This article is written from a biotech/pharma perspective, though much of the advice will be applicable to patent cases in other technology areas. It is based on our experience of working with small and medium sized biotech/pharma companies. The purpose of the article is to give general advice on what should be thought about at different stages in the life of a patent portfolio. It must be borne in mind that every portfolio is different because each technology area is different and the commercial needs of each company are different. Patent attorney advice should therefore be sought for each specific portfolio.
Companies that are considering their first patent filing need to think about the fact that it will probably one day be part of a portfolio. Building a portfolio can be a complex process and that must be recognised from the outset. Sometimes a company is in the position where it is as simple as filing on every new development that occurs. However often a lot of other factors can also play a part, and one purpose of this article is to highlight what those might be.
Why One Needs to Think About How to Build a Portfolio
Where patents represent a major part of the value of a company it is advisable to build up a patent portfolio in the area of commercial interest. It is important to give careful thought to how this should be done right at the start of the process. Generally less resources are available at the earliest stages of a company, and so it is of course important to use them as effectively as possible when filing patent applications. However it can also be the case that at the earliest stages a company will not have anyone whose role it is to think about how the portfolio needs to develop. That can lead to ill-thought-out early patent filings which will cause problems later.
The Commercial Goal and the Purpose of the Portfolio
The broadest question to ask is ‘what role patents will have in achieving the commercial goals of the company?’. The purpose of the patent portfolio is to provide monopolies in the areas of commercial interest, and so a company will need to decide on areas which are of commercial interest to it. That will be the immediate area it is working in and in which it will be selling goods or services. However the company should also identify secondary areas in which competitors are active or areas where other forms of income could be possible (such as from licencing). Clearly these secondary areas might be much less important than the areas in which the company is working, but they should always be borne in mind in case there are straightforward ways of obtaining protection there as the portfolio grows.
The Structure of the Portfolio
A portfolio will consist of patent cases that may or may not overlap in the areas they cover. Whether or not there are overlapping cases will depend on the nature of the research and commercial goals. In general for important products one would expect to have multiple layers of protection. For example, a first case might be directed to a new molecule and its therapeutic use. A second case may be directed to the molecule within a mixture than enhances its properties. A third case may be directed to the most effective mode of administration.
In addition cases will vary in the breadth of protection they provide. There might be earlier broader cases that, say, cover a broad class of compounds, with later narrower cases covering the most effective ones. There will probably also be a mixture of strong and weak cases, with the weak ones less likely to be granted.
Sometimes a portfolio can be thought of in terms of vertical and horizontal protection. Vertical protection is provided by a set of cases covering a given product, and horizontal protection might be a way of covering more than one product. For example a company might have three sets of distinct non-overlapping compounds, protected by three sets of vertical patent cases. A horizontal case could, for example, be directed at a method of identifying, making or administering any of the three sets of compounds. Clearly companies will often use the same approaches and techniques when developing and investigating compounds and so there can often be opportunities for filing horizontal cases.
Roadmap of the Research, Small Developments and Important Cases
At an early stage a roadmap of the expected research should be produced. Clearly this may involve a lot of guesswork, but it will help to provide guidance on how the portfolio needs to develop. Clearly patent filings will occur when there are developments in the research. Very minor developments can be patentable, and so a company needs to consider all developments that happen. For example, the researchers will usually optimise known assays as part of their work and that could lead to a patentable invention in itself, though it might be decided that it is not commercially worthwhile to file on. What should be avoided is the automatic preconception that patent applications will only be filed for the product that is being developed.
When making decisions about the portfolio the relative commercial importance of every case needs to be kept in mind. A roadmap of the research should help to identify when the company would expect to file the important cases, and that will help to avoid allocating too many resources to less important cases which might be filed earlier.
Earlier Filings Are Prior Art Against Later Cases
Earlier patent filings will be prior art against later filings, and sometimes they are the most relevant prior art cited during examination. The contents of each patent case therefore needs to be reviewed to ensure there is no unnecessary disclosure that will impact negatively on future filings. Clearly the focus should be on protecting later important cases from earlier less important cases, and perhaps even deciding not to file any cases before the first important case.
The cases in question will need to be looked at carefully to assess the extent of the problem. To give two very general examples:
– Sometimes earlier cases are directed to screening methods for identifying compounds, with later cases directed to the specific identified compounds. In general according to present practice that should not cause problems for the subsequent cases.
– In the situation where the earlier case is directed to using a molecule to treat a specific condition, and the subsequent case concerns use of the same molecule to treat another condition, problems with inventive step may well arise.
Time Frames Relevant to Portfolio Building
How quickly the portfolio is built up will depend on the speed of the research and the money that is available. In addition competitor activity might also be relevant. The costs on a patent case will in general escalate with time and so decisions on patent filings must be made taking into account the future costs and expected revenues. Clearly every filing will take away from the resources available for other patent cases, and so there must be constant monitoring to ensure that resources are preferentially allocated to important cases. The maintaining of existing cases must not be to the detriment of filing new ones that are more important, and so abandoning of earlier cases might be considered as the portfolio grows.
Costs can easily mushroom on a large portfolio. From the outset there needs to be a good grasp of expected costs for the foreseeable future, and control of costs needs to be asserted whenever appropriate. One important determinant of cost will be the number of territories chosen at the national phasing stage. In addition, at present, validation of a European patent can also be expensive if many territories are chosen. Costs can be controlled by limiting the number of territories at these two stages.
Translation costs at national phasing and European validation can be significant, and therefore thought might be given to limiting the length of the specification on less important cases. Sometimes researchers review and input on patent specifications as if they were scientific papers, and so less important cases might get more attention than they merit. The perceived importance of a case should be known to everyone working on it, so that it does not use too many resources.
In addition the cost of examination can sometimes be reduced by narrowing claim scope earlier in examination, which should make it less likely that complex arguments will need to be filed. For less important cases whether or not to abandon should be thought about at the early stages of examination if examination looks as if it will be difficult.
What You Need to Know About the Area of Commercial Interest
When building the patent portfolio it is worthwhile monitoring the area of commercial interest to see how it might be changing. Clearly third party publications will change the prior art situation for future filings. In addition these publications will identify parties that are active in the area and what they are working on, which in turn has a bearing on what claims to pursue on patent cases. In addition approaching such third parties for possible collaborations might make it less likely they will take actions, such as oppositions, against your patent cases.
Often there are commercial reasons for filing cases to protect certain areas, though it is not clear that Patent Offices will allow the cases, which might for example be due to prior art reasons. Such ‘weak cases’ are often filed in chemical and biotech practice. However they can cause problems. If there are too many weak cases in a portfolio then it can undermine the credibility of the entire portfolio if it is ever the subject of due diligence. In addition having weak cases can make the task of making decisions based on them much more complex. It makes it much more difficult for the business side of the company to evaluate the real position the company is in, and sometimes weak cases are more trouble than they are worth simply due to such internal reasons. There is more likelihood of dissent on whether to file a weak case, and that can lead to friction between different departments. Scientists are sometimes puzzled by why such cases are filed when there is a likelihood they will not be granted.
Weak cases often require more complex arguments to be filed in examination. That will require more resources. In addition it is more difficult to assess the possible impact of the arguments on examination of other cases.
However there can also be very good commercial reasons for filing weak cases. In view of the above comments though we would advise that the reasons for filing a weak case are clear to all concerned, and that the resources given to such cases are carefully monitored.
Who Are the People Inputting on Patent Decisions?
A patent portfolio is built in the context of a particular company which will usually have business people and researchers. It is important that all the relevant people are able to input as they need to on patent decisions. Too often only the patent department will know its true strength, and others will simply assume that it provides strong protection for everything which is important. It must be borne in mind that the patent department will usually not have as good a grasp of what is commercially important to a company as the business people. In turn the business people will probably not realise the extent to commercial considerations might impact a patent filing. They will make the assumption that patent claims are a matter on which only the patent department and the researchers should input.
A Creative Fresh Approach is Needed for Each Filing
Too often in a portfolio new patent filings are written using the language and perspective of the previous filing. However that can sometimes present the invention as something that logically follows on from the previous invention. If an Examiner comes to that view then it might lead to inventive step problems. Instead the new invention needs to be looked at in a new way, from the perspective of the prior art present at that time, and the language of the claims needs to reflect that. One option might be to use a different person to come up with the new claim language. They are more likely to have a fresh perspective.
Make Sure the Rationale for Each Patent Filing Can Be Justified to Third Parties
The patent portfolio may be subject to due diligence by third parties, for example by potential investors or buyers. For each case the patent department should be able to justify the commercial reasons for filing. In addition for cases where problems are expected during examination, there should be a strategy in place for how they will be dealt with. Often inventive step will be an issue and it is worth having possible arguments in support of inventive step kept on the internal files at an early stage in the case. Investors may focus on problems expected to arise during patent prosecution, but are less likely to be concerned by them if they know that strategies are in place for dealing with them.
Real World Decision Making
It is appreciated that for small companies it would be difficult to implement all of the suggestions made in this article due to lack of resources. However it is hoped that awareness of the complexities of building a portfolio will be of assistance in avoiding many of the pitfalls. It is also appreciated that it might not be possible to come to clear conclusions on some of the points, such as what the areas of commercial importance are or which cases are more important. There may not be agreement within the company on such issues, and ultimately it must be accepted that some guesswork will inevitably go into the decision-making.