger acquiring companies will open their checkbook is because they need the rights (i.e. they likely infringe or will infringe the patents) to develop their own products, secure market entry and their investments. The IP created by a startup can also be a component of a larger solution. It is often a feature or set of features which enhances the overall efficacy and value of a more comprehensive technology. As such, well protected IP can have significant value in the hands of a bigger company which may own or have licensed complimentary IP.

Even if your company is not acquired and you elect to go public the above comments still stand. Once the IPO money is in your bank account, your company will have the ability to leverage and defend your IP. This means that its value will go up, just like it would in the hands of a bigger company.

 

So, what makes patents valuable? Which leads to the next question: How can I make my current patents (applications) more valuable? Having that final goal in mind, here are a few well-honed approaches that will help drive their value of their patent portfolio.  

 

Draft Targeted Claims. The main problem with broad claims is that they are the easiest to invalidate, especially based on prior art and through a combination of obviousness rejection. A narrower, targeted claim will be more complex to invalidate. The most beneficial claims are often those that are carefully targeted to clearly map to a particular product or process, and often include rather narrow claim elements intentionally.

Patent Claims are essential in determining Patent Value. The freedom of operation the patentee has as well as the opportunities for asserting its rights are directly related to the number of claims a patent family has. In addition to the costs related to invalidate several claims at once, there is decreasing probability of being able to invalidate all of a large number of claims.

 

Draft with Assertion in Mind. A patent provides you with the right to exclude others from practicing your invention. This is why it is important to keep the assertion versus protection in mind when you are drafting your application and to make your competitors' life more difficult, in the case they want to copy, improve upon or design around your solution, either today or later on.

It is a good exercise to anticipate what a competitor might want to do and then broaden the protection. It is much better if you test the claims of your own patent prior to your competitor. It is essential to have meaningful claims of varying scope without making the patent overly complex to understand.


Build a Family. File in countries where your products will sell. US protection accounts for a large part of the portfolio value not only because this is a very large market but also this is where the largest damage awards are available. Additionally, the US system allows to file continuations and Continuations in Part  (CIPs). Filing  patent continuation applications can enhance the value of a portfolio.  The CIP application is a convenient way to claim enhancements developed after the parent application was filed. For a continuation-in-part application, claims to subject matter that was also disclosed in the parent are entitled to the parent’s priority date, while claims to the additional subject matter are only entitled to the filing date of the CIP application.   From a small company perspective, it can be highly advantageous to have continued prosecution open in a licensing context and to capture longer royalties terms.

 

Submit a Lot of Prior Art. One of the reasons patents can be invalidated is because of some prior art that wasn’t in front of the examiners during the review of the application. Do a good patentability assessment prior to filing in order to de-risk your patents costs. This is a well-valued investment. It will be more difficult to invalidate an issued patent if relevant prior art has been submitted to differentiate the invention.


Avoid “Paper” Patents. Judges and juries don’t like to reward people who simply came up with an idea, filed a patent application and moved on to the next project.

A reduction to practice of your invention is important as well a building patent families.

 
Confirm Easy Detectability. If you cannot demonstrate that someone is practicing all elements of an issued claim, how are you going to assert your patents? Typical examples are patents describing manufacturing processes where the infringing acts happen “behind the curtain” and there is no way to legally access the missing information. In case of insufficient evidence of infringement from the Plaintiff side, there can be an important potential for sanctions and fee-shifting at the pleadings stage. If you cannot or if its difficult to demonstrate infringement , then your patent has little commercial value. So always ask yourself how you can write claims that make evidence of use obvious.

 

Conclusion
Building patent portfolios are essential to preserve your competitiveness but also to secure your exit strategy, whether it is acquisition or IPO. Securing good patents generally doesn’t cost more than securing bad ones. The key is to take the right approach right from the first day you draft your application through the prosecution and well after the patent issues. In this way, you create intangible assets that will maintain their value and be there for you when you need them!

 

At Partnering4Biotech, we integrate IP in your R&D and commercial strategy directly from the beginning in order to build the stones needed for a strong patent portfolio which will maximize the value of your company.

 

We are happy to provide you with more information about our services.

Contact Roxanne Carreer

+ 32 488 235 835

info@partnering4biotech.com

www.partnering4biotech.com

A Belgium-based company

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