Consider this: over three million patent applications were filed worldwide in 2021 alone. This deluge transforms intellectual property from a mere legal detail into something far more critical. Smart management of intellectual property is now a top concern for corporate risk managers. A forward thinking approach to patents can fuel growth or ignite very expensive legal battles. I have seen both happen.
Why Patents Belong at the Heart of Risk Strategy
Thinking about the patent role in risk management means more than just spotting potential infringement. It is about actively shaping your patent portfolio. Patents can guard your own groundbreaking ideas. They can also open your company up to liabilities. Waiting to react can mean costly lawsuits and lasting damage to your reputation. Taking action early can turn potential problems into real opportunities to move forward.
How Freedom to Operate (FTO) Analyses Can Help
A typical first move when tackling patent related risk involves a Freedom to Operate (FTO) analysis. This process pinpoints existing patents that your products or methods might infringe. I make sure to tell my clients to start FTO analyses as early as possible in product development. Finding potential patent issues early on allows time to change designs and sidestep infringement. This saves considerable time and money down the road.
Keep in mind that FTO analyses are not perfect. The sheer number of patents globally makes it impossible to review each one individually. I emphasize that you must use smart assumptions to focus your search. This might mean concentrating on patents in specific technology areas or those held by your main competitors.
Smart Defensive Patenting Tactics
Another key aspect of patent risk management involves building a defensive patent portfolio. This involves deliberately obtaining patents on your own innovations to create a shield against legal challenges. A strong collection of patents discourages competitors from using their patents against you. It also provides leverage for cross licensing deals. I have assisted many organizations in creating patent portfolios that both protect their core technologies and create new licensing revenue.
A defensive patenting strategy does not mean patenting every idea. Be selective. Focus on the innovations that are most likely to draw attention from rivals or provide a major advantage.
The High Cost of Ignoring Patent Risks
Overlooking patent risk management can lead to serious trouble. Patent lawsuits are famously expensive. The costs often reach into the millions. The American Intellectual Property Law Association (AIPLA) says that the average expense of defending against a patent infringement case ranges from $2.8 million to $5 million, based on how much money is at stake. A negative outcome could also lead to court orders that stop production or sales, on top of significant financial penalties.
I have even seen businesses forced to shut down completely because of patent infringement cases. Results like these highlight how important it is to deal with patent risks proactively.
The Impact of Patent Trolls and Non Practicing Entities (NPEs)
Much of patent litigation comes from Non Practicing Entities (NPEs), often called patent trolls. These entities do not make or sell products. Instead, they buy patents specifically to use them against companies that are actively doing business. Dealing with patent trolls calls for a different plan than reducing risks from competitors. I typically suggest several approaches:
- Defensive Patent Portfolio: A strong portfolio can discourage trolls or offer grounds for counterclaims.
- Early Settlement: Settling early, even for a small amount, is often more economical than long drawn out litigation.
- Challenging Invalid Patents: Challenging the validity of patents that are asserted through inter partes review (IPR) procedures at the Patent Trial and Appeal Board (PTAB).
- Joining Anti Troll Organizations: Groups such as Unified Patents and LOT Network provide resources and strategies to minimize the risk of patent troll litigation.
Strategic Advice to file a patent in India
For companies that are operating or planning to operate in India, understanding the specific details of the Indian patent system is vital. India has become an appealing market for companies in many different industries. To successfully file a patent in India, several things deserve consideration. The process starts with a thorough patent search to confirm that the invention is new and not obvious. The application must then be written following Indian patent law. This includes clear specifications, claims and drawings, if needed. Remember that India uses a first to file system. This means that the first party to submit a patent application generally secures the patent rights, regardless of who came up with the invention first.
I often advise clients to hire experienced patent attorneys in India. They can guide you through the complexities of the Indian patent system and make sure that the application meets all the requirements. The expense to file a patent in India depends on how complex the invention is and what the attorney charges. Proper budgeting for these expenses is crucial for effective risk management. When considering the patent role in risk management, consider international filings.
Integrating Patent Risk Management into Corporate Governance
Patent risk management needs cooperation between legal, research and development and business teams. It should be part of the company’s overall risk management approach. The board of directors should review it on a regular basis. I suggest creating clear policies and procedures for spotting, evaluating and reducing patent risks.
This includes teaching employees about patent awareness and encouraging them to report potentially patentable inventions. You should also conduct regular patent landscape analyses to identify possible threats and opportunities. By making patent risk management a key part of corporate governance, companies can protect their innovations, reduce liabilities and gain an advantage over their competition.
Conclusion
The patent role in risk management is a critical function that deserves attention at the highest level. By proactively spotting and reducing patent risks, companies can protect their innovations, avoid costly lawsuits and strengthen their competitive position. As the global patent environment continues to change, a strategic and complete plan for patent risk management is essential for long term success.
