Patent Law Insights : Software Patent Lawyer & Attorney : Perkins Coie Law Firm : Intellectual Property & Technology Law

There are several ways to increase the value of a patent portfolio.  One is to ensure that patented claims cover  the evolutionary path of the relevant technology.  A second is to be sure to file patent applications (after receiving foreign filing licenses) in jurisdictions where the technology could have competitors or markets.

One market that is seen as being increasingly important is India.  A billion people live there and an increasing number of them are entering the middle class.  The inevitable off-shoring trend, though painful to many in the U.S. and Europe, has been a boon to people there.  They are demanding products and services they could not previously afford and, because of the popularity of American media, their demand for foreign brands is seemingly insatiable.

Although foreign companies have seen India as a source of cheap labor and a potential future market for several years, they have limited their direct investments because of India's rules that restricted royalty payments without prior government approval and lax enforcement of intellectual property rights.  The government of India on Wednesday announced a liberalization of the royalty payment rules. 

With this announcement along with improved enforceability of intellectual property, India is setting itself up for a bright future on the world stage.

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Entities sometimes need to determine what a patent or a portfolio of patents is worth.  Valuation of a portfolio may be useful when, among other things, an entity desires to:

• determine whether to pursue a patent application;
• evaluate a company's value (e.g., for merger, acquisition, or stock price); or
• estimate damages.

The value of a patent can depend on a multitude of factors including but not limited to: 

• breadth of a patent claim;
• scope of the patent claim given up during prosecution;
• validity of the patent given changes in patent laws;
• price customers would be willing to pay for a product embodying the claimed invention;
• license fees paid for similarly important components; and
• costs to substitute the claimed technology with an alternative.

Often, the value of a patent is not publicly known because parties often settle matters out of court.  Other times, the value of a patent becomes abundantly clear after a blockbuster court case.  For example, a jury yesterday awarded nearly $1.7 billion to Johnson & Johnson, whose patent the jury determined was infringed by Abbott Laboratories' drug, Humira.  Abbott Labs plans to appeal the verdict.

Valuing a patent can thus require the skills of someone who understands both legal as well as business issues, or at least an interdisciplinary approach.

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I just finished reading Burning the Ships: Intellectual Property and the Transformation of Microsoft by Marshall Phelps, which is a fascinating account of the transformation of Microsoft's patent power during Marshall Phelp's tenure there.  Under his leadership, Microsoft has become a significant holder of patents covering many important aspects of Microsoft's technology.  The book is well worth the read for anyone who wants to understand Microsoft's patent strategy.

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