For companies with products on the market — most notably in the United States, Europe, and even in emerging markets such as China or India — patent risk is one of the defining elements of their commercial success: a patent clearance search is the standard process for identifying and controlling these risks.
For startups seeking opportunities in cutting-edge technology fields, it is usually simple to limit the search scope and determine the company’s core technology.
However, as the industry moves towards maturity, new entrants join the field and file more patents. At the same time, the technologies involved in a product often become more sophisticated, making it harder to determine the relevance of a specific patent to a product.
As a result, the scope of a patent clearance search can become vague and some companies — especially in Asia — may even give up on controlling patent risk and simply allocate a budget for taking licenses.
As history has shown so well, preparing for risk is always more cost-effective than settling it when it occurs: Patentcloud’s Patent Quality and Value Rankings can help set the scope of a patent clearance search when a product becomes more complicated, and the number of related patents continues to increase.
Traditionally, practitioners take into consideration jurisdiction, legal status, and even current patent owners in their practices for patent clearance searches.
As the patent filing trend continues to rise, however, some industries — such as LCD, LED, wireless communication, mobile phones, lithium battery, and electric/unmanned vehicles — can easily involve thousands of active patents in each major country.
It would be better for practitioners to define the product and the criteria for determining the relevance of a patent to it. In this way, they could then evaluate the relevant patents based on the likelihood of infringement.
While there would still be thousands of relevant patents, the Patent Quality Ranking could be useful when limiting the search’s scope, so that the preliminary review could start with the patents that have relatively higher quality (those that are relatively less likely to be invalidated).
By identifying patents with a Patent Quality Ranking higher than D (the top 25% most likely to be invalidated), practitioners could somewhat narrow down the scope: if a patent holder takes the D-ranked patents against the product, it should be possible to settle the risk by invalidating them.