A patent portfolio is a collection of
patent
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an sufficiency of disclosure, enabling discl ...
s owned by a single entity, such as an individual or
corporation
A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...
. The patents may be related or unrelated.
Patent application
A patent application is a request pending at a patent office for the grant of a patent for an invention described in the patent specification and a set of one or more claim (patent), claims stated in a formal document, including necessary officia ...
s may also be regarded as included in a patent portfolio.
The monetary benefits of a patent portfolio include a market
monopoly
A monopoly (from Greek language, Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic Competition (economics), competition to produce ...
position for the portfolio holder and revenue from licensing the
intellectual property
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
. Non-monetary benefits include strategic advantages like
first-mover advantage
In marketing strategy, first-mover advantage (FMA) is the competitive advantage gained by the initial ("first-moving") significant occupant of a market segment. First-mover advantage enables a company or firm to establish strong brand recogniti ...
s and defense against rival portfolio holders. Constituting a patent portfolio may also be used to encourage investment.
Because patents have a fixed lifespan (
term of patent
The term of a patent
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an sufficiency of disc ...
), elements of a portfolio of patents constantly expire and enter the
public domain
The public domain (PD) consists of all the creative work to which no Exclusive exclusive intellectual property rights apply. Those rights may have expired, been forfeited, expressly Waiver, waived, or may be inapplicable. Because no one holds ...
.
Market value and evaluation
The value of a corporation's patent portfolio can be a significant fraction of the overall value of the corporation.
Ocean Tomo LLC, for example, maintains an index of corporations whose market value is governed in large part by their patent portfolio value. The index is called "
Ocean Tomo 300 Patent Index".
Another example is ''IPscore''—acquired in 2006 by the
European Patent Office
The European Patent Office (EPO) is one of the two organs of the European Patent Organisation (EPOrg), the other being the Administrative Council. The EPO acts as executive body for the organisation —a software application, developed by the Danish Patent and Trademark Office. The application estimates "the economic value of patents and development projects".
Patent portfolio valuation
Because patent portfolios can contain hundreds, sometimes thousands, of patents, companies that wish to license a patent portfolio often must negotiate without
complete information
In economics and game theory, complete information is an economic situation or game in which knowledge about other market participants or players is available to all participants. The utility functions (including risk aversion), payoffs, strategies ...
. In many cases, it is too costly for the negotiating parties to assess the validity and value of each of the portfolio's individual patents. Instead, parties will attempt to set a royalty that, over time, "converges on an objective probabilistic assessment of the portfolio's value."
[J. Gregory Sidak, ''Evading Portfolio Royalties for Standard-Essential Patents Through Validity Challenges'', 39 WORLD COMPETITION (Forthcoming 2016) at 10, https://www.criterioneconomics.com/evading-portfolio-royalties-for-standard-essential-patents.html.]
See also
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Intellectual property valuation
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Patent holding company
A patent holding company (PHC) exists to hold patents on behalf of one or more other companies but does not necessarily manufacture products or supply services based upon the patents held.
Patent holding companies may exist for tax reasons. Pate ...
*
Patent map
A patent map is a graphical model of patent visualisation. This practice "enables companies to identify the patents in a particular technology space, verify the characteristics of these patents, and ... identify the relationships among them, to se ...
*
Patent monetization
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Patent pool
In patent law, a patent pool is a consortium of two or more companies agreeing to cross-license patents relating to a particular technology. The creation of a patent pool can save patentees and licensees time and money, and, in case of blocking pa ...
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Patent thicket
A patent thicket is "an overlapping set of patent rights" which requires innovators to reach licensing deals for multiple patents. This concept has negative connotations and has been described as "a dense web of overlapping intellectual property ri ...
*
Patent troll
In international law and business, patent trolling or patent hoarding is a categorical or pejorative term applied to a person or company that attempts to enforce patent rights against accused infringers far beyond the patent's actual value or ...
References
Patent law
Monopoly (economics)
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