ARM on classifiers and managing patent budgets
Rob Calico, VP IP and Litigation, discusses the challenges of managing a sophisticated portfolio in a fast-moving technology environment, and how Cipher has helped them manage their patenting strategy and budgets. Rob is responsible for ARM’s IP strategy (both prosecution and enforcement) as well as worldwide litigation. The biggest challenge, he says, is being able to point to the value of the assets in their portfolio.
What are the strategic business questions you as an IP leader need to consider?
The fundamental question always is when executives say: “I see the number of patents, but how do I know that these patents are the ones that we need? If we want to go in a different direction, how will the patents continue to add value?” Those kinds of questions. Basically, does the IP match what the business is wanting to do, are they strategically aligned.
How do you go about answering those strategic questions?
ARM is roughly 30 years old at this point and is now a subsidiary of SoftBank. When I joined ARM roughly 9 years ago, it was a different situation. Not that long ago in terms of the age of the company, but the company behaved in a much more of a start-up fashion. Patent targets for invention were tied to metrics associated with technology developments, things that made sense at the time. As the organisation has grown, you try to figure out what are better empirical ways to figure out how many patents are the right number of patents.
My background is in litigation. Litigators always have a fear based on notice requirements around either indirect patent infringement or around wilful patent infringement. Around doing too much digging. You find yourself in the situation where you want to know, but you don’t want to know too much.
And it’s a difficult thing and a lot of the time, you’re set up in situations where you have to know the answer to the question about “Do we have the right strategic numbers of patents?” We find ourselves looking for unique, different or innovative ways to figure out where we are, where our competitors are – are we in the right space? Do we need more, do we need less?
The main strategic benefits of Cipher for ARM are the accuracy of the classifiers and the ability to continue to run those classifiers over time. Having an empirical way of pointing to why we file what we do, makes the case for the budget we need.
Rob Calico, Vice President IP and Litigation, ARM
How has Cipher changed your approach to these kinds of strategic questions and challenges?
As our relationship with Cipher developed it became obvious that Cipher would be useful for doing this kind of searching. The mechanism for getting the right amount of detail without getting too much detail.
Prior to that we’d used a lot of Boolean searching. We have a team that would do some of the landscaping work and a separate team that did the patent prosecution work. And the results of the two teams would be widely different and this caused unwanted tension. Modifying Boolean search is haphazard. You put in more terms or more phases or whatever, and the numbers for the patents are suddenly too big, and everyone loses confidence. You can end up in this cycle where you’re just more and more aware that what you’re getting is not terribly accurate.
What we’ve been able to do with Cipher is get the landscaping team, and the prosecution team and the Cipher team working together to generate classifiers, within areas of the business that we care about. And having built those classifiers, we now have a reliable and trusted source of data.
Once you have accurate landscaping, you can run those same searches over time and look at the relative velocity of other entities. Who’s growing faster? Are there people who have a low number of patent counts relative to us, but they’re increasing at such a rate that we should be concerned or, at least, watch what they’re doing?
What we’ve been able to do once we have that data is feed that back into the patent invention harvesting targets and the application filing targets and, tailor our targets more towards what we need. Cipher provides the data that enables us to be more nimble and responsive.
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How have you used Cipher to help manage budget?
ARM has grown substantially in the last 4 or 5 years, especially since the SoftBank acquisition. As we did the 10-year plan, our patent budget became really substantial in the next 5 to 10 years. It was necessary to revisit our budget because it didn’t make sense strategically.
While our current ways of setting patenting targets served us well for many years it doesn’t work in a period of rapid growth. Now we have the data to make decisions with greater confidence.
Has this had a significant impact on the way you’ve managed your patenting strategy? How do you communicate more broadly with the business?
There has been a slight softening in the semiconductor business. We’ve needed to identify areas where we can save.
Coming back to the subject of long-term budgets. We’ve been able to feed the numbers that we’ve generated and modified our patent application targets based on that work – essentially what we’ve done with Cipher to modify the slope of that line. We can see the year-on-year on savings. The nice part of modelling for the future, is that you can act ahead of time and avoid the spend in the first place. The next stage will be to optimise our existing portfolio and we do have an intention to look at what we have in prosecution and what has been issued.
Because we have incredible data from Cipher, we can honestly go to the organisation and say, “We’re going to make these changes in the way that we file patent applications. If we don’t proceed with these, it will materially impact the value of the company or our strengths in the areas that we operate in.”
Being able to demonstrate a strategy where you can save money without losing anything is always going to be a win, quite frankly.
How has Cipher helped you manage your budget?
Having an empirical way of pointing to why we file the applications that we file, based on data that we receive from Cipher classifiers, helps us to make the case that what we need, the budget that we need to file these applications, is critical based on where others are going and based on the future health of the company.
ARM was customer number one for Cipher and we’ve had a long relationship with you guys.
Having an empirical way of pointing to why we file the applications that we file, based on data from Cipher classifiers is crucial. It helps us to make the case of what we need to do and the budget required to file these applications.
Robert Calico, VP IP & Litigation, ARM
How do you measure the return on investment of Cipher?
Cipher for us is a necessary tool. It filled a need that we really had. We continue to look to Cipher to drive innovation and find new areas and new benefits that they can bring to ARM.
We’re happy with the engagement that we receive from Cipher. They work strongly with our team to build the classifiers and understand our business. Because our business is somewhat unique, we tend to stick with vendors who will spend the time and the energy to really and truly understand what we do.
How do you assess the return on investment of your work with Cipher?
There is a fair amount of upfront involvement and that work seems to be shared across Cipher and my own team. I think for us again it’s just about there not really being any other tool that we have seen that provides the same level of accuracy with respect to landscaping and patent counts, without subjecting us to the liability based on a more in-depth kind of ‘freedom to operate’ analysis.
How have you found working with Cipher over this period?
We have a number of relationships with law firms, patent prosecution firms, tool companies, who I think really feel a bit to us like family and so we do kind of go through every year looking who we’ve got and there is a bit of a special category for some. Cipher has always been willing to work with us, understand what we need, and it’s been a very fruitful relationship over time and we have really got a lot out of it.
Download Cipher’s Report on Portfolio Optimisation.
THE KEY FINDINGS ARE:
- Over $40 billion is spent on patents each year, but less than 20% of companies report that their portfolio is the right size
- Most patent experts believe that a well-balanced portfolio reduces the threat of patent litigation
- Patent strategy is scrutinised by the CTO, CFO or board in most organisations
- Organisations spend an average of 9% of their patent budgets on strategic patent intelligence