One of our clients recently asked us to provide the Pros and Cons of filing multiple, more detailed patent applications to cover a particular technology as opposed to filing a single, more general patent application. An overview of our answer is provided below.
- PROS
- Exclusivity/Market Advantage/Higher Profit Margins
Patents can be used to dissuade and/or legally prevent competitors from copying a business’ products. If done correctly, this can help create an “economic moat” around the company’s business, which should result in the company being able to charge more for its services, resulting in higher profit margins.
Including more detail in patents will almost always result in stronger patent protection. The additional detail allows us to draft a stronger series of strategic fallback positions in case our broadest claims are rejected during negotiations with the patent office. This can significantly increase the chances of a particular patent application being allowed. These types of fallback positions are also often crucial at trial or in related settlement discussions since, if a patent’s broadest high-level claims are invalidated, more technically focused claims will often still cover the product or service at issue.
Having multiple patents that cover different detailed aspects of a particular technology also typically provides stronger patent protection than a single patent covering the relevant technology at a higher level. This is because it generally costs more to review and challenge more focused patents. Also, because the patent office fees and legal fees associated with challenging the validity of patents are incurred on a per-patent basis, it becomes significantly more expensive to attack a patent portfolio if multiple patents are involved. As an example, the patent office fees for attacking a patent via an Inter Partes Review (IPR) are currently over $50k, and the average total cost of an IPR is currently about $350k – $500k per patent, with no guarantee of a positive outcome.
Also, having multiple applications pending on related technologies can provide options for effectively switching patent examiners during patentability negotiations if those negotiations become difficult, which can help avoid the need to potentially appeal an incorrect decision. This can significantly reduce the overall time and cost associated with obtaining a patent.
- Encouragement of Investment/Higher Valuations
A good patent portfolio can be used as a marketing tool for potential investors or purchasers of a company. If constructed properly, the patent portfolio should methodically highlight the company’s current proprietary technologies and provide a roadmap for the unique aspects of the company’s upcoming products and features.
Providing more technical detail and separating key inventive concepts into separate patent applications (generally with separate descriptive titles) helps emphasize the key features that the company has exclusive rights in. We have seen situations where a company’s IP has taken a back seat in the valuation process because it wasn’t presented effectively in negotiations. Having detailed and effectively categorized and labeled patents can help avoid this.
- Strategic and Defensive Benefits
A strong patent portfolio can help defend a company from potential patent lawsuits in two ways. First, any disclosure of a particular technology made in a particular patent application should block competitors from patenting that technology. This reduces the overall risk of patent lawsuits. Second, having strong patents in place often prevents competitors from initiating patent infringement lawsuits since they may be facing counterclaims for patent infringement in response to initiating the lawsuit.
Including more technical detail in patent applications will help to more effectively block competitors from obtaining similar patents of their own. It will also generally produce stronger patents, which should provide an additional deterrent effect to potential patent lawsuits.
- Licensing Opportunities
Patents can often be used to generate additional revenue through licensing. Having stronger, more detailed patents should increase the chances of licensing opportunities.
- CONS
- Cost – Legal Fees and Use of Internal Resources
The most significant downside to providing additional detail in patent applications is cost, both in terms of legal fees and the cost of using internal resources to help prepare and review the various patent documents. With costs in mind, we would always recommend a steady, methodical, and balanced approach to developing a strong patent portfolio. We also do our best to reduce inventor time in reviewing patent documents.
- Public Disclosure of Technology
Another downside relates to public disclosure. Because patents are public documents, in most situations, anything that we include in them will be made public. There is an often-overlooked option to have U.S. patent applications not publish unless the corresponding patent is granted, which can address this concern to some extent, but it’s always important to make sure that we’re comfortable publicly disclosing any information that we include in patent documents.
In summary, if funding is available and disclosing detailed information regarding the related technology isn’t an issue, we typically recommend filing multiple, more detailed patent applications to cover a particular technology. This approach typically provides a company with stronger offensive and defensive patent protection and – especially in the case of startup companies – can often have a meaningful impact on a company’s valuation.