In this article Amanda Simons, from leading patent and trade mark firm J A Kemp, looks at some common misconceptions about IP and highlights the need for IP rights holders, and those considering investing in companies holding IP rights, to review and fully understand their IP portfolios.
IP is an increasingly important asset for companies in a wide range of technologies and its correct understanding and management should not be undervalued. Investigating the value of this asset through a diligence process which assesses strengths and limitations is a critical part of the investment process. Companies may not want to wait for an investment round to see where these strengths and limitations lie. An early IP review can improve a company’s understanding of its IP and help it to put an appropriate IP strategy in place. Any company with an appropriate and correctly managed IP strategy will be well prepared for the IP due diligence investigations that potential investors are likely to perform. Unfortunately, misconceptions around IP abound and can lead to mis-understanding of the true value of an IP portfolio.
Here are five common ones:
“We have a patent, so we have the right to exploit our invention.” Unfortunately, false expectations of what IP rights allow are common. In fact, IP only provides the right to stop others from doing something – it does not provide the right to do something. It is necessary to perform freedom-to-operate (FTO) investigations to determine if there are rights of other parties that could prevent any proposed activities.
“We have worldwide patent protection for our idea.” Whilst it is possible to apply for a patent application via an international treaty (the Patent Cooperation Treaty), this does not lead to a “worldwide patent” but needs to be converted into separate national or regional patents in the countries of interest. In fact, the cost of filing and maintaining a patent family in a large number of countries can be prohibitively expensive and is normally only an option for multi-national companies with large IP budgets. However, an effective strategy can ensure useful protection is in place by selecting a number of key states in which to seek patent protection.
“Our patent provides us with a monopoly for our company’s product.” Whether this is the case or not will depend on the exact wording of the patent. A careful analysis of the claims of the patent will be needed to determine if the scope of protection is appropriate for preventing competitors from designing round the patent. And this may need to be done country by country as the scope of protection provided by patents in different countries in a patent family may vary. Care also needs to be taken to look at what a patent ultimately protects once it is granted. It is all too easy for companies to lose sight of IP when changes are made to product design during development: it may be that a patent does not actually cover the product it was intended to protect. Regular review of the IP portfolio against changing business plans can avoid this issue.
“We have not applied for any patents because it is not possible to obtain a patent for a computer program.” Many opportunities are lost because of this misconception. The European Patent Office alone grants thousands patents a year for computer programs.
“Now we have a patent, it will be easy for us to keep our competitors off the market.” Enforcing IP rights is often a complex business. There are significant costs and risks associated with litigation. Settling a dispute, with a licensing or other agreements, is normally the preferred option with suing a competitor for infringement of an IP right being a last resort.
Some of these misconceptions can mean that an IP portfolio does not provide the protection its owners think it does. Companies and their investors will want to understand exactly what IP they have, and how they can use it to maximise their company value. IP reviews at regular intervals, or at least in advance of any investment process, may help to provide that understanding and to resolve any issues at an early stage.
Amanda is a patent attorney with over 20 years’ professional experience focused on the pharmaceutical and medtech sectors, including medical sensors and other medical equipment. She also has experience in a broad range of chemical technologies including polymers, alloys and glasses. Amanda routinely advises on overall patent strategy and portfolio management, including due diligence and freedom to operate matters. Amanda Simons Partner, Patent Attorney firstname.lastname@example.org Tel: 01865 406100