To Renew or Not to Renew – That Is the Question

To renew or not to renew – that is the question.

Well, not THE question, but definitely a very important one.

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What does renewing a patent entail?

A patent journey is a long one. Sometimes, you tend to forget that fact after you (and your attorney) finish filing your long-anticipated patent application, but this is barely the beginning of the journey. After a (hopefully not too) long prosecution process, that patent will eventually be granted. Which means, the county you filed in determined that your patented invention is indeed unique, and they are willing to give you protection against others trying to implement this technology for the next 20 years. However, to ensure you get this protection, you will need to renew your patent application on the schedule set by the local patent office. In the US, for example, the first renewal of your patent comes at 3.5 years after it is granted, then 7.5 years, and finally 11.5 years later. In the EU, however, you start paying renewal fees from the 3rd year after it is filed (not after it is granted, like in the US).

Renewals are not cheap. It depends on the company size, but it may end up being almost $20K per patent. And if you have a large portfolio of patents, those annuities add up quickly.

In fact, for a company with a patent portfolio older than 10 years (since initial filing), the annuities alone may take up to 30% of their IP budget!

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So…When should you renew your patent?

Historically, if you ask most patent or intellectual property attorneys, they’ll try to assess the “strength” of the patent in question by understanding the breadth of its claims and then deciding if it is still worth renewal. However, the strength of the patent is only one factor to consider, and definitely not the most important one.

In our view, the only reason for a patent to stay active, is if it serves a business goal for the company that owns it.

Think about it this way – as technologies and products advances over the years, is it possible that one of your older patents is protecting a feature you don’t sell any more? And if so, are you using this technology elsewhere? Licensing it? If not, then, why should you spend more money on a patent that yields no business value at all?

What could be the business justification for a patent? Obviously, the business justification is protecting innovation in your products and features. Sometimes, even the tiniest element in your product may be the important one to protect, providing you with a competitive edge and defensive moat against competition.

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Patents do more than defend your intellectual property

Patents can also be used as offensive moves, and not just as protection. You already know your competitors, so you can make a strategic move by staking a few patents in the areas where they operate. These patents may not protect your own product directly, but they can effectively discourage competition.

Active patents can also signal your future business direction, provide leverage in partnerships, prepare you for an M&A, and in addition to other strategic moves.

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Putting patent management into practice

The bottom line is: patent management should be just like any other aspect of business management. You need to calculate the cost/benefit analysis for each expenditure, and only if there’s a good justification should you continue paying for it.

How can this be done with a patent portfolio? Well, a good practice is to do what’s called a taxonomy – identify what business goal each patent serves. At the very minimum, try to map the patents to features and products you have. Once the renewal time arrives, you’ll be able to easily identify if there’s still a need or use for this patent within your organization.

Another important aspect is to plan ahead of time. Renewal timelines are set well in advance (based on either the filing date or grant date, depending on the country), so you should always go into each calendar year knowing which patents are up for renewal. This will help you to plan and prepare your budget in advance.

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If you don’t renew, you can license or abandon

What should you do with patents that you don’t need to renew? This is a monetization opportunity. You may license them out or sell them to parties that may find use for that technology. This way, instead of spending more money on patents that sit unused on your “desk”, you may actually get some return on investment from them.

What happens when you don’t renew your patent? It expires and anyone can use the invention. However, your published patent remains part of the public record as prior art, preventing others from patenting the same idea again.

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There are tools to help

While these seem like a fairly simple steps, the larger your patent portfolio is, the harder is it to be strategic and intentional with patent maintenance and spend. For large companies, it becomes such a monumental task that it is almost impossible to maintain all of their patents manually.

Luckily, there are tools and platforms out there that can help you automate the whole process.

Check out SenseIP.ai; we help companies analyze and optimize their patent portfolios using AI-powered insights.

Quick takeaways:

1.   Plan early – know which patent renewals are due this year

2.   Maintain an up-to-date taxonomy – map each patent to the product / feature or strategic need it serves

3.   Calculate ROI – considering the benefits from the patent and renewal costs across your patent portfolio

4.   For each patent, ask yourself:

          a.   Does it still serve a business purpose to my company?

          b.   Will this protected technology be used in the future in my organization?

          c.   Can I find someone to license/sell this patent to?

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