How to build a patent sales programme

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Operating a profitable and efficient patent sales programme requires a clear understanding of the patent assets in the portfolio to be monetised, the technologies that they cover and the markets to which those technologies apply. Building this understanding upfront enables well-reasoned decisions to be made over time about what is appropriate to divest based on business strategy, financial strategy and patent portfolio holdings.

Common portfolio issues

Larger patent portfolios are often affected by a number of issues that stem from their size and the basis on which they were assembled. Typically, the following occur:

  • Unclear holdings – the portfolio may have been assembled and modified over time through mergers, acquisitions, divestments, expirations and new issues. These may not be well tracked by company portfolio management systems.
  • Unclear mapping – due to the lack of systems and patent expertise, there is little data concerning how the various patent assets map to technologies, products and the profitable divisions of adversaries.
  • Unclear strengths and weaknesses – often there is little data showing where the portfolio is deep and the patent coverage of certain technology areas is therefore strong, or conversely coverage is shallow and certain technologies are not covered at all.

These scenarios are likely to lead to a situation where the portfolio is not aligned with the company’s business objectives and thus it is difficult to decide which patents to divest, license or simply drop if they have no value.

Running parallel to these issues are systems and information management concerns, which typically prevent managers from being able to make quick and accurate decisions about the portfolio. In such instances it is difficult to frame and launch a patent sales programme because there is insufficient data to decide whether a patent should be retained or divested.

Active portfolio management

To support a patent sales programme, investments in knowledge about the portfolio are required that achieve the following:

  • A structured portfolio – detailed awareness of the technologies, applications and products covered by each patent family.
  • Identification of useful patents within the portfolio structure – assessment of patent strength based on the products that incorporate what the patents teach, claims construction, filing date and litigation history.
  • Knowledge management tools for accessing portfolio subsets based on perceived threats or opportunities – the ability to access patents based on their strength and the attributes of the portfolio structure.

Achieving this state of awareness about a larger patent portfolio takes significant effort on the part of the portfolio manager. The end goal of such work is to support portfolio monetisation decisions generally, and patent sales decisions in particular. The elements of the process needed to achieve this level of knowledge are depicted in Figure 1.

Figure 1. Steps needed to build a knowledge base for monetisation decisions


As shown in Figure 1, the initial step involves a review of all patents in the portfolio by subject-matter experts. To some degree, automated methods are first deployed to organise the patents into family groups (a patent family being all those IP rights and documents that flow from an initial inventive disclosure) and technology groups. Thereafter, the job is best taken up by patent-aware engineering teams, which scrutinise the patents and sort them into categories based on their potential licensing value and negotiation value in discussions with adversaries.

These activities are technical in nature and require the consistent application of set criteria across a broad array of technologies. Central to this work is the creation of a taxonomy for the patents that maps to the business that owns the portfolio. This taxonomy is used rigorously to categorise the patents in a manner that allows managers to access them using terms that are relevant to the business. Figure 2 shows the attributes of the type of programme invoked by large patent holders to build the portfolio knowledge base discussed above.

Figure 2. Outline of typical initial sort and review project for building the knowledge base needed for effective portfolio decision making

Portfolio sort and review

Patents categorised and scored according to an effective taxonomy:

  • Taxonomy accurately represents the business
  • Patents properly categorised within the taxonomy
  • Incisive commentary attached to each patent for later access

Taxonomy and scoring applied consistently:

  • Uniform rating system across portfolio
  • Comments tied to glossary of technical terms
  • Quality assurance procedures invoked to assure consistency

Work done by trained analysts with powerful tools:

  • Knowledgeable in the relevant technologies
  • Patent aware and skilful at identifying evidence of use


  • Evaluators to enter assessments efficiently
  • Decision makers to access what they need quickly

An example of the type of taxonomy developed in such projects is displayed in Figure 3, which shows portfolio managers the areas where the portfolio is deep (voltage regulation) and where there may be excess patents of good quality that could be brought into an orderly patent divestment and monetisation programme.

Figure 3. Example patent portfolio taxonomy


Figure 4. Criteria and approach for an initial portfolio review and assessment before a monetisation programme

Portfolio assessment criteria – relevant to portfolio management goals

Criteria for consideration:

  • Use of the technology within industry
  • Ability to detect use of the invention
  • Strength of the invention
  • Commercial merit of the technology
  • Quality of the claims construction
  • Probability of existing prior art
  • Remaining lifespan of the patent
  • Strategic value to the core business
  • Previously licensed technology

Consider a staged approach – two to three criteria on first pass. The results will identify overall portfolio strengths and weaknesses, and highlight monetisation opportunities

One of the significant outcomes of a sort and review process is the ranking of the patents in terms of licensing potential. This is where the true character of the portfolio emerges in terms of quality and value. A number of important criteria are used to rank patents as shown in Figure 4, the most important of which are:

  • evidence of use in industry; and
  • the ability to detect such use.

These two criteria are key because of the exclusionary nature of patents. If no one is practising what the patents teach, no one can be approached to take a licence and thus generate a royalty stream tied to the patent. Clearly, if the patent claims are compelling and the invention appears to have a bright future, in principle a party could be convinced to enter a business that practises what the patents teach. But it will not need a licence or to acquire the patent until it has decided to do so. Thus, without any evidence of use, patents have marginal or little value within the framework of a transaction.

Figure 1 showed that the second step in the active portfolio management process is to compare the findings of the completed portfolio review with business objectives and goals. This is where the patent monetisation and divestment opportunities begin to emerge because, when compared with business goals, it becomes clear which patents are core to the business. Questions that can be posed include the following:

  • What products must be protected?
  • Is there a mandate to expand the reach of existing licensing programmes or to target additional prospects?
  • Are there specific companies or technology areas that should be targeted?
  • Are there patents acquired in mergers and acquisitions that are not related to the present or future of the overall business?
  • Would the sale of patent assets unsuited to the licensing programme be an option?

This last question leads to the rational building of a patent sales programme, where patents are divested in an orderly way because they have no strategic value to the business, but may have solid evidence of use in industries that are not related to the business.

Figure 5. Portfolio structure and implications for divestment and monetisation

Portfolio structure and options to monetise

What technology groups are core toyour products?

  • Defence of market space

What technology groups are non-core to your business?

  • Assertive licensing
  • Patent sale

What technology groups have wide use across multiple market segments (eg, sensors, wireless)?

  • Defence of market space
  • Assertive licensing
  • Patent sale

How large are your technology groups?

  • Smaller, non-core groupings could be good candidates for sale

Are there patent families with no current evidence of use or conceivable future adoption in industry?

  • Candidates to take off maintenance and reduce expenses

The patents that portfolio managers choose not to divest tie directly to business strategy considerations and are retained for reasons such as:

  • ensuring freedom to operate;
  • defending market share through threats of assertion and counter-assertion;
  • generating revenue through licensing;
  • enabling collaboration with compatible rights holders; and
  • establishing IP-based ventures.

This part of the portfolio knowledge development process focuses on the technologies and processes that are core to the business. Some have narrow application, while others have broad application and may have value in industries outside the main focus of the business. Figure 5 details some of the questions to ask in this area and the opportunities that become available based on the answers.

Returning to Figure 1, the third and final step is to consider monetisation options based on the detailed attributes of the portfolio that are now placed in an accessible knowledge base. Portfolio managers can now access and use the knowledge base for monetisation decisions as well as quick strategic (offensive/defensive) decisions. Figure 6 shows all of the choices that can be made regarding a monetisation programme including a patent sales programme.

Figure 6. Sequence of decisions to identify divestment assets within a portfolio


Patent asset categories following review and strategic analysis


Patent auction programmes for the divestment of patent assets involve consideration of the markets which the patents target and the propensity for participants in those markets to acquire portfolios that they have not invented themselves. Further, such programmes involve building bid tension within the patent ecosystem among participants that are both practising and non-practising in areas to which the patents are directed. Some entities have an investment orientation, while others are purely manufacturers and want freedom to operate.

The same patent can have a number of different values depending on who acquires it and why they wish to own it. Figure 7 sets out these value differences for operating companies, non-practising entities and defensive consortia.

One key aspect of conducting a successful selling process is to maintain the momentum of the process at all times. The last thing that is needed is a buyer diligence question that takes three weeks to answer and slows down the diligence process for that buyer, while the others move ahead. This puts the diligence efforts among possible buyers out of sync and reduces eventual bid tension. Stimulating bid tension means ensuring that all buyers get through the diligence process at roughly the same rate and can present offers at around the same time. It is critical to complete all marketing and diligence documentation before announcing the patent sale and anticipating the answers for diligence questions that a buyer might pose. Obviously, claim charts and other evidence of use should be in hand well before launch.

There is substantial value in establishing a virtual data room and loading it with all of the marketing materials in both a ‘public’ section and a ‘confidential non-disclosure agreement-only’ section, since this provides all of the materials to target buyers in a fair, uniform and consistent way. Approaching all buyer constituencies at the same time also serves to improve bid tension among operating companies, non-practising entities and defensive patent consortia.

Figure 7. Different patent values for the same patent based on the purpose that the ultimate owner has in mind for the patent


Basis of value

Relative value (assignee)


Ability to prevail in multiple patent suits targeting infringed market

High (non-practising entity)


Ability to prevail in a court countersuit to diminish the impact of a patent suit

Significant (operating company)


Ability to prevail in boardroom discussions to counter the assertions of adversaries

Moderate (operating company)


Cost of litigation avoided by preventing NPE access to patent

Modest (defensive aggregation entity)


When building a patent sales programme, one should begin with a patent sort and review process to ascertain exactly where the value lies in the portfolio to be monetised. One should also consider retaining a patent broker to assist in such matters. A good broker is well versed in the issues noted above and will possess a wealth of contacts in the IP domain that would otherwise take years to acquire. Further, having a broker present a portfolio to targeted buyers essentially eliminates the prospect of a target buyer launching a declaratory judgment action if the patents are mistakenly presented in a way that appears to be an assertion threat. Finally, an experienced broker will have the resources at hand to deal with the patent analytics and evidence of use requirements that must be in place to support the value of the patents being sold.



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Art Monk

Vice president, patent brokerage

[email protected]

Art Monk is vice president, patent brokerage at TechInsights, the global leader in IP consulting, patent brokerage and technical analysis, now in its 25th year in business. In his present role Mr Monk has facilitated high-value patent divestment and procurement transactions for clients in Japan, the United States, Taiwan and Europe. Before TechInsights, Mr Monk was CEO of Inflexion Point Analytics, an entity focused on patent analytics and transactions. Mr Monk holds a BSc (honours) in physics and an MSc in biophysics from the University of Manitoba. He also holds an MBA in operations research from the University of Alberta, where he dedicated time towards postgraduate research in solid state physics.

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