5 Things To Consider Before Buying A Patent

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Companies acquire patents for various reasons. These may include building a defensive portfolio, entering a new market, developing a licensing program, avoiding litigation, etc. Whatever the reason, the process of buying a patent is expensive and requires significant investment. For this reason, it is best to practice caution when venturing into patent acquisition. Below we discuss a few pointers that can guide you in performing due diligence when purchasing a patent.  

Table of Contents

Gather Information 

Thorough research is the first step in acquiring a patent. Make the research as detailed as possible to avert any future difficulties.  

  • Secure file histories and copies of target patents from the seller for analysis. 
  • Enquire about relevant agreements involving the patents, like current licenses, offers to license, merger agreements, etc. 
  • Check maintenance fee, expiration date, and any special actions required to be taken for the patents.  

Account For The Future  

A particular technology may seem lucrative at present but may not be fruitful in the near future. Before buying a patent analyze the future of the market. Identify any alternatives that may replace the tech and make it obsolete. Run a risk assessment by investigating the domain the technology is in and how long it is likely to survive.

Patent Strength 

Even the best of patents can be challenged in Court upon presenting a strong prior art. To avoid being drawn into expensive litigation later, it is best to invest in a good prior art search. While these searches can be costly and time-consuming, it is nothing compared to the exorbitant costs of litigation later. Remember, a valid prior art can cause your patent to be declared invalid. 

Robustness Of Claim Construction

Patents that overlap a major product in the market need to be scrutinized for how good the overlap is. In order to do so, each claim needs to be individually verified for choice of words and language. There are ample precedents in infringement cases where some basic words in the Claim have turned the tide

Jurisdictions 

Be aware of the geographical area covered by the patent before purchasing. This is extremely useful especially when companies are looking to expand into newer markets. It also comes in handy when dealing with infringement cases as the laws vary in different jurisdictions. Having a patent family with members in different jurisdictions is a favorable sign. 

Other Considerations 

  • Does the company have confidentiality agreements with all its employees to not disclose trade secrets and important information? 
  • Any licensing notices received by the company from a third party or any other correspondence regarding an IP dispute over patents. 
  • Has the company received any information that may result in the patent being unpatentable, invalid, or unenforceable? 
  • Investigate the involvement of a third party and its significance. The most infamous example of overlooking this point was when Volkswagen bought the IP assets of Rolls Royce and Bentley. Post the deal they discovered that the trademark “Rolls Royce” was owned by BMW and had to enter into a separate agreement to gain ownership rights over it.  
  • Check for any pending mortgage on the patent portfolio or you may end up repaying the debt. 
  • Ensure you have all copies of important IP-related documents. 

Conclusion

Before buying any patent ensure that it is aligned with your businesss goals and objectives. Analyze the worth of the patent based on its value to your strategy. If the goal is to build a defensive portfolio, then emphasize the strength of the patent. for product development purposes look at the usability of the patent to the product line. Consulting the R&D department is crucial so that you don’t end up buying a patent that will not be useful for the product line. By keeping these simple points in mind, you can reap the maximum benefits from buying a patent

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