Building the connection between patent cost and value
We understand that patenting strategy functions within tight budget constraints; and that any increase in expenditure needs to be justified. Cipher gives you the ability to analyse historic and projected costs. And using industry accepted financial models, it provides you with the evidence required to justify budgets by reference to mitigation of exposure to patent risk.
“9% of patent budgets are being invested in analysis to communicate the strategic benefit of portfolios. This investment is critical where, on average, 4.5% of revenues can be exposed to third party patent claims.”
Cipher Report on Portfolio Optimisation, March 2020
You want to put every dollar invested in patents towards its highest and best use. If you anticipate increased competitive threats in the future, you want to make sure that your resource allocation is commensurate with those forward-looking threats.
Jared Engstrom, Head of Patent Development, Red Hat
Do you need to answer these questions?
How do I know whether the patent budget is being sensibly allocated?
The Cipher Optimisation Model provides a rational basis for identifying areas of over- and under- stocking. By creating a repeatable model, your patenting strategy can be recalibrated as business requirements and competitive landscapes change.
When facing budget pressure, how do you know what cuts cause the least damage?
There’s no easy way to identify your ‘bad’ patents. There are patents however that don’t serve your business objectives well. By mapping your patents to your technology taxonomy, and combining with revenue data, you can identify the patented technologies that provide the least value. This evidence-based approach provides the strategic patent intelligence required to develop a pruning strategy.
What information best conveys to the CTO and CFO the value delivered by our patent portfolio?
Many companies cannot point to direct licensing revenue. There are, however, established ways to link the cost of your portfolio to the quantum of patent risk mitigated. Executives are alive to the substantial risk of paying away substantial royalties. Explaining the relationship between your patents and the ability to neutralise threats plays well before this audience.
…then Cipher can help.
How Cipher supports your analysis of patent budget
Define Budget Objectives
Define the approach that will best enable you to understand how the patents in your portfolio map to product/revenue lines.
Build an Optimisation Model
By combining patent data from Cipher and revenue data, the model identifies areas of under- and over-stocking.
By understanding which patented technologies deliver the most value, will enable you to decide how best to align your patent budget.
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
Insights and Events
Budget Management FAQs
Why is helpful to use both patent and revenue data when considering budget questions?
The size of your portfolio should be analysed relative to both your revenue and the market more generally. Any other approach fails to take account of either the global population of patents in a specific area or of the relative importance of that technology to your organisation.
Do financial models ignore important topics such as patent quality?
No. Both patent quality (and other subjective factors such as seriousness of threat) are taken into account. While Cipher ‘quality’ scores use indicators such as citations, age, the model expects the company to add a subjective weighting in this area.
Does Cipher provide all the inputs for its Optimisation Model?
The Cipher platform can provide the required patent numbers (both for your own portfolio and others). The revenue data will either be available internally or from publicly available sources (such as SEC filings). The Cipher Solutions team is able to provide additional consultancy support.
Can Cipher help in the identification of our best patents?
No. Cipher does include industry standard measures of ‘quality’ (e.g. citations, age, geography). As of now, it is beyond AI to identify definitively what is a ‘good’ patent in key areas such as validity and infringement.
With Cipher you can also…
Trained by humans, built by machine to give you independently verified accuracy
“Cipher’s classifiers enable you to understand the patent landscape or analyze a portfolio. Combining expertise in both IP and data science, Cipher provides you with solutions to the strategic problems patent owners face, with quick and accurate results.” Erik Oliver, Richardson Oliver Insights