Case study: Infringement potential analysis in a complex industry
Philipp E. Hammans and Alexander Gangnus, of Dennemeyer IP Consulting, discuss a recent case in which Dennemeyer's report helped a client gain robust insights into their relative competitive and technological position within the industry.
Our client is a specialist in an immature but highly innovative industry. The company has subsidiaries around the world, but the market for its products and services is relatively new, with business models still developing. As the number of patent families is rapidly increasing in this sector, the risks of infringing third party IPRs and being sued over IP infringement are on the rise. Due to these developments, Non-Practicing-Entities' (NPEs) attacks can be expected, and it was high time for our client to act. Litigation costs can be enormous, to the point of becoming an existential threat, particularly in the very litigious U.S. market.
While it takes one to two years from filing a patent to a publication becoming accessible in patent databases, the speed of innovation in our client's industry is rapid. It was vital to learn about relevant third parties' existence and behavior by adequately monitoring their activities and preparing for potential threats. Our client is active in an increasingly complex, diversified and competitive environment, where multiple players try to integrate their business models within the supply chain.
To prevail, we needed to know the answers to the following questions:
- How can the competitive landscape be sufficiently monitored in this diverse setting?
- How can our client be adequately protected against potential third party attacks?
- What are the trends in our client's industry sector?
- Which third party patent families is our client potentially infringing on?
Step 1: Technology assessment
Our proposed concept was based on a technology assessment and two sets of key performance indicators (KPIs) for infringement potential: one consisting of technological attributes (detectability, circumvention possibility and access) and the other comprising patent characteristics (ownership, legal status, country coverage, age, etc.).
In the initial step of the assessment, our client's technologies were first clustered into several sub-fields (elements) and then into around 100 technology details (attributes) with numerous sub-attributes to set an individual and exact starting point for further research and analyses. Once designed, those clusters can then be used for additional monitoring, competitor comparisons and innovation stimulation.
Step 2: Infringement risk potential assessment
During joint client-consultant workshops, the respective clusters' attributes were assessed in terms of their potential to infringe third party IPRs. The first goal was to identify those technological features or areas with a high infringement risk potential where NPEs and competitors would most likely attack. Also, numerous potential opportunities for generating licensing income were discovered. For example, an innovative technology that cannot be accessed or detected and is hard to circumvent without significant quality losses should have a high potential of revenue when out-licensed or otherwise commercialized.
Steps 3 and 4: Creation of research profiles and iterative patent research
As soon as the client's technologies were clustered and the risk potentials were assessed, our next step was to "translate" elements and attributes into searchable keywords and create more than 100 patent research profiles. We found the relevant patent families matching the client's technology clusters and characteristics in an iterative research process, with more than 10,000 patents being identified for the research profiles.
Steps 5 and 6: Application of patent-related KPIs and market analysis
After concluding the research and profiles, the second set of patent-related KPIs was applied to the analyzed patent families in order to complete the risk assessment. In parallel, we ran market-based research to identify all relevant market players and classify them according to Porter's Five Forces approach and landscape their IPR activities. This step represented an additional backstop, assuring that we have not missed any relevant market players during the technology assessment phase. Altogether, thousands of different applicants have been normalized and clustered to more than 100 company names.
Results and benefits
As a main result, the client obtained a comprehensive technology matrix that is fully searchable and matches existing patents to relevant technologies. All KPI systems have been combined, and the search results were evaluated according to the KPI systems. This led to an individual patent infringement KPI score for each patent family.
With our report, the client can identify areas with a high risk for litigation. In the future, the technology matrix can be used to identify and react to key competitors, new entrants and suspected NPEs, and to assess their innovative performance and development potential.
The article was first published in The Patent Lawyer Magazine, Annual 2021 edition.
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