A company’s intellectual capital, particularly its patent portfolio, is one of several criteria that should be properly reviewed before engaging in a licensing deal or considering a merger or acquisition. As a result, there are a few elements to consider while evaluating a company’s patent portfolio.
Commercial Transactions And Patents
It is critical to understand that patents are territorial in nature and that only a granted patent would bestow the prized exclusionary rights in an invention on its owner. There is no such thing as an “international patent” – neither international treaty nor national law provides for it – and separate patent applications explaining the invention would have to be submitted in each and every jurisdiction where exclusionary patent rights are sought.
Patent applications filed under the Paris Convention for the Protection of Industrial Property (within 12 months of the date on which the first patent application describing the invention was filed) or the Patent Cooperation Treaty (within 31 months of the date on which the first patent application describing the invention was filed) are not extendible.
Furthermore, all issued patents must be maintained, and yearly renewal payments are due; if a renewal fee is not paid on time, a given patent would expire. The Patents Act in each jurisdiction does include a method for restoring a patent that has lapsed owing to non-payment of renewal fees, and a formal application to that effect must be lodged with the Registrar of Patents. However, it is far from assured that an application for the restoration of a lapsed patent will be granted, and both the application and the circumstances surrounding the lapse must adhere to certain peremptory clauses of the Patents Act.
Significantly, if an expired patent is not reinstated, a third party may create, use, exercise, dispose of, offer to dispose of, or import the invention detailed in the lapsed patent. The ex-patentee would have no remedy against the aforementioned third party in this case (in so far as the law of patents is concerned).
It is also important to remember that the exclusionary rights granted by a patent are defined and restricted by the patent’s claims. The extent of these rights is influenced by previously awarded patents or known technology (the so-called “prior art”), and a trained patent attorney would be best equipped to construe the patent claims in order to ascertain the exact extent of the claimed monopoly.
Finally, a full review of a company’s patent portfolio should include a detailed technology landscape study on its rivals’ patent portfolios and the condition of the technology sector in general. A technology landscape study, for example, can identify major players and developing trends in a technical industry, and a party with access to this information will have a competitive edge over its competitors.
This emphasizes significant topics to consider in a patent-related business transaction but is by no means exhaustive. Every business transaction is unique and necessitates a thorough examination of the patent portfolios of the parties.