An Intellectual Asset Management Program For SMEs

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1 Portfolio Media. Inc. 860 Broadway, 6th Floor New York, NY Phone: Fax: An Intellectual Asset Management Program For SMEs Law360, New York (February 17, 2012, 1:34 PM ET) -- In our experience, many small- to medium-sized entities ( SMEs ) understand how to use patents in their respective businesses and have become sophisticated in, or at least acquainted with, the concepts and vocabulary of intellectual asset management ( IAM ). There are, however, two primary hurdles for SMEs seeking to take advantage of IAM. First, many SMEs seem not to have enough time to take full advantage of IAM, even as they recognize they should. Instead, while acknowledging the many benefits of managing patent issues strategically, these companies continue to invest heavily in patents without establishing a strategic program to move forward. Many other companies simply are too skeptical or do not care enough about strategic management. Second, while there are myriad software platforms and books on intellectual asset management that allow patent owners to pick and choose goals for an operating procedure, most provide few details on how to actually develop the operating procedure. Enterprise software for IAM comes bundled with workflows, but choosing among them can require almost as much work as developing an ideal operating procedure and software design from the ground up. An additional hurdle for SMEs is that current enterprise software systems tend to be designed around the needs of large enterprises. Therefore, we decided to analyze these issues by working through the details of what would be involved for an SME to establish an operating procedure and a software tool to deliver most of the features of a sophisticated IAM system. In other words: How complicated would it need to be if simplicity were the goal? We believe we have been able to make solid progress on this problem by testing ideas and prototype interfaces ourselves, and asking clients to try them out. To begin, we established two objectives for our work. The first objective was to convince ourselves that IAM does not need to involve extraordinary amounts of time or intellectual effort. We cannot yet prove the additional time burdens would generate setoffs in the form of cost savings, greater value in the company s patents and reduce risk from infringement suits, but we continue to believe they are likely to do so. The second objective is to convince ourselves and our clients that the additional burden is not too onerous; that sophisticated IAM can be done without dauntingly complicated software or operating procedures.

2 Our model operating procedure begins with the assumption that the SME is concerned about third-party patents ( 3PP ) and wishes to use patents to protect its own innovations where it makes sense to do so. Therefore, we began with the premise that our model company obtains patents for product or process innovations based on patentability criteria and discovers freedom of operation threats by searching existing patent databases to vet new designs. The goals of our operating system are to allow the extraction of more value from the company s intellectual capital, manage costs of patent procurement and maintenance, and obtain meaningful offensive and defensive strategic advantage from patents. Secondary benefits include providing a more stimulating work environment, lower prosecution costs, better patents, and other related items. Our model operating procedure requires four roles: (1) an IP clerk who is responsible for ensuring administrative tasks are completed in a timely manner; (2) a lawyer, but not necessarily a patent lawyer; (3) IP team members; and (4) an IP committee that is made up of the IP team members and that performs tasks in a distributed fashion. Although not explicitly defined as having a role in the operating procedure, a new product team will also be involved, since it designs new products and/or processes which are inputs to the operating procedure. The software platform may be used to communicate with a patent attorney, firm, or agent, regardless of whether they are in-house or outside counsel. The IP committee is preferably a C or near C-level crossdisciplinary team with marketing, technical (design, manufacturing), and patent legal expertise. It provides an important source of innovation and as such, expertise that may provide constraints or ideas for new innovations that can be directed to patent protection. The basic software platform is designed around two main tables. The first is a 3PP table that is used to capture and list observations regarding third-party patents and patent publications and provides fast links to 3PP reference content for quick review, search and analysis. The second table is an inventions table, which identifies claimed or claimable subject matter of home-grown inventions and provides fast links to patent portfolio content for quick browsing, search and analysis. Other data captured and stored for analysis include 3PP search criteria and categories for 3PP and invention table entries such as product category, technology category, business area. The tables are treated as a communication vehicle with counsel and are designed to be managed in a way that can support a claim of attorney-client privilege. The 3PP table provides an interface that allows references to be reviewed quickly and efficiently. The references themselves are stored in a separate table and are regularly refreshed by the IP clerk with new entries that have either been located in a search or recently issued or published. The function of the 3PP table is to catalog company reviewer observations on references of interest and to categorize them according to product category, business area, technology category, and how the reference is relevant to the company s business. The 3PP table is populated with observations from persons having the requisite skill in the art specific to the reference and in the limited manner described above. The capture of categorization data allows the 3PP table to be filtered to reveal relevant issues for decision-making. In our process, during regular IP meetings, a cross-disciplinary team reviews the filtered 3PP table and assigns follow-up tasks as required. The new product team can use the 3PP table to identify freedom-to-operate ( FTO ) issues quickly during review meetings as well as in a distributed fashion during new product development. The new product team may also use the 3PP table to assess the state of the art ( SOA ) in developing a protection position for new products and processes.

3 The new product team can make additional records or changes to the 3PP table to make it more useful going forward. A docket captures and indicates unremarkable issues requiring action, while sensitive issues are handled in an appropriate way by counsel, preferably outside the software platform. The inventions table is readily updated from the patent docket and new entries and status changes are indicated in the inventions table. The inventions table is a tool for identifying late claims, identifying key patents, categorizing relevance of inventions and managing new invention development. The inventions table is not just a list of patent documents, but a list of inventions in the portfolio. This forces the user to think about the scope of claims and how claims among different patent authorities, even in the same family, may differ in terms of scope, ability to withstand invalidity attack, and related matters. Thus, the act of maintaining the inventions table exposes a key control point for management and reinforces its understanding of the business function served by the portfolio contents. Through these maintenance operations, the inventions table is made useful for decision support by the IP team members, IP committee (e.g., pruning dead wood or identifying useful late claims), and the new product team for assessing freedom to operate issues and the company s protection position for new products and processes. The following is a rough attempt to segment the operating procedure according to sophistication/level of effort. Segment 1, Basic Surveillance of 3PP and HGI In Segment 1, regular 3PP searching and reviewing is provided to capture and make usable the SOA as reflected in the patent databases and to identify FTO issues in the areas of the company s products and technology. The raw 3PP data is filtered, categorized, and otherwise compressed to make it available and usable for decision-making in product design review meetings where FTO threats can provide constraints on design. The SOA information is used to assess the degree to which new products can be protected by patents. For companies that already have review meetings where patents are evaluated, the additional overhead is in the routine activity of filtering and categorizing the 3PP table. The inventions table is regularly reviewed by members of a patent committee to capture categorization input and the result is reviewed during patent review meetings. The processed entries can then be filtered according to the issue (e.g., product area, technology, business area) and used to assess the strength of a new product patent position, shepherd developing new applications, identify late claims, and prune dead wood from the portfolio. Segment 2, Patent-Oriented Development of HGI In Segment 2, the 3PP information is additionally used to provide input to defining an SOA benchmark against which the company can compare product and process innovations and assess its protection position. Technologies that can be licensed and potential entities that could be licensing targets for the company s home-grown inventions may be identified. New inventions are developed in a structured way from the earliest phase of product development. Discarded ideas that still can be included in patent applications are captured and stored in the inventions table. The inventions table is used for tracking new applications that are in the Paris Convention grace period. During the evolution of a patent application, many separate inventions may be identified and each would be entered as a separate record in the inventions table.

4 By cross-referencing the 3PP data, the potential protection position can be identified, recorded and tracked. The inventions table also may record basic valuation criteria to facilitate the selection of alternative protection schemes and level investment for each invention. The development of new inventions may include structured innovation processes as explained in the Miles & Stockbridge paper IP Strategy Based On Idealized Invention Interview. Segment 3, Leveraging 3PP to Enhance HGI and Strategic Patenting The 3PP table is an important resource for inventing for strategic patents. New product and process development is only one of the drivers and creative outlets for patents. If the company s focus is to be getting patents that provide strategic advantage, which might arise by innovating from sources of inspiration or motivations such as defensive use, then the company must anticipate changes in markets or technology enablers (sometimes referred to as patenting in the future), enervate competitor patents, and lay down defensive publications. By including searches which effectively uncover secondary references that can be used for obviousness rejections, the 3PP table may also be used to identify useful solutions in parallel technical areas that are far afield of the company s markets. The inventions table becomes a vehicle for capturing and sharing the basic data that is used for structured innovation of developing patentable concepts. This is aligned with the idea that patents are an independent creative outlet that leverages existing expertise and knowledge to create value rather than something obtained simply from the innovations that result from product development. Setoffs The operating procedure is a training tool. As anyone who has worked with patents can attest, to think creatively about patents requires a detailed understanding of the anatomy of a patent application and its prosecution history. Understanding of how the disclosure supports the claims and how the elements of a claim define something that is patentable is crucial in order to evaluate what if scenarios at the heart of creating strategic patents. The additional effort applied to maintaining the reduced data in the Inventions and 3PP tables is immediately set off by acquired knowledge. By exposing knowledge workers to the raw information contained in patents, the likelihood that valuable and protectable discoveries will be extracted from the precious raw material identified from the patent publication literature is increased. Conclusions (So Far) Minor usability issues are very important. We ended up doing a lot of programming to make the user interaction fast, especially for browsing and filtering the tables and drilling down into details. Users have readily recalled sensitive issues using only a minimum amount of information. For example, the users can identify that two inventions are different without sensitive conclusions such as that one invention in the same family is narrower, and quickly recall the issue of different scope based merely on the different classifications of the inventions. So even though we prevented the system from accepting sensitive information, the ability to share knowledge about sensitive issues has not been hampered. Another observation is that we ended up paying a great deal of attention to refining search criteria and now believe it to be a very valuable asset of users.

5 We establish permanent criteria and temporary (project dependent) criteria which are available for inspection. Concerns are raised by users about over or underinclusion of references during the stages of review. These are entered in the action docket, and an experienced searcher makes any needed changes to the criteria. We ve shared these ideas with colleagues who are interested in working with clients in more efficient ways, and it seems that many have developed very similar ideas and even software platforms. We are always very interested in sharing ideas and practical feedback on ways that patent owners can be more involved in and better manage patent issues. --By Mark A. Catan and David R. Schaffer, Miles & Stockbridge PC Mark Catan and David Schaffer are principals with Miles & Stockbridge in the firm's Tysons Corner, Va., office. The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media, publisher of Law360. This article is for general information purposes and is not intended to be and should not be taken as legal advice. All Content , Portfolio Media, Inc.