By George C. Lewis, J.D., P.E. of Merchant & Gould and David St. John-Larkin of Merchant & Gould
George C. Lewis, P.E. and David St. John-Larkin are attorneys with Merchant & Gould in Denver. They can be reached at 303-357-1670.
In-house patent counsel are often asked some variation of “What are we getting for the money we are spending on patents?” or “How well are we protected?” The patent counsel’s answer should both justify the amount of money spent as well as provide the executive management, investors and shareholders with confidence that the patent portfolio budget is being well spent. By using a metric or metrics that convey how well the company’s patent portfolio protects its products and profits, patent counsel can show management the return on the company’s patent investment. In addition, such metrics can be used to manage the strategic direction of the patent portfolio over time to more effectively protect the company’s assets.
Although variations may exist by industry, the typical rule of thumb used by many innovating companies is to budget for filing one patent application per year for every $1M/year spent by the company in research and development (R&D) spending. This type of patent portfolio budgeting, driven by R&D metrics, provides management (and investors) some idea of the relative importance a company places on its patent portfolio and its competitive position vis-à-vis competitors’ portfolios. For example, a budget that call...