Here is a dirty little secret of my profession–patents confuse even the most sophisticated business people. I have watched CEOs who can read a complicated term sheet in their sleep stare at their own patent claims with no real idea what those claims cover. This also means that they
It is not their fault. My profession is not paid to make patents comprehensible to their owners; it is paid to obtain and maintain them, and a claim set drafted to survive examination is not drafted for the person signing the checks. Whose job is it, then, to close that gap? Not, in the ordinary course, your patent attorney’s. The Patent Industrial Complex, as I call it, is quite comfortable with the arrangement, because confusion is less a defect in it than a billing model.
A mentor told me something years ago that I have never forgotten: people spend an enormous amount of their working lives confused, confusion paralyzes them, and an expert’s job is to clear it away so that they can move forward. Nowhere is that more true than in patents. And this post is meant to clear up some of the confusion that you, as a patent owner, may have about what your patent portfolio means to your business.
So here is where most patent owners live: “I have patents. They cost me a LOT of money. I have competitors selling products I believe my patents cover, so somebody is probably infringing them. But I do not actually KNOW.” Note how much work the word “probably” is doing there, and that it will do none of it for you when it counts, because “probably” does not get you a licensing conversation, a litigation funder, or a buyer.
Knowing at the level necessary for actual use of your patents in a business or litigation context requires an evidence of use analysis–which can be thought of in laymen’s terms as an “evidence of infringement” analysis. This requires two things. The first is a rigorous understanding of your own patents, namely, what each claim actually means, element by element, in language a businessperson can act on. The second centers on a comprehensive analysis of other companies’ products, as can be found in datasheets, manuals, specifications, product teardowns, and marketing collateral, with all of these available resources being mapped against every element of every claim in your patents. If you skip either of these steps, you cannot know whether there is any way for you to leverage your patents. Put simply, if you do not conduct both of these analyses, your patents are effectively worth nothing. Full stop.
Of course, this work has always been expensive, which often prevented patent owners from seeking clarity, especially after dropping lots of money to obtain them in the first place. In this regard, not long ago, outside counsel quoted a client of mine $5,000 to $10,000 per patent for credible evidence of infringement documentation across his portfolio, which was a non-starter for a company that had already spent heavily to obtain them. This did not include the groundwork of finding the third-party information that was required to identify products that might be relevant to the patents’ claims. Multiply these costs by a portfolio and you can see why most owners have stayed confused, stayed stuck, and left the patents hanging there as “very expensive wall art.”
Expert-directed AI has changed that arithmetic in a way I could not have imagined a few years ago, the last time I watched a client try to put its patents to work in an exit. After I had spent far too many (largely unpaid) hours generating claim charts, a small internal team spent weeks acquiring competitive information, working through product teardowns, building damages models, and assembling documentation directed toward a credible case of third party infringement. Even with all of that spade work, a team that knew its competitive landscape as well as anyone in the industry could surface only one plausible candidate, and the damages picture for that candidate was too modest to matter at the scale the transaction was operating on. So a portfolio built carefully over many years, covering technology that was genuinely gaining ground, could not be made to carry the weight it should have–not for want of patents, but for want of proof of infringement.
Fast forward a short while, and the landscape has changed dramatically. Today, I am able to use AI to translate what a claim means into plain business terms, then to scan the competitive field with carefully constructed prompts to get a bead on who may be practicing it. For some products, AI can even generate credible product teardowns. These processes take a fraction of the time they once did, and by using automatically generated “plain English” explanations of what the outputs comprise, my clients can actually participate rather than receive a conclusion they cannot independently verify as laymen.
What strikes me most about this shift is whom it changes things for. Credible proof of infringement was, until very recently, something only well-capitalized patent owners and the litigation funders who back them could afford to develop, which meant that an operating company holding a perfectly good portfolio and an ordinary budget simply never found out what it owned. That gate has come off. However, it has come off on both sides, and I would ask you to sit with that for a moment, because the acquirer across the table from you and the competitor you have been worrying about can now run the same analysis against your patents that you are finally able to run against theirs.
This is what it now means to demonstrate value. A portfolio does not become an asset the day it issues; it becomes an asset the day you can show somebody, element by element and against a product actually on the market, what you cover and what that coverage would cost him. Had that team been able to run this analysis at today’s price, it would not have spent weeks to surface one marginal candidate–it could have tested every plausible one and carried whichever actually mattered into the deal conversation. In short, stop accepting “probably” about assets you have already paid for, and go find out what you own while finding out is cheap. Feel free to reach out if you would like to talk through what your patents actually cover.