Strong patent portfolios enable companies topping the S&P 500 list, such as Microsoft, NVIDIA, and Alphabet, to maintain their dominance in particular technological fields. 

Although tech-giant companies are also the ones that have the resources to continuously invest in research, development, and obtaining new patents, IP value for startups and emerging companies should not be underestimated. Such companies need to approach IP protection thoughtfully, allocating their limited resources to protect strategically important assets. This can only be done if all stakeholders appreciate the utility of IP in general and understand upfront how to prioritise certain inventions in their particular situations.

The diverse utility of intellectual property

Intellectual property encompasses many types of intangible assets, such as registered rights of patents and trademarks, and less formal rights, such as copyrights and trade secrets. This intangible and scattered nature of assets makes it difficult to determine the actual value of IP. Nevertheless, its estimation has significant practical consequences. 

For businesses, it is essential to understand that IP assets can be leveraged like any other company asset and used strategically, for example, as collateral to secure financing or to obtain favourable conditions when negotiating a merger. Additionally, startups that hold patents and trademarks are 10 times more successful in securing funding than those that don't. And, of course, companies can draw additional revenue from licensing or the sale of their unused intellectual property, turning it from a cost to an income source.

Thus, while most appreciate that IP protection bars competitors from using your creations, its broader benefits should not be overlooked. As a strategic asset, IP is among the most consequential assets a business can possess.

Choosing the proper protection mechanism

The company's ability and options to use intellectual creations as assets hinges on adequate protection. The proper choice of IP right to protect a specific intellectual creation depends on the strategic goals of the company and the object that needs protection. 

For example, methods of production, recipes, know-how and inventions can often be best protected by trade secrets. Protection of trade secrets usually does not require any registrations and is unlimited in time provided the company follows strict rules to ensure information remains undisclosed to the public.

Even though trade secrets grant IP rights, keeping something a secret is not easy and does not always suit the goals of the company best. Thus, companies might want to opt for making their inventions public, particularly if they aim to license their technologies or have their inventions included in technology standards. In such cases, patents are the most relevant legal instrument of protection. Even though they grant protection that is limited in time, administering and enforcing patents is usually easier. 

Besides inventions, other IP rights protect the creative output of companies: 

• Copyrights and related rights protect artistic or creative work
• Trademarks protect brand identifiers such as logos and product names
• Industrial designs protect the visual appearance of a product
• Database rights protect the creation of databases
• Plant variety rights protect new plant species
• Geographical indications and indications of origin protect producers of agricultural and industrial products that are produced in specific regions and/or follow recognised production methods
• Domain names protect the digital identity of the company

Patents are usually the most important for emerging high-tech companies as they cover unique products, solutions, methods, and similar innovations. Thus, tech startups should pay special attention to patent portfolio management.

Establishing and managing a patent portfolio: strategies and considerations

If a company decides to move forward with patent protection, it should take multiple considerations into account, as patenting can be a time-consuming and resource-intensive process. Most importantly, it is crucial to understand that patenting is part of the overall business strategy and can only successfully bring about the desired added value if it is endorsed and supported by all stakeholders within the company.

Setting up a patent strategy 

Any patenting activity within the company should begin with a patent strategy, whether formalised or not. For tech startups, it makes sense to start with a less formal yet clear approach and then move towards formalisation as you grow and learn, which is what we did at Oxylabs. Having a clear strategy allows clarification with management on which inventions and products of the company are strategically important to protect and how wide such protection should be. 

Once this step is agreed upon, relevant stakeholders should be involved in determining roles and responsibilities for collecting and prioritising ideas eligible for patenting. Internal stakeholders, including innovators, IP lawyers, and business managers, must cooperate to identify which ideas are the most valuable to the business from different perspectives.

As a next step, creating and adjusting patent filing and prosecution strategy needs to follow. A company needs to have a clear vision of how it prioritises applications in the examination process, abandons unsuccessful applications or manages patent families. Additionally, clarity is needed regarding the desired lifespan of granted patents for different products. Failure to properly manage these topics will result in disproportionately high IP portfolio costs and minimum added value to the company.

Consider the jurisdictions

Another thing to remember is that patents are granted for specific jurisdictions. A patent secured in the United States doesn't automatically grant protection in China or Brazil. Since applying for patents is expensive, the company needs to decide which jurisdictions are the most important and strategically valuable for the company today and in the coming few years. 

The jurisdictional choice depends on many factors and is different for each company. Common criteria include the main market for the company's products, manufacturing sites, export markets, and similar considerations, as well as the main locations of competitors. 

For technology companies, such as Oxylabs, it is also crucial to consider potential future client locations and changes in the regulatory framework. It is not uncommon for companies to migrate from jurisdiction to jurisdiction while seeking more favourable regulation. Thus, you need to understand your clients and the international regulatory landscape to strategically prioritise certain jurisdictions when applying for patents.

Summing up

In high-tech, the value of intangible intellectual property often outweighs that of tangible assets. Companies that have already made their fortune, which is based on their impressive IP, are also the ones with sufficient resources to pursue all the patents and trademarks they consider valuable.

Startups and emerging companies, on the other hand, must approach patenting strategically. It starts with appreciating the various potential uses of intellectual assets and aligning your IP protection strategy with the broader company goals. Even teams starting small can achieve great things with smart portfolio management and organisation-wide cooperation.

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