The Value of a Patent According to EPO: 6 Key Questions Answered

The value of a patent according to EPO: six key questions answered

May 16, 2017

Generally speaking, patents are not merely regarded as a legal document providing a technical solution to a problem; they also provide a basis for fostering innovation and promoting commercial opportunities. Business prospects arise when patents exclude others from a given market or create potential for marketing a product related to the patent or for patent licensing to their companies, which may then use the technology. Patents are also sometimes considered as a type of contract between the inventor and society. On the one hand, the inventor is interested in benefiting (personally) from his invention. On the other hand, society is interested in encouraging innovation to promote better products and production methods which can be used for the benefit of all. Below, the reader can find answers to the most common questions on the value of a patent, based on European Patent Office (EPO) policy and general philosophy

1. What can be described as the value of a patent?

The monetary value of a patent is usually considered to be the income that a company can derive from it. In other words, the value of a patent is the future commercial potential resulting from using the patent. The patent may be used to protect one’s own products or to create licensing income. Patents can be extremely valuable assets that can be assigned, sold, acquired and used as a strong “weapon” in commercial negotiations.

2. Who is interested in the value of a patent?

Besides being interesting to the applicants themselves, patent value is mainly of interest to technology transfer institutes, banks, competitors and venture capitalists.

3. What makes my patent application strong?

The “strength” of a patent becomes apparent when your competitors want to copy you. Many patent applications can be drafted in a certain way to be admissible by the EPO. Generally, if you follow the EPO rules and guidelines, receiving a patent is possible. However, a patent in and of itself may not return any value.  A well thought out and detailed patent vision and strategy is required for your patent to have an impact in the relevant patent arena, where hundreds of competitors may be queuing up with a similar idea. Additionally the claims for a patent must be written so as to protect the innovation from competitors.

Some key tips include:

  • Apply for a patent that you will actually use as a commercial vehicle. Many patent applications are made for patents that will never be used commercially (paper patents). Test the marketability of your invention, perform a careful search of what the market needs are now and, even more importantly, where you anticipate the market needs will be moving forward.
  • An easy way to distinguish good patents from bad is to focus on the length and number of claims. Well-drafted patents tend to include claims that are broad rather than claims that are limited in scope and number. As we will demonstrate below, a carefully drafted patent becomes less susceptible to possible infringements.
  • Prior art search points the way to strong patents. As the EPO suggests, a prior art search will either provide reassurance that you have a good patent or reveal that investing in your idea is not a wise option.

More specifically, EPO’s guidance:

  • You should not ignore evidence you do not like. The purpose of a prior art search is to reveal evidence that may protect you from unwise financial decisions.
  • The absence of prior art at the time of your searches may not be a permanent absence. You should update your prior art searches periodically as you develop your idea.
  • No prior art search – not even an official Patent Office examination – is regarded in law as conclusive proof of novelty.

4. Is word choice an element of a strong patent?

In short, yes. Apart from drawings, words used in patent applications make a difference. EPO has some very indicative examples of how choosing a word wisely can reinforce your whole patent application. For example, if a claim starts with words like: “Apparatus for carrying out the process etc…” this must be construed as merely meaning apparatus suitable for carrying out the process. Apparatus which otherwise possesses all the features specified in the claims but which would be unsuitable for the stated purpose or which would require modification to enable it to be used in such a way would normally not be considered as anticipating the claim.
Similar considerations apply to a claim for a product for a particular use. For example, if a claim refers to a “mold for molten steel,” this implies certain limitations for the mold. Thus a plastic ice cube tray with a melting point much lower than that of steel would not come within the claim.

These examples show that the applicant must also research what words mean when used in a particular field. In-depth knowledge of your product and its applications will help you choose the right words (which may vary depending on the language) to show that you are willing to invest in your patent.

5. How do I know if I have a valuable patent?

Research has identified several indicators that may be used to assess a patent’s value. For example, the number of forward citations is often used as a strong indicator of patent value. A forward citation refers to the patent to be evaluated in a later document. Other indicators of patent value include the lifespan of a patent, the outcome of oppositions to the patent application and as explained above, the number and quality of claims.

6. Is my patent weak in terms of long-term defensibility?

Inventors do not understand the real value of their patents until they are called to defend it. Commonly, “weak” patents lead companies to invest in other means of protection like secrecy, NDAs, etc. The answer to this question not only concerns the strength of your patent claims but also your long-term patent management.

Strong patent portfolios usually have the following characteristics:

  • A clear strategy from the start. During the initial product development, an IP strategist can help you identify where you need protection and help you develop a defensible patent portfolio.
  • Good patent portfolio managers will keep a close eye on rival companies’ moves in the intellectual property field to maintain a competitive edge, identify cross-licensing opportunities and protect their clients from potential litigation.
  • Knowledgeable patent portfolio managers regularly review their patent portfolios to identify non-core patents that add value to other entities for licensing-out or sales. Furthermore, they routinely evaluate their patent portfolios to identify outdated patents that no longer reflect the company’s business objectives.

Strong patents can be considered a company’s cornerstone. In an era where immovable assets are outdated, patents are sometimes the only proof that a company is commercially strong and viable. Markets need robust inventions that will be translated into financial prosperity. Remaining vigilant and informed and using the expertise of professionals will transform your simple idea of an invention into a source of funding and development.

Sofia Georgiadi
Attorney at Law
LLM Commercial Law

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