Strengthening your due diligence on patent acquisitions
Patents can be valuable assets, and not surprisingly tens of thousands of patents are transferred annually in the US and other countries.
Patents are generally transferred for two reasons:
The patents being part of a sale of a business from one owner to another (in some of these cases, the listed legal owner of the patent may not change, but regardless, a potentially valuable asset was transferred from one beneficial owner to another).
A dedicated purchaser of a patent independent of the sale of a business. A leading reason for this is the acquisition of patents by companies who wish to monetize these patents at some stage. Other reasons include the strengthening of a patent portfolio for defensive purposes, and the desire to invest in a particular technology, including its underling IP protection.
The need for due diligence
Given that patents can be very valuable, it is natural that potential purchasers will want to undertake appropriate due diligence. This often starts with a check of the legal details of the patent, including the ownership and legal status.
For many acquisitions of patents as part of a purchase of a business, this is as far as the due diligence extends. But for purchasers looking to monetize patents, often more diligence is involved. Potential owners can look for potential monetization opportunities, and will often consider carefully the legal ‘strength’ of the patent – regardless of whether it has been granted or not.
This last point is becoming increasingly important. While some purchasers will rely on the legal status as listed by a patent office as a final indicator of the legal strength of the patent, more sophisticated purchasers will know that even a granted status is only a starting point. This is even more so in recent years in the US, as the 2012 America Invents Act has increased the rate of inter partes reviews – and with a claim survival rate of only around 25% for patents reaching final written decisions - and this is for a dataset of over 9,000 IPRs since 2012 (for example, check out image below, based on data supplied by Finnegan.com)
Of course, such statistics can be misleading as IPRs only tend to be initiated on patents where the opponent has decided that the patent would be worthwhile challenging (and for which they have a financial motivation to challenge the patents). But regardless, such a high claim failure for the patents that are challenged, does show that a general assumption of validity for granted US patents is simplistic. This would suggest that appropriate due diligence for patents you are considering acquiring may be very worthwhile.
How Ambercite can help with patent due diligence
As patent applicants who have through been the process of getting a patent granted may fully understand, patent examination can be very rigorous before a patent is granted, with many stages of patent searching and examination reports. Given this, one might surmise that finding new prior art (that can weaken the patent) that the examiner has missed can be challenging.
And indeed this can be the case if only conventional patent searching is used, i.e. searching that is based on the same keyword and class code searching method as used by patent offices.
However Ambercite is not a conventional patent searching tool. Instead it uses a unique algorithm that analyses a network of over 180 million patent citations to identify similar patents to a patent (or group of similar patents). The patents found will comprise a combination of known patent citations – and ‘unknown’ patent citations, which in fact are not citations per se, but instead are patents which could be patent citations, i.e. are similar patents that need to be considered from an invalidation and hence due diligence perspective.
An example of such as a network is shown, in this case for the famous Amazon ‘one-touch patent - this only shows part of the network, including a very small part of the secondary network (unknown patent citations).
These unknown citations can include patents that may have very different keywords and class codes to the patent in question, which can help explain why they were missed by the original searcher or examiner.
Ambercite due diligence can be very rapid
To run a due diligence on a patent, simply input the patent number into Ambercite, along with the date filter to match the patent itself.
As a very simple example, I have entered US10,000,000 in the search box in the image below, along with a date filter to match the March 2015 priority date of this patent.
The results are given in ranked order of predicted similarity, and include a mixture of known and unknown citations - which need to be considered from a potential invalidation viewpoint.
Individual patents (families) can be easily reviewed in our patent review panel:
And can be downloaded in spreadsheet form - or shared with a fully interactive share link, which can be opened by any recipient (click on the image to below to see a live version of this interactive page for yourself).
Benefits of Ambercite
Ambercite is very fast to use, and can provide a unique perspective on patent searching. Its network based searching algorithms can provide a fresh perspective on the prior art for the patents you are looking at (as shown below) and so strengthen your due diligence process.
Considering the money wasted if a money is spent on a patent which later turns out to fall over in a IPR process - Ambercite can be a very high returning investment indeed.
