RED C. H. JEN*

It is an inevitable trend that patents are regarded as a viable method to generate profitable revenue, and among all the applications that utilize patents as profitable revenue, building up strong patent portfolios now plays an increasingly important role due to their versatility and strategical advantages.

As is evident from relevant articles of the Patent Act (e.g., Article 58 that stipulates effects of invention patent right and Article 96 that stipulates the right to claim in the event of patent right infringement), patents are usually regarded as a shield that protects inventions from being infringed. Therefore, it is important to comprehensively expand the coverage of patents in all dimensions of the patent right, including term, regions, technique, and/or products of protection: (a) always keep relevant patents in force by maintaining the patent term, filing divisional applications or filing different applications year by year; (b) file applications in different countries to expand the patent family; (c) file additional applications based on relevant techniques; and/or (d) file additional applications to cover all relevant products. This approach involves several decisions to be made, depending on the corporate strategy in terms of cost, risks, business scale, etc. The goal is to build a rigorous and effective patent protection web that will eventually enable a corporate entity to establish a significant competitive advantage in a specific technical field.

For a patent portfolio, to ensure the best and most thorough protection of an essential technique, applicants should collect as many relevant patents as possible, depending on the strategy being used. Common strategy types include the barrier, wall, carpet and jungle types as explained in the following table:

Based on the contents in the table above, in light of budget constraints, it is possible to only apply for patents covering crucial techniques, and for a patent portfolio described as the barrier type. In such case, however, the risk of infringement is much higher compared to the other approaches since competitors would be able to devise an avoidance design and easily circumvent the patented scope. On the other hand, if the budget is of no concern, applicants may consider filing as many patents as possible to protect all aspects of a certain technique, building a patent portfolio described as the carpet type. In such case, it will be difficult for competitors to circumvent the protected scope. In addition to the above two approaches to building a patent portfolio, the more balanced wall type approach or the more strategical jungle type approach may also need to be considered in order to create and coordinate a corporate entity’s patent portfolio that is most appropriate and fits with the actual business scale. Nevertheless, none of these approaches can offer an all-embracing solution and it is important to bear all possibilities in mind and make adjustments along the way when building a patent portfolio and expanding an enterprise’s business scale.

According to Article 62, Paragraph 1 of the Patent Act, “The assigning, entrusting, licensing, or establishing of a pledge on a patent right by the patentee shall have no locus standi against any third party unless it is recorded with the Specific Patent Agency.” Accordingly, in addition to applying for patents, another approach to enrich a patent portfolio is to purchase relevant patents that are not owned by a patentee of concern through assignments.

When talking about the purchase of patents, it is sometimes worthy to consider discussing a transaction with a non-practicing entity (NPE), which refers to an entity that collects patents from patent owners but does not produce any product or carry out any development and implementation. This entity may be a public or private research institute that collects patents mainly for fundamental analyses and studies, and then authorizes the results for other individuals or groups to handle and carry out. Accordingly, companies may always consider buying patents from the NPE to enrich the patent portfolio, and maintain a good cooperative relationship with the NPE to avoid potential risks caused by the lack of any essential patents. Additionally, do be careful of one possible incarnation of the NPE, the notorious patent troll. A patent troll is known to maliciously collect patents and then initiate litigations against, or gain royalty from, alleged infringers after these alleged infringers have already invested extensive resources into production or marketing. Patent trolls usually acquire patents with the intention to squeeze profits from practicing entities without engaging in any effort to develop relevant inventions and techniques. This kind of risk should be carefully noted and avoided, preferably by collecting relevant patents in advance. Therefore, the importance of a well-built patent portfolio needs no further explanation and is self-evident.

Once an expansive patent portfolio is established either by applying or purchasing patents, in addition to prevention of possible infringement, the combination of patents may also act as a strong weapon against potential competitors. In other words, the collected patents in an extensive patent portfolio may simply serve to protect a company from being accused of patent infringement. Alternatively, companies may also consider enforcing their collected patents and their increasingly broadening patent portfolio in a proactive fashion to find and prosecute patent infringers, thereby transforming a company’s IP department from being only an overhead expense into a financially productive unit. Further, it can be a huge advantage to have a strong patent portfolio when a company decides to sell or license its patents or undergoes mergers and acquisitions. In short, a strong and expansive patent portfolio can provide multiple options to cut down costs and generate profits, while minimizing the risks of potential infringements.

Since the increasing importance of patent portfolios is an inevitable trend, the engagement of patent attorneys becomes more and more important. Experienced patent attorneys are capable of establishing a comprehensive patent portfolio for enterprises, especially when a more sophisticated strategy rather than just a barrier type or carpet type portfolio is needed. More specifically, after helping an enterprise to build an expansive patent portfolio, patent attorneys can be relied on in terms of putting said portfolio into practice, such as by initiating patent litigations. Accordingly, professional attorneys will be able to devise a comprehensive plan to maximize a patent portfolio’s value.

*Patent Attorney, Section Chief of International Patent Division at Tai E International Patent & Law Office