Red Hat on using the Cipher Optimisation Model
Jared Engstrom, Head of Patent Development, talks about the growth in Red Hat’s portfolio, how he has used Cipher’s custom classifiers and how the Cipher Optimisation model has improved their understanding of the competitive landscape. Jared manages Red Hat’s portfolio, the harvesting of new invention disclosures as well has moving them through the patent process. He is also responsible for the strategy around what patents Red Hat file, how they are maintained and how they are used to protect the company and support the open source community.
What types of strategic business questions do you need to consider?
You need to understand where your risk is as a company – for many companies, it’s tied to the products and offerings you have and the revenue you generate. Understanding that risk naturally helps you understand where you need to build up fortifications and defences.
In our case, we have a patent portfolio used for defensive purposes only and understanding where we have risk exposure due to the markets we operate in and what other companies are doing in those spaces, are questions that we need to answer at a fine level of granularity.
How have you managed to answer that kind of strategic business question in the past?
We recently hit an inflection point. As a smaller company over the previous 10-15 years or so, we were largely concerned with building up the size of our portfolio. We also knew we had a handful of key threats out there and so a lot of our time and energy was focused on making sure that we were well prepared to defend against those particular threats.
As we’ve hit this inflection point, where we’re a bigger company with a sizeable patent portfolio, and we’re in many more markets and in many more tech spaces, we’ve got to have a broader view of patent risk in general. We really need to answer questions about our risk and ensure that we align our defensive measures in each of our relevant spaces proportional to the relative risk.
Cipher has helped us answer strategic business questions specifically by presenting the data to us in a way aligns with our own view of the world.
Jared Engstrom, Head of Patent Development, Red Hat
What was the approach that you used to take and how did that approach change when Cipher was introduced into the process?
We did do analysis in the past, where we looked at other companies and we literally assembled a spreadsheet of 100+ companies that we thought either had products that were similar to ours, or they competed in some of our spaces and we did a bunch of manual analysis that took us months and months to build, and it gave us some insights about where some of our risks were, but it was static data and it was hard to update and maintain.
Once we learned about Cipher, it was sort of an ‘aha’ moment where we realized that we can dynamically monitor, measure, see trends, and better understand what the world looks like, but do it through our own lens, through our own taxonomies. Seeing the world through that lens gives us better ability to act on that information, because we are already familiar with that lens and we know that it aligns with our business strategy.
How did you find that process of taking your view of the technologies of interest into a Cipher taxonomy?
The process was straightforward. We defined the technologies and provided examples of patents that met the definitions for the different technology areas. We were under some time pressure to finish the project before the end of our last fiscal year, and we managed to work through the whole thing in what I think was less than a month. And it wasn’t a full-time effort on the part of the Red Hat team. The Red Hat team certainly put in a lot of time and effort, but the Cipher team did all the heavy lifting. It would have taken us several months of nearly full time effort for us to do that on our own.
Cipher’s way of approaching classification is particularly useful because it’s customised to the way Red Hat views the world in terms of technological taxonomy.
Jared Engstrom, Head of Patent Development, Red Hat
How did you get over the trust and confidence issues required to share that data more broadly inside your business?
Red Hat as a technology company, understands the value of technology, understands the value of good data, understands the power of artificial intelligence.
We also had quite a bit of our own historical data and manual analysis that we could compare against the Cipher results so it was fairly easy to get comfortable with the results as the Cipher results lined up pretty well with our own. Cipher also provided insights into things that we weren’t aware of.
You referenced there that you got some insights that maybe you hadn’t been able to access before, can you talk about that?
In our own manual analysis, we did some exhaustive research on 100+ companies, to see what patents they had, their revenue, their litigation history – all those sorts of data points you need to understand the landscape. But it’s impossible to research every company on the planet and it’s hard to know whether you’re missing anybody that you should be aware of.
Sure enough, in our Cipher analysis, there were two or three or four companies that weren’t on our radar, and we are now conducting more in depth research and analysis to understand how those companies might or might not be a risk – but we wouldn’t have known about them if it wasn’t for Cipher.
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How does the Cipher Optimisation Model help with your analysis?
It helps in a variety of ways. Historically, we had spent a long time focussed on helping Red Hat build its portfolio from a very few patents to now several thousand patents. In that world any patent we could get for Red Hat was a good patent.
Now It’s really important for us to be focussed on getting patents that align with our taxonomies and our strategy. The optimisation initiative enables us to break the portfolio into different zones, and we analyse whether we have sufficient patents to meet our strategic objectives.
We can now easily identify a particular technology area where we have a deficit and be able to focus on that. This helps drive all kinds of things, from invention harvesting, to paying maintenance fees, to how we prosecute applications. It delivers us insight and focus that we can use to drive our decisions every day.
How would you explain the impact and value of Cipher to other IP leaders in the market?
Any company that is trying to execute some kind of patent strategy needs data to help them understand that strategy and execute against it. Cipher takes the time to understand how you view the world, the lens through which you see the world, and then they are able to provide the data that we need, almost magically, using a lens that aligns with our company’s view of the world. This means that whether it’s filing trends, or technology trends, or any other critical patent analysis, we can leverage it more immediately, more efficiently and more effectively.
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