De-clutter your intellectual property in 2021

Gerlinde Nattler
Dickinson Wright

The year 2020 has finally ended. It has been shaken up by a pandemic, a contentious presidential election and protests. For businesses, 2020 brought mixed results, as behavioral adjustments shifted consumer spending. As a result, small and mid-size businesses especially may be more cash-strapped than in pre-pandemic times. This trend is likely to continue for some time, until household incomes have recovered and life has mostly returned to pre-pandemic habits.

As a result, your business may have reoriented itself in certain areas to the degree that some business lines may have fallen by the wayside, while new business opportunities have arisen. It is thus very important to protect your new achievements with patents and trademarks and to let go of IP rights directed to those projects that have been discontinued.

If your business needs to adhere to a tight budget, it is important to de-clutter your Intellectual Property (IP) rights, be it patents or trademarks. Especially in the U.S., it is easy to overlook IP expenses for patents and trademarks because fees are only due every four or five years. And maintenance fees for U.S. patents only become due after a patent has been issued. But foreign patents and even patent applications require annuities every year.

In the United States, patent maintenance fees are higher for older patents than for newer patents. The rationale is that, in order to keep others from using a protected technology for longer, the protected technology must be worth more to the patent owner the older it gets. Even for small businesses, maintaining a U.S. patent beyond 12 years after issuance costs $3,850.00 ($7,700.00 for large companies with over 250 employees). In foreign countries, annuities differ, but they also increase with age and are due every year for every country, even while a patent application is still pending.
The costs of maintaining trademarks does not depend on the age of a trademark, but it can be very expensive to maintain a comprehensive trademark portfolio.

Therefore, once a patent family or a trademark has served its purpose, it has reached the end of its useful life. The purpose might have been to protect a product, to keep a competitor from implementing a work-around or improvement, or to accumulate a portfolio to secure funding. Once the protected features do not apply to current market conditions anymore, it is time to declutter. The money needed to maintain old IP rights is then better spent on filing new patent applications and possibly new trademarks to secure a competitive position in the ever-changing marketplace.

For small and medium-sized businesses without their own IP database, it may be difficult to figure out what your IP assets are, especially if they include foreign IP rights. Although your business may receive quarterly maintenance questionnaires, these are only sorted by deadlines and numbers, not by technical concepts. To get a better understanding of the big picture, if is very helpful to request a complete master list from the IP counsel who works on the business' patent and trademark prosecution, preferably with pictures and/or hyperlinks to the respective patent or trademark. That makes it easy to see which IP rights are associated with specific projects, products, or services. Instead of making a decision for only one patent or trademark at a time, all IP efforts worldwide should be linked to projects and topics. Then these IP rights can be reviewed in groups. Sometimes, it is necessary to go into greater detail because a proposed improvement has not worked out as envisioned. But overall, a project-guided review will separate important IP rights from those of lesser or no value that should be dropped.

This will also cap the costs of the prosecution of some patent applications or trademark applications that may have become difficult and expensive due to recurring attorney fees. These attorney fees may at some point exceed the benefit of the IP right. In particular with U.S. patent matters that will show up on maintenance reports only after a patent is issued, such a portfolio review can uncover pending applications that have outlived their usefulness. All future attorney fees can be avoided by instructing the attorney to close a case before the attorney analyzes the next Office Action.

It is also helpful to keep a record of these associations with respective projects. This will save time for future reviews that ideally will be conducted annually or at least whenever U.S. maintenance fees are due.

Not only will these efforts make budgeting for the new year easier, they will also free up funds for securing future IP rights.

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Gerlinde (Linda) Nattler is a member in the intellectual property practice of Dickinson Wright. She works on patent portfolio management, patent prosecution, and opinion matters dealing with patent validity and potential infringement in various technical fields for domestic and international clients.