Monday, 18 July 2016

Cutting unnecessary portfolio costs: an engineering company makes savings

This month's case study takes a look at the application of IP analytics to the generally unsexy, humdrum but often critically important issue of cost management.  This exercise looks at the savings that can be made by an engineering business with global reach.

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Global Engineering Company Eliminates Unnecessary Portfolio Costs

Objective: the IP team was mandated to shave 15% off the company's budget without inflicting an adverse impact on the quality of its patent portfolio.

The challenge

Understanding the various costs associated with a large portfolio is a complex activity. This company’s portfolio had been built up over decades, and was the result of a range of acquisitions across numerous geographies in a fast-moving technology area.

Assessing, analysing and manipulating the data relating to the portfolio history requires research, and either manual effort or complex computational calculations. The challenge is compounded by the fact that, to be useful, the reviews have to be conducted regularly.

Benchmarking the portfolio against the strategy of competitors is challenging due to difficulties in aligning ownership, status, age, conversion and territorial data at a technology level.

The solution

Access to the Aistemos Cipher analytics tool enabled the team to respond to the challenges in the following ways:

1. Portfolio analysis

By uploading details of the patent portfolio from the patent management system, Cipher applied its unique cost estimation solution to produce a view of historic and current patenting costs by technlogy. Combined with Cipher’s objective and unique cost data, the team were able to make valid comparisons.
Figure 1: estimated 10-year expenditure
It was immediately apparent that there was a mismatch between the technologies critical to the business and parts of the portfolio that were consuming disproportionate amounts of the patenting budget.

2. Territorial analysis

Cipher analysed the portfolio at the technology level and identified similar portfolios owned by competitor and comparable companies. By combining territory, cost and status information, Cipher generated an instant view of territorial coverage and how this compared to others.


Figure 2: heatmap of geographic protection of technology area
This analysis highlighted a number of anomalies. There were many patent families that were being protected in countries that were no longer of strategic importance. This provided a rational and objective basis to inform a more aggressive approach to lapsing.

3. Pipeline analysis

Cipher was able to analyse the proportion and time for patents to convert to grant. With this information, the team could consider the extent to which budget was being focused on areas that were not contributing to long-term value.


Figure 3: Conversion rate (Control software technology)
The company was able to identify areas where it was achieving relatively low conversion rates compared to its competitors. This allowed the team to conduct a more detailed review of a range of issues from patent office trends to the performance of external counsel.

Impact

As a direct result of the analysis:

• Immediate plans were developed by the IP team to reduce cost by lapsing patents in non-core technologies and jurisdictions as well as improvements in conversion rates
• Routine portfolio reviews now include IP analytics, enabling more effective monitoring and better reporting
• Better understanding of the patent portfolio’s relevance and contribution to the overall business strategy.

To take a look at earlier Cipher Case Studies, which give a good idea of the sort of things that IP analytics can achieve, click here.

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