The current economic downturn is forcing operators to tighten their belts by cutting cost in various ways. Vodafone announced it will focus on cost control on the heels of a reduced revenue outlook for 2009. Nortel reported a huge loss of $3.4 billion in the third quarter and revealed plans to reduce headcount by 5%. Many other leaders like Nokia have also revised their economic outlooks.
Telcos large and small will reduce costs by outsourcing more processes, reducing headcount and generally reaffirming focus on core markets and technologies. The cost-cutting conversation for many will eventually turn to intellectual property (IP). There is opportunity for many thousands or millions of dollars in value creation by reducing costs and increasing revenue through strategic management of IP.
Legal fees and filing fees can easily surpass $20,000 for a single US utility patent application, and maintenance fees for an issued patent can total $6,000. When that same patent is filed globally, the costs further multiply. A patent issued by the European Patent Office can rack up more than $20,000 in maintenance fees over its lifespan, excluding filing fees. In Japan, expect to pay more than $8,000.
Even still, the vast majority of companies consider only a few criteria, such as an invention's potential patentability and overall product importance, when making costly patent decisions. This non-strategic approach can lead to out-of-control costs and, too often, a low return on IP investment. Worse, many companies owning more than a few issued patents are unknowingly carrying significant cost burdens by paying maintenance fees for patents that are not supportive of current or future business strategies, markets and technologies.
It is not enough to simply ask if an invention is patentable or whether it supports a key product or technology. To generate patents that are truly valuable to the business, companies should adopt a systematic patent review process that considers many other strategic factors.
First, it is critical to identify the intended strategic uses of the potential patent. Will the primary use of the patent be to create freedom to practice, or to block others‾ Will we use it in cross-licensing relationships to gain access to others' IP or to drive telecom industry standards‾
Companies should also analyze the useful life cycle of the invention before filing a patent. For example, if the invention relates to a mobile phone component, will the market be on to something else, or will the technology become obsolete before the patent issues in three or more years‾
Further, it is important to consider trends in the competitive IP landscape.
Inventions that do not meet important strategic criteria for a patent application may be protected with other IP vehicles.
Enabled technical publications are a very low-cost alternative to patents that can be used as prior art to discourage competitors from pursuing related patents. This is particularly useful as a way to safeguard against others creating a 'patent picket fence' around a core invention by obtaining their own patents on incremental improvements. IBM, Motorola, Sony, Siemens and many others in telecom use defensive publishing as a critical IP tactic.
Strategic business decisions can be informed when a marketability assessment is combined with an internal assessment of the patents' business alignment.